Clark v. Prudential Ins. Co. of America

• Decision Date: 24 January 1970
• Docket Number: No. 45517,45517
• Citation: 464 P.2d 253,204 Kan. 487
• Parties: Frank L. CLARK and Fern E. Clark, Appellees, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Appellant.
• Court: Kansas Supreme Court

Page 253

464 P.2d 253

204 Kan. 487

Frank L. CLARK and Fern E. Clark, Appellees, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Appellant.

No. 45517.

Supreme Court of Kansas.

Jan. 24, 1970.

Syllabus by the Court

1. As a general rule, the construction and effect of a written contract of insurance is a matter of law to be determined by the court. If the facts upon which a beneficiary relies to recover on the policy are admitted, then it is for the court to decide whether they come within the terms of the policy, and such determination may be made pursuant to a motion for summary judgment. (Following Goforth v. Franklin Life Ins. Co., 202 Kan. 413, 449 P,2d 477.)

2. Rules governing the determination whether ambiguity exists in the terms of a policy of insurance are stated and applied.

3. When the terms of a policy of insurance are clear and unambiguous, the words are to be taken and understood in their plain, ordinary and popular sense, as an average or reasonable person with ordinary understanding would construe them, when used to espress the purpose for which they were employed in the policy.

4. In an action on an insurance policy, wherein the beneficiaries seek to recover an additional benefit provided for in a supplementary benefit provision entitled 'Nonoccupational Vehicle Accident Death Benefit,' the record is examined, and for reasons stated in the opinion, it is held:

1. Whether the terms or words of the provision referred to are ambiguous is a question of law to be determined by the court.

2. The terms of the provision referred to are clear and unambiguous.

3. Under the undisputed facts the accident, resulting in the death of insured, did not fall within the conditions of the provision referred to.

4. The trial court erred in failing to sustain defendant's motion for summary judgment.

Nelson E. Toburen, Pittsburg, argued the cause, and Paul L. Wilbert, Randall D. Palmer, and Garry W. Lassman, Pittsburg, were with him on the briefs for appellant.

Perry Owsley, Pittsburg, for appellees.

KAUL, Justice.

This case involves the construction of a provision for 'Non-occupational Vehicle Accident Death Benefit' in a policy of life insurance issued by the appellant on the life of Jerry L. Clark, son of the appelles.

The facts are not in dispute.

On May 26, 1965, appellant issued to Jerry L. Clark a life insurance policy in the face amount of $5,000.00 with double indemnity for accidental death and triple indemnity for accidental death falling within the 'Non-occupational Vehicle Accident Death Benefit' provision.

The policy was in full force and effect on April 29, 1966, when Jerry L. Clark was killed in an accident. He was driving a Appellees, the benficiaries of the policy, were paid $10,000.00; $5,000.00 on the face amount of the policy and $5,000.00 under the accidental death provision. Appellant refused to pay the triple indemnity benefit and this litigation followed.

motorcycle when he collided with a pickup truck at an intersection in Pittsburg.

The provision in question and its caption or heading are as follows:

'NON-OCCUPATIONAL VEHICLE

ACCIDENT DEATH BENEFIT

'If an Accidental Death Benefit is payable, as specified in the Accidental Death Benefit provisions, or would be payable except for the operation of the Reduction paragraph of such provisions, and if the required due proof shows that the injury resulting in the accidental death was sustained by the Insured (a) while driving or riding in the private automobile of pleasure car design (including station wagon or similar body types) not in use for commercial or occupational purposes by the Insured, or (b) as a result of being struck by a motor vehicle while not himself or herself driving or riding in a motor vehicle, or (c) while riding as a passenger in or upon a public conveyance provided by a common carrier for passenger service, the Company will pay, in addition to all other benefits provided by the policy, a Benefit equal to the face amount. If this Benefit becomes payable, it will be added to the proceeds otherwise payable under the policy.' (Emphasis supplied.)

The question is whether the terms of the provision are ambiguous.

After pleadings were filed and issues joined, appellant filed a motion for summary judgment which was heard and overruled by the trial court on the grounds that the question whether the policy was ambiguous was an issue of fact, not determinable by summary judgment. Thereafter, a pretrial conference was had following which the trial court entered a pretrial order in which essentially the same rulings were made as those announced on the overruling of appellant's motion for summary judgment.

Pertinent portions of the pretrial order read as follows:

'3. The court determines the following to be questions of fact to be determined in the case: (a) Whether or not the insurance policy provision is ambiguous; (b) Whether or not plaintiffs are entitled to the rule of favorable construction.

'4. A question of law is presented as to whether or not parole(sic) evidence is admissible concerning the interpretation of the policy by insurance agent of defendant. The court rules that a question of fact being present on ambiguity of the policy provisions, parole (sic) evidence is admissible to explain the intention of the parties to the insurance policy and evidence of the interpretation of the policy by insurance agents of defendant is admissible.'

The case proceeded to trial on the issues set out in the pretrial order. Testimony of a number of witnesses, concerning the interpretation of the provision in question, was submitted by appellees over the objection of appellant. Thereafter, appellant presented the testimony of several witnesses to the effect that the provision was not ambiguous.

The trail court found the provision ambiguous; that parol evidence was admissible; and it was the intent of the parties that a benefit of triple indemnity would be paid for the death of the insured from a 'non-occupational vehicle accident.'

After hearing further evidence on the issue of attorney fees, the trial court found that appellant had refused, without just cause, to pay the loss and allowed a reasonable attorney fee to appellees' attorney.

On appeal appellant claims error by the trial court in ruling that ambiguity was a question of fact; that parol evidence was admissible regarding the interpretation of the policy; in failing to sustain appellant's motion for summary judgment; in finding the policy provision ambiguous; and in allowing attorney fees.

Whether a written contract is ambiguous is a question of law. (West v. Prairie State Bank, 200 Kan. 263, 436 P.2d 402; and Kittel v. Krause,185 Kan. 681, 347 P.2d 269.) The same rule applies to a written contract of insurance. (1 Couch on Insurance 2d § 15.3, p. 638; and Goforth v. Franklin Life Ins. Co., 202 Kan. 413, 449 P.2d 477.)

If the facts are admitted, it is the province of the court to determine whether they come within the clear and unambiguous terms of a policy of insurance. (1 Couch on Insurance 2d § 15.3, pp. 638, 639.)

In the Goforth case, decided January 25, 1969, subsequent to the trial of the instant case, we held:

'As a general rule, the construction and effect of a written contract of insurance is a matter of law to be determined by the court. If the facts upon which a beneficiary relies to recover on the policy are admitted, then it is for the court to decide whether they come within the terms of the policy, and such determination may be made pursuant to a motion for summary judgment.' (Syl. 1.)

On appeal appellees' counsel candidly admits the trial court should have found the question of ambiguity to be one of law. However, it is contended the matter is of no consequence since the same trial procedure would have been followed and thus the rights of appellant were not prejudiced by the trial court's erroneous rulings. We are inclined to agree with the appellees' theory as to the nonprejudicial effect of the trial court's ruling if the policy were ambiguous but, as to this, we cannot agree.

Before proceeding further with the question of ambiguity we should first consider the nature of the provision in relation to the policy as a whole. The provision is not a part of the basic contract between the parties but rather it provides for an additional benefit under the circumstances set out. It is not an exclusionary or reduction clause. The reduction paragraph of the accidental death benefit provision, mentioned in the first sentence of the provision, refers to a reduction of the accidental death benefit in case a payment had been made prior to death for the loss of sight or limbs, as a result of the same accident. The reduction paragraph referred to is not a reduction of benefits but only serves to avoid duplication of benefit payments and has no bearing on any of the issues here.

The provision in question is not an exclusionary clause, as contemplated in Buchanan v. Employers Mutual Liability Ins. Co., 201 Kan. 666, 443 P.2d 681. It does not grant and then take away; it only provides for a triple indemnity benefit, conditioned on the factors set forth therein, in addition to the benefits provided for in the other insuring agreements of the policy.

Returning to the question of ambiguity, we note rulings of this court dealing with the subject and pertinent to the issue in the case at bar.

When an insurance contract is not ambiguous, the court may not make another contract for the parties. Its function is to enforce the contract as made. (Braly v. Commercial Casualty Ins. Co., 170 Kan. 531, 227 P.2d 571.) To be ambiguous the contract must contain provisions or language of doubtful or conflicting meaning, as gleaned from a natural and reasonable interpretation of its language. (Goforth v. Franklin Life Ins. Co., supra; Koehn v. Central National Ins. Co., 187 Kan. 192, 354 P.2d 352.) Ambiguity in a written contract does not appear until the...