Connecticut General Life Ins. Co. v. Boseman

• Decision Date: 27 August 1936
• Docket Number: No. 8077.,8077.
• Citation: 84 F.2d 701
• Parties: CONNECTICUT GENERAL LIFE INS. CO. v. BOSEMAN.
• Court: U.S. Court of Appeals — Fifth Circuit

84 F.2d 701 (1936)

CONNECTICUT GENERAL LIFE INS. CO. v. BOSEMAN.

No. 8077.

Circuit Court of Appeals, Fifth Circuit.

July 14, 1936.

Rehearing Denied August 27, 1936.

Major T. Bell and Lamar Cecil, both of Beaumont, Tex., for appellant.

Leon P. Howell, of Beaumont, Tex., for appellee.

Before FOSTER, SIBLEY, and HUTCHESON, Circuit Judges.

SIBLEY, Circuit Judge.

The sole question presented by this appeal is whether the contract of insurance against total and permanent disability on which John Boseman recovered is governed by the law of Texas. The trial court so held, awarding judgment for attorney's fees and damages as fixed by a Texas statute, and denying validity to a provision of the insurance contract that no claim would be paid after termination of Boseman's employment unless written notice were given of it within 60 days after the employment ceased. The court found, and it is conceded, that the provision about notice is valid under the law of Pennsylvania which the insurer contends is controlling, and that no attorney's fees or damages would be recoverable under that law. We put aside the question about statutory damages and attorney's fees, because that about notice will control the case.

The contract is one of group insurance for employees. The insurer is a corporation of Connecticut, with its home office at Hartford. It had during the time here involved a permit to do business in Texas, but had never qualified by making the required deposits, had no office or agents in Texas, and had written no insurance there of any kind since 1917. The employer who negotiated for the insurance is Gulf Oil Corporation of Pennsylvania, having its home office at Pittsburgh. Boseman was an employee of Gulf Refining Company which is an affiliate or subsidiary of Gulf Oil Corporation, and which was carrying on business at Port Arthur, Tex. Prior to 1932, Gulf Oil Corporation, for its employees and those of its subsidiaries and affiliates, had arranged group insurance with this same insurer under contracts known as policies G5039 and G5545, and Boseman was insured under the latter. On March 15, 1932, at Pittsburgh, Gulf Oil Corporation in behalf of itself, its subsidiaries, and affiliate companies, by a writing there delivered to an agent of the insurer, requested that policies G5039 and G5545 be canceled as of March 31, 1932, and that a new policy, G5039R, be issued in Pittsburgh and to be governed by the laws of Pennsylvania, under which employees shall be insured who have complied with its terms. Under date of March 7, 1932, Boseman had at Port Arthur signed and delivered to an officer of Gulf Refining Company an application for insurance under the new policy to be effective April 1st, agreeing to be bound by the rules governing it, and authorizing the deduction from his pay each month of the proper amount in advance for premium and agreeing to take the new insurance in lieu of the old. This paper was not sent to the insurer, but remained in the employer's files. The new policy was issued under date of April 1, 1932, and delivered at Pittsburgh to Gulf Oil Corporation. Reciting that it is issued in accordance with the application and cancels and substitutes the former policies, it states that "Connecticut General Life Insurance Company, Hartford, Connecticut (hereinafter called the Company), specifies in this policy the terms and conditions under which it insures certain employees of Gulf Oil Corporation of Pennsylvania and/or subsidiary and/or affiliated companies (hereinafter called the employer)." The policy proceeds to define the risks covered and the employees who are eligible for insurance, and includes those who on March 31, 1932, were insured under the former policy, G5545, and hence included Boseman. Other employees are required to have completed a stated period of service. "An employe may elect insurance under this policy by completing any form of payroll deduction order approved by the employer. Each employe electing the insurance before becoming eligible will be insured automatically on the day he becomes eligible." In some stated cases evidence of insurability satisfactory to the company is required, but Boseman was not included in them. The period of the policy and the premium requirements are: "This policy is issued for a term of one year from April 1st, 1932, 12:01 A. M. Standard Time at the employer's address, in consideration of the application of the employer, the payment of the binding premium of $1.00, and the payment of such further premiums as are provided herein." "On the effective date of this policy and on each annual policy renewal date thereafter an average annual premium rate will be established" in a stated way. "Premiums are due and payable monthly in advance at the home office of the Company," determined as above. "If any premium is not paid when due this policy shall cease except that 31 days of grace will be allowed without interest for the payment of all premiums other than the binding premium." The employer at the beginning of each month is to notify the company of new employees taking insurance and of those whose insurance has terminated, and premium adjustments are to be made accordingly. "Upon termination of employment of any insured employee his insurance shall be cancelled as follows except as hereinafter provided: 1. Employes who upon termination of employment request a refund of the unearned premium shall have insurance cancelled upon termination of employment." Boseman's employment ceased October 8, 1932, and he received a proportionate refund for that month. "The policy and the application of the employer, copy of which is attached to and made a part of this policy, and the applications of the employes, if any, shall constitute the contract between the parties." "This contract is issued and delivered in the City of Pittsburgh in the Commonwealth of Pennsylvania, and is governed by the laws of that Commonwealth." Other details of the insurance are omitted as not here material. The policy, however, contains this: "The Company will issue to the employer for each insured employee an individual certificate. The certificate will in no way void any of the terms and conditions outlined in the policy, but will show the insurance protection to which the employe is entitled, to whom payable, and the conversion privilege." The Gulf Refining Company notified Gulf Oil Corporation of Boseman's application for insurance and Gulf Oil Corporation notified the insurer, and about May 1st the insurer issued a certificate effective April 1st which states that it is issued pursuant to the above-quoted provision of the policy and certifies that the insurer "has issued a policy of cooperative group life insurance to Gulf Oil Corporation and/or subsidiary or affiliated companies, executed and delivered in the Commonwealth of Pennsylvania, and that subject to its terms and conditions John Boseman, an employe, is insured for $4,000." Many but not all of the terms and conditions of the policy are annexed to the certificate, and among them this: "No claim for permanent disability incurred by any employe during employment shall be paid after the termination of such employment unless the employe gave written notice of disability to the Company during the period of employment or within sixty days thereafter." This certificate was delivered to Gulf Oil Corporation in Pittsburgh and was sent by it to Port Arthur to Boseman. Boseman lived and worked at Port Arthur, and the deductions from his pay were made there. Neither Boseman nor any other employee had any direct communication with the insurer previous to making claim, but only with the employer. Both the officers of the employer and of the insurer testified that the former were not in any manner authorized nor did they attempt to act for the insurer, but acted for and in behalf of the employees touching the insurance. The Gulf Oil Corporation paid the insurer the required premiums at Pittsburgh or Hartford, and reimbursed itself in part only by the pay deductions of the employees.

Group insurance is of recent origin. It is usually cheaper than individual insurance probably...