Droz v. Paul Revere Life Ins. Co.

• Decision Date: 24 September 1965
• Docket Number: No. 2,CA-CIV,2
• Citation: 405 P.2d 833,1 Ariz. App. 581
• Parties: Fern S. DROZ, Appellant, v. PAUL REVERE LIFE INSURANCE CO., a corporation, Appellee. * 28.
• Court: Arizona Court of Appeals

Page 833

405 P.2d 833

1 Ariz.App. 581

Fern S. DROZ, Appellant, v.PAUL REVERE LIFE INSURANCE CO., a corporation, Appellee. ^*

No. 2 CA-CIV 28.

Court of Appeals of Arizona.

Sept. 24, 1965.

Earl Terman, Tucson, for appellant.

Spaid, Fish, Briney & Duffield, by Richard Duffield, Tucson, for appellee.

HATHAWAY, Judge.

Fern S. Droz, plaintiff below, appeals from a judgment entered in the Superior Court of Pima County in favor of the defendant, Paul Revere Life Insurance Company.Briefly, the facts are as follows.

The defendant insurance company issued to Giles Motorama, Inc., Giles Motor Center, Inc., and Giles Motordom, Inc., its group insurance policy, effective on October 10, 1959.The insured, Harold E. Droz, deceased husband of the plaintiff, was employed as a salesman for Giles Motor Center, Inc., and became an insured under the policy on January 2, 1960.In addition to the group insurance policy issued to the employer, the defendant insurance company issued for delivery to the insured employee an individual certificate summarizing the insurance coverage provided for such employee.

On February 6, 1960, Harold E. Droz terminated his employment with Giles Motor Center, Inc., and went to work for Young Buick, Inc.He was killed in an automobile accident in Tucson on February 23, 1960.Pursuant to the provisions of the 'payment during conversion privilege period' clause contained in the policy, the defendant insurance company paid to the plaintiff, as designated beneficiary, the sum of $4,000.This was the amount of the employee group life insurance benefit established by the schedule of insurance contained in the policy.Subsequently, the plaintiff submitted a claim for accidental death and dismemberment benefits in the sum of $4,000 which was refused and for which the plaintiff brought suit.The lower court granted defendant's motion for summary judgment.

We must resolve the question: Are accidental death benefits payable under the 'payment during coversion privilege period' clause of the policy?

Examination of the subject policy discloses a wide variety of insurance benefits, including life insurance benefit, accidental death and dismemberment benefit, hospital, surgical, and medical benefits.The format of the printed policy is pertinent to the problem at hand.The provisions governing each benefit coverage are set forth under the particular title designating the specific benefit dealt with therein.In addition to the titles preceding each category, the bottom of each page included in the particular category bears letters designating the category and page number of the particular benefit, e. g., 'EGL--1' denoting employee group life insurance benefit, page 1.Each category is a self-contained unit in that it embodies the insuring provisions relative to the particular benefit therein described.

A specific section of the insurance policy is devoted to general provisions applicable to all benefits.One such provision states that the insurance of an employee shall automatically cease upon his termination of employment.In the case at bar, defendant insurer paid life insurance benefits to the plaintiff despite the cessation of decedent's insurance coverage because of termination of employment.This payment was made under the 'payment during conversion privilege period' clause which is included in the policy under the category denominated Employee Group Life Insurance Benefit.A subheading under this section is labelled Conversion Privieges and the clause thereunder entitled Termination of Employment provides that an employee whose insurance ceases because of termination of employment is entitled to have the company issue to him, without evidence of insurability, an individual policy of insurance without disability or other supplementary benefits, if application is made and the first premium paid within 31 days after termination of employment.The exclusion of disability or other supplementary benefits specifically limits the coversion privilege to the life insurance benefit.The 'payment during conversion privilege period' clause following, but relating to the foregoing conversion privilege, provides:

'If any employee dies during the 31 days while entitled to convert to such insurance in accordance with the above paragraphs, then the insurance company will pay the amount of insurance which was in force on the date of termination of such insurance immediately upon receipt of due proof of death fo the employee.'(Emphasis ours.)

The plaintiff takes the position that the emphasized portion above refers to all insurance benefits in force on the date of termination.She further contends that if such was not intended by the insurer, the language is at best ambiguous and such ambiguity should be construed most strongly against the drafter of the contract, the insurance company.We agree that the section standing alone is susceptible of the interpretation urged by plaintiff, but the policy must be read as a whole in order to give a reasonable and harmonious meaning and effect to all of its provisions.Globe Indemnity Co. v. Teixeira, 230 F.Supp. 451, 455(D.C.Hawaii1964);Miller v. Madison County Mut. Auto. Ins. Co., 46 Ill.App.2d 413, 197 N.E.2d 153, 156(1964);Clare v. Malia, 52 Ariz. 552, 558, 84 P.2d 456(1938).We are mindful that in determining whether an ambiguity exists, the language must be considered from the standpoint of one who is not trained in law or in the insurance business.Trousdell v. Equitable Life Assur. Soc. of U. S., 55 Cal.App.2d 74, 130 P.2d 173, 177(1942).

Reading the contract in its entirety, we find no ambiguity.The clause in question is physically set forth under the benefit denominated Employee Life Insurance Benefit, and is manifestly intended to refer to that category of insurance.

Careful scrutiny of the policy further establishes an intention to limit the application of the clause in question to the category in which...