English v. Insurance Company of North America, EC6398.

• Decision Date: 26 June 1967
• Docket Number: No. EC6398.,EC6398.
• Citation: 270 F. Supp. 713
• Parties: Edna Talley ENGLISH, Plaintiff, v. INSURANCE COMPANY OF NORTH AMERICA, Defendant.
• Court: U.S. District Court — Northern District of Mississippi

270 F. Supp. 713

Edna Talley ENGLISH, Plaintiff, v. INSURANCE COMPANY OF NORTH AMERICA, Defendant.

No. EC6398.

United States District Court N. D. Mississippi, E. D.

June 26, 1967.

Burgin & Gholson, Columbus, Miss., Harvey S. Buck, West Point, Miss., for plaintiff.

Threadgill & Hicks, Columbus, Miss., Watkins & Eager, Jackson, Miss., for defendant.

OPINION

CLAYTON, Chief Judge.

This case originated when Mrs. Edna Talley English, plaintiff, filed her declaration against defendant, Insurance Company of North America, in the Circuit Court of Clay County, Mississippi, seeking to recover $50,000.00 as the named beneficiary with respect to a certificate of insurance issued by defendant on the life of Elbert W. English, her deceased husband. The case was removed by defendant to this court on the basis of diversity. After removal and before a responsive pleading by defendant had been served, the declaration was amended by exhibiting a copy of insurance policy No. SGA-402, issued by defendant and referred to in the original declaration. In due course, defendant answered and the case was tried to a jury with a verdict for plaintiff, upon which judgment was entered for her in the amount sued for.

At the close of all the evidence, defendant moved for a directed verdict upon specific grounds, and the court reserved ruling under the provisions of Rule 50(b), Federal Rules of Civil Procedure. After the jury verdict and entry of judgment thereon, defendant filed a timely motion to have the verdict and judgment set aside and for judgment in accordance with the motion for a directed verdict and, alternatively, for a new trial. Rules 50 and 59, Federal Rules of Civil Procedure. That motion is now for disposition on briefs of the parties.

The policy in suit insured "* * * against loss resulting directly and independently of all other causes from bodily injuries caused by accident * * *"

I.

Defendant contends that this controversy is governed by the law of Tennessee, while plaintiff contends that Mississippi law controls. This issue stands at the threshold and must be dealt with first.

The contract is a group policy between defendant, a Pennsylvania corporation, and the Tennessee Valley Authority, with a certificate issued thereon to Mr. English. The record is silent as to where the group policy was executed and delivered, but the record does clearly show that Mr. English moved directly from Kentucky to Mississippi and became a resident of Clay County, Mississippi, before he began to work as an employee of the Tennessee Valley Authority, and that never, after becoming such an employee, did he reside at any place other than Clay County, Mississippi. He was a resident there at the time of his death. At the time of the application for insurance, he was an employee of the Tennessee Valley Authority with a payroll number, and this status continued until his death. He paid all of the premiums and these facts, with the relevant specific language of the master policy itself, bring the question of which law applies into proper focus. The applicable language of the master policy is:

Any provision of this policy which, on its effective date, is in conflict with the statutes of the state in which the insured resides on such date, is hereby amended to conform to the minimum requirements of such statutes.

No action shall be brought after the expiration of three years (or the minimum time, if more than three years, permitted by law in the state where the insured resides). (Emphasis added.)

Mr. English was a resident of Mississippi at the effective date of the policy and so remained continuously until his death.

The proper principle to be applied in determining which state law governs the construction of this policy is well stated in 16 Am.Jur.2d, Conflict of Laws, § 41, as follows:

* * * The true test for the determination of the proper law of a contract is the intent of the parties and that this intent, whether express or implied, will be given effect except under circumstances evincing a purpose in making the contract to commit a fraud on the law. In other words, the proper law of the contract is that which the parties intended or may fairly be presumed to have intended. Under this rule, the place where the contract is made and the place where it is to be performed are both important indicia of the law by which the parties may fairly be presumed to have intended that the contract should be governed, but neither is necessarily conclusive.

This principle has been recognized and applied by the United States Supreme Court in such cases as Gaston, Williams & Wigmore of Canada, Ltd., v. Warner, 260 U.S. 201, 43 S.Ct. 18, 67 L.Ed. 210 (1922); Pinney v. Nelson, 183 U.S. 144, 22 S.Ct. 52, 46 L.Ed. 125 (1901), and The Majestic, 166 U.S. 375, 17 S.Ct. 597, 41 L.Ed. 1039 (1897), and others. It has been followed in Mississippi e. g., Castelman v. Canal Bank & Trust Company, 171 Miss. 291, 156 So. 648 (1934) and Greenlee v. Hardin, 157 Miss. 229, 127 So. 777, 71 A.L.R. 741 (1930). It has also been expressed as the rule with respect to conflict of laws in Tennessee. See First National Bank v. Shaw, 109 Tenn. 237, 70 S.W. 807, 59 L.R.A. 498 (1902).

The quoted language from the policy clearly indicates the intention of the contracting insurance company to have the construction of the contract varied in accordancce with the laws of the state in which the respective insureds should reside. This, coupled with the universally applied rule (which needs no citation of authority to sustain) that since the policy or contract was prepared by the insurance company, it must be strictly construed against defendant, makes it clear, in the light of the undisputed facts here, that the law of Mississippi should and does control.

Cases cited by defendant such as Protective Life Insurance Company v. Lamarque, 180 Miss. 243, 177 So. 15 (1937) and Hartford Accident and Indemnity Company v. Delta and Pine Land Company, 169 Miss. 196, 150 So. 205, reversed, 292 U.S. 143, 54 S.Ct. 634, 78 L.Ed. 1178 (1933), are inapposite and are readily distinguishable on their facts. In Protective Life, Lamarque, the insured, had no contractual relationship with the insurance company, but was a third-party beneficiary of the contract which was between Alabama Power Company and the insurance company. Moreover, the insurance company was an Alabama company and wrote the policy for the power company in Birmingham, Alabama, and the policy made all effective dates, proofs, privileges and provisions to be performed in Alabama and subject to Alabama law. All premiums were paid by Alabama Power Company and none were paid by Lamarque. In Hartford Accident, the United States Supreme Court held that Mississippi law did not apply because the plaintiff had its principal office in Memphis, Tennessee (although it was doing business in Mississippi); an agent of plaintiff in Memphis contacted the Memphis office of the insurance company and there contracted for the fidelity bond coverage, and the contract was written and delivered in Tennessee and under its language was to be performed in Tennessee and construed under the law of that state.

II.

Elbert W. English, the insured, whose death gave rise to this suit, was employed during his lifetime, at a Tennessee Valley Authority power transmission substation which was located in the outskirts of West Point, Mississippi. He was one of two substation operators assigned to this substation. Each of these operators worked alone and when so working had the sole responsibility of conducting switching operations under directions therefor which were issued to them by a dispatcher for the Tennessee Valley Authority operating from Muscle Shoals, Alabama. These instructions were issued by voice over one of several means of communication. The object of such switching operations was to change, divert and reroute the flow through power transmission lines of electric power of extremely high voltages.

On the night of October 22-23, 1962, Elbert W. English was on duty and was engaged in carrying out switching instructions which had just come to him from the dispatcher. To carry out these instructions, it was necessary for him to manually operate a series of switches in the sequence prescribed by his instructions, but this he did not do. He made a switching error which left a tremendous amount of power with no place to go. This power arced upward and across the equipment with a tremendous flash of light. This phenomenon was seen by witnesses as much as three miles away. They described it as "a tremendous flash of light over the northwest section of West Point" and as "a hugh flash of light in the vicinity of the substation which lit up the whole sky," and as being "like lightning, just overhead." This arcing power damaged and destroyed a substantial amount of equipment in this substation and threw pieces of insulators as far as 50 feet away from the place where the are began.

The dispatcher at Muscle Shoals immediately noticed that something was wrong at this substation when a heavy surge of power occurred on the distribution system which had the effect of blocking out some of its principal high power lines. He tried without success to reach English over the several communications systems available from 5:19 a. m. to 5:26 a. m. He did reach English at 5:26 a. m. and testified that at that time English was in a dazed condition, but coherent. English reported that he had made an operating mistake and then gave to the dispatcher information about the conditions which then existed at the substation, most of which was correct, but he did give some wrong figures. English was then given some additional instructions by the dispatcher which he started carrying out.

The other substation operator who had been alerted by telephone arrived at the substation at about 5:30 a. m. and immediately checked all of the dials and instruments on the board or panel which was inside...