Exstrum v. Union Cas. & Life Ins. Co.

Decision Date25 July 1958
Docket NumberNo. 34243,34243
Citation167 Neb. 150,91 N.W.2d 632
PartiesHazel EXSTRUM, Appellee, v. UNION CASUALTY AND LIFE INSURANCE COMPANY, a corporation, Appellant.
CourtNebraska Supreme Court

Syllabus by the Court

1. A contract will ordinarily be construed according to the law of the place where the contract is made.

2. It is the general rule that a foreign law or rights thereunder must be proved

like any other fact, in the absence of which the law of the forum is ordinarily applied.

3. Under applicable Illinois law a certificate of insurance which was issued to an employee by insurer under master policy of group life insurance, and which differed from master policy in several respects, constituted a part of the insurance contract.

4. In the absence of any conflicting decision by any other intermediate court of appeal or by the Supreme Court of a state, a decision of an intermediate court of appeal of such state must be accepted by the parties and by the courts of a sister state as stating the law of the state where the decision was made.

5. Where the provisions of a contract of insurance are in conflict, or subject to more than one interpretation, the provision or interpretation most favorable to the insured will ordinarily be adopted.

Stiner & Boslaugh, Hastings, for appellant.

Dryden & Jensen, Kearney, Ginsburg, Rosenberg & Ginsburg, Lincoln, for appellee.

Heard before SIMMONS, C. J., and CARTER, MESSMORE, YEAGER, CHAPPELL and WENKE, JJ.

CARTER, Justice.

This is an action at law brought by Hazel Exstrum as plaintiff against the Union Casualty and Life Insurance Company, defendant, in the district court for Buffalo County, to recover on a group life insurance policy under which it is alleged that Clayton D. Exstrum became insured with the plaintiff as the named beneficiary. Proof of the death of her husband was made by the plaintiff, and the defendant company refused payment on the ground that as deceased was not in active employment on January 1, 1955, and did not return to active employment prior to his death, he was not eligible for insurance coverage. A jury was waived and a trial had to the court. After the trial, judgment was rendered for the plaintiff. The defendant has appealed.

On December 6, 1957, an opinion affirming the judgment of the district court was filed. Exstrum v. Union Casualty & Life Ins. Co., 165 Neb. 554, 86 N.W.2d 568. A motion for a rehearing was granted and a reargument had. We withdraw the former opinion and reconsider the case on the merits.

There is no substantial dispute in the material facts. Prior to 1954 a trust agreement had been entered into between the Central States Area Employers Association, and ten others, as first party, and Central States Drivers Council, Southern Conference of Teamsters, and their affiliated local unions, acting on behalf of their members then or thereafter employed as drivers, helpers, or in such other capacities as would be mutually agreed upon, as the second party. The first party will be hereafter referred to as employer, and the second party as the union.

The trust was denominated Central States, Southeast and Southwest Areas Health and Welfare Fund. Its purpose was to receive the contributions of employers as provided in the agreement between the employers and the unions in order to provide and pay for life insurance for drivers and helpers represented by the unions. The trust fund thus created was under the joint control of representatives of the employers and the unions. Brown Transfer Company was an employer within the agreement. Clayton D. Exstrum was employed by Brown Transfer Company on March 5, 1954, and on September 13, 1954, became a member of the union.

The trustees purchased a 1-year renewable term nonparticipating life insurance policy for the term beginning April 1, 1952, and ending March 31, 1953. The policy was amended as of April 1, 1953. The policy as amended was renewed from year to year and was in full force and effect during the period involved in this action. Employees in Exstrum's classification were eligible for life insurance upon compliance with conditions precedent in the policy. The trustees were the sole procurers of the insurance and they were the insured under the terms of the policy. Premiums were paid by the trustees to the insurance company. Employees were under no contractual obligation to pay insurance premiums, such premiums being paid by the trustees from the fund maintained by the contributions of the employers pursuant to their agreement with the unions.

Four amended provisions of the policy are cited by the insurance company in support of its claim of nonliability. They are as follows:

'1. The effective date of this policy as to an employer becoming a Contributing Employer after April 1, 1952 shall be the first (1st) day of the calendar month following two (2) full calendar months from the date such employer becomes obligated to make his contributions to the Policyholder. The effective date as to such Contributing Employer may be a date earlier than that set forth by agreement between the Contributing Employer, the Policyholder, and the Company.

'2. Each employee employed on the effective date of his employer's insurance, for whom contributions have been made for two (2) full calendar months on his behalf prior thereto, is insured on such effective date.

'3. Each employee not insured on the effective date of his employer's insurance is insured on the first (1st) day of the calendar month following two (2) full calendar months of contributions made by his employer on his behalf.

'4. Each employee not in active employment on the effective date of his insurance after the effective date of this policy shall be insured on the first (1st) day of his employment.'

Placing the most favorable construction on quoted paragraph 3, the first day of the calendar month following 2 full calendar months of contributions by his employer would be December 1, 1954. The evidence shows, however, that Exstrum became ill on November 20, 1954, and never returned to active employment thereafter prior to his death on January 19, 1955. It would appear therefore that Exstrum had never qualified for insurance under the terms of the group policy. The evidence discloses, also, that the trustees, nor anyone else with authority to do so, had not certified to the insurance company that Exstrum had qualified for the insurance, nor had the trustees, or anyone else, paid any premium to the insurance company for insurance on the deceased, Exstrum. It would appear, as contended by the insurance company, that Exstrum had neither qualified nor become insured under the terms of the group policy.

The evidence shows that the insurance company issued a certificate of insurance to the deceased, Exstrum, prior to his death, an act required by the policy and the applicable Illinois statute. The certificate was found among the papers of the deceased after his death. The insurance company admits the certificate was issued and asserts that it was issued through mistake, although there is no evidence to sustain this contention. The pertinent part of the certificate is: 'Union Casualty & Life Insurance Company * * * Certifies that it has insured certain employees of Contributing Employers to the Trustees * * * for Group Life Insurance under Group Life Policy Number L.I.T.-90, and that Clayton D. Exstrum an employee, is insured for the sum of $2,500.00 payable in event of death of such employee to Hazel Exstrum--Wife beneficiary designated by the employee to receive such benefits as are payable in the event of the death of the employee. Effective Date Oct 1 1954 * * * (Provided Employee is then regularly performing the duties of his occupation).' The evidence is uncontradicted that Exstrum regularly performed the duties of his occupation after October 1, 1954, and until November 20, 1954. It is not disputed that Exstrum became ill on November 20, 1954, and that he died on January 19, 1955, within the 6-months termination period provided in the policy when the termination of his employment is due to illness. The question to be determined is the effect of the issuance of the certificate of insurance on the liability of the insurance company under the facts recited.

The contract of insurance is an Illinois contract. As such it is governed by the laws of that state. The applicable Illinois statute provides that no policy of group insurance shall be issued or delivered in that state unless it contains the following: '(b) A provision that the policy, the application of the employer or trustee of any association of employees and the individual applications, if any, of the employees insured shall constitute the entire contract between the parties, * * *.' Smith-Hurd Ill.Ann.St. Ch. 73, § 843(b), p. 325. The foregoing statute was pleaded by the insurance company in support of its allegations that the certificate was not a part of the contract of insurance.

The insurance company contends that under the foregoing statute the certificate of insurance is not a part of the contract and that the provisions of the master policy control the result in this case under the law of Illinois. It is the general rule that a foreign law or rights thereunder must be proved like any other fact, in the absence of which the law of the forum is ordinarily applied.

We have been cited to no decision of the Supreme Court of Illinois interpreting the pleaded statute of that state; nor has our research revealed the existence of any such decision. We conclude that the question has not been before the Supreme Court of that state. We are cited to the case of Thieme v. Union Labor Life Ins. Co., 12 Ill.App.2d 110, 138 N.E.2d 857, 860, in which the court held: 'The Illinois Appellate Courts for three different districts, while not having the precise issue before them, have determined the rights of an insured under a policy of group insurance by treating both the...

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