Fowler v. United Equitable Ins. Co.

• Decision Date: 09 March 1968
• Docket Number: No. 44962,44962
• Citation: 438 P.2d 46,200 Kan. 632
• Parties: Ralph E. FOWLER, Appellee, v. UNITED EQUITABLE INSURANCE COMPANY, Appellant.
• Court: Kansas Supreme Court

Page 46

438 P.2d 46

200 Kan. 632

Ralph E. FOWLER, Appellee, v. UNITED EQUITABLE INSURANCE COMPANY, Appellant.

No. 44962.

Supreme Court of Kansas.

March 9, 1968.

Rehearing Denied April 10, 1968.

Syllabus by the Court

1. Rules of construction relating to insurance contracts stated and applied.

2. If an insurer intends to restrict or limit the coverage provided in its policy, it should use clear and unambiguous language in doing so; otherwise, the policy will be liberally construed in favor of the insured in order that the purpose for which the policy was issued will not be defeated.

3. Where an insurance policy providing indemnity benefits for hospitalization resulting from accidental bodily injury contains a clause:

'HOSPITAL CONFINEMENT BENEFIT FOR LIFE-$1,000 PER MONTH

'The Company will pay at the rate of $1,000 per month for one day to a lifetime beginning with the first day when such injury shall continually confine the insured to a hospital * * *.'

it is held: (1) The clause was ambiguous, and must be liberally construed in favor of the insured; (2) the policy provided benefits for successive periods of hospitalization resulting from a particular accidental injury; and (3) the district court properly allowed the insured to recover for two periods of hospitalization, notwithstanding an interval of twenty-six days during which the insured was not hospitalized.

V. E. Danner and John V. O'Donnell, Ellsworth, were on the brief, for appellant.

George D. Miner and Paul L. Aylward, Ellsworth, were on the brief, for appellee.

O'CONNOR, Justice.

This is an action by Ralph E. Fowler against the United Equitable Insurance Company to recover on a policy providing indemnity benefits for hospitalization resulting from accidental bodily injury. The lower court held that plaintiff was entitled to recover, and the defendant insurance company appeals.

The sole question concerns the construction of the following clause in the insurance contract:

'HOSPITAL CONFINEMENT BENEFIT FOR LIFE-$1,000 PER MONTH

'The Company will pay at the rate of $1,000 per month for one day to a lifetime beginning with the first day when such injury shall continually confine the insured to a hospital * * *.' (Emphasis added.)

The facts were stipulated. Plaintiff sustained an accidental injury on November 14, 1965, and by reason thereof was confined to a Larned, Kansas, hospital from November 14 to December 6 (twenty-two days). He returned home until January 2, 1966, when, because of the same injury, he was confined to a Lyons, Kansas, hospital until February 6 (thirty-five days). Plaintiff sought recovery for both periods of hospitalization, or a total of fifty-seven days. Defendant admitted it was liable for the first period of hospitalization but denied liability for the second period because the two periods of confinement were not 'continual,' as required by the terms of the policy.

The district court found there was an 'element of conflict' between the bold print 'HOSPITAL CONFINEMENT BENEFIT FOR LIFE-$1,000 PER MONTH' and the words contained in the clause quoted above, 'continually confine the insured to a hospital.' Applying the rule of liberal construction in favor of the insured, the court concluded the policy covered both periods of hospitalization, and rendered judgment accordingly.

Counsel candidly admit they have found no cases construing an identical clause, and our research reveals none. Our attention, however, is directed to Atkinson v. Pilot Life Insurance Co., 260 N.C. 348, 132 S.E.2d 681, where a policy provided hospital expense benefits when the insured was 'continuously confined in a hospital,' and also to cases involving 'house-confinement' clauses found in many accident and/or health insurance policies, and by analogy the parties urge their respective positions.

Before examining the arguments, we are mindful of certain general rules already prescribed by this court regarding the construction to be given to insurance contracts. The language of a policy of insurance, like any other contract, must, if possible, be construed in such manner as to give effect to the intention of the parties. The test to be applied in determining this intention is not what the insurer intended the policy to mean, but what a reasonable person in the position of the insured would understand it to mean. When the contract is clear and unambiguous, the words are to be taken and understood in their plain, ordinary, and popular sense, and there is no need for judicial interpretation of the application of rules of liberal construction; the court's function is to enforce the contract according to its terms. Since an insurer prepares its own contracts, it has a duty to make the meaning clear, and if it fails to do so, the insurer, and not the insured, must suffer. Thus, if the terms of a policy are ambiguous or uncertain, conflicting, or susceptible of more than one construction, the construction most favorable to the insured must prevail. For cases in which these rules have been applied, see, Leiker v. State Farm Mutual Automobile Ins. Co., 193 Kan. 630, 396 P.2d 264; Lavin v. State Farm Mutual Automobile Ins. Co., 193 Kan. 22, 391 P.2d 992; Kendall Plumbing, Inc. v. St. Paul Mercury Ins. Co., 189 Kan. 528, 370 P.2d 396; Ferguson v. Phoenix Assurance Co., 189 Kan. 459, 370 P.2d 379, 99 A.L.R.2d 118; Jameson v. Farmers Mutual Automobile Ins. Co., 181 Kan. 120, 309 P.2d 394; cases cited in 3 Hatcher's Kansas Digest, Insurance §§ 40, 42; and 6 West's Kansas Digest, Insurance k146, et seq.

The defendant contends the clause in question is clear and unambiguous, and the policy should be literally enforced according to its terms, citing Atkinson v. Insurance Co., supra, and Sheets v. Farmer's &amp Merchant's Mutual Life & Casualty Association, 116 Kan. 356, 225 P. 929, both of which will be discussed later. Plaintiff's position, on the other hand, is that the clause is ambiguous, and given a liberal construction, the policy provided indemnity benefits for both periods of hospitalization resulting from his injury.

In Atkinson, a hospital expense policy provided that if an insured was injured by accident and entered a hospital on account of such injury, the insurer was obligated to pay $10 per day for each day the insured was 'continuously confined' in such hospital. The insured was accidentally injured and continuously confined in a hospital for eleven days, for which he was paid benefits under the policy. Nearly four months later he was again confined in another hospital for nineteen days because of the same injury. In denying benefits for the second period of hospitalization, the court, in a per curiam opinion, held the terms of the policy were unambiguous and the insured's confinement was a separate and distinct period for which no coverage was provided under the policy.

We think the case is not in point because of the fine line of distinction between the terms 'continually confined' and 'continuously confined.' As defined in Webster's Third New International Dictionary, Unabridged (1967), 'continual' means 'proceeding without stopping, interruption, or intermission: recurring in steady and rapid succession: repeated at intervals with brief perhaps regular intermissions in time.' 'Continually' is defined as not only 'unceasingly: continuously in time: without intermission' but means 'in regular or repeated succession: very often.' On the other hand, the word 'continuous' is defined as 'characterized by uninterrupted extension in time or sequence: continuing without intermission or recurring regularly after minute interruptions.' 'Continual' implies 'a close prolonged succession or recurrence,' whereas 'continuous' implies 'an uninterrupted flow or spatial extension.' (Webster's Seventh New Collegiate Dictionary (1963)). It would appear from these definitions that the term 'continually confined' is somewhat more flexible in its meaning and application than 'continuously confined,' and is not necessarily restricted to confinement that is unceasing and uninterrupted.

Turning to the 'house-confinement' cases, we find that in Sheets v. Farmer's & Merchant's Mutual Life & Casualty Association, supra, a health insurance policy provided full indemnity for a disabling sickness during a period in which the insured was 'necessarily and continuously confined within the house,' and a lower indemnity rate when not confined within the house. Plaintiff there had suffered an attack of appendicitis. After hospitalization he returned to his home for a short time, during which period he left his house on five occasions to see his physician. In denying plaintiff recovery of full indemnity for the entire period, the court said:

'* * * It was competent for the parties to stipulate that insurance should be paid according to the degrees of sickness which incapacitated the insured for work or business. They agreed that it should be measured by confinement to the house, and the court is not warranted in ignoring or eliminating an unambiguous provision included by the parties in their contract. The entire contract should be considered together, and effect given to every part of it, and the clause relating to nonconfining sickness can no more be ignored than those limiting the time for which insurance shall be paid. To do so would be to make a different contract than the parties made for themselves. * * *' (p. 358, 225 P. 930.)

The above decision was followed in Richardson v. Interstate Business Men's Accident Ass'n., 124 Kan. 685, 261 P. 565, where a health insurance policy contained provisions for different indemnities for 'house-confinement' illness and 'non-house-confinement' illness. There the court held that the plain, ordinary, usual and unmistakable meaning of the language in the contract should control, and liberal construction was not warranted, since there was no ambiguity in the meaning of the words used. The holding is succinctly stated as follows:

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