Fruhman v. Nawcas Benev. Auxiliary, 17223

Decision Date17 January 1969
Docket NumberNo. 17223,17223
Citation436 S.W.2d 912
PartiesBessie FRUHMAN, Appellant, v. NAWCAS BENEVOLENT AUXILIARY, Appellee. . Dallas
CourtTexas Court of Appeals

Elihu E. Berwald, of Rosenfield, Berwald & Mittenthal, Dallas, for appellant.

Gerald R. Coplin and Gene W. Francis, of Passman, Jones, Stewart & Andrews, Dallas, for appellee.

CLAUDE WILLIAMS, Justice.

This is an appeal from a take nothing summary judgment in an action to recover the proceeds of an insurance policy. Sam Fruhman died at Dallas, Texas on September 4, 1966. In the year 1949 Fruhman became a member of Nawcas Benevolent Auxiliary, which is a voluntary, nonprofit, unincorporated association and fraternal benefit society as defined in Art. 10.01 et seq., of the Insurance Code of the State of Texas, V.A.T.S., Fruhman remained an active member of the association until his death which occurred when he was seventy-six years of age. The certificate of membership in effect at the time of his death, being No. 0010010 dated January 17, 1964, and which was a replacement of two prior certificates of membership, was specifically subject to the constitution and by-laws of the association. Fruhman's wife, Bessie, was the named beneficiary in the certificate issued to Sam Fruhman. Following Fruhman's death, Bessie Fruhman, his widow, sued Nawcas Benevolent Auxiliary seeking to recover a $5,000 death benefit, with penalty and attorney's fee, alleged to be due her as the designated beneficiary in the certificate of membership issued to Sam Fruhman. Mrs. Fruhman filed her motion for partial summary judgment seeking to recover the death benefit of $5,000, together with the statutory 12 per cent penalty, and requesting that her claim for reasonable attorney's fees be severed and tried separately. The court overruled this motion. Nawcas filed its motion for summary judgment, supported by affidavits, and the trial court sustained its motion and rendered judgment denying Mrs. Fruhman any recovery. From this judgment she appeals. We affirm.

We agree with both appellant and appellee that there is no genuine issue of any material or disputed fact and that this record presents only a question of law as to whether the appellant is entitled to the death benefit, with penalty and attorney's fee, or whether she is entitled to nothing. The correct resolution of the question depends upon the construction and interpretation of the contract of insurance between appellee Nawcas and appellant's deceased husband.

Article IX of the constitution and by-laws, and being an integral part of the certificate of insurance, sets forth the benefits accruing to a member and his designated beneficiary. Section 1 of Article IX is as follows:

'SECTION 1.--Benefits shall be of three (3) types:

A. Death Benefits--payable to the member's designated beneficiary as provided by Article IX, Section 2 et seq and Article XIII, Section 1 hereof.

B. Monthly Retirement Benefits--payable to the member beginning one month after attainment of the retirement age and continuing until death, provided that in the event that accumulated monthly benefits paid to the members do not exceed the stipulated death benefit to which the member's beneficiary would have been entitled, the difference between the accumulated monthly payments and death benefit shall be paid to the member's beneficiary .

C. Terminal Benefit--payable to the member's designated beneficiary in the event that the total of the accumulated monthly benefits paid to the member exceeds the stipulated death benefit. The terminal benefit shall be $500.00.'

Section 2 of Article IX sets forth schedules of death and retirement benefits from which it appears that the death benefit applicable to Sam Fruhman was $5,000 and that he was entitled to retirement benefits of $50 per month commencing one month after his attainment of retirement age (70) and continuing until his death. Section 2 further provides that: 'Upon the death of a member in good standing who is eligible for death benefit, said member's beneficiary shall receive the maximum death benefit allowable in such instances, * * *.'

Article XVI, entitled 'Definitions', provides:

'1. BENEFITS:--Any monies paid by this Association to members or their beneficiaries, including death payments or monthly payments, shall be considered a 'benefit' as that term is used herein.'

It is undisputed in this record that when Sam Fruhman reached the age of seventy he requested and received, in accordance with his certificate of membership and the constitution and by-laws of the appellee Nawcas, retirement benefits at the rate of $50 per month and continued to draw such amount until his death. The total amount thus received by Fruhman was the sum of $2,450. Following Fruhman's death appellant made demand upon appellee for all death benefits owing to her as designated beneficiary, contending that she was entitled to receive the full sum tof $5,000 pursuant to the provisions of subparagraph A of Section 1 of Article IX of the constitution and by-laws, above quoted. Appellee refused such demand and took the position that the above quoted portion of the constitution and by-laws, and especially subparagraph B of Section 1 of Article IX, accorded to the beneficiary the death benefit of $5,000, less the amount of $2,450 which had been paid to Sam Fruhman in retirement benefits during his lifetime. Appellee tendered to appellant its check for the difference between $2,450 and $5,000, or the sum of $2,550, which it contended was the proper amount owed to the beneficiary by virtue of the express terms and conditions set forth in the insurance agreement. The parties entered into an agreement in writing that appellant might accept the $2,550, without prejudice to her rights to assert her claim for the additional sum of $5,000. It is without dispute, therefore, that appellant has received and retained the sum of $2,550 as beneficiary of her deceased husband.

Appellant takes the position that she is entitled to receive the $2,550 so paid to her by virtue of subparagraph B of Section 1, Article IX, above quoted, and that her receipt of that difference does not in any way affect her being entitled to the death benefit of $5,000 provided for in subparagraph A of Section 1 of Article IX and that she would therefore be entitled to the total sum of $7,550. She also contends that she made written demand upon appellee for payment more than sixty days prior to the institution of the suit, thus maturing the 12 per cent penalty and reasonable attorney's fee provided for in Article 10.13 of the Insurance Code, Vernon's Ann.Civ.St., if the claim for $5,000 death benefit is valid.

Appellee, as opposed to this contention, argues that when the contract of insurance is viewed within its four corners the entire plan of insurance demonstrates an intent that the total amount of retirement benefits paid to a member during his lifetime should be deducted from the $5,000 death benefit and that the beneficiary receive the excess, if any. In the event that the retirement benefit so received by the member exceeds the $5,000 death benefit, that particular benefit becomes exhausted, in which event the 'terminal benefit' provided for in subparagraph C of Section 1, Article IX, becomes effective and the total amount due the beneficiary is the sum of $500. We think the position taken by appellee is correct.

We do not consider this insurance contract to be ambiguous or its meaning obscure. We hold, as a matter of law, that the insurance agreement is plain and unambiguous so that the intent of the contracting parties is expressly found in the language used in the agreement. In construing the contract under consideration we are governed by well established rules of law. An insurance policy is nothing more than a contract between the insurer and the insured wherein each party becomes bound to perform the obligations recited in the policy. The parties to such insurance contract may agree as they see fit, provided no provision of law or public policy is thereby contravened. 32 Tex.Jur.2d, Insurance, §§ 1 and 5. Since insurance policies are contracts, they are governed by the rules of interpretation that are applicable to contracts generally and this notwithstanding the rule that contracts of insurance are to be strictly construed in favor of the insured. 32 Tex.Jur.2d, Insurance, § 54, pp. 102--103; United American Ins. Co. v. Selby, 161 Tex. 162, 338 S.W.2d 160, 84 A.L.R.2d 367 (1960); Pan American Life Ins. Co. v. Andrews, 161 Tex. 391, 340 S.W.2d 787, 93 A.L.R.2d 560 (1960); Westchester Fire Ins. Co. v. Rhoades, 405 S.W.2d 812 (Tex.Civ.App., Austin 1966, writ ref'd n.r.e.). Courts may only construe a contract of insurance as it was made; they are not authorized to make a new contract for the parties. Republic Nat. Life Ins. Co. v. Spillars, 368 S.W.2d 92, 5 A.L.R.3d 957 (Tex.Sup.1963); Royal Indemnity Co. v. Marshall, 388 S.W.2d 176 (Tex . Sup.1965); American-Amicable Life Ins. Co. v. Lawson, 419 S.W.2d 823 (Tex.Sup.1967); American Casualty...

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