General American Life Ins. Co. v. Gant

• Decision Date: 13 July 1938
• Docket Number: No. 8691.,8691.
• Citation: 119 S.W.2d 693
• Parties: GENERAL AMERICAN LIFE INS. CO. v. GANT et al.
• Court: Texas Court of Appeals

119 S.W.2d 693

GENERAL AMERICAN LIFE INS. CO. v. GANT et al.

No. 8691.

Court of Civil Appeals of Texas. Austin.

July 13, 1938.

Rehearing Denied September 21, 1938.

Appeal from District Court, Travis County; Roy C. Archer, Judge.

Action by Loleta Williams Gant and another against the General American Life Insurance Company to recover on a group life policy. Judgment for plaintiffs, and defendant appeals.

Affirmed.

Tass D. Waterson, Smith, Goldsmith, Adams & Bagby, and Arthur P. Bagby, all of Austin, for appellant.

Lee & Betts, of Austin, for appellees.

BLAIR, Justice.

Appellees, Loleta Williams Gant and Effie Williams Vaughn, sued appellant, General American Life Insurance Company, to recover as beneficiaries on its group life insurance contract or policy issued to Lightsey's Drive-It-Yourself System, Inc., and covering, among other Lightsey Corporation employees, Charles E. Williams, the father of appellees. The sole defense of appellant was lapsation of the insurance prior to the date of the death of the insured, because of alleged failure to pay the premiums when due. A jury trial resulted in verdict and judgment for appellees for $1,000, the value of the policy, 6% interest, and 12% statutory penalty thereon, and $400 attorney's fees; hence this appeal.

The determination of the appeal turns upon the question of whether Lightsey Corporation, the employer, was the agent of appellant in making pay roll deductions or paying premiums due on the group policy after May 27, 1934. The trial court held that the employer was the agent of appellant, and we sustain that conclusion.

In January, 1931, the representatives of the Missouri Life Insurance Company, whose insurance contract appellant assumed, met with C. O. Lightsey, owner of most of the stock and sole manager of the Lightsey Corporation, a corporation engaged in renting automobiles for hire; and with all of the employees of said Lightsey Corporation, and after discussing same entered into the group insurance contract in suit. The group policy provided as follows: "The Company will issue to the employer for delivery to each employee whose life is insured under this policy, an individual certificate setting forth a statement as to the insurance protection to which he is entitled and to whom payable * * *."

In accordance with this provision, Charles E. Williams applied for and received Certificate No. 15, which contained the following statement:

"This is to certify that under and subject to the terms and conditions of a Group Policy of Insurance, No. G-3571 issued and delivered to Lightsey's Drive-It-Yourself System, Inc., * * * by the Missouri State Life Insurance Co., * * the life of Charles E. Williams is insured for the sum of One Thousand Dollars payable to his daughters Loleta Williams * * * and Effie Williams * * *.

"The insurance provided by the said policy for the Employee shall terminate at the expiration of the period for which premiums are last deducted by the Employer from the pay of the Employee, or remitted by the Employee to the Employer, unless the Employee shall elect to continue in accordance with the Conversion Privilege given on the second page of this certificate."

The group policy also provided as follows:

"Grace Period—Thirty-one days of grace will be allowed for the payment of every premium after the first, during which period the policy remains in force."

At the time of the meeting and execution of the group contract all parties understood and the employees instructed Lightsey Corporation, or its sole manager, C. O. Lightsey, to deduct from their wages or earnings each month the amount necessary to pay their respective premiums due on the group policy, and to transmit same to the appellant insurance company. It is admitted that this was done up to and including May 27, 1934, and the jury found that said Lightsey Corporation deducted from the weekly earnings of Charles E. Williams the premiums due on the group policy for the period from June 27, 1934, to September 28, 1934, which together with the 31 days of grace allowed for payment of premiums extended the insurance beyond the date of the death of the insured on October 26, 1934.

When the group policy is construed in the light of the certificate, which provides for deduction of premiums by the employer from the pay of the employee, and the fact that it was understood and the employees instructed the employer to deduct premiums from their earnings, which was done for more than three years and was the only way any premiums were paid, it was conclusively proved that the employer was the agent of appellant in making pay roll deductions or paying premiums on the group policy. The same or a similar group policy was construed in the case of Missouri State Life Ins. Co. v. Compton, Tex.Civ.App., 73 S.W. 2d 1079, wherein the court held that the employer was the agent of the insurer, and "that the payment by the employee of his monthly premium through a deduction from his monthly salary by his employer who by prearrangement is to retain the same and make payment of monthly premiums on the group policy, is payment to the insurer so far as such employee is concerned. All States Life...