Holmstrom v. Mutual Benefit Health and Accident Ass'n

• Decision Date: 10 October 1961
• Docket Number: No. 10221,10221
• Citation: 139 Mont. 426,364 P.2d 1065
• Parties: Carl Axel HOLMSTROM, Plaintiff and Respondent, v. MUTUAL BENEFIT HEALTH AND ACCIDENT ASSOCIATION, a Nebraska Corporation, Defendant and Appellant.
• Court: Montana Supreme Court

Page 1065

364 P.2d 1065

139 Mont. 426

Carl Axel HOLMSTROM, Plaintiff and Respondent, v. MUTUAL BENEFIT HEALTH AND ACCIDENT ASSOCIATION, a Nebraska Corporation, Defendant and Appellant.

No. 10221.

Supreme Court of Montana.

Submitted May 9, 1961.

Decided Sept. 18, 1961.

Rehearing Denied Oct. 10, 1961.

Toomey & Hughes, George T. Bennett, Helena, for appellant. George T. Bennett, argued orally.

Marchi, Vance & Leaphart, Helena, C. W. Leaphart, Jr., Helena, for respondent. C. W. Leaphart, Jr., argued orally.

JOHN C. HARRISON, Justice.

This is an appeal by the defendant, Mutual Benefit Health and Accident Association, hereinafter referred to as appellant, from a judgment of the first judicial district, Lewis and Clark County, the Honorable Victor H. Fall, Judge presiding, entered pursuant to an agreed stipulation of facts in favor of the plaintiff, Carl Axel Holmstrom, hereinafter referred to as the Insured, ordering the appellant to reinstate a health and accident policy issued to the Insured and further ordering said appellant to continue to insurer the Insured so long as the annual premiums are timely made.

The agreed stipulation of facts is as follows:

The Mutual Benefit Health and Accident Association, a Nebraska corporation, qualified to transact health and accident insurance business in the State of Montana, first issued to Carl Axel Holmstrom, at all times a resident of the State of Montana, health and accident policy No. 36-50118, on September 23, 1926.

The policy was applied for and issued to the Insured in Meagher County, Montana. The Insured paid or tendered the required premium payments to the appellant insurer at all times from the date of issuance of the policy to November 1, 1957.

The annual premium payment for the year 1958, tendered by the Insured prior to November 1, 1957, was returned by the appellant together with a letter advising the Insured that it declined to renew the policy at the end of the current premium payment period, upon the ground that the policy was being terminated as a term insurance policy.

The contract of insurance in question contained the following provisions important to a determination of the questions raised by this cause, to-wit:

Attached to the policy and labeled 'Non-Cancellable Endorsement', signed by the president and treasurer of the Company, is the following:

'The Association cannot cancel this policy during any period for which the premium has been paid.

'It is further understood and agreed that this policy cannot be cancelled by the Association during any period of disability of the Insured.'

On page 4 of the policy under the heading 'Additional Provisions' appears the following:

'The acceptance of any premiums on this policy shall be optional with the Association, and should the premium provided for herein be insufficient to meet the requirements of this policy, the Association may call for the difference as required.

'(d) The term of this policy begins at 12 o'clock noon, Standard Time, on date of issue against accident and on the thirty-first day after date of issue against disease and ends at 12:00 o'clock noon on date any renewal is due.'

The question involved is whether the Insured, relying on the Non-Cancellable Endorsement quoted above can require the appellant to keep the policy in question in force as long as there is a tender of the annual premium as required by the policy, or whether the appellant relying on the portion of the contract entitled 'Additional Provisions' quoted above, when read with other provisions of the policy, including the Non-Cancellable Endorsement has the right to decline to renew the policy at the end of any premium payment period and to refuse to accept the tendered premium for the next succeeding year.

All of the appellant's specifications of error revolve around the question of whether or not the language of the contract is ambiguous.

The full policy must be read to see whether or not any ambiguity exists, and whether if such ambiguity does exist if it is confusing and uncertain in its terms. Ambiguity does not exist just because a claimant says so. It can only exist where the wording or phraseology of a contract is reasonably subject to two different interpretations. See Osterholm v. Boston & Montana Mining Co., 40 Mont. 508, 107 P. 499; Johnson v. Metropolitan Life Ins. Co., 107 Mont. 133, 83 P.2d 922; Scinski v. Great Northern Life Ins. Co., 110 Mont. 106, 99 P.2d 218.

The exterior face of this policy shows in large print Non-Prorating Business Men's Special Policy, along with the Insuring Clause. Part C of the Accident Clause begins at the bottom of page 1 and takes about one-third of page 2. Attached and covering page 2 is an endorsement in bold face type Non-Cancellable Endorsement previously referred to in the agreed stipulation of facts. Following the Accident Clause on page 2 is the Illness Clause which covers a portion of the page. Then follows the Standard Provisions Clause which completes page 2 and takes one small portion of page 3. Page 3 has Additional Provisions Clause and a copy of the application which runs through page 3 and page 4 and is incorporated as a part of the contract.

Paragraph C of the Additional Provisions Clause found on page 3, referred to in the stipulation of facts is as follows:

'(c) The copy of the application indorsed hereon is hereby made a part of this contract and this policy is issued in consideration of the statements made by the Insured in the application and the payment in advance of Forty-six ($46.00) Dollars the first year; and the payment in advance of premium of Thirty-six ($36.00) Dollars annually or Nine ($9.00) Dollars quarterly thereafter, beginning with January 1, 1927, is required to keep this policy in continuous effect. If any such dues be unpaid at the office of the Association in Omaha, Nebraska, this policy shall...