Interstate Life & Acc. Ins. Co. v. Flanagan, 47203
| Decision Date | 01 October 1973 |
| Docket Number | No. 47203,47203 |
| Citation | 284 So.2d 33 |
| Parties | INTERSTATE LIFE AND ACCIDENT INSURANCE COMPANY v. Johnnie R. FLANAGAN. |
| Court | Mississippi Supreme Court |
Wells, Wells, Marble & Hurst, John E. Hughes, III, Jackson, for appellant.
Liston & Upshaw, Winona, for appellee.
This case came to this court as an appeal from the decree of the Chancery Court of Montgomery County, Mississippi, in favor of the appellee on an insurance policy in which she was the beneficiary.
The testimony in this case shows that on July 30, 1963, Cletus R. Flanagan (deceased husband of appellee) submitted a signed application to the appellant, Interstate Life and Accident Insurance Company, for a policy of life insurance. Mr. Flanagan made application for a ten-year term life policy in the face amount of ten thousand dollars ($10,000.00) and also requested a provision for double indemnity payable to the beneficiary in a sum equal to the face amount of the policy.
The insurance company issued a policy in accordance with this appellication on August 21, 1963. The policy provided that during the effective term of the policy the insurance could be converted to a policy of permanent life insurance after notice to appellant and in consideration of surrendering the term policy. 1
In April, 1970, the agents of the appellant approached Mr. Flanagan and consulted with him about exercising his conversion privilege under the terms of the policy, so as to convert his term policy into a regular permanent life insurance policy for the face amount of ten thousand dollars ($10,000.00). Mr. Flanagan filed a request for a conversion on Form 'L-M 16'.
An agent for the insurance company delivered the new regular life insurance policy to Mrs. Flanagan. This policy had attached to it the original application submitted by Mr. Flanagan for the term policy. This original application contained the request for double indemnity benefits which were originally provided under the term policy. The new regular life insurance policy itself did not specifically contain double indemnity benefits. However, written on the first page of the new policy was this statement: 'This policy and the application, if a copy is attached, constitute the entire contract.' 2
The new regular life policy was issued on May 14, 1970, and the premiums were paid thereon until September 11, 1970, which included the time when the insured Cletus R. Flanagan was killed when an automobile on which he was working fell on him. There is no issue as to the fact that the decedent died of accidental means.
After the death of the insured, appellee filed a claim with the appellant for the face amount of the contract plus double indemnity benefits. The appellant paid the face amount of the policy to the appellee, but refused to pay double indemnity benefits. The appellee, therefore, filed suit for specific performance for the contract of insurance. The trial court, after having heard the testimony, awarded double indemnity benefits to the appellee; whereupon, the appellant has appealed to this court.
The appellant has assigned several errors, but we are of the opinion that only one assignment need be discussed under the circumstances in this case. That is to say, the trial court erred in applying the law to the established facts upon which this case is based.
Mrs. Johnnie Rachel Flanagan Burleson, the beneficiary in both the term policy and the regular life policy, testified that at the time her husband converted the original term policy to a regular life policy they desired the same benefits in the regular life policy as were afforded by the term policy. She testified that at the time the agent, Mr. Lemley, delivered the policy she asked if this policy was the same as the other policy and whether or not double indemnity was afforded. She testified that the agent said that he would check and let her know, but that he never came back. She also testified, however, that she talked with her husband as to whether or not the policy had double indemnity, but that they decided to keep it in force. Mr. Lemley, the agent, testified that he told Mrs. Flanagan that the policy did not contain double indemnity, but that it could be added if she so desired. Mr. Tingle, a witness for the appellant, testified that in the sentence in the term policy, 'The new policy shall not contain additional benefits for disability or accidental death if you do not furnish evidence of insurability satisfactory to us, or if the new policy is issued as of the date of exchange and your attained age exceeds 55 years', the words 'additional benefits', although they might not be clear to everybody, were clear to the people who understood them. He also testified that Application L-M 16 for a change to a permanent policy was never attached to the new policy, but that the original application was attached. He further testified that the new life policy was not issued pursuant to the application, but on the basis of the L-M 16 conversion form.
The first issue to be determined is whether or not the application attached to the new policy should be considered a part of the contract of insurance. The appellant contends that the application itself is for a term policy of life insurance and that the new ordinary life policy was issued pursuant to the conversion Form L-M 16 and not as a result of the application, and that the application was attached to provide certain information for the insured.
In determining whether or not the application is a part of the new life policy, we find that on the first page of the ordinary life policy under the heading 'The Contract', the following sentence appears: 'This policy and the application, if a copy is attached, constitute the entire contract.' This application is the only application made for a life insurance policy.
The text writers on insurance contracts seem to be in agreement that the application attached to a contract is a part of an insurance contract. For example, see the following authorities.
'An application which has been accepted, as considered supra § 232, and which complies with the statutory requirements with regard to its being attached to the policy, as considered supra § 258, is a part of the contract of insurance, and is to be read and construed in connection with the policy and other papers, if any, constituting the contract, where it and the policy and other papers are executed as part of one transaction, or where an intent to make the application a part of the contract is otherwise manifest, as where the policy refers to the application and expressly makes it as part of the policy.' 44 C.J.S. Insurance § 301(a), at pp. 1209-1210 (1945).
In 43 Am.Jur.2d Insurance § 208, at 265 (1969) is the following statement:
'The application for a policy of insurance becomes a part of the contract if it is made a part thereof by the express terms of the policy . . .'
Couch, in his treatise on insurance law, sets forth the following rules:
'The contents of an application for insurance have no contractual force where the application is not made a part of the policy, but where properly incorporated in the policy, the application forms an integral part thereof.' Couch on Insurance 2d, Vol. 1, § 4.2, at 151 (1959).
'The application is ordinarily made a part of the policy by expressly stating in the policy that the application is made a part thereof, or by making such a reference and attaching a copy of the application to the policy.' Couch on Insurance 2d, Vol. 1, § 4.3, at 152-153 (1959).
See also Appleman, Insurance Law & Practice, Vol. 13, § 7582, at 334 (1943).
If, however, we accept the general theory that an application for the term policy became a part of the ordinary life insurance policy, the question still remains in the instant case as to whether or not considering these two instruments together, the contract includes double indemnity benefits. The appellant argues that the application is only an offer to contract, and the insurer is free to accept it as written or issue a policy different from the application and, in that case...
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