Jackson v. Continental Cas. Co.

• Citation: 402 So.2d 175
• Decision Date: 29 June 1981
• Docket Number: No. 14245,14245
• Parties: Phillip JACKSON v. CONTINENTAL CASUALTY COMPANY.
• Court: Court of Appeal of Louisiana (US)

Page 175

402 So.2d 175

Phillip JACKSON v. CONTINENTAL CASUALTY COMPANY.

No. 14245.

Court of Appeal of Louisiana, First Circuit.

June 29, 1981.

Writ Granted Sept. 18, 1981.

Leo J. Berggreen, Baton Rouge, for plaintiff-appellant Phillip Jackson.

Paul H. Spaht, Baton Rouge, for defendant-appellee Continental Assur. Co.

Before COVINGTON, CHIASSON and LEAR, JJ.

COVINGTON, Judge.

Phillip Jackson, the plaintiff, has appealed the judgment of the trial court in favor of the defendant, Continental Assurance Company (referred to in plaintiff's petition as "Continental Casualty Company"), dismissing the plaintiff's demand for death benefits under a group insurance policy with Jackson's employer. We affirm.

The relevant facts were stipulated by the parties and are not at issue on this appeal. The primary question before this Court is one of law, whether Beulah Jackson was the "legal spouse" of Phillip Jackson so as to make her eligible for coverage under the group life insurance policy in question.

The salient facts disclosed by the joint stipulation of facts are as follows: Phillip Jackson was a Louisiana State University employee prior to September 8, 1973, and all times material hereto, and was a participating member of the State of Louisiana Employees Uniform Group Benefits Program with premium deductions made directly from his paychecks. Life insurance in the group program was written by Valley Forge Life Insurance Company and its successor, Continental Assurance Company. On September 8, 1973, Jackson submitted an enrollment card for dependent life insurance, listing Beulah Jackson as his dependent spouse. Thereafter, deductions from his paychecks were made for these premiums. On July 9, 1979, Beulah Jackson died. When Jackson applied for death benefits, the insurer rejected his claim, denying any liability on the dependent coverage issue on the life of Beulah Jackson on the basis that she was not eligible for coverage because she did not qualify as a "dependent" under the policy, having never been lawfully married to Jackson. The insurer remitted all premiums paid by Jackson, but he has declined to accept them. Prior to her death, Beulah Jackson and Phillip Jackson, although "never legally married," lived together in a "common law marriage" relationship for some thirty-five years. During all this time, Beulah Jackson was "economically dependent" upon Jackson. According to the agreed facts, Jackson is illiterate. Continental did not learn that the Jacksons were not married until after Beulah Jackson had died.

The insurance policy in question contains the following provision concerning persons eligible under the policy:

"Section III ELIGIBILITY

"All employees of the Employer who qualify under Statement # 5 of the application, and their dependents, if any, as defined in this policy, are eligible to become insured hereunder.

"Present dependents of the employees shall become eligible on the date the employee becomes eligible. Newly acquired dependents shall become eligible on the date that they acquire dependent status as defined in this policy." (Emphasis added).

The subject policy defines "Dependents" as follows:

"Section VI DEPENDENTS

"The term 'Dependent', as used in this policy, means any of the following persons who are enrolled for coverage hereunder as dependents, provided they are not also covered as an employee:

"1. The insured Employee's legal spouse residing with the employee.

"2. Any unmarried children fourteen (14) days of age and over but under nineteen (19) years of age residing with the employee and depending upon him for their support.

"3. Any unmarried children nineteen (19) years of age but under twenty-four (24) years of age who are enrolled as full-time students and who depend upon the employee for their support...." (Emphasis added).

In construing the insurance policy and the applicable statute, LSA-R.S. 22:175(B)(7), ¹ the trial court concluded that an insured employee could insure his "legal spouse," but that neither the statute nor insurance policy extended coverage to "partners of a common-law union."

Louisiana does not recognize the "common law marriage." ² LSA-C.C. art. 88; Liberty Mutual Insurance Company v. Caesar, 345 So.2d 64 (La.App. 3 Cir. 1977), writ denied, 347 So.2d 1118 (La.1977). Hence, Beulah Jackson was not the "legal spouse" of Phillip Jackson. The lower court, following Harris v. Lumbermen's Mutual Casualty Co. of Chicago, 48 So.2d 728 (La.App. 1 Cir. 1950), held that a "spouse" means "one's wife or husband." We agree. Inasmuch as Beulah Jackson was never the "legal spouse" of Phillip Jackson, she was not eligible for coverage under the subject group life insurance policy.

The appellant further argues that the insurer's defense as to the ineligibility for coverage of Beulah Jackson is barred by the incontestability provision of LSA-R.S. 22:176(2), which reads:

"Incontestability: A provision that the validity of the policy shall not be contested, except for nonpayment of premiums, after it has been in force for two years from its date of issue; and that no statement made by an individual insured under the policy relating to his insurability shall be used in contesting the validity of the insurance with respect to which such statement was made after such insurance has been in force prior to the contest for a period of two years during such individual's lifetime nor unless it is contained in a written instrument signed by him." (Emphasis added).

As can be seen, the incontestability provision states that the validity of the policy shall not be contested; it does not say that coverage shall not be contested.

The distinction between "validity" and "coverage" has been judicially recognized. In Allison v. Aetna Life Ins. Co., 158 So. 389 (La.App. 2 Cir. 1935), modified on rehearing, 161 So. 645 (La.App. 2 Cir. 1935), the Court stated:

"As we understand the law, this limitation of contestability applies to questions involving the validity of the policy and not those involving coverage. Metropolitan Life Ins. Co. v. Conway, 252 N.Y. 449, 169 N.E. 642". (Emphasis added).

This question was thoroughly reviewed in the case of Crawford v. Equitable Life Assurance Society of the United States, 56 Ill.2d 41, 305 N.E.2d 144 (1973), as follows:

"The courts of other States have considered a number of factual situations relating to eligibility, such as whether the insured is an employee at all, whether he was actively employed, whether he exceeded a specific maximum age, whether he was disqualified for some other reason, and whether he was incorrectly classified as to position. The decisions, which are collected in an annotation appearing in 26 A.L.R.3d 632, are not uniform in result.

"The proposition that an insurer may challenge the eligibility of the insured has been advanced, either by direct holding or otherwise, with regard to the states of Arkansas, Idaho, Louisiana, Michigan, New Hampshire, Pennsylvania, Texas and Wisconsin, the decisions in some instances having been rendered by a Federal court called upon to ascertain and apply the law of the State in question. See Gill v. General American Life Insurance Co. (8th Cir. 1970), 434 F.2d 1057; General American Life Insurance Co. v. Charleville (Mo.1971), 471 S.W.2d 231; Pond v. Idaho Mutual Benefit Ass'n (1959), 81 Idaho 38, 336 P.2d 314; Allison v. Aetna Life Insurance Co. (La.App.1935), 158 So. 389, modified, 161 So. 645; Rasmussen v. Equitable Life Assurance Society of the United States (1940), 293 Mich. 482, 292 N.W. 377; Fisher v. Prudential Insurance Co. (1966), 107 N.H. 101, 218 A.2d 62; First Pennsylvania Banking and Trust Co. v. United States Life Insurance Co. (3d Cir. 1969), 421 F.2d 959; Carp v. California-Western States Life Insurance Co. (5th Cir. 1958), 252 F.2d 337; Spitz v. Continental Casualty Co. (1968), 40 Wis.2d 439, 162 N.W.2d 1.

"The contrary view has been taken with respect to California, Oklahoma, Utah, and West Virginia. See John Hancock Mut. Life Ins. Co. v. Dorman (9th Cir. 1940), 108 F.2d 220; Baum v. Massachusetts Mutual Life Insurance Co. (Okl.1960), 357 P.2d 960; Cragun v. Bankers Life Co. (1972), 28 Utah 2d 19, 497 P.2d 641; Morris v. Missouri State Life Insurance Co. (1933), 114 W.Va. 278, 171 S.E. 740; Poffenbarger v. New York Life Insurance Co. (S.D.W.Va.1967), 277 F.Supp. 726.

"The rule originally announced in Georgia was that eligibility could not be challenged (Equitable Life Assurance Society v. Florence (1933), 47 Ga.App. 711, 171 S.E. 317), but a subsequent Federal decision applying Georgia law looks the other way (Washington National Insurance Co. v. Burch (5th Cir. 1959), 270 F.2d 300). Conversely, the New York view, as first expressed in a Federal decision, was that the insurer might raise the defense of ineligibility (Fisher v. United States Life Insurance Co. (4th Cir. 1957), 249 F.2d 879), but a subsequent decision in 1969 by the New York Court of Appeals holds to the contrary (Simpson v. Phoenix Mutual Life Insurance Co. (1969), 24 N.Y.2d 262, 299 N.Y.S.2d 835, 247 N.E.2d 655). It is the Simpson decision on which the appellate court principally relied in the case now before us.

"We, however, consider that the question of eligibility is one which relates to the risk assumed and that a defense based on lack of eligibility is therefore not foreclosed by an incontestability clause.

"It is, of course, true that eligibility may relate to circumstances existing at the inception of the contract (although it may also arise subsequently because of a change in employment status). It is also true that it may have been determined initially upon the basis of statements made by the insured or by his employer. And it may be assumed that whether a person is an employee or is a full time employee is a matter affecting the willingness of the insurer to assume the defined risk at the defined premium charge, since employment or active or full-time employment may protect the insurer...