James R. Soda, Inc. v. United Liberty Life Ins. Co.

• Decision Date: 02 July 1986
• Docket Number: No. 85-1202,85-1202
• Citation: 24 Ohio St.3d 188,24 OBR 418,494 N.E.2d 1099
• Parties: , 24 O.B.R. 418 JAMES R. SODA, INC., Bellevue Corporation, Appellant, v. UNITED LIBERTY LIFE INSURANCE COMPANY, Appellee.
• Court: Ohio Supreme Court

Page 188

24 Ohio St.3d 188

494 N.E.2d 1099, 24 O.B.R. 418

JAMES R. SODA, INC., Bellevue Corporation, Appellant, v. UNITED LIBERTY LIFE INSURANCE COMPANY, Appellee.

No. 85-1202.

Supreme Court of Ohio.

July 2, 1986.

Syllabus by the Court

In the absence of a statutory or contractual provision to the contrary, once an insurer's legal risk has attached, the premium is not apportionable, and the insured is not entitled to a return of any part of the premium paid.

On July 7, 1972, James R. Soda, Inc., n.k.a. the Bellevue Corporation ("corporation"), made an application for a life insurance policy on its key employee, James R. Soda, with the United Liberty Life Insurance Company ("United") in the face amount of fifty thousand dollars. On July 25, 1972, United issued policy No. 7356 which provided for the payment of premiums annually, semi-annually, or quarterly.

On July 25, 1983, the corporation paid the annual premium of $3,540.50. Twelve days later Soda died and United paid the benefits under the policy. The corporation sought a refund of the "unearned" portion of the annual premium paid, but United refused to refund any portion of the premium.

On March 8, 1984, the corporation filed suit against United for the refund of the premium paid. On July 11, 1984, United filed a motion for summary judgment, which was set for hearing on July 27, 1984. On July 26, 1984, the corporation filed a memorandum in opposition to the motion for summary judgment. On July 27, 1984, the trial court granted summary judgment in favor of the corporation for a refund of three-fourths of the annual premium paid.

Upon appeal, the court of appeals reversed the trial court and entered final judgment in favor of United.

The cause is now before this court pursuant to the allowance of a motion to certify the record.

Westenfield & Neuman and Douglas J. Neuman, Niles, for appellant.

Letson, Griffith, Woodall & Lavelle and W. Dallas Woodall, Warren, for appellee.

WRIGHT, Justice.

This is a case of first impression in our state. Here the policy provided that it became effective upon payment of the first premium and delivery of the policy to the insured. The insured's employer chose to pay the premium annually. The inception of United's liability or the date its risk attached was the date the premium was paid. The general and well-settled rule is that in the absence of a statutory or contractual provision to the contrary, once an insurer's legal risk has attached, the premium is not apportionable, and the insured is not entitled to a return of any part of the premium paid. 6 Couch on Insurance (2 Ed.1985) 856, Section 34:9, states, "This rule is based upon just and equitable principles, for the insurer has, by taking upon himself the peril, become entitled to the premium, and although the rule may result in profit to the insurer, it is just compensation for the dangers or perils assumed, besides the danger incurred may be greater in any one moment than during the entire remaining period and it would be difficult, to say the least, to fairly apportion the risk." Accord 43 American Jurisprudence 2d (1982) 951, Insurance, Section 918; Fleetwood Acres, Inc. v. Federal Housing Admin. (C.A. 2, 1948), 171 F.2d 440, 442.

The general rule must yield to any statutory or contractual exception. The corporation's claim for return of the "unearned" portion of the annual premium paid to United is not based on any contractual provision. Neither by statute nor by contract is there any authority for refund of a portion of the insurance premium by United. In view of the foregoing, we hold that the corporation is not entitled to a refund of a portion of its annual premium paid to United on July 25, 1983.

United's alternate proposition of law is that a trial court is not authorized under Civ.R. 56 to enter summary judgment in favor of a nonmoving party. This proposition is correct. In the instant case, the trial court erroneously awarded the corporation summary judgment even though it had not filed such a motion. This action is contrary to the Rules of Civil Procedure. See Marshall v. Aaron (1984), 15 Ohio St.3d 48, 472 N.E.2d 335.

Accordingly, we hold that the trial court erred in granting summary judgment for the...