Key Life Ins. Co. of South Carolina v. Taylor, 7148

• Decision Date: 25 June 1970
• Docket Number: No. 7148,7148
• Citation: 456 S.W.2d 707
• Parties: KEY LIFE INSURANCE COMPANY OF SOUTH CAROLINA, Appellant, v. Johnny TAYLOR, Appellee.
• Court: Texas Court of Appeals

Page 707

456 S.W.2d 707

KEY LIFE INSURANCE COMPANY OF SOUTH CAROLINA, Appellant, v. Johnny TAYLOR, Appellee.

No. 7148.

Court of Civil Appeals of Texas Beaumont.

June 25, 1970.

Rehearing Denied July 16, 1970.

Wheat, Wheat & Stafford, Woodville, for appellant.

Seale & Stover, Jasper, for appellee.

KEITH, Justice.

This is an action upon a contract of insurance. Trial was by jury and judgment was rendered for plaintiff upon the verdict. The parties will be referred to here as they were in the trial court.*

In response to requests, the defendant admitted plaintiff was injured on or about August 21, 1968, while working in the course and scope of his employment for E. N. Read and that its Blanket Accident Policy issued to E. N. Read was in full force and effect on that date. The contract of insurance in issue shows E. N. Read to be the Policyowner. Plaintiff brought this action directly against the defendant insurance company. In its first series of points, defendant contends this is an indemnity policy and that plaintiff cannot maintain this suit. These points are overruled.

Even though E. N. Read is named as the Policyowner, it is inescapable that this policy is for the benefit of his employees. The contract is called a 'Blanket Accident Policy' and contains the provisions usually found in a group policy. In the first paragraph, the defendant agrees to to pay benefits for losses resulting from accidental bodily injuries suffered by persons in the employ of the Policyowner. The word 'indemnity' is not used in this policy, and there is no provision that benefits will be paid only after a judgment is obtained against E. N. Read. There is nothing in the policy to indicate that E. N. Read must first be found liable to an injured employee before the benefits are payable. Throughout the policy the words 'benefit' and 'Benefit for Losses' and 'Claimant' are used. It is thereby indicated that the 'Policyowner' and the 'Claimant' are not intended to be the same person, because in other portions of this policy, E. N. Read is clearly designated as the 'Policyowner'. It is clear to us that it was the intention of the parties for this to be an insurance contract for the benefit of a third party, and that plaintiff can properly maintain this suit. Edds v. Mitchell, 143 Tex. 307, 184 S.W.2d 823, 829 (1945); Quilter v. Wendland, 403 S.W.2d 335 (Tex.Sup., 1966); Old Colony Insurance Company v. Messer, 328 S.W.2d 335 (Beaumont, Tex.Civ.App., 1959, error ref. n.r.e.).

Defendant also contends that plaintiff cannot recover in this case because it has a release executed by E. N. Read. The disposition of the first points of error above controls this point. In holding this contract was for the benefit of plaintiff and that he could properly bring this suit, it necessarily follows that only plaintiff could release his cause of action. Neither party has cited us a case directly in point. Defendant argues that inasmuch as this policy of insurance provides that the Policyowner may terminate the policy, and that the consent of no other person was required to effect such termination, that the Policyowner is likewise empowered to give it a release of a claim. We do not follow the logic of this argument. Even though it is true the Policyowner could have failed to pay the premiums due and the policy would terminate, or could have terminated the contract of insurance otherwise by his action alone, it does not follow that once a cause of action has accrued in favor of a party beneficiary the Policyowner could do anything to release it. Those cases cited to us by plaintiff are more nearly in point in construing a group policy of insurance providing for penalty and attorney's fees, to mean the injured person was the 'holder of the policy' and the one who could recover those benefits. See Mercury Life Insurance Company v. Mata, 310 S.W.2d 130 (San Antonio Tex.Civ.App., 1958, error ref.); Grand Lodge Free and Accepted Masons v. Walker, 110 S.W.2d 945 (Dallas Tex .Civ.App., 1937, no writ). The point is overruled.

Defendant's next point of error is that there was no evidence to support the finding by the jury that plaintiff was regularly attended by a doctor of medicine or osteopathy for a period of 44 weeks as a direct result of his injury. We consider only the evidence favorable to such jury finding in passing upon this point of error. Plaintiff testified as follows: The date of his injury he was carried to St. Elizabeth Hospital in Beaumont and placed under the care of Dr. Campbell, who performed surgery upon him. He stayed in that hospital about a week and was carried to the hospital in Woodville, where he was placed under the care of Dr. Swearingen. He remained in the Woodville Hospital about four months and had a second operation, this time by Dr. Swearingen. Dr. Swearingen or his partner came by to see him regularly while in the Woodville Hospital. After being released from the hospital he went to see Dr. Swearingen every week at first, and then every two weeks. He was off from work a year from the date of his injury, and during that year he continued to see Dr. Swearingen. This testimony supported the finding by the jury. The point is overruled.

Defendant has points of error contending that plaintiff has not made the proper proof of loss to defendant as required by the insurance policy as a condition precedent to filing this action. The policy of insurance before us requires written notice of injury within 20 days of the date of the commencement of the first loss for which benefits arising out of an injury may be claimed. Such notice given by or on behalf of a claimant must be with particulars sufficient to identify the injured person. Proof of loss must be furnished to the company within 90 days after the termination of the period for which claim is made. The policy also provides that no action may be brought before the expiration of 60 days after written proof of loss is furnished.

The evidence shows this accident occurred August 21, 1968. Read, called as a witness by defendant, testified he filed three proofs of loss with defendant, dated October 16, 1968, October 24, 1968, and March 8, 1969. All three were signed by Read, and the first was also signed by Dr. George L. Campbell and the other two by R. E. Swearingen, M. D. Read testified further that defendant sent him checks to pay hospital and doctor bills and also checks so that he could pay plaintiff $35.00 per week. Read gave plaintiff his last check February 16, 1969, and told him there would not be any more money coming.

This contract of insurance contains the following provision:

'6. The Company, upon receipt of the notice required by this Policy, will furnish to the claimant such forms as are usually furnished by it for filing proof of loss. If such forms are not so furnished within fifteen (15) days after the Company received such notice, the claimant shall be deemed to have complied with the requirements of this Policy as to proof of loss upon submitting, within the time fixed in the Policy for filing proofs of loss, written proof covering the occurrence, character and extent of the loss for which claim is made.'

Notwithstanding Read's testimony that he told plaintiff on February 16, 1969 that there would be no more money coming from the defendant, he testified that he sent in additional proofs of loss thereafter, namely on March 8, 1969. Plaintiff had no direct contact with the defendant, and there is no proof in the record from any source that the defendant sent any additional forms either to Read or to the plaintiff after the claim of March 8. Under the policy provision quoted above, plaintiff was 'deemed to have complied with the requirements of the policy' and the point now urged is without merit. The denial of liability made to Read was just as effective as if made directly to plaintiff. Merchants' Ins. Co. of New Orleans v. Nowlin, 56 S.W. 198, 199 (Tex.Civ.App., 1900, no writ). See generally: 22 A.L.R. 407, s. 108 A.L.R. 901, s. 49 A.L.R.2d 161; 32 Tex.Jur.2d, Insurance & 384, p. 594, and cases therein cited.

Defendant's next series of points complain of the action of the trial court in submitting issues to the jury as to penalty and attorney's fees and then rendering judgment upon such issues. The jury found the duration of plaintiff's disability to be 44 weeks, the defendant's liability being fixed by the verdict at $1,540.00. Defendant was given credit for $840.00 theretofore paid and judgment was for the sum of $700.00 plus 12 per cent penalty and $1,500.00 attorney's fees. It is argued that no proper demand was made in order to make Article 3.62 of the Insurance Code, V.A.T.S., operative, and that demands made by plaintiff's petition were excessive. The first sentence in such Article reads as follows:

'In all cases where a loss occurs and the life insurance company, or accident insurance company, or life and accident, health and accident, or life, health and accident insurance company liable therefor shall fail to pay the same within thirty days after demand therefor, such company shall be liable to pay the holder of such policy, in addition to the amount of the loss, twelve (12%) per cent damages on the amount of such loss together with reasonable attorney fees for the prosecution and collection of such loss.'

The facts are not in dispute and the record conclusively shows that no formal demand (as distinguished from pleadings filed in court) was ever made by the plaintiff. The original petition, filed March 18, 1969, contained an allegation that plaintiff had made 'proper demand' upon the defemdant, and sought the penalties and attorney's fees authorized by Article 3.62, Insurance Code. Defendant answered on April 17, 1969, stating it had paid all claims due under the policy. Thereafter, a first amended original petition was filed on August 26, 1969, and a second amended original petition filed on October 16, 1969, in each of which the allegations...