Kinard v. Mutual Benefit Health & Accident Ass'n

• Citation: 108 F. Supp. 780
• Decision Date: 09 December 1952
• Docket Number: Civ. A. No. 562.
• Parties: KINARD v. MUTUAL BENEFIT HEALTH & ACCIDENT ASS'N OF OMAHA, NEB.
• Court: U.S. District Court — Western District of Arkansas

108 F. Supp. 780

KINARD v. MUTUAL BENEFIT HEALTH & ACCIDENT ASS'N OF OMAHA, NEB.

Civ. A. No. 562.

United States District Court W. D. Arkansas, El Dorado Division.

December 9, 1952.

COPYRIGHT MATERIAL OMITTED

Bernard Whetstone, El Dorado, Ark., for plaintiff.

Walter L. Brown, El Dorado, Ark., for defendant.

JOHN E. MILLER, District Judge.

Formal findings of fact and conclusions of law, separately stated, have been filed herein.

The plaintiff, Kenneth Kinard, is seeking to recover from the defendant, Mutual Benefit Health and Accident Association of Omaha, Nebraska, benefits in the sum of $200 per month from November 29, 1950, to the date of the filing of the complaint, April 2, 1952. However, at the trial it was stipulated by the parties that if the plaintiff is entitled to recover, judgment should be entered for the amount found due at the date of the trial, October 29, 1952.

The suit is based upon a policy of insurance No. 204A XXXXXX-XXM, dated May 9, 1947.

The material facts, as shown by the testimony and set forth in the findings of fact, are not in dispute, but the parties are in disagreement as to the rules of law that should be applied to the facts. Only such facts as are necessary to a clear understanding of the contentions of the respective parties will be referred to hereinafter.

The plaintiff contends:

(1) That following the date of the occurrence of the accident, June 29, 1949, in which he was injured, and after the submission of proof of the accident and the injury, a settlement was entered into between him and the defendant under the terms of which the defendant began paying him monthly benefits of $200 per month under part C of the policy, and that the said payments continued from the date of the accident to November 29, 1950, when the defendant wrongfully ceased to make such payments.

(2) That even though the Court should hold that a new contract had not been entered into by the parties, nevertheless, defendant, by making such payments with full knowledge of all the facts, waived any defenses it might have to plaintiff's claim.

(3) That in any event, under the provisions of the policy he is entitled to recover under part C the sum of $200 per month until his 60th birthday, and $100 per month thereafter.

(4) That the injuries received by him were within the provisions of the policy and were not "received as a result of or while participating in aeronautics or air travel."

The defendant contends:

(1) That there was no independent contract entered into by the parties following the occurrence of the accident in which plaintiff was injured, and that by making the payments of $200 per month from the date of the accident, June 29, 1949, to November 29, 1950, it did not waive any of the provisions of the policy, and that the extent of its liability under the provisions of the policy is $1,500. That it has paid the plaintiff far in excess of the said sum of $1,500 and is entitled to recover from plaintiff the difference between the amount paid him and the said sum of $1500.

(2) That the injuries of plaintiff were received while participating in aeronautics or air travel and as a result thereof, and that under the provisions of the policy the defendant is not liable to the plaintiff in any amount for such injuries.

Neither party has made any contention that the law of any state other than Arkansas applies, and both parties have cited and relied largely upon Arkansas decisions in their respective briefs. Although the testimony was not entirely clear upon the point, a fair inference from the testimony is that the contract was completed by a delivery of the policy by Mr. White, the representative of the defendant, to the plaintiff in El Dorado, Arkansas. Assuming that the policy was thus completed in Arkansas, then Arkansas law governs the rights of the parties herein. John Hancock Mut. Life Ins. Co. of Boston, Mass. v. Munn, 8 Cir., 188 F.2d 1, 3.

In considering the contentions of the parties it should be borne in mind that when the language of the policy is clear and unambiguous the policy should be construed as any other contract and the language should be given its natural meaning, i. e., the interpretation which an ordinary person would place upon it. Life & Casualty Ins. Co. of Tennessee v. De Arman, 192 Ark. 11, 90 S.W.2d 206; Hearin v. Standard Life Ins. Co., D.C. E.D.Ark., 8 F.2d 202. Moreover, the policy should be considered and construed as a whole. National Life Ins. Co. v. Gregg, 168 Ark. 80, 269 S.W. 62; Hearin v. Standard Life Ins. Co., supra. But, if the policy is ambiguous and susceptible to more than one reasonable construction, the law is well settled that the construction most favorable to the insured should be adopted. Martin v. Mutual Life Ins. Co. of N. Y., 189 Ark. 291, 71 S.W.2d 694; Travelers' Protective Association of America v. Stephens, 185 Ark. 660, 49 S.W.2d 364; American Standard Life Ins. Co. v. Meier, Ark., 246 S.W.2d 128. The reason for the rule is stated in Travelers' Protective Assoc. of America v. Stephens, supra, on page 665 of 185 Ark., on page 366 of 49 S.W.2d, as follows:

"Where the provisions of a policy of indemnity are reasonably susceptible of two constructions consistent with the object and purpose of the contract, one favorable to the insurer and the other to the insured, that will be adopted which is favorable to the insured. It has been the settled policy of this court since the beginning of its construction of contracts of insurance to hold that the policy should be liberally construed so as not to defeat, without necessity, the claim for indemnity. The reason is that such policies are written on printed forms prepared by experts employed by the insurance companies for that purpose, and the insured has no voice in the matter. Hence, it is fair and reasonable that, where * * * susceptible of two constructions, that which will sustain the claim and cover the loss should be adopted."

The parties, while agreeing that the rule of construction is as above stated, do not agree as to whether the terms and language used in the policy involved herein are ambiguous. However, in considering and deciding the issues presented in the case, the Court has examined and studied the policy with the above principles in mind.

Plaintiff's first contention is that a settlement or adjustment contract was entered into by the parties. However, adjustment contracts must meet the requirements applicable to contracts generally, and in the instant case the plaintiff offered no proof of any agreement between the parties, nor did he allege or prove any consideration for such a contract. There is no evidence from which the Court could find the existence of a valid contract of settlement or adjustment intended by the parties to supersede the contract as evidenced by the policy, and plaintiff's first contention is without merit.

Plaintiff's second contention is based upon the following facts:

On June 29, 1949, plaintiff was struck by an airplane propeller and received serious injuries, including the loss of one eye. Thereafter, plaintiff made a full disclosure to the defendant of the exact manner in which the accident occurred and the extent of the injuries which he had sustained. With full knowledge of all the facts, defendant began paying plaintiff $200 per month under part C of the policy and continued such payments for 18 months. Further, the defendant, with full knowledge of all the facts, accepted and retained the payment of the annual premium of $104 that was due under the terms of the policy on June 1, 1950.

Plaintiff argues that in view of these facts, the defendant has waived any defenses which it might have under the terms of the policy. Specifically, plaintiff argues that the defendant has waived any defense based upon the aeronautics exclusionary clause of the policy, or any defense based upon the exclusiveness of the provision allowing recovery for the loss of an eye only. However, in the argument the plaintiff fails to differentiate between waiver of a forfeiture or waiver of certain provisions of the policy, which may be allowed, and extension of the coverage of a policy, which may not be allowed. While it is true that the insurer may waive a forfeiture, it is equally true that waiver or estoppel may not be successfully urged as a method of bringing within the terms of a policy risks expressly excluded therefrom, or as a means of extending the coverage of a policy. In Metropolitan Life Ins. Co. v. Stagg, 215 Ark. 456, 221 S.W.2d 29, the Court, in holding that the Insurance Company, by accepting premiums, through its general agent, who had knowledge of the fact that the insured was in the military service, did not waive the exemption clause in the policy relieving the company from liability for death while in the military service, said, at page 459 of 215 Ark., at page 31 of 221 S.W.2d:

"Conceding without deciding that Ament was a general agent, possessing all authority of a general agent, and that the law in regard to a waiver is as appellee contends, the question remains whether the waiver doctrine is applicable here. We think it is not, as the controlling question is whether the death of insured under the undisputed testimony was a risk against which the insurance had been written. The insurer may unquestionably through the knowledge of its authorized agent, waive provisions of a policy which, if not waived, would defeat a recovery thereon, when with such knowledge, the insurer receives premiums to continue the policy in force, but it is not the law that through waiver a new policy can be substituted insuring against risks expressly excluded in the original policy. * * *

"In the chapter on Insurance, 29 Am.Jur. Sec. 903, page 690, it is said: `The doctrines of implied waiver and of estoppel, based upon the conduct or action of the insurer, are not available to bring within the coverage of a policy risks not covered by its terms, or risks

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