Leach v. The Metropolitan Life Insurance Company

• Decision Date: 10 December 1927
• Docket Number: 27,608
• Citation: 124 Kan. 584,261 P. 603
• Parties: IDA LEACH, Appellee, v. THE METROPOLITAN LIFE INSURANCE COMPANY, Appellant
• Court: Kansas Supreme Court

261 P. 603

124 Kan. 584

IDA LEACH, Appellee, v. THE METROPOLITAN LIFE INSURANCE COMPANY, Appellant

No. 27,608

Supreme Court of Kansas

December 10, 1927

Decided July, 1927

Appeal from Crawford district court, division No. 1; DANIEL H WOOLLEY, judge.

Judgment reversed and cause remanded.

SYLLABUS

SYLLABUS BY THE COURT.

1. INSURANCE--Group Insurance on Lives of Employees--Writings Constituting Policy and Subsequent Amendments Construed Together. An application by an employer to an insurance company for group insurance on the lives of its employees, provided that "all employees of the employer who are actively at work and who have completed six months' service shall be eligible for the insurance under this policy." An application afterwards by the same employer to the same insurance company for additional insurance stated that "employees now insured may apply for additional life insurance"; also, "these amendments and changes are to be taken and considered as part of the said application and subject to the agreements and covenants therein contained, and the said application, together with these amendments and changes, are to be taken as a whole and considered as a basis and as a part of the contract of insurance." The insurance company accepted the amendments in this language: "The above amendments and changes under application for group policy . . . are hereby accepted and payments under the policy will be in accordance with such amended application on and after May 16, 1924." Held, the original application, the amendments thereto and other writings constituting the policies, must be considered and construed together in order to ascertain the intention of the contracting parties.

2. SAME--Group Insurance on Lives of Employees--Employees Included. And, further, it was necessary as a condition precedent that an employee to have been entitled to additional insurance under the later arrangement, must have been actively at work on the effective date of the new policy or subsequent thereto.

3. SAME--Group Insurance on Lives of Employees--Lapse of Employment Before Effective Date of Policy. And, further, an employee who had insurance under the original arrangement and who made application for additional insurance, but whose employment lapsed before the delivery and effective date of the additional insurance, was not entitled thereto.

4. SAME--Employee Not Within Terms of Policy--Return of Premium and Cancellation of Policy. And, further, held, where the insurance company delivered a policy for the additional insurance to the insured or his beneficiary without knowledge that the employee was no longer actively at work for the employer, and received premiums therefor, but returned the premiums to the employee and canceled the policy immediately on learning of his lapse of employment, the insurance company was not liable to the beneficiary for such additional insurance.

5. SAME--Group Insurance on Lives of Employees--Agency. And, further, held, under the facts related in the opinion, there was no agency on the part of the employer for the insurance company.

C. O. Pingry, P. E. Nulton and G. L. Stevenson, all of Pittsburg, for the appellant.

A. B. Keller, C. S. Denison and E. V. Bruce, all of Pittsburg, for the appellee.

OPINION

HOPKINS, J.:

The action was one to recover on a certificate of life insurance issued under what is known as the group insurance plan. Plaintiff prevailed and defendant appeals.

On May 7, 1923, the Kansas City Southern Railway Company made application to defendant for a group policy of insurance on the lives of its employees. The application was granted and such a policy issued May 8, 1923. Thereafter, and on April 19, 1924, the defendant issued its individual policy of insurance to plaintiff's husband, since deceased, in the sum of $ 1,000. Previous to the date last mentioned, the railway company had made application to the defendant for additional insurance for its employees. The application was accepted and terms agreed upon, to be effective May 16. On May 5, 1924, the deceased applied for one thousand dollars additional insurance and was issued a rider or certificate increasing his insurance one thousand dollars, effective May 16. The deceased last worked for the company on May 7, and after May 9, 1924, was confined in a hospital and died January 28, 1925. He was not working for the railway company on May 16. William Moran, an employee of the railway company, delivered the policy of insurance, or rider, to plaintiff sometime in June, 1924; talked with her at that time and knew her husband was in the hospital, but continued to receive payments from her on her husband's policy until notified by the company in October, 1924, not to receive any further payments. The defendant first learned of the deceased's illness the latter part of September, 1924, through claim made by him for total and permanent disability benefits, and thereupon canceled the rider providing for the additional insurance. There is no controversy as to the original policy for $ 1,000. The defendant paid benefits for disability on the basis of $ 1,000, amounting to $ 51.04 per month until the time of insured's death, and thereafter paid the balance of the $ 1,000 due. The controversy concerns only the additional insurance.

Various questions are raised and argued, but the main one around which the controversy turns is whether in making the contract it was the intention of the parties that the policy for additional insurance should cover one who was not actively engaged at work for the railway company at the effective date of the new policy.

Under provisions of the original application, the insurance was to become effective May 8, 1923, and was to apply to employees actively at work on that date and who had been in the continuous service of the railway company for six months. It was to become effective when seventy-five per cent of the eligible employees of the railway company made application thereunder. Employees who were eligible, and who made written application for insurance, were insured for one, two or three thousand dollars, according to the annual salary each received. The insurance was to be automatically increased or decreased on April 1 of each year if the salary of the employee was increased or decreased. The term of the insurance was to be for one year from the date of the group policy, and renewals thereof from year to year, such renewals being granted by the defendant upon the application of the employer, the insurance company reserving the right to decline to renew the policy on any anniversary when the number of the employees insured was less than seventy-five per cent of those eligible for insurance. It was provided that--

"All employees of the employer who are actively at work and who have completed six months' service shall be eligible for the insurance under this policy.

"All new employees of the employer who are actively at work are entitled to apply for the insurance after completing six months' continuous service. . . .

"The company will issue to the employer, for delivery to each employee whose life is insured hereunder, an individual certificate setting forth a statement as to the insurance protection to which such employee is entitled, the beneficiary to whom payable," etc.

The certificate issued to the deceased certified that it was under and in accordance with the group policy.

The group policy provided that the premiums should be payable by the employer; that the insurance company would issue to the employer, for delivery to each employee insured under the group policy, an individual certificate setting forth a statement as to insurance protection, etc.; that the group policy, the application of the employer and the application of the employees should constitute the entire contract between the parties; that the employer would report to the insurance company each month the names of the employees insured and not previously reported, the names of the employees whose insurance is discontinued on account of termination of employment, etc., the names of new employees applying for insurance, the names of the employees not insured, etc.; that upon proof of total and permanent disability the insurance company would pay to the...