Magee v. Sun Life Assur. Co. of Canada

Citation182 Miss. 287,180 So. 797
Decision Date09 May 1938
Docket Number33103
CourtUnited States State Supreme Court of Mississippi

Division A

Suggestion Of Error Overruled June 6, 1938.

AFFEAL from the chancery court of Lincoln county, HON. V. J STRICKER, Chancellor.

Suit by Mrs. Georgia Nettles Magee against the Sun Life Assurance Company of Canada and another on a certificate of life insurance issued under a group policy. From a decree dismissing the bill of complaint, the plaintiff appeals. Affirmed.


F. D. Hewitt, of McComb, for appellant.

Each group policy is to be interpreted according to its own terms with a liberal construction, and the rules of construction should be applied liberally, since the wage earners and persons secured thereby do not have the opportunity to know the contents of the contract between the insurance company and the employer.

There is only one condition on which this policy could have been forfeited, and that is, had Henry W. Magee "ceased employment" his policy would be void unless the insurer accepted the premium from the employer knowing this to be true. It may be true that Henry W. Magee's estate could be held to the railroad company, employer, for the amount of the unpaid premiums, but they cannot avoid this man's policy as long as he remained in the employment of the railroad company.

Murray v. Metropolitan Life Ins. Co., 110 So. 660.

One of the rights given, at the termination of an employee's employment, for any reason, whatsoever, was to have issued to him, upon application made to the company within 31 days, an individual policy of insurance; that this was a benefit of very real value, because he would be entitled to receive the policy even though at the termination of his employment, his physical condition was such that he could not otherwise obtain insurance. The courts have held that if the employer could terminate the status of employee, who was at the time temporarily laid off or absent on leave simply by notifying the company that it had done so without notice to the employee, knowledge on his part of the termination of employment would be necessary.

Emerick v. Conn. Life Ins. Co., 105 A.L.R. 413.

There is nothing in the contract that requires the employee to pay the Sun Life Assurance Company, whatsoever, and there is no liability upon the part of the employee for the premium payment. It is also held that the acceptance of a premium through an inadvertence and without knowledge that the insured employee had ceased his employment, so as to be no longer eligible for the insurance has been held not to keep the insurance in force.

Proof, however, that the employer collected the employee's premium for the month in which loss occurred established a prima fame case of coverage, placing the burden on the insurance company to show that the employment had terminated, thus cancelling the insurance as to such employee.

Joiner v. Metropolitan, 40 Ga.App. 740; Aetna Life Ins. Co. v. Castle, 259 Ky. 722, 835 S.W.2d 465.

On the question as to whose agent the employer is the decisions are not uniform and are in conflict regarding the status of the employer in collecting and forwarding the premiums to the insurance company. Some of the courts hold that the employer is the agent of the employee, but it has been stated that where the employer collects the premium from the employee and remits it to the insurer, that the better rule seems to be that the employer is the agent of the insurer, particularly in collecting and forwarding the premium.

All States Life Ins. Co. v. Tillman, 226 Ala. 245, 146 So. 393; Grossman v. London Guarantee & Acc. Co., 144 Misc. 520; Payton v. Metropolitan Life Ins. Co., 148 So. 721; Payton v. Morgan L. & L. R. & S. S. Co., 148 So. 724; Section 5196, Code of 1930.

In this case if employment never ceased the defendant is bound to pay under this policy. All of the parties, the Sun Life, Zurich, the Railroad Company, and the insured, Henry W. Magee, were bound according to the master policy and the certificate issued to insured. The facts are undisputed. When a disputed question of fact about the employee having ceased and severed his employment relationship with employer, that question is one for the jury. Where the facts are undisputed, as in this case, is one of law.

Henry W. Magee had been practically continuously employed, according to the testimony of the master mechanic, J. N. Chapman, since 1918. At different times in his service record he was suspended, but when he returned to work on April 14, 1934, these two certificates were issued to him upon one application, which certificates were written up and numbered, signed and returned by the Sun Life from its office in Montreal, Canada. It is undisputed that he became ill with a permanent and total disability on July 30, 1934, and remained so until the time of his death January 5, 1936.

Public, No. 162, 75 Congress, Chapter 382, 1st Session, H. R. 7519; Aetna Life Ins. Co. v. Castle, 252 Ky.

The Supreme Court of Mississippi has stated time and again that the law abhors a forfeiture and will adopt the theory that will uphold the insurance.

The facts are undisputed that no notice was given by the railroad company, employer, to the insurance company, insurer, to Henry W. Magee, insured, or his beneficiary Mrs. Magee, that his insurance was cancelled.

This group policy like a great many group policies contains what is known or is designated as a conversion privilege under which upon cessation of employment the employee is entitled to have issued to him upon application within 31 days an individual policy of life insurance in the amount of his insurance under the group contract. This was in Mr. Magee's policy and he could have exercised this privilege without medical examination, and it is reasonable to believe that he would have done so had he been notified by the I. C. R. R. Co., or the Sun Life Assurance Company that his employment had ceased, as this was the only insurance that he had or could possibly get.

There are two lines of decisions on this question, one holds that it is not necessary to give notice, and the other, which is the most enlightened, reasonable and preferable, especially in view of the fact that the employee has no way of knowing anything about the provisions of the master policy, that he must be notified in some way.

The decisions hold that where a man is discharged or suspended and his relationship definitely fixed by a definite termination of his employment, that this is notice sufficient, and he does not have to have further notice before cancellation. That he is advised of all his rights and privileges at that time, but in this Magee case he always maintained the status of an employee.

Prudential Ins. Co. v. Furgerson, 180 S.E. 503; Emerick v. Conn. General Ins. Co., 120 Conn. 60.

Can it be said that every time an employee gets sick and ceases to be actively employed and remains off for several months, would he lose a valuable right because he got permission of his employer to remain at home sick. This would be a foolish construction of this policy. A man with no other insurance, with a large family, anxious to keep his insurance up, at home sick with a fatal disease, had no notice from the Sun Life, the Zurich or the railroad company, and to have a clerk in the Group Insurance Bureau at Chicago, without any authority from the employing officers, to give notice that his policy was cancelled would be tantamount to robbery.

When this suit was filed the appellant had no way of getting any information from the I. C. R. R. Company or the insurance companies, and it was alleged in the bill of complaint that Magee left the service of the railroad company on July 30, 1934, when the proof showed that he was granted a leave of absence for one year and then the leave of absence was extended for six months. A timely motion was made for permission to amend the bill of complaint so as to conform to the proof in this case, which was denied, the court saying that it was not necessary as he had decided the case on another question.

Sec. 567, Code of 1930.

We have only to state timely request was made for this amendment in order to show that the court was in error in not permitting it to be done.

Brady, Brady & Phillips, of Brookhaven, Clinton H. McKay and Lucius E. Burch, Jr., both of Memphis, Tenn., and E. C. Craig and John W. Freels, both of Chicago, Ill., for appellees.

The general rules of construction to which other forms of insurance are subject, are applicable to the group contract.

Crawford on Group Insurance, sec. 16, page 37.

If an insurance contract is perfectly plain and unambiguous, it should be construed as written.

Continental Casualty Co. v. Hall, 118 Miss. 871, 80 So. 335; The Protective Life Assurance Co. v. Hale, 230 Ala. 323, 161 So. 248; Equitable Life Assur. Society v. Adams, 259 Ky. 726, 83 S.W.2d 461; Missouri State Life Ins. Co. v. Sargeant, 49 Ohio App. 545, 197 N.E. 397; 14 R. C. L. 931; 55 A.L.R. 1246; Boseman v. Connecticut General Life Ins. Co., 301 U.S. 196, 81 L.Ed. 1036, 110 A.L.R. 732.

Under the insurance contract, Magee's insurance could be canceled upon his ceasing to make the required contributions even if he had not left the service of the employer.

Boseman v. Connecticut General Life Ins. Co., 301 U.S. 196, 81 L.Ed. 1036, 110 A.L.R. 732; Equitable Life Assurance Society v. Austin, 255 Ky. 23, 72 S.W.2d 716; All States Life Ins. Co. v. Tillman, 226 Ala. 245, 146 So 393; Pool v. Protective Life Ins. Co. , 26 Ala.App. 161, 155 So. 631; Austin v. Metropolitan Life Ins. Co., 142 So. 337; Steffen v. Equitable Life Assur. Society, 64 S.W.2d 302; Aetna Life Ins. Co. v. Castle, 252 Ky. 228, 67 S.W.2d 17; Murray...

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