Marriot v. Pacific Nat. Life Assur. Co.

• Decision Date: 08 April 1970
• Docket Number: No. 11879,11879
• Citation: 24 Utah 2d 182,467 P.2d 981
• Parties: d 182 J. Wendell MARRIOT, Administrator of the Estate of Russell L. Marriot, Deceased, Plaintiff and Appellant, v. PACIFIC NATIONAL LIFE ASSURANCE COMPANY et al., defendants and Respondents.
• Court: Utah Supreme Court

Page 981

467 P.2d 981

24 Utah 2d 182

J. Wendell MARRIOT, Administrator of the Estate of Russell L. Marriot, Deceased, Plaintiff and Appellant, v. PACIFIC NATIONAL LIFE ASSURANCE COMPANY et al., defendants and Respondents.

No. 11879.

Supreme Court of Utah.

April 8, 1970.

Arden E. Coombs, Ogden, for appellant.

P. Knute Peterson, Salt Lake City, for respondents.

CROCKETT, Chief Justice.

Plaintiff as administrator for Russell L. Marriot sues to recover $2000 life and $2000 accidental death benefit insurance under a group insurance program furnished by Pacific National Life Assurance Company covering employees of Skyline Construction Co., Inc., for whom Mr. Marriot was working as an operating engineer when he was killed by contract with a highvoltage line on September 17, 1964. There is no question involved here as to who was at fault in the cause of his death, nor as to the right of his dependents to receive workmen's compensation benefits provided by law. ¹ The sole issue is whether he had qualified and was thus also covered under the company's group insurance program. The trial court granted defendant's motion for summary judgment. Plaintiff appeals. There being no disputed issues of fact, the question we confront is whether defendant was entitled to judgment as a matter of law. ²

The eligibility of employees under the group insurance program was set forth in a 'Certificate of Coverage' issued to the employees together with an affixed booklet explaining the conditions of coverage. These documents contained the contract of insurance which in pertinent parts provided:

The insurance benefits * * * are effective only if the person is eligible * * * (and) * * * becomes insured * * * in accordance with the provisions of the policies.

* * * an employee must work at least 300 hours in a period of three or less consecutive calendar months. Each employee who meets this requirement * * * shall first become insured on the first of the second calendar month next following such period.

Mr. Marriot had completed the required 300 hours, having worked 198 hours in August and 104 hours in September prior to his death. Therefore if he had lived he would have been insured on the 'first of the second calendar month' after completing those hours, which would have been November 1, 1964. The defendant's position, adopted by the trial court, is that because his death occurred on September 17, 1964, the period for his eligibility was never completed, and the insurance never went into effect.

In opposition to that position the plaintiff places reliance on another provision of the insurance plan which states:

* * * if you become disabled while actively at work between the date on which you complete the necessary hours for eligibility (300 hours) and the date your eligibility actually begins (November 1, 1964) your insurance will take effect as indicated above.

He makes these arguments: that everything required to be done by the decedent had been done (except only lapse of time); that if he had survived, even in a coma, until November 1, he would have been insured, without further payment of premiums, or anything else being done which would benefit the company. Wherefore, plaintiff avers, the delayed effective date was but a condition subsequent, not necessary to be fulfilled in order to make the insurance contract binding. ³ Correlated to and supportive of this, he further urges that the above quoted provision, that if the decedent became 'disabled while actively at work' the insurance would nevertheless take effect, constituted a waiver of any further duties upon his part; and that, in any event, he was in fact literally 'disabled' from further work when he was killed and therefore should be deemed covered.

In regard to the plaintiff's position there are some general observations with which we acknowledge agreement. While it is true that insurance is a matter of contract, it is to be recognized that the parties are not usually in an equal bargaining position, but rather are in a situation where one side with all of the expertise, can fashion the contract to its own interests. It often makes representations of insurance which it holds out to the customer, but which are explained in numerous paragraphs of fine print, many of which are found to be conditions and exceptions limiting the coverage. We entirely agree that courts should not give support to such methods and thus enable insurance companies to hold out expectations of coverage with one hand and take them away with the other by setting forth a promise in one part of the contract and then taking it away somewhere else; ⁴ not should they be permitted to avoid liability for promised coverage by relying upon technical requirements not material to the risk involved. ⁵

Notwithstanding our accord with the propositions just stated, we do not see them as applying in the circumstances shown here to provide a basis for plaintiff's recovery. Bearing upon that problem it is also to be borne in mind that inasmuch as insurance coverage is based on contract, unless there is some good reason to the contrary, ⁶ we are obliged to assume that language included therein was put...