Massachusetts Mut. Life Ins. Co. v. De Salvo

• Decision Date: 22 March 1971
• Docket Number: No. 22930,22930
• Citation: 482 P.2d 380,174 Colo. 115
• Parties: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, Plaintiff in Error, v. Frances De SALVO, Defendant in Error.
• Court: Colorado Supreme Court

Page 380

482 P.2d 380

174 Colo. 115

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, Plaintiff in Error, v. Frances De SALVO, Defendant in Error.

No. 22930.

Supreme Court of Colorado, In Department.

March 22, 1971.

Phelps, Fonda, Hays & Wills, Donald E. Abram, Pueblo, for plaintiff in error.

Laurence A. Ardell, Pueblo, for defendant in error.

HODGES, Justice.

After trial to the court, Frances De Salvo, as the plaintiff, recovered a judgment for $14,500 plus interest against Massachusetts Mutual Life Insurance Company, which will be hereinafter referred to as the 'Mass. Mutual.' This judgment was premised on the trial court's finding that a non-contributory group life policy which Colorado Fuel & Iron Corporation (C.F. & I.) provided for its non-bargaining employees, covered the plaintiff's husband at the time of his death.

By this writ of error, Mass. Mutual urges reversal. It claims that the provisions of its policy clearly exclude coverage for the deceased husband of the plaintiff. We agree and therefore reverse the trial court's judgment.

On August 11, 1964, when the plaintiff's husband Russell De Salvo died, he was employed as a foreman, which is a non-bargaining position. He had been transferred two days prior thereto from a job as laborer, which is a bargaining position.

Mr. De Salvo, a long time employee of C.F. & I., was first promoted to foreman in 1941. Thereafter, he served in this capacity except for three periods of time when he was transferred back to the position of laborer. It is the last such period, when Mr. De Salvo on June 1, 1964 was transferred to laborer, and thereafter, on August 9, 1964, two days before his death when he was promoted back to foreman, which creaed the purported difficulty in determining from the provisions of the policy whether Mr. De Salvo was or was not covered by the $14,500 policy on non-bargaining employees on the date of his death.

Bargaining employees of C.F. & I. are covered under another non-contributory life policy which provided for a $4,500 death benefit. A different insurance company, which was not a party to this action, wrote the bargaining employees' policy for C.F. & I. The dispute, which is the basis of this action, concerns itself with the meaning and interpretation of pertinent provisions of the $14,500 policy which were designed to describe when a non-bargaining employee is eligible for coverage, when he has coverage, and when coverage is terminated.

Mr. Groves, Director of Insurance for C.F. & I. testified that the non-contributory policy for non-bargaining employees and the non-contributory policy for bargaining employees were designed to dovetail with each other. Consequently, the provisions concerning eligibility for coverage, for coverage, and for termination of coverage as set forth in both policies, were formulated to provide efficient management of the insurance program by making certain that each employee had coverage under one of the policies, and to provide a guideline for proper payment of monthly premiums by C.F. & I. to the appropriate insurance company. Employees are inventoried on the first day of each month as to insurance coverage under one or the other insurance policy. Based thereon, the premiums are paid to the appropriate insurance company.

Mr. Dennison, Supervisor of the group insurance accounting section of C.F. & I., testified that in accordance with the policy provisions of the $14,500 policy, a premium for Mr. De Salvo was paid on June 1, 1964 which provided him with coverage for the entire month of June. Because he had been transferred on June 1, 1964 to laborer, a premium for coverage of Mr. De Salvo under the $4,500 policy was paid by C.F. & I. on July 1 and August 1, 1964. The payment of these premiums secured coverage for Mr. De Salvo under the $4,500 policy during July and August 1964. No premium was paid by C.F. & I. to Mass. Mutual on July 1 and August 1, 1964 for coverage of Mr. De Salvo under the $14,500 policy. On this basis, Mr. Dennison indicated in his testimony, and Mass. Mutual contends in urging reversal of the trial court's judgment, that Mr. De Salvo was not covered by the $14,500 policy when he died; and that the policy provisions clearly and unambiguously state that under the circumstances here relating to his promotion back to foreman on August 9, 1964, that Mr. De Salvo was not eligible for coverage under the $14,500 policy during August 1964. However, had he lived and continued as foreman, he would have been covered by the $14,500 policy on and after September 1, 1964.

The evidence is undisputed that C.F. & I. did not pay the insurance company a premium to cover Mr. De Salvo for the month of August 1964 under the $14,500 policy. The other insurance company was paid a premium for August 1964 and thus, Mr. De Salvo was covered on the date of his death by the $4,500 policy.

In resolving this matter in favor of the plaintiff by holding that Mr. De Salvo was, nevertheless, covered by the $14,500 policy on the date of his death, the trial court, as a matter of law, held that several pertinent provisions of the policy pertaining to eligibility for coverage and cessation of coverage were ambiguous or so unclear as to require trial court interpretation. The trial court thereupon applied its interpretations to these provisions; and, premised on these interpretations, it held, in effect, that the plaintiff, as the widow and beneficiary of Mr. De Salvo, was entitled to the $14,500 death benefit provided by the insurance company's policy.

We do not agree with the trial court that these provisions are ambiguous or so uncertain in phraseology as to be susceptible of two reasonable interpretations: one, favorable to the beneficiary and the other favorable to the insurer. These provisions, although perhaps couched in complex language, do clearly and definitely state when a bargaining employee is eligible for coverage under the $14,500 policy, when he is covered by this policy, and when such coverage ceases. When applied to the dates when Mr. De Salvo's employment status was changed, the provisions in question reflect clearly that he was not covered under the $14,500 policy. In other words, the Mass. Mutual policy by its provisions cut off coverage for Mr. De Salvo on the last day of June 1964, and since he died on August 11, 1964, he was not at any time after the last day of June and until his death on August 11, 1964, eligible for coverage under the $14,500 policy.

By the provisions of the Mass. Mutual policy, and in accordance with the insurance program provided for both its bargaining and non-bargaining employees, C.F. & I. did not pay a premium for Mr. De Salvo to Mass. Mutual for either the month of July or August 1964. The policy involved carries only C.F. & I. and Mass. Mutual as the contracting parties. As shown not only from the provisions of the policy but from the testimony before the trial court, it was the obvious intent of the contracting parties that coverage for non-bargaining employees was to be provided only upon the payment of a premium.

Since Mass. Mutual received no premium, and since C.F. & I. did not pay a premium in accordance with the provisions of the policy, there is no basis in contract law or equity to hold Mass. Mutual liable to the beneficiary of Mr. De Salvo for the death benefit provided in this policy. The rights of the contracting parties as well as the benefits to employees or their beneficiaries are measured by the terms and conditions of this policy. No court should or can take from the contracting parties the inherent right to contract as they will and to make a contract for them to do what they intended not to do. Where provisions of an insurance policy are couched in plain and unambiguous language and do not contravene some principal of public policy, a court has no right by a forced construction or interpretation to require a result not intended by the contracting parties. Standard Marine Insurance Co. v. Peck, 140 Colo. 56, 342 P.2d 661; General Accident Fire & Life Assurance Corp. v. Heller, 127 Colo. 64, 253 P.2d 966.

We will now...