McKay v. Equitable Life Assur. Soc. of U.S.

• Citation: 421 P.2d 166
• Decision Date: 16 December 1966
• Docket Number: No. 3548,3548
• Parties: Dean E. McKAY, Appellant (Plaintiff below), v. The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, Appellee (Defendant below).
• Court: United States State Supreme Court of Wyoming

Page 166

421 P.2d 166

Dean E. McKAY, Appellant (Plaintiff below), v. The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, Appellee (Defendant below).

No. 3548.

Supreme Court of Wyoming.

Dec. 16, 1966.

Bruce P. Badley, Sheridan, for appellant.

Houston G. Williams, of Wehrli & Williams, Casper, for respondent.

Before PARKER, C. J., and HARNSBERGER, GRAY, and McINTYRE, JJ.

Mr. Justice GRAY delivered the opinion of the court.

Plaintiff, as an employee of Black Hills Power and Light Company, was insured under a group policy issued to his employer by the defendant. The policy included a provision for major medical expense benefits for employees and their dependents whereby defendant agreed to pay certain charges incurred for hospitalization and medical expenses as a result of a 'non-occupational accidental bodily injury or a non-occupational sickness' in an amount 'in excess of the deductible amount defined in paragraph B below.' Paragraph B-the focal point of dispute-provided as follows:

'B. DEDUCTIBLE AMOUNT. The deductible amount shall be equal to the sum of

'1. a cash deductible of $100, and

'2. the total amount of benefits provided (including the value of benefits provided on service basis) with respect to such covered charges under the Group policy and any other group plan or plans toward the cost of which any employer makes contributions or payroll deductions or any labor union makes contributions.'

During the time the policy was in force plaintiff was stricken with a heart attack and incurred 'covered charges' under the policy in the sum of $2,665. Of this amount, $1,459 was paid under a groupplan insurance to which plaintiff's wife belonged, commonly known as Blue Gross-Blue Shield, for which her employer-not plaintiff's employer-had made payroll deductions. Plaintiff, nevertheless, made claim against the defendant for the full amount of the 'covered charges.' Defendant refused to pay the full amount claimed, insisting that under the terms of its policy the charges paid by the wife's insurer were deductible and defendant was liable only in part for the excess. In keeping with its position, defendant paid the sum of $828 and tendered to plaintiff an additional amount of $222 which it claimed fully discharged its obligation. The tender was refused, plaintiff contending that defendant was not entitled to take the deduction, and this action followed. In due time plaintiff moved for summary judgment and thereupon the trial court, after a determination that there was no genuine issue as to any material fact, entered judgment for the defendant. From that judgment plaintiff has appealed.

It is plaintiff's position that the printed words 'any employer' contained in the deduction clause of defendant's policy set forth above create an ambiguity, which according to well-recognized rules of construction applicable to insurance contracts establish fundamental error in the proceedings below. He relies primarily upon a general principle recognized by this court in Wilson v. Hawkeye Casualty Co., 67 Wyo. 141, 215 P.2d 867, that where such contracts are so drawn as to be ambiguous and uncertain and to require construction, the contract will be construed liberally in favor of the insured and strictly against the insurer. Also, if the contract is fairly susceptible of two constructions, the one favorable to the insured will be adopted; and this in essence is the premise of plaintiff's argument inasmuch as it is suggested that the words 'any employer' may be taken to mean what defendant here says they mean, and that is any employer of plaintiff and his dependents, or as any employer of the plaintiff alone. Furthermore, says plaintiff, the latter is the most reasonable interpretation. The rule, that the language of the policy is to be tested by what a reasonable insured would understand the meaning of the language employed to be, is also advanced.

It is true that in the Wilson case we took cognizance of the foregoing general principles of construction often stated and applied in controversies involving policies of insurance. However, we also took cognizance of other equally applicable general principles and have before and since added to that body of the law. Thus, in essence and in addition to the tenets advanced by plaintiff, we have said-except where otherwise indicated-that the parties have the right to employ whatever lawful terms they wish and courts will not rewrite them. Alm v. Hartford Fire Insurance Company, Wyo., 369 P.2d 216, 217. In other words, the terms must not conflict with pertinent statutes or public policy. Such contracts should not be so strictly construed as to thwart the general object of the insurance. Miles v....