Old Southern Life Ins. Co. v. Williams

• Decision Date: 28 April 1989
• Citation: 544 So.2d 941
• Parties: OLD SOUTHERN LIFE INSURANCE COMPANY v. R.H. WILLIAMS. 87-1238.
• Court: Alabama Supreme Court

Page 941

544 So.2d 941

OLD SOUTHERN LIFE INSURANCE COMPANY v. R.H. WILLIAMS.

87-1238.

Supreme Court of Alabama.

April 28, 1989.

Charles A. Dauphin and David McKnight of Baxley, Dillard & Dauphin, Birmingham, for appellant.

James Tony Glenn, Russellville, for appellee.

ADAMS, Justice.

Old Southern Life Insurance Company appeals from a summary judgment in favor of R.H. Williams on Old Southern's complaint seeking a judgment declaring its obligations to Williams under a "hospital benefits" insurance policy, and on Williams's counterclaim for benefits allegedly due under the terms of the policy.

Old Southern issued the policy to Williams on September 15, 1982, and required monthly premiums to be paid by the 15th day of each subsequent month to keep the policy in force. A 31-day grace period was granted for the payment of each premium falling due after the first premium, during which the policy was to continue in force. The policy also contained a "reinstatement" provision:

"If any renewal premium be not paid within the time granted by the insured for payment, a subsequent acceptance of premium by the insurer or by any agent duly authorized by the insurer to accept such premium, without requiring in connection therewith an application for reinstatement, shall reinstate the policy; provided, however, that if the insurer or such agent requires an application for reinstatement and issues a conditional receipt for the premium tendered, the policy will be reinstated upon approval of such application by insurer, or, lacking such approval, upon the forty-fifth day following the date of such conditional receipt unless the insurer has previously notified the insured in writing of its disapproval of such application. The reinstated policy shall cover only loss resulting from such accidental injury as may be sustained after the date of reinstatement and loss due to such sickness as may begin more than ten days after such date. In all other respects the insured and insurer shall have the same rights thereunder as they had under the policy immediately before the due date of the defaulted premium, subject to any provisions endorsed hereon or attached hereto in connection with the reinstatement. Any premium accepted in connection with a reinstatement shall be applied to a period for which premium has not previously been paid, but not to any period more than sixty days prior to the date of reinstatement." (Emphasis added.)

On April 8, 1987, Old Southern received a monthly premium payment from Williams, which had been due on March 15, 1987: this paid for the policy through April 15, 1987. The April 15 premium was paid to Old Southern on May 21, 1987, more than 31 days from the date the premium was due, and Old Southern wrote Williams on May 26, 1987, to inform him that although the policy had lapsed on May 15, 1987, it would be reinstated on June 15, 1987. Old Southern received another premium payment on May 28, 1987, and credited the payment to Williams's account to pay the policy from July 15, 1987, to August 15, 1987. On May 28, 1987, however, Old Southern received a claim from Humana Hospital in Russellville for services rendered to Williams on May 23, 1987 (the parties disagree as to whether this was the first notice Old Southern had of Williams's injuries). Old Southern refused to pay the claim and filed its declaratory judgment action, contending that the policy was not in force at the time Williams's...