Pan-American Life Ins. Co. v. Welch

• Decision Date: 30 July 1934
• Docket Number: No. 2580.,2580.
• Citation: 74 S.W.2d 408
• Parties: PAN-AMERICAN LIFE INS. CO. v. WELCH et al.
• Court: Texas Court of Appeals

Page 408

74 S.W.2d 408

PAN-AMERICAN LIFE INS. CO. v. WELCH et al.

No. 2580.

Court of Civil Appeals of Texas. Beaumont.

July 30, 1934.

Rehearing Denied September 19, 1934.

Appeal from District Court, Shelby County; T. O. Davis, Judge.

Action by William Thomas Welch and another against the Pan-American Life Insurance Company. Judgment for plaintiffs, and defendant appeals.

Reformed, and, as reformed, affirmed in part, and reversed and remanded in part.

McBride, O'Donnell & Hamilton, of Dallas, for appellant.

Sanders & McLeroy, of Center, for appellees.

O'QUINN, Justice.

On August 5, 1925, and November 5, 1926, appellant issued its group insurance policies Nos. 120 and 120A to the El Paso Electric Company insuring said company's employees, and on said dates issued its certificates of insurance to said employees. At and before the issuance of the said group insurance policies, William J. Welch was an employee of the El Paso Electric Company in the operation of its street cars. On said dates, to wit, August 5, 1925, and November 5, 1926, appellant issued to said William J. Welch its certificates of insurance, No. 303 under group policy No. 120, and No. 249 under group policy No. 120A. The provisions of the policies are identical, as were also the certificates. The certificates issued to Welch insured him in the sum of $1,000 each. They provided for a death benefit in the sum of $1,000, and a health or disability benefit in the sum of $1,000; the total coverage in the two certificates being $2,000. The beneficiary in each certificate was William Thomas Welch, the father of said William J. Welch, but before the death of William J. Welch, the insured, he married and changed the beneficiary in one of the certificates (No. 249) to his wife. She died without issue before William J. Welch ceased to be an employee of the El Paso Electric Company. On February 27, 1932, William J. Welch died, and on March 1, 1933, appellee William Thomas Welch filed this suit in the district court of Shelby county, Tex., against appellant to recover upon the two certificates above mentioned.

Each of the certificates sued upon provided:

"Pan-American Life Insurance Company "New Orleans, Louisiana

"* * * Under and subject to the terms and conditions of a Group Contract of Insurance No. 120, issued and delivered to the El Paso Electric Co. Employees' Association, (hereinafter called the Assured) and covering members of the Assured who are employees of the El Paso Electric Co., Rio Grande Valley Traction Co., or El Paso & Juarez Traction Co., (hereinafter called the Employers) insures the life of William J. Welch (hereinafter called the Employee) for the sum of One Thousand Dollars, payable to William Thomas Welch, his father as Beneficiary, (subject to the right to change such Beneficiary reserved in said contract) if death shall occur while an employee of the Employers during the continuance of said contract. Such payment at the election of the Assured shall be paid either in one amount or in a fixed number of payments at intervals of not less than one month and covering a period of not exceeding one year.

"The insurance provided for by said contract terminates with the termination of employment with the said employers, or the termination of membership with the said Assured, unless the employee shall elect to continue the insurance in accordance with the Conversion Privilege printed on the second page of the Certificate and which is made a part hereof.

"The provisions for permanent total disability benefits printed on the second page of this Certificate are, subject to the terms and conditions of said contract, made a part hereof. * * *

"Permanent Total Disability Benefits

"If any employee insured under said contract shall furnish the Company with due proof that he has, before having attained the age of sixty, become wholly disabled by bodily injury or disease and will be permanently, continuously and wholly prevented thereby from engaging in any occupation or employment for wage or profit, the Insurance Company, three months after receipt of due proof of such disablement, shall, in full settlement of all obligations under this certificate, begin making payment to the employee of the insurance provided for on page one, under one of the following plans at the option of the employee:

"Sixty monthly installments at the rate of $18.00 per thousand dollars of insurance.

"Five annual installments at the rate of $214.00 per thousand dollars of insurance.

"Ten annual installments at the rate of $116.18 per thousand dollars of insurance.

"Fifteen annual installments at the rate of $83.90 per thousand dollars of insurance.

"Twenty annual installments at the rate of $67.98 per thousand dollars of insurance.

"Should the employee die before all installments are paid, any remaining installments will be paid to the beneficiary."

Appellees alleged that on December 31, 1931, William J. Welch, while an employee of the El Paso Electric Company, became totally and permanently disabled by insanity, which disease concurrently and proximately caused his death on February 27, 1932, and that said insurance evidenced by said policies and certificates of insurance matured and became demandable on said date, December 31, 1931, or, in the alternative, on February 27, 1932, the date that William J. Welch died, and that appellant became indebted to appellees in the amount thereof, to wit, $2,000; and, in the alternative, that, if they were not entitled to recover in a lump sum, then under the provisions of the policies and certificates of insurance they were entitled to recover as per one of the installment payment plans, and elected to recover under the plan of five annual installment payments in the sum of $214 per each $1,000 of insurance, and alleged that two of such installments, or $428, were due at the time of filing their first amended original petition, July 22, 1933, and that one such installment would fall due annually thereafter and prayed for general relief. They further alleged that notice of the death of William J. Welch was given ten days after same occurred; that demand for payment had been made more than thirty days before the filing of the suit, which was refused, and by reason thereof they were entitled to recover 12 per cent. of the amount claimed as a penalty, and also to recover attorney's fees in the sum of $500, which they alleged was reasonable.

Appellant answered by general demurrer, and specially excepted to appellees' petition because (a) it appeared therefrom that the death of William J. Welch occurred on February 27, 1932, and it was not alleged that he had not terminated his employment with the El Paso Electric Company, nor his membership in the El Paso Electric Company Employees' Association on that date; and (b) it was not alleged that William J. Welch, or any one for him, had furnished the company with due proof of his alleged disability, it appearing from the contracts of insurance sued upon that the furnishing of such proof was a condition precedent to recovery for such disability.

It further answered by general denial, and specially (a) that prior to the death of William J. Welch, on, to wit, December 31, 1931, he had terminated his employment with his employers named in the contract of insurance sued upon, and had terminated his membership in the assured organization, the El Paso Electric Company Employees' Association, and that said Welch did not elect to continue the insurance in force as provided in the "Conversion Privilege" set out in the insurance contracts, wherefore at his death there was no insurance in force with appellant, said insurance contracts having been fully terminated; and (b) denied that William J. Welch became totally and permanently disabled while said insurance was in force, and pleaded that the liability of the insurer was conditioned upon the making of due proof of such disability by the insured as provided in the insurance contracts, and that no proof of such disability was furnished by William J. Welch, or by any one for him, while he was an employee and insured under said contracts and for three months prior to his death, wherefore the provisions as to total disability never came into effect, and there was no liability on the part of appellant to appellees or any one else by reason of any disability suffered by said Welch, deceased.

By supplemental petition appellees replied to the answer of appellant in which they denied the allegations in said answer, and pleaded waiver and estoppel against appellant on the ground that appellee William Thomas Welch, through his attorney, had written appellant some ten days after the death of the insured informing it of said death and the cause thereof, and requesting it to furnish blank proofs of such loss, which it failed to do, and thereby waived the making of proof of loss and was estopped to set up same as a defense.

Euleta Perisho, a sister of deceased, William J. Welch, intervened and alleged that the beneficiary of one of the certificates (No. 249) issued to her brother William J. Welch for the sum of $1,000 was his wife, that said wife predeceased said Welch without issue, and that she, intervener, and her father, appellee William Thomas Welch, were the only heirs of said William J. Welch, and therefore she was entitled to a portion of the proceeds of said certificate.

The case was tried to the court without a jury, and judgment rendered for appellees against appellant for the principal amount of the insurance certificate, $2,000; 12 per cent. penalty...