Poch v. Equitable Life Assurance Society of United States
| Decision Date | 29 September 1941 |
| Docket Number | 47 |
| Parties | Poch, Appellant, v. Equitable Life Assurance Society of United States |
| Court | Pennsylvania Supreme Court |
Argued May 14, 1941.
Appeal, No. 47, March T., 1941, from judgment of C.P Allegheny Co., July T., 1937, No. 556, in case of Mary Poch v. The Equitable Life Assurance Society of United States. Judgment reversed.
Assumpsit. Before DITHRICH, J.
Verdict for plaintiff. Judgment entered for defendant n.o.v Plaintiff appealed.
Judgment reversed and rule for new trial reinstated.
D. F. McCarthy, for appellant.
Seward H. French, Jr., with him Henry Eastman Hackney, Reed, Smith Shaw & McClay and Karl W. Warmcastle, for appellee.
Before SCHAFFER, C.J., MAXEY, DREW, LINN, STERN, PATTERSON and PARKER, JJ.
This is an action in assumpsit instituted by Mary Poch, appellant, as named beneficiary, to recover unpaid total and permanent disability benefits under a contract of life and disability insurance evidenced by a group policy issued by the Equitable Life Assurance Society of the United States (hereinafter called "the Society"), appellee, to the Homestead Steel Works Employees' Insurance and Safety Association (hereinafter called "the Association"), an unincorporated association of employees of the Homestead Steel Works of the Carnegie Steel Company, and by a subsidiary certificate issued to appellant's son, George Poch, deceased, under the terms of the group or master policy. A jury trial resulted in a verdict for appellant in the sum of $4237.50, representing the face amount of the policy and an allowance for interest, which was set aside by the court en banc, and judgment non obstante veredicto was entered in favor of the appellee Society. This appeal followed.
The group policy, whereby the Society contracted to insure such of the members of the Association as elected or should thereafter elect to become insured thereunder, was originally issued to the Association on June 30, 1926. By its terms it insured members who so elected (1) against loss of life which should occur while insured under the group policy, and (2), in lieu of the death benefit, against total and permanent disability which should commence while thus insured and prior to attaining age 60, the amount of insurance in force on the date of the commencement of such disability to be paid to the insured in equal monthly installments, according to a certain table. Disability installments remaining unpaid upon the death of the member were made payable to the named beneficiary as they became due, with the right to commute at 3 1/2% interest per annum. Appellant's insured having made application for insurance under the group policy, an individual certificate was issued to him, bearing the same date as the master policy, insuring him in the amount of $3000. This certificate, which recited that it was furnished in accordance with the terms of the group policy "which together with the Association's application therefor constitutes the entire contract between the parties", contained certain provisions of the master policy as to terms and conditions under which benefits would be paid, including the provisions relating to total and permanent disability.
As contemplated by the insurance plan under the group policy, the proportionate amount of the total premium payable on account of the insurance coverage of each employee participating in the insurance was collected monthly by the Association from the employee, as dues, through wage deduction authorization slips or, if no pay was due the employee for a monthly period, in cash, and one sum was then turned over to the Society by the Association representing the entire monthly premium of the insured members. No part of the premium was paid by the employer, as is often the case in group insurance. The policy was originally issued for the term of one year, but contained a provision for automatic renewal by the Society upon each anniversary of the Register date and, in accordance with such annual renewal provision, was renewed on June 30, 1932, in the form originally issued, for the further period of one year.
On or about January 18, 1933, while still a member of the Association and an employee of the Carnegie Steel Company, according to the company's employment records, George Poch, the insured, became and was totally and permanently disabled, as the jury found, by reason of cirrhosis of the liver. His dues were paid in full until February 28, 1933, but none were paid thereafter, in consequence of which the Association, on July 13, 1933, terminated his membership for nonpayment of dues and notified the Society that he was no longer a member of the Association or entitled to participate in the insurance under the terms of the group policy. Poch died on October 1, 1933, at the age of 35 years, and the present suit was instituted on April 30, 1937, by appellant, as named beneficiary, to recover the full amount of disability benefits provided for by the "total and permanent disability." provision contained in the master policy, as originally issued and renewed on June 30, 1932, and in the individual certificate issued thereunder, no payments having been made to the insured during his lifetime.
In the interim between June 30, 1932, the date of renewal of the original policy for another year, and January 18, 1933, the date of Poch's disability, the Society, in accordance with a recommendation by the board of directors of the Association, attached a rider to the master policy which purported to cancel the "total and permanent disability" provision as of September 1, 1932. The rider, which was executed by an assistant registrar of the Society and by the Association's chief clerk, provides: . Notice of cancellation of the provision for disability benefits was posted on a bulletin board at the Association's office and new individual certificates were issued to the Association for delivery to the insured members, but it does not appear how long the notice remained posted or that it was seen or read by Poch, nor does it appear that a new certificate was ever delivered to him or that any demand had been made upon him to surrender the certificate held by him under the terms of the original policy. Neither the master policy nor the certificate issued to the insured employee reserved to the Society or the Association any right to cancel or eliminate any of the effective provisions of the insurance contract during the policy year, and it appears that the amount of premiums paid by the insured to the Association and by it transmitted to the Society, from the renewal date of the policy to and including the premium for February, 1933, was the same as would have been payable by him under the terms of the original policy. The cancellation agreement provided for no adjustment of the premium rates by reason of the elimination of the disability clause.
The Society here concedes that appellant's insured was not consulted with reference to cancellation of the provision for disability benefits and did not consent thereto, as also that, so far as the record shows, there is no evidence to establish that he was ever advised of the change or had any knowledge or notice thereof, but contends that the mutual agreement between it and the Association, evidenced by the rider attached to the policy, that the disability provision should be void on and after September 1, 1932, was nevertheless effective and binding upon the insured members and that, consequently, at the time of accrual of Poch's disability, such provision was not in effect, as the court below held, basing its entry of judgment for the Society solely on this ground. Appellant contends, on the other hand, that upon renewal of the original policy on June 30, 1932, the insured acquired a vested right to the insurance afforded by the terms of the policy, which it was beyond the power and authority of the Society and Association to impair by limiting or changing the risk, without the consent of the insured; further, that the insured was at least entitled to notice of any such change.
In Miller v. Travelers Ins. Co., 143 Pa.Super. 270 [*] two group policies were issued to the Lehigh Railroad Company, one of which was a group life policy covering railroad employees who joined the plan and who, like the insured in the present case, authorized premium payments to be deducted from their wages, and individual certificates were issued naming the appellant in that case as beneficiary. Both of the group policies were later cancelled in their entirety by mutual agreement between the insurer and the Railroad Company, of which the insured was notified but to which he did not consent. The insured died subsequent to the effective date of cancellation, whereupon the beneficiary sued to enforce the group policies, contending that their cancellation was ineffective, since made without the insured employee's consent. It was held that, under the circumstances there presented, the cancellation by mutual agreement of the insurer and the company was effective and binding upon the insured, despite his lack of consent. The court said (pp. 273, 274, 275): ...
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