Prudential Ins. Co. of America v. Lancaster

• Decision Date: 12 September 1966
• Docket Number: No. 20114,No. 1,20114,1
• Citation: 219 N.E.2d 607,139 Ind.App. 292
• Parties: The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Appellant, v. Dora LANCASTER, and Edward Sparkowitz, d/b/a West Walkerton Truck Stop, Appellees
• Court: Indiana Appellate Court

Page 607

219 N.E.2d 607

139 Ind.App. 292

The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Appellant, v. Dora LANCASTER, and Edward Sparkowitz, d/b/a West Walkerton

Truck Stop, Appellees.

No. 20114.

Appellate Court of Indiana, Division No. 1.

Sept. 12, 1966.

[139 INDAPP 292] James W. Oberfell, Crumpacker, May, Levy & Searer, South Bend, C. Malcolm Moss, Walter W. Siebert, Chicago, Ill., of counsel, for appellant.

James H. Pankow, Jones, Obenchain, Johnson, Ford & Pankow, South Bend, for appellee Dora Lancaster.

[139 INDAPP 293]

Daniel R. Morgan, South Bend, for appellee Edward Sparkowitz, d/b/a West Walkerton Truck Stop.

FAULCONER, Judge.

This is an appeal from a joint judgment against appellant and appellee, Edward Sparkowitz, d/b/a West Walkerton Truck Stop, on a verdict by a jury for appellee, Dora Lancaster, who had filed suit against appellant and appellee-Sparkowitz to recover benefits under a group insurance policy issued by appellant to appellee-Sparkowitz. Appellant's motion for new trial was overruled, and such action is assigned as error on appeal. Appellee-Sparkowitz did not appeal from the judgment against him.

Appellant, among other specifications in its motion for new trial, asserts error in the giving by the trial court of plaintiff-appellee's Instructions Nos. 1, 2 and 5. In view of the result we have reached, we deem it necessary to consider only the giving of the above instructions and the giving of plaintiff-appellee's Instruction No. 3.

Plaintiff-appellee's Instruction No. 5 told the jury that '(c)ancellation of group insurance coverage effected by an employer and an insurer is not effective as to a covered employee until such employee is notified of such cancellation.' It further instructed the jury that if they should find in this case that 'plaintiff was not notified of cancellation of coverage, if any cancellation there was, prior to her disability and surgery, then your (thier) verdict should be for the plaintiff and against The Prudential Insurance Company of America for all the benefit provided by the policy.'

Appellant objected to this instruction in that it is contrary to the law of Indiana and that by the expressed provisions of the policy no notice is required to be given to either, the policy holder or the individual certificate holder.

There is no provision in the master policy or the certificate issued to appellee-Lancaster, as the employee, directly binding the appellant-insurer to give notice to Dora Lancaster of the [139 INDAPP 294] cancellation of the policy. While some States have statutes requiring notice to be given an insured employee prior to the cancellation of a group insurance policy, there is no such statute in Indiana.

We are, therefore, presented with the question whether, under the terms of the policy or the certificate, appellant-insurer was required to give notice of its intent to cancel the policy prior to so doing. If this be answered in the negative, we must then examine the evidence to determine if any other agreement was made. If we find no other agreement, then we must determine if, as has been found in some other States, the common law is that notice to the employee should be a prerequisite to any effective cancellation or termination of the master policy.

Although from our research on this precise fact situation we have found no decisions in Indiana, we can draw from the many cases available in Indiana setting forth the general rule concerning insurance contracts.

In Bell et al. v. New York Life Ins. Co. (1963), 134 Ind.App. 614, 190 N.E.2d 432, this court affirmed the action of the trial court in sustaining a demurrer to a complaint filed by an employee to recover benefits under a group insurance policy. We therein found the policy of insurance and certificate of insurance clear and unambiguous and that the latter fully informed the employee of the terms of the policy. We referred to the well-established rule in Indiana that our courts can only enforce the terms of the contract as agreed upon and have no authority to make a new or different contract.

In Bell et al. v. New York Life Ins. Co., supra at page 621 of 134 Ind.App., page 435 of 190 N.E.2d., Judge Carson, speaking for this court, stated:

'The appellants urge that no notice was given to the appellants (appellants') decedent that his employment had terminated.

We find no provision in the certificate of insurance entitling the insured to any notice.'

[139 INDAPP 295] In the case presently before us the certificate of insurance supplied appellee--Dora Lancaster is very lengthy and, indeed, contains nearly all of the provisions contained in the master policy. Both the master policy and the certificate under the section designated 'Termination of Individual Insurance' contain the following pertinent provisions:

'The Employee's employee coverage and his dependents coverage, if any, with respect to all his dependents will terminate on the first of the following to occur:

'(a) Termination of the Group Policy.

'(b) Failure of the Policyholder to include in any premium paid under the Group Policy the premium charge applicable to the Employee's employee coverage and dependents coverage, if any, thereunder.'

We find this language clear and unambiguous. Also, it informs the employee of the conditions of his coverage. We find nothing in the master policy or the employer's certificate requiring notice to an employee by the insurer in the event it terminates said policy on either grounds.

We have examined the cases cited by appellant in its able brief, and those set out in Annot., 68 A.L.R.2d 215 (1959). From our examination we conclude that there is a conflict between, and sometimes within, the various jurisdictions on the issue of whether prior notice is required to be given the employee by the insurer before cancellation. We are of the opinion that the cases requiring such notice can be distinguished from the one here under consideration by the facts involved, the provisions of the policy and certificates, the court's interpretations of said provisions, or upon State statutes.

In our opinion, there being no statute of our State applicable, no provision in the group policy or certificate of insurance directly and specifically requiring notice, or from which we could infer notice was agreed upon as a condition to termination, no such notice was required in the present case.

[139 INDAPP 296] We agree with the statement of the Appellate Court of Ohio in Taylor v. Continental Assurance Company (1956), 104 Ohio App. 78, 144 N.E.2d 213, at page 217, that:

'(I)t would be desirable that some notice be accorded to employees covered by group policy of its termination so that they might be assured of the accrual of the right to have a new policy issued to them, but we cannot hold that the phraseology employed in the section will permit of this construction.'

We, as the judiciary, must leave to the Legislative and Executive departments of Government the task of determining public policy. State ex rel. Kostas v. Johnson (1946), 224 Ind. 540, 547, 69 N.E.2d 592, 168 A.L.R. 1118.

We also must leave to individual parties the right to make the terms of their agreements as they deem fit and proper, and, as long as those terms are clear and unambiguous and are not unlawful, we can only enforce them as agreed upon. New Harmony Realty Corp. v. Superior Oil Co. (1941), 108 Ind.App. 668, 678, 31 N.E.2d 673.

The trial court gave plaintiff-appellee's tendered Instruction No. 3 which informed the jury that '(w)here a group insurance policy provides for premium payments by the employer to the insurer and further provides for employee contributions, then the insurer constitutes and designates the employer as its agent to collect and remit the contributory part of the premiums.' Such instruction further stated that if the jury found that the insurance company agreed that the employer-Sparkowitz should collect employee contributions and remit them to the insurance company 'then you Although appellant does not contend the giving of this instruction as error in this appeal, since we have concluded this cause must be reversed with instructions to grant a new [139 INDAPP 297] trial, and it appears likely said instruction may again be tendered, we feel it incumbent upon us to comment thereon.

may find Edward Sparkowitz to have been the agent of The Prudential Insurance Company of America in the collection and remittance of such contributory part of the premiums.'

Both our Supreme Court and this court have decided this issue to the contrary in the absence of a statutory or policy provision stating, or from which we can infer, that the parties thereto agreed otherwise.

'It seems clear to us from the relations of the parties that in the negotiations that resulted in the issuance of the policy; in receiving and accepting the certificate referred to in clause 6; and in deducting premiums from the appellee's pay and in remitting them to the insurance company the coal company was acting in the capacity of agent for the appellee.' Metropolitan Life Ins. Co. v. Henry (1940), 217 Ind. 33, 36, 24 N.E.2d 918, 920.

'The master policy was in the hands of Inland Steel Company. It was the agent of its employees in the negotiations that resulted in the issuance of the policy and in deducting premiums from their pay and remitting them to the insurance company. Metropolitan Life Insurance Co. v. Henry, 1940, 217 Ind. 33, 24 N.E.2d 918. Appellant's decedent was therefore charged with knowledge of the provisions of the policy.' Morales v. Equitable Life Assur. Soc. of United States (1945), 115 Ind.App....