Robertson v. Southland Life Ins. Co.

• Decision Date: 17 January 1974
• Docket Number: No. 3,No. 48710,48710,3
• Citation: 130 Ga.App. 807,204 S.E.2d 505
• Parties: Linda L. ROBERTSON v. SOUTHLAND LIFE INSURANCE COMPANY
• Court: Georgia Court of Appeals

Page 505

204 S.E.2d 505

130 Ga.App. 807

Linda L. ROBERTSON v. SOUTHLAND LIFE INSURANCE COMPANY.

No. 48710.

Court of Appeals of Georgia, Division No. 3.

Jan. 17, 1974.

Rehearing Denied Feb. 8, 1974.

Robinson, Buice, Harben & Strickland, Sam S. Harben, Jr., Gainesville, for appellant.

Smith, Smith & Frost, R. Wilson Smith, Jr., Gainesville, for appellee.

Syllabus Opinion by the Court

STOLZ, Judge.

This is the second appearance of this case in this court. See Robertson v. Southland Life Ins. Co., 127 Ga.App. 143, 192 S.E.2d 910, in which we held that the defendant insurer, which was defending on the basis of the lapse of the life insurance contract for nonpayment of premium, had failed to carry its burden of proof on summary judgment that it had presented a pre-authorized check to the insured's bank at the time the premium was due and that it had been returned or that the plaintiff beneficiary had failed or refused to supply pre-authorized checks. The defendant filed a second motion for summary judgment, from the granting of which the plaintiff appeals. Held:

1. Although the insured paid his first premium upon his signing of the application for insurance on April 13, 1970, and although the policy provides that there shall be no liability thereunder until delivery of the policy to the insured (which occurred on May 7, 1970), the evidence demanded a finding that the premium in question was due on August 23, 1971. The policy was dated April 23, 1970, and provides that when it is delivered and paid for, the policy shall be in force from its policy date; that 'policy years, months and anniversaries will be determined from the policy date which is the effective date of this policy.' (emphasis supplied.); that the premium was due as of the annual policy date and thereafter as provided in the policy (monthly). The premiums were paid by the insured monthly on the 23rd day by pre-authorized checks. The policy was effective as of the policy date as a matter of law. See Code Ann. § 56-2429 (Ga.L.1960, pp. 289, 671).

2. The uncontested showing of the defendant upon the present motion was that it had presented the pre-authorized check to the insured's bank at the time the premium was due (August 23, 1971); that the check had been dishonored and returned marked 'account closed'; that the insured received the defendant's written notice, dated September 14, 1971, of the dishonored check; that neither the insured nor the plaintiff had ever paid the premium within the grace period or at any time thereafter, either by valid, pre-authorized check or otherwise; and that the insured died on September 25, 1971, after the expiration of the grace period. As to the contention that the affidavits supporting the motion did not affirmatively appear to have been made upon the affiant's personal knowledge, see Harvey v. C. W. Matthews Contracting Co., Inc., 114 Ga.App. 866(1), 152 S.E.2d 809 and cits. The above facts demanded a finding that the policy had lapsed as a matter of law. See Kersh v. Life & Cas. Ins. Co., 109 Ga.App. 793(2), 137 S.E.2d 493; Progressive Life Ins. Co. v. Reeves, 89 Ga.App. 900, 81 S.E.2d 519; Gulf Life Ins. Co. v. Frost, 125 Ga.App. 63, 66, 186 S.E.2d 456; Bankers Health & Life Ins. Co. v. Crozier, 65 Ga.App. 329(1), 16 S.E.2d 65.

3. The plaintiff contends that the policy did not automatically lapse for failure to pay the premium, and that it had to be affirmatively canceled by the defendant insurer by written notice of cancellation under the provisions of Code Ann. § 56-2430 (Ga.L.1960, pp. 289, 671; 1967, p. 653; 1968, p. 1126).

This contention is without merit. Code Ann. § 56-2430 has no application in this case as it applies only to the cancellation of an insurance policy. The facts in the case show beyond all doubt or question that the insurance policy in issue was not canceled, but simply expired or lapsed because of nonpayment of premium. Code Ann. § 56-2429 (Ga.L.1960, pp. 289, 671) provides: 'A policy of insurance or an annuity or endowment contract shall run from mid-day of the date of the policy or contract, and the time shall be calculated accordingly, if the policy or contract is to be in force for a specified period of time unless the hour and minute of attachment of liability is specified.' As noted in Division 1, the policy date was April 23, 1970, and the premiums were due as of the annual policy date and thereafter as provided in the policy (monthly). Each monthly premium as it was paid extended the life of the insurance policy for an additional premium paying period and continued the grace period in effect. See Code Ann. § 56-2503(1)(a) (Ga.L.1960, pp. 289, 677). The failure to make timely payment of the premium, even within the grace period, caused the policy to expire. To hold otherwise would extend indefinitely the grace period for the payment of premium, which by statute is limited to 30 days, unless otherwise provided in the insurance contract, if the insurer does not meet the requirements of 'cancellation' provided by Code Ann. § 56-2430, supra. We believe it unreasonable to hold that the General Assembly intended to create such a situation with the enactment of this statute. The statute does not apply, nor was it intended to apply, to the expiration or lapse of an insurance contract (policy) because of failure to pay premium necessary to keep a policy in force according to its terms.

The defendant's showing upon the present motion having supplied the deficiencies pointed out by this court on the previous appeal, the trial judge correctly granted summary judgment in favor of the defendant.

Judgment affirmed.

EBERHARDT, P.J., concurs.

PANNELL, J., concurs specially.

PANNELL, Judge (concurring specially).

I concur in the result reached by the majority opinion, but I do not concur in the construction of the statute (Code, § 56-2430), that is, that it applies only to 'cancellations,' which holding implies that the statute requiring notice of cancellation does not apply in any case where the policy has a built-in or automatic expiration, termination or cancellation clause. That construction gives too much emphasis to one word in the statute, rather than its overall purpose and intent. It is my opinion there may be many instances where an automatic expiration or termination provision in a policy would be ineffective in the absence of a notice under the statute; otherwise, an insurance company, by providing for automatic termination or expiration under various conditions, could completely evade this statute.

This court took two divergent views on the construction of this statute in Thames v. Piedmont Life Ins. Co., 128 Ga.App. 630, 197 S.E.2d 412, neither of which views is binding upon this court, and neither of which I agree with. The 'majority' view held any termination of the policy is ineffective unless a notice of cancellation is given under the statute. The 'minority' view was that the statute applied only to instances where the insurer had an option to terminate under the provisions of the policy and when a return of unearned premiums was required. My views are as follows:

Construction of Code § 56-2430. (a) If the broad ruling in the 'majority opinion' in the Thames case in correct then it would follow that an ordinary life policy where premiums are to be paid at regular intervals can, if the insurer does not meet the requirements of 'cancellation' provided by the statute, become a policy of lifetime protection without payment of premiums (the basic consideration for the protection provided by the policy), except as deductions from the amount of the death claim. It is unreasonable to believe that the Legislature intended to create this condition by the enactment of the statute. The statute does not apply, nor was it intended to apply, to the termination and cancellation thereof because of the failure to pay premiums necessary to keep a policy in force according to its terms. To hold otherwise would create a lifetime 'grace period' for payment of premiums, with premiums payable only at death by deductions from the death benefit, which in some instances might actually be less than the premiums.

(b) I do not agree with the concept that the use of the language 'cancellation of a policy which by its terms and conditions may be cancelled by the insurer shall be accomplished as prescribed herein' makes the statute applicable, by the use of the word 'may,' only where the 'terms and conditions' of the policy give the insurer an option to cancel. To use this as a basis for the construction would permit any insurer, by changing its policy so as to make termination or cancellation automatic on certain conditions, to completely evade the beneficent purposes of the statute, just as the...