Sahlin v. American Cas. Co. of Reading, Pa.

• Decision Date: 01 February 1968
• Docket Number: No. 8969--PR,8969--PR
• Citation: 103 Ariz. 57,436 P.2d 606
• Parties: Betty Marie SAHLIN, a widow, Appellant, v. AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA, a corporation, Appellee. . In Banc
• Court: Arizona Supreme Court

Page 606

436 P.2d 606

103 Ariz. 57

Betty Marie SAHLIN, a widow, Appellant, v. AMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA, a corporation, Appellee.

No. 8969--PR.

Supreme Court of Arizona. In Banc.

Feb. 1, 1968.

Rehearing Denied Feb. 27, 1968.

Langerman, Begam & Lewis, Phoenix, for appellant.

Lewis, Roca, Scoville, Beauchamp & Linton, Phoenix, for appellee.

STRUCKMEYER, Justice.

This case originated as an action to recover death benefits under a group disability insurance policy brought by Betty Marie Sahlin against the American Casualty Company. Summary judgment was granted in the trial court in favor of the American Casualty Company, denying death benefits. The Court of Appeals reversed. Opinion of the Court of Appeals, 5 Ariz.App. 126, 423 P.2d 897 is vacated.

Kenneth W. Sahlin, deceased husband of the appellant, was an employee of the United State Forest Service. The appellee insurance company issued a master group disability insurance policy to the 'Director, Division of Personnel, Trustee for Forest Service Employees' Travel Plan,' which was effective from June 15, 1961, to June 15, 1962. The policy insured employees of the Forest Service who elected to make application and pay the requisite premium. The premium was specified as $12.00 for the policy period for those paying their premium from June 15, 1961, to June 15, 1962. Appellee provided solicitation material and application forms for the Forest Service which, in turn, distributed them to its employees.

Kenneth W. Sahlin, in answer to the solicitation, applied for this group insurance, accompanying the application with his check for $12.00 dated August 2, 1961. The application and check were accepted by appellee, and a certificate of insurance was mailed to Kenneth Sahlin in August of 1961, Which provided insurance as of June 12, 1961.

On June 25, 1962, Kenneth W. Sahlin was killed in an airplane accident while on duty with the Forest Service. This was a covered event under the terms of the group policy. Thereafter, on February 25, 1965, appellant herein brought suit on the policy for death benefits. Motions for summary judgments were made by both parties. The trial court granted summary judgment in favor of appellee insurance company on the ground that the policy had lapsed for nonpayment of the premium due on June 15, 1962.

Appellant urges the doctrine of equitable estoppel could be applied against the American Casualty Company arising out of the facts that the brochure prepared for the Forest Service employees by appellee contained in ambiguity as to the date of coverage which might have induced an ordinary prudent man to believe that when he sent in his premium he was receiving a full year of coverage from the date the check was sent in, not from the date of the master policy which specified coverage from June 15, 1961, to June 15, 1962. Accordingly, it is asserted that there was an issue of fact arising by reason of estoppel which should have been answered by the jury. Our inquiry is, therefore, limited solely to the question of whether appellee could be estopped under the particular facts of this case to deny death benefits under the group disability insurance policy.

The elements of equitable estoppel are these:

'* * * conduct by which one * * * induces another to believe and have confidence in certain material facts, which inducement results in acts in reliance thereon, * * * which cause injury to the party thus relying.' Builders Supply Corp. v. Marshall, 88 Ariz. 89, 94, 352 P.2d 982, 985.

In this instance equitable estoppel requires that the appellant must show that the insured was excusably ignorant of the true facts and that he, therefore, could have justifiably relied upon the asserted ambiguity in appellee's brochure.

It is clear that appellant has not made a case for estoppel. Betty Marie Sahlin testified in a deposition that between June 15th and June 25th, 1962, she overheard her husband tell some friends that he had Forest Service insurance for $10,000. Even giving full credence to this testimony, it is not sufficient as a matter of law to raise estoppel. The deceased could not have been excusably ignorant that coverage would terminate on June 15, 1962, and hence, could not have justifiably believed that he was covered by the policy in question because exact knowledge of the expiration date was readily available to him.

In Hagin v. Fireman's Fund Insurance Co., 88 Ariz. 158, 353 P.2d 1029, 16 A.L.R.2d 1200, a beneficiary under an insurance policy was denied benefits on the ground (inter alia) that the insurance company notified her that it would no longer accept delinquent payments as it had in the past. In that case, we spoke of knowledge:

"Means of knowledge and knowledge itself are, in legal effect, the same thing where there is enough to put a party on inquiry. Knowledge which one has or ought to have under the circumstances is imputed to him. * * * In other words, Whatever fairly puts a person on inquiry is sufficient notice where the means of knowledge are at hadn; And if he omits to inquire, he is then chargeable with all the facts which, by a proper inquiry, he might have ascertained. A person has no right to shut his eyes or his ears to avoid information and then say that he had no notice; he does wrong not to heed the 'signs and signals' seen by him. * * *" 88 Ariz. at 162, 353 P.2d at 1032. (Emphasis supplied.)

In a group insurance policy it is usually considered that the primary contract is evidenced by the master policy issued to the employer. 1 Appleman, Insurance Law and Practice § 46; and see A.R.S. § 20--1402, subsec. 2. Thus, courts look first to the master policy in construing contracts of group insurance. 1 Appleman, Insurance Law and Practice § 46. The master policy stated that it was effective June 15, 1961, to June 15, 1962. It also provided that certificates of insurance would be issued to the employees who...