Schuerman v. General American Life Ins. Co.

• Decision Date: 24 May 1937
• Citation: 106 S.W.2d 920,232 Mo.App. 352
• Parties: OSCAR H. SCHUERMAN, APPELLANT, v. GENERAL AMERICAN LIFE INSURANCE CO., RESPONDENT
• Court: Kansas Court of Appeals

106 S.W.2d 920

232 Mo.App. 352

OSCAR H. SCHUERMAN, APPELLANT, v. GENERAL AMERICAN LIFE INSURANCE CO., RESPONDENT

Court of Appeals of Missouri, Kansas City

May 24, 1937

Appeal from Circuit Court of Pettis County.--Hon. Dimmitt Hoffman Judge.

REVERSED AND REMANDED.

Judgment reversed and cause remanded.

Lamm & Barnett and Crawford & Harlan for appellant.

Montgomery Martin & Montgomery and J. R. Burcham, of Counsel for respondent.

BLAND J. SHAIN, P. J., concurring.

OPINION

BLAND, J.--

Plaintiff, the insured under a life insurance policy with disability provisions, brought this action to recover benefits in the sum of $ 2000 for total and permanent disability suffered by him.

At the close of plaintiff's testimony the court instructed the jury to find for the defendant, which the jury accordingly did, resulting in a judgment in its favor. Plaintiff has appealed.

The facts show that, under date of October 1, 1927, the Missouri Pacific Railroad Company, plaintiff's employer, made application to the Missouri State Life Insurance Company, for a group life insurance policy "on the one year renewable term plan." As originally written the group policy was effective for a period of one year from October 1, 1927, with the option of the railroad company to renew it from year to year for an additional term of one year. The policy was renewed from year to year until October 1, 1931, at which time the last yearly renewal term expired, but by a special agreement between the railroad and the insurance companies the policy was extended to midnight October 3, 1931. The obligations under the policy of the Missouri State Life Insurance Company were assumed by the defendant on the 7th day of September, 1933.

The group policy insured certain employees of the railroad company, among whom was the plaintiff, against death and against total and permanent disability. The policy provided:

"The insurance of an employee shall cease at the expiration of the period for which premiums are last received by the Company for such employee, except as herein provided. (This exception refers to certain conversion privileges accorded the employees.) If an employee is disabled, given leave of absence, or temporarily laid off, the employment need not be considered terminated unless the employer shall so elect.

"If any premium shall not be paid when due, this policy shall terminate."

The policy provided for the issuance of an individual certificate to the employees and accordingly plaintiff received an individual policy in the sum of $ 2000, certifying that it was issued under and subject to the terms and conditions of the group policy. The certificate recited that the beneficiary was to be paid the sum last mentioned should insured's death occur during the continuance of the insurance under the certificate.

The certificate further provided:

"The insurance provided by said policy for the employee shall terminate at the expiration of the period for which premiums are last deducted by the employer from the pay of the employee, or remitted by the employee to the employer, unless the employee shall elect to continue the insurance in accordance with the Conversion Privilege given on the second page of this certificate."

Both the group and the individual policy provided:

"TOTAL AND PERMANENT DISABILITY BENEFITS:--"If any employee insured under this policy shall furnish this company with due proof that before having attained the age of 60 years, he or she has become totally and permanently disabled by bodily injury or disease, and that he or she is then, and will be at all times thereafter, wholly prevented thereby from engaging in any gainful occupation, and that he or she has been so permanently and totally disabled for a period of six months, the Company will immediately pay to such Insured in full settlement of all obligations hereunder as to such insured's life, the amount of insurance in force hereunder on such Insured at the time of the approval by the Company of the proofs as aforesaid."

Both the group policy and the certificate contained a provision granting to the employee certain conversion privileges. Such privileges were granted only in case of the termination of the employment for any reason whatsoever. The group policy shows that it was within the contemplation of the parties that the employees of the railroad should contribute toward the premiums to be paid on the policy on the basis of 60c per month per $ 1000 of insurance. The evidence shows that the sum of $ 1.20 per month was deducted by the railroad company regularly from plaintiff's wages for payment upon the insurance.

Prior to May 15, 1931, plaintiff became afflicted with paint poisoning which, at a later date, developed into paralysis. Plaintiff continued at his work with the railroad company until May 15, 1931, at which date he was laid off temporarily. He was not discharged at this or at any any other time. Four or five months later he was asked if he was able to resume work. However, he could not do so on account of his physical condition. The premium payments were deducted from plaintiff's wages to pay his insurance to June 1, 1931. No premiums were paid to the insurer by the employer to cover his insurance after that time and plaintiff did not pay them.

It was admitted at the trial that plaintiff became totally and permanently disabled on May 15, 1931. On April 19, 1936, he submitted proofs of his disability to the defendant but the latter denied all liability.

Plaintiff insists that the court erred in instructing the jury to find for the defendant. The court, no doubt, gave the instruction upon the theory now advanced by the defendant in its brief, which is as follows:

"The respondent (defendant) contends that under such clause, (that is the one headed 'Total and Permanent Disability Benefits') by reason of express limitations and conditions, the company only insured against a total and permanent disability which existed for a period of six months, so that, unless the group policy and the employee's individual coverage thereunder were maintained in force throughout such six months' period and were in force at the end of such period, no liability would attach. Respondent's position in this connection is that under this clause the subject of the insurance, the contingency insured against, is a disability which has existed for six months and no liability can arise or cause of action accrue in favor of any insured employee unless and until the disability forming the basis of claim has existed for six months, and due proof thereof is submitted during the effective term of both the group policy and the employee's individual coverage thereunder. Of utmost significance as indicative of the intent of the parties is the fact that the company's sole promise is to pay 'the amount of insurance in force' on the insured employee's life at the time of approval of proofs showing the requisite disability."

We are unable to agree with defendant's contention. If the policy provided for six months total disability insurance there might be merit in the contention; but it does not so provide as it expressly states that it is insurance against permanent disability. The six months' provision provides merely for a testing period as to the character of the disability as to its permanency. As stated in Paul v. Mo. St. Life Ins. Co., 52 S.W.2d 437, 439: "The six months' clause was for the purpose of determining, if possible, the reality of the disability, and, if at the end of that time it appeared with reasonable certainty that the disability would last for life, then the company obligated itself to pay." [See also Shea v. Aetna Life Ins. Co. (Mass.), 198 N.E. 909, 914]. The existence of total disability for a period of at least six months was to be evidential of the permanency of the disability but not, of course, conclusive. In effect, the existence of the disability for that length of time was a part of the proof to be furnished the insurer of the permanency of the disability.

Of course, under the provisions of the policies, the insurance came to an end on October 3, 1931, at which time the payment of premiums upon plaintiff's insurance had ceased. In fact the payments ceased on June 1, 1931. It is, therefore, important to decide whether his insurance matured prior or subsequent to the last mentioned date. It is our opinion that it matured prior thereto.

The disability, itself, occurred in this instance on May 15, 1931, and it was this disability that was insured against and, when it occurred, under the terms of the policies, plaintiff's insurance became matured. There was nothing remaining for him to do in order to recover the amount of the insurance save to wait six months and then furnish proof to the company that his disability had existed for that period of time and that it was permanent.

A careful analysis of defendant's contention shows the injustice that might result in giving it effect in construing the policies. It is apparent that it would result in many instances in depriving insured of his insurance contrary to the understanding that a laymen would have of the policies.

It will be noted that plaintiff's disability began within the last six months the policies were in force. The group policy provided for one year term insurance which ceased on October 3, 1931. It is, therefore, apparent that, if the construction is given the policies that defendant is contending for, there was no possibility of plaintiff recovering for his disability, even though he continued paying the premiums on his insurance. Both the group and the individual policy plainly, upon their face, indicate that, if the premiums were paid, they furnished insurance for total and permanent...