Schweigert v. Beneficial Standard Life Ins. Co.

• Decision Date: 27 April 1955
• Citation: 204 Or. 294,282 P.2d 621
• Parties: Marvin S. SCHWEIGERT, a minor, by his guardian, Gotthilf Schweigert, Appellant, v. BENEFICIAL STANDARD LIFE INSURANCE COMPANY, Respondent.
• Court: Oregon Supreme Court

Page 621

282 P.2d 621

204 Or. 294

Marvin S. SCHWEIGERT, a minor, by his guardian, Gotthilf Schweigert, Appellant, v. BENEFICIAL STANDARD LIFE INSURANCE COMPANY, Respondent.

Supreme Court of Oregon, Department 1.

Argued April 6, 1955.

Decided April 27, 1955.

Stewart M. Whipple, Portland, argued the cause for appellant. On the briefs were Easley, Whipple & McCormick and Carl Robert Wells, Portland.

Robert H. Hollister, Portland, argued the cause for respondent. On the brief were Hollister & Hollister, Portland.

Before WARNER, C. J., and ROSSMAN, LATOURETTE and PERRY, JJ.

WARNER, Chief Justice.

This is an action brought for Marvin S. Schweigert, a minor, by his guardian against the Beneficial Standard Life Insurance Company, a California corporation, to recover certain hospital, surgical and medical benefits alleged to have accrued under the terms of a policy in favor of the plaintiff as the party assured. The jury returned a verdict in favor of plaintiff. Subsequently, the court entered an order notwithstanding the verdict and dismissed plaintiff's complaint. From this judgment plaintiff appeals.

On March 19, 1948, Marvin and the defendant company entered into a contract of insurance whereby the company undertook to pay certain hospital, surgical and medical benefits if Marvin sustained, among other things, bodily injuries while the insurance was in force, subject, however, to the following exception: 'This policy does not cover any loss for which benefits are provided in any workmen's compensation or employer's liability law.'

While the policy was in force and effect, Marvin was injured, on September 9, 1950; and, as a result, he incurred medical, surgical and hospital expenses in the amount of $850. In his complaint he alleges this amount is payable to him under the terms of the policy.

At the time of Marvin's accident he was in the employ of C. W. Murphy and Bill McNutt working on a hop baler or hopbailing machine near Harrisburg, Oregon. Prior to the commencement of his action against the insurance company, Marvin sued his employers to recover for the injuries which he sustained. He alleged in that complaint that the work he was engaged in at the time of his injury involved risk or danger within the meaning of the Employers' Liability Law of the state of Oregon, ORS 654.305 to 654.335.

Before the action against Marvin's employers was at issue, a settlement was effected between him and the defendants in that case whereby he received a substantial payment and his case was dismissed.

Although Marvin is inclined to equivocate the true legal character and significance of his complaint against his former employers, we are of the opinion that it was framed for the deliberate purpose of bringing the pleader within the purview of the provisions of the Employers' Liability Law and assume without deciding that the settlement made with him involved an acknowledgment between defendant employers that Marvin's employment did, in fact, involve elements of risk and danger which made the accident amenable to the Employers' Liability Law of this state.

It is the foregoing action which Marvin brought against his employers that the defendant insurance company here invoked as the basis and support for a judgment in favor of the defendant notwithstanding the verdict on the grounds (1) that the court as a matter of law should have instructed the jury that the plaintiff's injuries arose under such conditions that the Employers' Liability Law was applicable, entitling the insurance company to a directed verdict; and (2) that Marvin was judicially estopped from changing his position from that taken in the case filed against the employers to the position taken in this case, that is, that his recovery by reason of the first case was not a recovery of any benefit under any Employers' Liability Act.

We have only one question to decide: Is the insurance company excused from all liability to the plaintiff under its policy by reason of plaintiff's action for damages brought against his employers under the Employers' Liability Law? The answer to that question depends upon the meaning to be accorded the word 'benefits' as that word is employed in the insurance contract.

The company's engagement in return for premiums paid and accepted by it is to maintain the policy in force 'against loss due to hospital confinement resulting from bodily injures sustained during any term of this policy, hereinafter called 'such injury' * * * and for other specific losses the cause of which originates and loss occurs while this policy is in force; all subject to the provisions, conditions and limitations herein contained.'

Then follow the most important conditions--four separate parts in which the company outlines the money amounts it will pay to a beneficiary for specified losses resulting from injury or sickness while the policy is in force. Part 1 is headlined 'Hospital Residence Indemnity', under which the company covenants to pay up to a certain per diem charge for hospital confinement but not to exceed a maximum number of days. Part 2 relates exclusively to 'Hospital Benefits' arising out of certain injuries or illnesses peculiar to women. Part 3 is entitled 'Miscellaneous Hospital Expense Benefits', under which the company agrees to pay the expenses on seven general items up to a certain maximum amount, all usual or incidental to a hospital confinement such as use of operating room, drugs, dressings, X-rays, etc. Part 4 is captioned 'Surgical Operation Benefits' and is followed by 185 surgical items which the company agrees to pay within maximum limitations there stipulated for each item of surgical service rendered. (Italics ours.)

Summarizing the overall character of the contract, we can find no better words to express our own thought, as descriptive of the policy's character and scope and the insurance company's intent with reference thereto, than to borrow the words of the insurer when it declares: 'This policy provides benefits for hospital confinement, surgical operations and certain other expenses resulting from bodily injury or sickness not covered under any workmen's compensation or employer's liability law to the extent herein limited and provided.'

Although not strictly one of the provisions within the boundaries of the conventional contractual language of an insurance contract, the foregoing statement appears twice in bold, black print. The first time it catches the reader's eye is where it appears as a printed endorsement on the back of the policy in 18-point type. Again it appears on the top of the first page of the policy in type of similar size and as a prelude, so to speak, to the contractual language of the policy which follows immediately after. The insurance company's brief freely refers to it as a part of the policy and attempts to employ it in support of its position. Certainly, we are justified, under the circumstances, in assuming that it represents the insurance company's construction of its own contract. It carries significant language to which we will make further reference.

The position of the appellant is that the word 'benefit' comprehends a tangible monetary advantage flowing directly to the employee, such as the mandatory benefits disbursed under the Workmen's Compensation Law, ORS 656.002 et seq. The appellant correctly asserts and the respondent admits that no 'benefits' in that sense accrue under the Employers' Liability Law.

The defendant insists that the policy contains no ambiguity and that the use of 'benefits', as that word appears in the exception clause, is free from doubt. The insurance company contends that the 'benefits' of the Employers' Liability Law comprehend intangible benefits which are conferred upon an injured employee who seeks redress against his employer under that law. The advantage or 'benefit' he derives, the insurance company argues, arises from the denial to the employer of the common law defenses of the fellow-servant doctrine, contributory negligence and the assumption of risk, even though, as the company admits, no benefits accrue thereunder as indemnity for hospital, surgical or other expenses incident to the injury of the worker.

As defined by our Code, insurance is a 'contract whereby one undertakes to indemnify another against loss, damage or liability arising from an unknown or contingent event, whereby the insured or his beneficiary suffers loss or injury.' ORS 736.005.

Before proceeding further, it is well to note some rules of construction which are peculiarly applicable to the instant policy. It will be observed that they incline to a liberal construction of such contracts to the favor of the insured rather than the insurer.

As said by Mr. Justice Stone in Stipcich v. Metropolitan Life Ins. Co., 277 U.S. 311, 322, 48 S.Ct. 512, 515, 72 L.Ed. 895, 900, a case construing a policy issued in Oregon: '* * * But narrow and unreasonable interpretations of clauses in an insurance policy are not favored. They are prepared by the insurer and if, with equal reason, open to two constructions, that most favorable to the insured will be adopted. * * *'

The language used in a contract of insurance is entitled to a construction as favorable to the insured as in good conscience will be permitted, and every reasonable intendment will be allowed to support a view that will protect the insured and...