Shea v. Aetna Life Ins. Co.

• Decision Date: 09 December 1935
• Citation: 198 N.E. 909,292 Mass. 575
• Parties: SHEA v. AETNA LIFE INS. CO.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

292 Mass. 575

198 N.E. 909

SHEA v. AETNA LIFE INS. CO.

Supreme Judicial Court of Massachusetts, Suffolk.

December 9, 1935

Report from Superior Court, Suffolk County; O'Connell, Judge.

Action of contract by Jerry Shea against the AEtna Life Insurance Company. On report from the superior court, where there was a verdict for defendant.

Judgment for plaintiff.

R. E. McCarthy and R. A. Shea, both of Boston, for plaintiff.

A. S Allen, of Boston, for defendant.

FIELD Justice.

This is an action of contract brought by the plaintiff, a former employee of the Franklin Motor Car Company, herein referred to as the employer, against the Aetna Life Insurance Company herein referred to as the company, to recover total and permanent disability benefits under a policy of so called group insurance issued by the company to the employer. The jury in answer to special questions submitted to them found-and these findings are not challenged-that the plaintiff was not, ‘ prior to April 26, 1932, totally disabled fom pursuing any occupation for wages or profit,’ but that ‘ for at least six months after April 26, 1932’ he was so totally disabled and that such total disability has ‘ continued to the present date’ and will ‘ presumably continue for the rest of his life.’ The judge, on motion therefor, directed a verdict for the defendant, subject to the plaintiff's exception, and reported the case for the determination of this court in accordance with a stipulation of the parties that if the verdict was directed rightly judgment is to be entered thereon, ‘ otherwise judgment is to be entered for the plaintiff in the sum of one thousand dollars with interest from March 16, 1933, the date of the writ.’

The defendant contends that the verdict for it was directed rightly, on the grounds (a) that the plaintiff was not the proper party to maintain the action, (b) that the plaintiff's insurance was terminated before he gave notice of any claim of disability, and (c) that the plaintiff defaulted in his payments. The direction of the verdict cannot be sustained on any of these grounds.

A policy of so called group insurance purporting to have been issued by the company to the employer, dated January 7, 1924, was introduced in evidence. By this policy the company, in consideration of the application of the employer and the payment of an annual premium, agreed to pay a certain amount-$1,000 in the case of an employee of the plaintiff's class-on due proof of the death of any insured employee of the employer. And the policy contained these provisions among others: ‘ Employees * * * entering service after the policy date will be eligible for insurance upon completion of six months of continuous service. Insurance hereunder will be effective only for eligible employees who make written application therefor and agree to contribute the required portion of the premium to the employer. Employees who apply to the employer for insurance hereunder prior to the expiration of ninety days from the date they are (or become) eligible therefor will be insured without evidence of insurability * * * if the employee is not eligible for insurance on the policy date, insurance shall be effective from the date he becomes eligible if he applies for insurance prior thereto. * * * The employer shall furnish the Company with proper application (on the Company's form) for all employees who duly apply for insurance hereunder. * * * At the end of the first term, and at the end of each subsequent premium paying period, the employer may at his option continue this policy by paying in advance * * * the premium for the insuring age attained at the commencement of the policy year by each and all insured. * * * A grace of thirty-one days, during which the policy will remain in full force, will be allowed in the payment of all premiums except the first. The employer may effect the cancellation of insurance upon any employee insured hereunder upon or at any time after termination of employment or failure to make the required premium contribution for such insurance by returning the card for such individual insurance with the form thereon entitled ‘ Notice of Discontinued Employment’ (which form the employer may amend to read ‘ Notice of failure to pay the required premium contribution for this insurance’ ) properly filled out and signed by the employer. * * * Upon request * * * for discontinuance of insurance upon any life insured hereunder, insurance upon such life shall cease. [Provision is made for the computation of unearned premiums.] * * * The Company will issue to the employer for delivery to each employee whose life is insured under this policy an individual certificate setting forth a statement as to the insurance protection to which the employee is entitled and to whom it is payable. * * * If total disability of any employee entitled to insurance under the schedule of insurance contained in this policy begin before age sixty, and if due proof be furnished the Company after such disability has existed for a period of six months, and if such disability presumably will during lifetime prevent such employee from pursuing any occupation for wages or profit, such employee shall be deemed to be totally and permanently disabled within the meaning of this policy. * * * Upon receipt of due proof at the Home Office of the Company of the total and permanent disability of any employee entitled to insurance under the schedule of insurance contained in this policy, the Company will waive further payment of premium for the insurance upon the life of such disabled employee and will pay immediate disability benefits, in lieu of all other benefits provided for under this policy. * * * This policy, the application of the employer and the individual applications, if any, of the employees insured, constitute the entire contract between the parties hereto.'

The application addressed to the company, signed by the plaintiff, was introduced in evidence. It names the plaintiff's wife, Margaret Shea as ‘ death beneficiary,’ and contains the statement ‘ I hereby apply for Life Insurance in amount of $1000 in accordance with the terms of the Group policy issued to my employer, and authorized the deduction of 60¢ per month from my wages as my contribution toward the cost of this insurance.’ A certificate signed by the company was also introduced in evidence reciting that the defendant has insured the lives of certain employees of the employer by the group policy of insurance above referred to, that ‘ Under and subject to the terms and conditions of said policy, and the application therefor,’ the life of the plaintiff is ‘ insured for the sum of one thousand dollars, in favor of Margaret Shea-Wife Beneficiary,’ and that ‘ This insurance will be terminated whenever said employee fails to make the required premium contribution or ceases to be in the employ of said employer.’

There was evidence that the plaintiff entered the employment of the employer October 26, 1931, and that some insurance premiums were withheld by the employer from his wages or paid by the plaintiff to the employer. The company in reply to a notice to admit facts under G.L.(Ter.Ed.) c. 231, § 69, admitted that the policy of group insurance and the certificate above referred to ‘ became of full force and effect so far as relative to the plaintiff on April 26, 1932.’ The employer purported to cancel the plaintiff's insurance in August, 1932. The parties agreed that if the company had the right to cancel the policy ‘ it took effect on August 23, 1932, subject also to the grace period of thirty-one days before it could apply.’ The parties also agreed that ‘ so far as the employer is concerned the policy is on an annual payment basis and * * * payment is made in one lump sum with an adjustment for employees whose insurance might be cancelled. In the case of Jerry Shea and the other * * * employees at that time, there was an advance made by the employer, the Franklin Motor Car Company, and * * * as of the date of the cancellation notice [an amount] was returned as unearned premium.’

1. On facts which could have been found and the terms of the policy and of the plaintiff's application rightly interpreted, the plaintiff is a proper party to maintain this action.

The plaintiff, according to the terms of the insurance contract contained in the policy and in the plaintiff's application, was a party to that contract. The policy originally was a contract between the employer and the company. But it contemplated that by making an application for insurance thereunder an employee might become a party thereto. The plaintiff made such an application by which he applied for insurance in accordance with the terms of the policy, and by these terms his application became a part of the insurance contract. See G.L.(Ter.Ed.) c. 175, §§ 24, 134, cl. 2; Beecey v Travelers' Ins. Co., 267 Mass. 135, 138, 166 N.E. 571; Duval v. Metropolitan Life Ins. Co., 82 N.H. 543, 550, 136 A. 400, 50 A.L.R. 1276; Smithart v. John Hancock Mutual Life Insurance Co., 167 Tenn. 513, 527, 71 S.W.(2d) 1059. Insurance under the policy, so far as applicable to this plaintiff, was upon his life and against his disability. The policy refers to employees as ‘ insured’ thereunder and to ‘ the insurance protection to which the employee is entitled.’ See G.L.(Ter.Ed.) c. 175, § 134, cl. 2, cl. 4. The premium paid by the employer was in part paid by it for the plaintiff and such payment was impliedly ratified by him by authorizing the deduction of monthly payments from his wages as his ‘ contribution toward the cost of this insurance.’ In these circumstances the promise of the company to pay insurance benefits on the death or disability of the plaintiff must be regarded as a...