Simmons v. Continental Casualty Company

• Decision Date: 24 June 1968
• Docket Number: Civ. No. 1161 L.
• Citation: 285 F. Supp. 997
• Parties: Robert Glenmore SIMMONS and Gladyce W. Simmons, Plaintiffs, v. CONTINENTAL CASUALTY COMPANY, a Corporation, Defendant.
• Court: U.S. District Court — District of Nebraska

285 F. Supp. 997

Robert Glenmore SIMMONS and Gladyce W. Simmons, Plaintiffs, v. CONTINENTAL CASUALTY COMPANY, a Corporation, Defendant.

Civ. No. 1161 L.

United States District Court D. Nebraska.

June 24, 1968.

COPYRIGHT MATERIAL OMITTED

Robert G. Simmons, Jr. and James R. Hancock, Scottsbluff, Neb., for plaintiffs.

C. C. Fraizer and T. J. Fraizer, Lincoln, Neb., for defendant.

MEMORANDUM.

HANSON, District Judge.

These rulings are predicated upon the plaintiffs' motion for summary judgment and upon what is denominated as a motion for judgment on the pleadings filed by the defendant.

For the purposes of this submission, the defendant's motion for judgment on the pleadings will be considered as a motion for summary judgment as matters outside the pleadings have been presented to the Court. See 3 Barron and Holtzoff, Federal Practice and Procedure, Section 1240 (1958 ed.).

This action was commenced by plaintiffs to recover insurance benefits allegedly due under a certificate issued by defendant to Gladyce W. Simmons. Jurisdiction is grounded on diversity of citizenship. Plaintiffs are citizens of Nebraska and the defendant is a corporation organized under the laws of Illinois with its principal place of business in Illinois.

There does not appear to be a genuine issue as to any of the material facts and the parties have not brought any to the Court's attention. The Court will briefly outline the salient facts which are admitted in the pleadings or presented in exhibits filed at the hearing held on the motions.

The defendant issued a group accident policy to the American Judicature Society which was effective on December 1, 1961. In an effort to obtain approval of the master policy issued to the American Judicature Society by the Department of Insurance of Illinois, the defendant submitted master policy No. SRP-21025 to the Department on October 24, 1961, along with a letter which stated in part that: "The coverage under this group policy is to be made available to eligible members and wives of members of the American Judicature Society. The benefits provided are for accidental death and dismemberment coverage as well as permanent total disability indemnity."

The master policy, No. SRP-21025, designates the American Judicature Society as the "Holder" where used in the contract. It sets up four classes of "insured Persons": Class I insured persons are members of the holder from the ages of 21 through 69 years old; Class II insured persons are members of the holder from the ages of 70 through 74 years old; Class III insured persons are all wives of Class I or Class II insured persons from the ages of 21 through 69 years old; and, Class IV insured persons are all wives of Class I or Class II insured persons from the ages of 70 through 74 years old. The policy provides for payment of certain sums for death or dismemberment caused by an accident. It further provides permanent total disability benefits to a person injured as the result of an accident. However, permanent total disability benefits are expressly limited to "Class I and Class II insured persons only." Part XIV of the Policy states that "This Policy, the application of the holder and the individual applications of the insured persons, if any, constitute the entire contract between the parties. * * *"

On November 11, 1961, plaintiff Robert G. Simmons made application to the defendant for himself and for his dependent spouse, Gladyce W. Simmons. Mrs. Simmons has never been a member of the American Judicature Society. Separate certificates of insurance were issued to each of the plaintiffs effective on December 1, 1961. The certificates issued to each of the plaintiffs designate the American Judicature Society as the "Holder." The certificates expressly restrict permanent total disability coverage to "members of the Holder only."

On the effective date of the certificates, the plaintiff Robert Simmons was 70 years of age and the plaintiff Gladyce W. Simmons was 68 years of age. When Gladyce Simmons became 70 years of age, the defendant requested and received the same amount of premium for Mrs. Simmons' insurance as it was receiving for Mr. Simmons' coverage.

On May 10, 1964, the plaintiff Gladyce W. Simmons was in an automobile accident in which she received injuries that permanently disabled her. Her disability has been total and permanent from the date of the accident to the filing of the petition herein.

On May 24, 1964, plaintiff Robert Simmons gave notice to the American Judicature Society that he had received a cracked rib and Mrs. Simmons sustained a "broken arm and other injuries" from the accident. He requested information as to whether the policy covered those injuries. On June 4, 1964, the Administrator of the program responded that the policy he held only related to "accidental death, the more serious accidental injuries resulting in the complete loss of sight or of a hand or foot, and total disability resulting from injury. Payment of benefit is, therefore, predicated upon the accidental loss of life, the loss of one or more of the extremities, or the loss of one eye or the sight therein."

On May 20, 1965, Mr. Simmons wrote the defendant a letter in which he made claim for total permanent disability benefits for Mrs. Simmons and asked defendant to advise him of "whatever formal proof you require, and send me instructions for preparation thereof." Mr. Simmons related that: "The above policy was issued to Gladyce W. Simmons as insured along with a similar policy issued to me, and provides for payment of $25,000.00 to me in the event of Mrs. Simmons suffering permanent and total disability for a period of one year, with a continuation of that condition a probability." On June 7, 1965, the defendant sent Mr. Simmons a claim form and two medical authorizations. The defendant related that the medical authorizations were necessary "so that we may obtain the necessary medical facts to properly evaluate the claim." The plaintiff Roberts Simmons was also asked to submit the names of the doctors who had attended Mrs. Simmons and the hospitals in which she had been confined.

In compliance with these directions, the medical authorizations were signed and the names of doctors and hospitals given on June 12, 1965. On June 22, 1965, Mr. Simmons submitted a claim form on Mrs. Simmons and asked the defendant to advise him as to any "additional submissions" which were necessary.

On August 17, 1965, the defendant wrote Mr. Simmons the following letter:

"In our recent telephone conversation I stated that when you initially wrote to us and notified us that you desired to file claim for permanent and total disability sustained by Mrs. Simmons, it was overlooked by us that Mrs. Simmons was covered solely as your wife and not as a member of the American Judicature Society.

The policy issued to you and to your wife provides similar benefits for accidental death and dismemberment. In addition, as a member you are covered for permanent and total disability. Wives, however, are not covered for permanent and total disability.

The various applications used for this coverage explain the benefit available for insured members and also for dependent wives. Under the portion of the application entitled `Wife Insurance,' it is specified that, `Wife may buy up to the same amount as husband at the same rates, but the wife's policy does not contain the total and permanent disability provision.'

The certificate that was issued, under Part IV, which is titled Permanent and Total Disability Indemnity, in the first sentence states, `With respect to members of the Holder only.'

We greatly regret our oversight in not noting that your wife was covered as a dependent rather than an insured member when you first wrote to us and wish to apologize for any inconvenience this may have caused you. While the premium for members and their wives is identical, the permanent and total disability feature is a benefit given only to members of the Society."

Turning now to the issues presented in the case at hand, the defendant contends that the law of Illinois applies since the group policy was issued by an Illinois corporation to the American Judicature Society of Chicago, Illinois. The plaintiffs contend that Nebraska law should control as the Nebraska conflicts of law rule is that the situs of the last act necessary to complete the contract is the situs of the contract and the delivery of the certificates to plaintiffs herein was a necessary part of the contract. Plaintiffs further urge that since the defendant has neither pled nor proven the relevant Illinois law, Nebraska law governs. Plaintiffs concede the law of both States is identical in any event.

The Nebraska conflicts rule is that the state where the last act of a contract is performed which is necessary to the validity of the contract is the situs of the contract and such final act can consist of the delivery of an insurance certificate. See, e.g., Young v. Order of United Commercial Travelers, 142 Neb. 566, 7 N.W.2d 81; Avondale v. Sovereign Camp, W.O.W., 134 Neb. 717, 279 N.W. 355. But in the case of a group policy, it appears that the last act is considered to be done in the state in which the negotiations for the purchase of the group policy are carried on, the policy was delivered, and the premiums were paid, even though the individual certificate may have been delivered outside the boundaries of that state. See Exstrum v. Union Cas. and Life Insurance Co., 165 Neb. 554, 86 N.W.2d 568, withdrawn on rehear., 167 Neb. 150, 91 N.W.2d 632.

It is true that there is a Nebraska rule that unless the laws of other states are pleaded and proved, such laws are presumed to be the same as the law of the forum. See Exstrum, supra; Molina v. Sovereign Camp, W.O.W., 6 F.R.D. 385 (D.Neb.). However, such a rule is merely one of pleading and not one of substantive law and therefore not subject to the doctrine of Erie R. Co. v....