Smith v. Industrial Hospital Ass'n

• Decision Date: 09 April 1952
• Parties: SMITH v. INDUSTRIAL HOSPITAL ASS'N.
• Court: Oregon Supreme Court

Page 592

242 P.2d 592

194 Or. 525

SMITH v. INDUSTRIAL HOSPITAL ASS'N.

Supreme Court of Oregon.

Argued and Submitted March 26, 1952.

Decided April 9, 1952.

Walter J. Cosgrave, of Portland, argued the cause for appellant. With him on the briefs were James G. Smith and Maguire, Shields, Morrison & Bailey, all of Portland.

Donald S. Richardson, of Portland, argued the cause for respondent. On the brief were Green, Richardson & Green, of Portland.

Before HAY, Acting C. J., and ROSSMAN, LATOURETTE and WARNER, JJ.

WARNER, Justice.

Sometime after the institution of this appeal, the plaintiff, Eugene E. Smith, died and Ida B. Smith, his wife, as administratrix of plaintiff's estate, was substituted in his stead as the plaintiff-respondent. Our references hereinafter to the plaintiff will, however, be to the decedent, Eugene E. Smith.

The plaintiff brings this action to recover from the defendant-appellant, Industrial Hospital Association, for certain medical and hospital expenses incurred by plaintiff by reason of an operation in April, 1948, for rectal cancer. The jury found for plaintiff. The defendant rests its appeal upon the refusal of the court to direct a verdict in its favor.

The defendant is an Oregon corporation authorized to conduct a hospital association business. Prior to September 1, 1947, the defendant entered into an agreement with the Electrical Construction Company wherein it agreed, in consideration of certain monthly payments to be made by the employees of that company, to bear the expense of hospital care, medical and surgical services and certain other related services to and for the employees of the electrical company, subject, however, to the terms, limitations and restrictions expressly stated in the agreement.

The pertinent conditions of the contract with which we are concerned are:

'15. Coverage: This agreement shall cover the following:

'Hospital care, the services of physicians, surgeons, and specialists, including surgical operations and other services provided for by this agreement, as needed for the following conditions:

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'b. Acute sickness, other than those enumerated in paragraph 20 hereof entitled 'Exemptions', whether occurring during or outside the hours of employment. The term 'acute sickness' as used in this agreement means those ailments that develop quickly and run their course, as differentiated from ailments that develop more slowly over a longer period of time and are more or less chronic in their nature.

'c. Chronic conditions, except those enumerated in paragraph 20 hereof entitled 'Exemptions', that become acute will be treated. This will include the expense of hospital care and surgical operations, when needed, for such conditions as stomach ulcers, gall stones, kidney stones, hemorrhoids, and other ailments of this nature.

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'f. Cancers will be treated, including surgical operation or treatment by radium.

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'16. New Employees: By the term 'new employees', is meant any person who comes under the protection of this agreement subsequent to the effective date thereof. New employees shall not be entitled to services for chronic conditions, as provided in paragraphs c, d, e, f, and g of Section 15, which may acutely manifest themselves during the first six months of employment under the protection of this contract * * *. [Italics ours.]

'20. Exemptions: The services provided for herein shall not apply to any disease, condition, deformity, infirmity or accidental injury which definitely existed at the time the afflicted employee came under the protection of this contract * * *. Employees will not be entitled to services for chronic conditions, as provided in paragraphs c, d, e, f and g of Section 15, until they have been under the coverage of the Industrial Hospital Association for six consecutive months, except when employees are entitled to credit as provided for in paragraph 17 hereof.' (Italics ours.)

Paragraph 17, referred to in paragraph 20 above, has no application to the subject claim.

The plaintiff was an employee of the electrical company on September 1, 1947, and on that date formally accepted the coverage offered by the defendant's agreement with his employer and began then to make the payments of the premiums required on his part. September 1, 1947, is, therefore, of importance in the solution of the questions propounded by the appeal of the hospital association.

The history of the discovery of Mr. Smith's malady and its treatment subsequent to September 1, 1947, is of special interest. A sharp pain in the lower left quadrant of plaintiff's abdomen compelled medical attention sometime late in March, 1948. He then consulted with his family physician, Dr. Marion J. Jones. The examination made by Dr. Jones the next day resulted in his referring the plaintiff to Dr. Darrell Bollam, who made a proctoscopic examination on April 1, 1948. Dr. Bollam determined the presence of a tumorous growth in the colon from whenece tissue was removed for pathological study. This examination confirmed the presence of a malignant lesion. On April 9, 1948, Mr. Smith went to Emanuel Hospital in Portland, Oregon. Three days later, on April 12, Dr. W. H. Bueermann operated for rectal cancer. It will be observed from the foregoing that all the events leading to the discovery of plaintiff's serious condition and the examination and operative procedure which followed occurred after the lapse of the period of six months provided for in paragraph 20 of the contract, that is, after March 1, 1948.

The only issues raised by the defendant's answer and presented by this appeal are: (1) Did plaintiff's rectal cancer acutely manifest itself during the first six months that plaintiff was under the contract, that is, before March 1, 1948; and (2) did the cancer definitely exist on September 1, 1947, the date of plaintiff's employment by the electrical company?

It is defendant's contention that a verdict in its favor should have been directed on the ground that defendant, by uncontradicted testimony, had established both of its defenses as a matter of law, that is, that Mr. Smith's malady had become acutely manifest prior to March 1, 1948, and definitely existed on September 1, 1947.

When considering a defendant's motion for a directed verdict, the record must be viewed and the evidence interpreted in a light most favorable to the plaintiff. Such a motion admits the truth of plaintiff's evidence and every favorable inference to be drawn therefrom, as well as such favorable inferences as may be drawn from the defendant's evidence. Stroh, Administrator v. Rhoads, 188 Or. 563, 569, 217 P.2d 245, Pond v. Jantzen Knitting Mills, 183 Or. 255, 257, 190 P.2d 141. It is not our function to weigh or evaluate the testimony. Our duty is to ascertain whether there is substantial evidence to support the verdict of the jury. Allister v. Knaupp, 168 Or. 630, 643, 126 P.2d 317.

This appeal necessitates the construction of particular words and phrases found in an insurance contract. In so doing, we are constrained to give the language so used a construction as favorable to the insured as will be permitted in good conscience and embrace every reasonable intendment in support of a view that will protect the insured and defeat a forfeiture. Purcell v. Washington Fidelity Nat. Ins. Co., 141 Or. 98, 103, 16 P.2d 639; Schoeneman v. Hartford Fire Ins. Co., 125 Or. 571, 577, 267 P. 815.

The escape clauses, represented by the conditions of exemption and exclusion which the defendant has incorporated into its contract for its own protection, as more particularly reflected by the above-quoted portions of paragraphs 15, 16 and 20, are defensive in character. They cast upon the hospital association the burden of establishing by a preponderance of satisfactory evidence that the cancer 'acutely manifested' itself sometime before March 1, 1948, or 'definitely existed' prior to September 1, 1947. See American Life Ins. Co. v. Walker, 208 Miss. 1, 11, 43 So.2d 657, 658 (an action on a hospitalization policy wherein the defendant insurance company defended on the ground that the insured was not 'in good health' at the time she came under its coverage). Also see Francis v. Mutual Life Ins. Co., 55 Or. 280, 287, 106 P. 323; Truitt v. National Life & Accident Ins. Co., 236 Mo.App. 1036, 161 S.W.2d 683, 685; Hill v. Great Northern Life Ins. Co., 186 Wash. 167, 57 P.2d 405, 408.

It will be observed that if the defendant can show that cancer definitely existed prior to September 1, 1947, then proof of its acute manifestation prior to March 1, 1948, becomes unnecessary. It was not incumbent upon the plaintiff to demonstrate the nonexistence of cancer or the absence of a manifestation thereof prior to those dates. Indeed, as we shall later learn, defendant's burden in this respect was made an even greater one by employing the modifying adverbs 'acutely' before the word 'manifest' and 'definitely' before the word 'existed'.

The phrases 'acutely manifest' and 'definitely existed', as employed in the hospital association contract, are unusually significant here. We are unable to find that these phrases or their equivalent have been heretofore judicially defined. We must, therefore, look to conventional and medical dictionaries for aid and with definitions there found, as far as may be necessary, assign meanings consonant with the context of their contract setting. Further discussion will avail us nothing until this is done.

In medical parlance 'acute' is the antithesis of 'chronic'. It means sharp; severe; having a rapid onset, a short course and pronounced symptoms. Blakiston, New Gould Medical Dictionary. From Webster's New International Dictionary (2d ed.) we learn that 'manifest' is defined as 'to show plainly; * * * to put beyond question or doubt * * *.' In our opinion, the phrase 'acutely manifest', as used in paragraph 16 of defendant's contract, means a manifestation...