Sturgill v. Life Ins. Co. of Ga.

• Decision Date: 15 May 1970
• Parties: King STURGILL, Jr., Complainant-Appellee, v. LIFE INSURANCE COMPANY of GEORGIA, Defendant-Appellant.
• Court: Tennessee Court of Appeals

Page 742

465 S.W.2d 742

62 Tenn.App. 550

King STURGILL, Jr., Complainant-Appellee, v. LIFE INSURANCE COMPANY of GEORGIA, Defendant-Appellant.

Court of Appeals of Tennessee, Eastern Section.

May 15, 1970.

Certiorari Denied by Supreme Court Nov. 16, 1970.

John K. Gillenwater, Gore, Ladd & Gillenwater, Bristol, for defendant-appellant.

David S. Haynes, Curtin, Haynes, Winston, Caldwell & Johnson, Bristol, for complainant-Appellee.

CARNEY, Judge.

The defendant below, Life Insurance Company of Georgia, has appealed from a decree of the Chancery Court of Sullivan County adjudging certain provisions of a group accident and health policy issued by defendant Life Insurance Company of Georgia to be ambiguous and construing the same in favor of the complainant, King Sturgill, Jr. Sturgill, an employee of Orkin Exterminating Company, became totally disabled on February 9, 1968, as a result of injury sustained in the course of his employment. The group policy was issued to Orkin Exterminating Company and covered all regular employees of Orkin under age 65 who worked at least thirty hours per week.

The application for group insurance signed by the employer, Orkin Exterminating Company, recited as follows:

'OTHER COVERAGES--Specify and give details:

Salary Continuance

Employees

Benefit Formula: 60% Of Basic Monthly Earnings. This benefit will include all benefits which the employee is eligible to receive, including Workmen's Compensation and Primary Social Security.

Maximum Benefits: $2,500 monthly including Workmen's Compensation, Social Security and any other disability compensation the employee may receive from any source.

Minimum Benefit: $50 per month exclusive of any other benefit received from any source.

Waiting period: 90 days for accident & sickness.'

Sixty percent of the complainant Sturgill's basic monthly earnings at the time the disability commenced was $345.54 per month. Coverage under the policy began 90 days after the complainant Sturgill become totally disabled or May 9, 1968. The defendant company sent the complainant Sturgill a check for the full 60% Of his wages for the month of June, 1968, in the amount of $345.54.

In July, 1968, the complainant Sturgill entered into a lump sum settlement for his claim for Workmen's Compensation Insurance with the employer, Orkin Exterminating Company, under the authority of T.C.A. Section 50--1023. In July, 1968, payment was made to Sturgill of $9,016.15 which represented the commuted value of 69% Permanent partial disability to the body as a whole, or 276 weeks at $38.00 per week. The lump sum award was in addition to temporary total disability payments and medical payments.

In September or October, 1968, complainant Sturgill began receiving Social Security benefits at the rate of $154.00 per month. After June, 1968, the defendant company reduced its monthly checks to the minimum of $50.00 provided in the policy.

The company contended that under the provisions of Clause C of the policy monthly benefits were to be reduced by the amount of Workmen's Compensation Insurance to which the complainant would have been entitled each month had he received his Workmen's Compensation Insurance by the month instead of accepting the same in a lump sum settlement.

Sturgill filed suit for a construction of the policy. His Honor the Chancellor held that the policy was ambiguous. He construed the same in favor of the complainant and held adversely to the contention of the defendant insurance company.

The Chancellor held that the insurer was entitled to deduct from its monthly payment the Social Security payments received by or accruing to the complainant each month but was not entitled to deduct Workmen's Compensation benefits except for the month of July, 1968, when the complainant received his full lump sum settlement.

On July 24, 1969, a final decree was entered by the lower court awarding the complainant benefits due to the date of the hearing and also defendant was ordered to pay $191.54 per month for as long as the complainant's total disability, resulting from the injury of February 9, 1968, should continue or until the expiration of five years subsequent to March 31, 1968, the date that the policy issued by the defendant to Orkin Exterminating Company, Inc. was terminated.

So far as counsel have been able to ascertain this is a case of first impression in Tennessee on this question. Pertinent provisions of the policy issued by defendant are as follows:

Our Tennessee appellate courts have said many times that an insurance contract is to be considered liberally in favor of the insured and strictly as against the company and where, by reason by ambiguity and language employed in the contract, there is doubt or uncertainty as to its meaning, and it is fairly susceptible of two interpretations, the one favorable to the insured will be adopted. Alsup v. Travelers Insurance Co., 196 Tenn. 346, 268 S.W.2d 90; American Employers Insurance Co. v. Knox-Tenn Equipment Co., 52 Tenn.App. 643, 377 S.W.2d 573; Pacific Mutual Life Insurance Co. v. Walt, 198 Tenn. 59, 277 S.W.2d 434.

For emphasis we requote the determinative sentence from Clause, C, Reduction of Benefits, as follows:

'If at any time the Total monthly amount of (1) payments from the group policyholder, (2) payments from retirement plans, and (3) remuneration from employment other than with the group policyholder, being receivied by the employee, and (4) Disability income payments promised for the same disability under all valid disability income coverage, exceeds 60% Of the basic monthly earnings of the employee at the time disability commenced, then the Company shall be liable only for such part of the benefits under this Policy as, when combined with such payments and remuneration together equal 60% Of such monthly earnings.' (Italics ours.)

Both the employee-insured, King Sturgill, Jr., and the insurer, Life Insurance Company of Georgia, were chargeable with knowledge of T.C.A. Section 50--1023 which provided for the commutation to a lump sum payment of Workmen's Compensation Insurance claims. We copy from Volume 9 of T.C.A. as follows:

'50--1023. Periodical amounts--Commutation to lump sum payment with consent of court--basis.--The amounts of compensation payable periodically hereunder may be commuted to one (1)...