World Ins. Co. v. Perry

Decision Date11 July 1956
Docket NumberNo. 200,200
Citation210 Md. 449,124 A.2d 259
PartiesWORLD INSURANCE COMPANY, a body corporate, v. Nathaniel Harold PERRY.
CourtMaryland Court of Appeals

Melvin J. Sykes, Baltimore (S. Robert Levinson and Max Sokol, Baltimore, on the brief), for appellant.

No attorney for appellee.

Before BRUNE, C. J., and DELAPLAINE, COLLINS, HENDERSON and HAMMOND, JJ.

DELAPLAINE, Judge.

This is a declaratory judgment proceeding brought by Dr. Nathaniel Harold Perry, a dentist, of Baltimore, against World Insurance Company, a body corporate, of Omaha, Nebraska, to obtain (1) a judicial declaration that a health and accident insurance policy, which the company had issued to him in 1940, is still in full force and effect, and (2) a preliminary injunction restraining the company from cancelling the policy.

Under the Uniform Declaratory Judgments Act, any person interested under a contract may have determined any question of construction or validity arising thereunder, and obtain a declaration of rights, status or other legal relations thereunder. Code 1951, art. 31A, § 2. The remedy of declaratory decree is appropriate in this case for the purpose of construing the insurance policy and determining the rights and obligations of insurer and insured under its provisions. Turner v. Manufacturers' Casualty Insurance Co., 206 Md. 601, 112 A.2d 670; Commercial Casualty Insurance Co. v. Webb, Md., 121 A.2d 832; Malley v. American Indemnity Corporation, 297 Pa. 216, 146 A. 571, 81 A.L.R. 1322; Travelers' Insurance Co. v. Greenough, 88 N.H. 391, 190 A. 129, 109 AL.L.R. 1096; Equitable Life Assurance Society of United States v. Hemenover, 100 Colo. 231, 67 P.2d 80, 110 A.L.R. 1270; Aetna Life Insurance Co. of Hartford, Conn. v. Haworth, 300 U.S. 227, 57 S.Ct. 461, 81 L.Ed. 617, 108 A.L.R. 1000.

Complainant made the following allegations in his bill of complaint: (1) That he purchased the insurance policy in October, 1940, for the consideration of a premium of $33 per annum; (2) that he regularly paid the premium every year through the year 1953, and on March 8, 1954, he tendered the sum of $33 as the premium for the year 1954; (3) that defendant refused to accept this premium unless he would sign a waiver of benefits for any illness caused by disease of the heart or circulatory system; (4) that the policy contains a non-cancellable provision, and he was advised by the agent that this clause meant that the policy could not be cancelled by the company for any reason so long as he desired to keep the policy in force and complied with its terms; and (5) that he believes the policy is still in force and effect, as he has abided by all its terms and proffered payment of the premium, but the company refuses to recognize the policy as still being in force and claims that it is cancelled.

The non-cancellable provision, upon which complainant relied, reads as follows:

'This policy is effective and can not be cancelled by the Company for any cause, except for fraud and misrepresentation, during any period it is actually in force in accordance with its terms as to acceptance, payment of premium and renewal, but the Insured may cancel same at will. * * *'

Defendant, in its answer to the bill, asserted that it had the right under one of the 'general agreements' in the policy to refuse to accept any renewal premium, and also called attention to one of the 'standard provisions' which reads: 'No change in this policy will be valid, unless approved by a chief executive officer of the Company and such approval be endorsed hereon.'

The general agreement, upon which the insurer relied, reads as follows:

'This Policy shall not be in force until the premium has been actually received, accepted and acknowledged at the Home Office in Omaha, Nebraska, and the official premium receipt is dated and issued, all while the Insured is alive, in good health and free from injury, sickness or disease. Acknowledged acceptance of the Insured's first premium shall place this policy in force at 12 o'clock noon, Certral Standard Time, on the date of such acceptance, but only to cover accidental injury thereafter sustained and such sickness or disease as may originate more than 15 days after the date of such acceptance. A receipt signed by the Secretary or other officer of the Company shall be the only binding evidence that a premium has been paid; and renewal premiums must be mailed in sufficient time to reach the Home Office on or before 12 o'clock noon, Central Standard Time, of the date when due, as stated in the policyholder's last premium receipt, which payment, upon acknowledged acceptance by the Company, shall renew this Policy for such term as the payment shall cover. If not in force as aforesaid, the extent of the Company's liability shall be the return of the premium or premiums paid, which amount will be returned by the Company.'

The chancellor regarded the policy as one continuing contract, which could not be terminated by the insurer except for non-payment of premium, and not a series of contracts arising on payment of each premium. He thought that the policy is ambiguous, and, in order to construe it liberally in favor of the insured, he held that the insurer was estopped from refusing to accept the renewal premium unconditionally, inasmuch as it had accepted renewal premiums unconditionally for twelve years, and the physical condition of the insured had now become such that he could not obtain desirable insurance in any other company.

The chancellor accordingly entered a decree declaring that the policy is in full force and effect so long as the insured shall continue the payment of premiums thereon, and shall not be subject to cancellation by the insurer except for nonpayment of premiums, and restraining the insurer from cancelling the policy because of the failure or refusal of the insured to sign an elimination rider excepting disease of the heart or circulatory system. The insurer appealed from that decree.

It is accepted as a general rule that a renewal of an insurance policy by the payment of a new premium and the issuance of a receipt therefor, where the renewal is in pursuance of a provision to that effect, is not a new contract but an extension of the old. Thus it is held in Maryland that where an accident policy contains an express provision for its renewal by payment of the premium annually in advance, a renewal prevents the lapse of the policy and extends its life, and does not constitute a new contract. Standard Accident & Life Insurance Co. of Detroit, Mich. v. Wood, 116 Md. 575, 594, 595, 82 A. 702.

The rule is equally clear that a renewal of a policy by the payment of a new premium and the issuance of a receipt therefor, where there is no provision in the policy for its renewal, is a new contract in that it cannot be made without the mutual consent of the parties and a meeting of the minds on all the essential terms of the contract. The parties may renew the policy on terms different from those contained in the original contract; but, of course, the terms of the policy unless otherwise expressed, are not changed by a renewal, but are merely continued in force as binding upon the parties. Mallette v. British-American Assurance Co., 91 Md. 471, 482, 46 A. 1005; City Mortgage & Discount Co. v. Palatine Insurance Co., Limited, 226 Ala. 179, 145 So. 490; W. P. Harper & Co. v. Ginners' Mutual Insurance Co., 6 Ga.App. 139, 64 S.E. 567; Hartford Fire Insurance Co. v. Walsh, ...

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  • Allstate Ins. Co. v. Rochkind
    • United States
    • U.S. District Court — District of Maryland
    • March 31, 2019
    ...are clear that an insurance policy may be considered a "renewed" policy even though it contains new terms. See World Ins. Co. v. Perry , 210 Md. 449, 454-55, 124 A.2d 259 (1956) (stating that "parties may renew [an insurance] policy on terms different from those contained in the original co......
  • CIGNA v. Zeitler
    • United States
    • Court of Special Appeals of Maryland
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    ...are clear that an insurance policy may be considered a "renewed" policy even though it contains new terms. See World Ins. Co. v. Perry, 210 Md. 449, 454-55, 124 A.2d 259 (1956)(stating that "parties may renew [an insurance] policy on terms different from those contained in the original cont......
  • Aetna Cas. & Sur. Co. v. Kuhl
    • United States
    • Maryland Court of Appeals
    • August 11, 1983
    ...of parties under insurance policies, Glens Falls Ins. v. Amer. Oil Co., 254 Md. 120, 254 A.2d 658 (1969); World Insurance Co. v. Perry, 210 Md. 449, 124 A.2d 259 (1955), we have also held that a declaratory judgment action brought by an insurer is inappropriate where the same issue is pendi......
  • Government Employees Ins. Co. v. Ropka
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    • February 11, 1988
    ... ... See ... Page 272 ... World Ins. Co. v. Perry, 210 Md. 449, 454, 124 A.2d 259 (1956). In Mallette v. British Am. Assurance Co., 91 Md. 471, 46 A. 1005 (1900), the insured ... ...
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