World Ins. Co. v. Perry, No. 200

• Court: Court of Appeals of Maryland
• Writing for the Court: Before BRUNE; DELAPLAINE
• Citation: 210 Md. 449,124 A.2d 259
• Parties: WORLD INSURANCE COMPANY, a body corporate, v. Nathaniel Harold PERRY.
• Docket Number: No. 200
• Decision Date: 11 July 1956

Page 449

210 Md. 449 124 A.2d 259 WORLD INSURANCE COMPANY, a body corporate,
v.
Nathaniel Harold PERRY. No. 200. Court of Appeals of Maryland. July 11, 1956.

Page 451

[124 A.2d 260] 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.

Page 452

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 [124 A.2d 261] 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

Page 453

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.'

Page 454

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 [124 A.2d 262] 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...