Zeigler v. Equitable Life Assur. Soc. of United States

• Decision Date: 02 April 1935
• Docket Number: 42845.
• Citation: 259 N.W. 769,219 Iowa 872
• Parties: ZEIGLER v. EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES.
• Court: Iowa Supreme Court

259 N.W. 769

219 Iowa 872

ZEIGLER v. EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES.

No. 42845.

Supreme Court of Iowa.

April 2, 1935

Appeal from District Court, Webster County; Sherwood A. Clock Judge.

Action on a policy of group insurance. The defense was that the employment had been terminated. The policy provided that the insurance could be continued by the employer on all employees temporarily laid off. The employee had been formally dismissed, but there were a number of circumstances indicating that the employer intended such termination of employment as temporary. The trial court submitted to the jury the question as to whether the employee had been permanently discharged or temporarily laid off. The jury returned a verdict in favor of the beneficiary of the insurance. The insurance company appealed.

Affirmed.

Under group life policy providing that insurance of employee shall automatically cease upon termination of employment, except that employer may elect that all temporarily laid off employees shall be considered to be in employment during period of insurance, whether locomotive engineer, who had been discharged because of violation of rule which resulted in wreck, but who was informed by foreman that engineer would be rehired, and whose premium was paid by railroad and by him, was temporarily laid off so as to entitle recovery on policy, held for jury.

Henry & Henry, of Des Moines, and Mitchell & Mitchell, of Fort Dodge, for appellant.

D. M Kelleher and R. A. Knudson, both of Fort Dodge, for appellee.

POWERS, Justice.

The appellant herein, the Equitable Life Assurance Society of the United States, hereinafter referred to as the Insurance Company, issued to the Chicago, Great Western Railroad Company, hereinafter referred to as the Railroad Company, a policy of group life insurance about the first of January 1931, covering all of the employees of the Railroad Company who should elect to participate therein. Under the plan adopted, the Railroad Company and the employees both contributed to the premium payments. The Railroad Company made the payments and deducted the employee's share from his pay check. Arthur Zeigler, a locomotive engineer of the Railroad Company, duly elected to participate in the group insurance and there was issued to him by the Insurance Company a certificate in which the Insurance Company certified that it had contracted to insure his life for the amount of $2,000, and in which his wife, Nellie C. Zeigler the plaintiff and appellee herein, was named as beneficiary. On December 8th, following, the superintendent of the Railroad Company advised Mr. Zeigler by letter that because of his violation of one of the rules of the Railroad Company which resulted in a wreck near Austin, Minn., on December 1st, 1931, " it becomes my unpleasant duty to dismiss you from the Company's service and you will please accept this as due notice thereof." The letter further requested Zeigler to acknowledge receipt and to turn in the Railroad Company's property in his possession. Zeigler, in due course thereafter, acknowledged receipt of the letter, turned in the Railroad Company's property, and was not thereafter in the actual employ of the Railroad Company. He was killed in an automobile accident on July 3, 1932. The present action is by the beneficiary to collect the insurance. The trial below resulted in a verdict for the plaintiff, and the Insurance Company has appealed.

Many errors are assigned by appellant. They relate to a failure of the court to sustain objections to the introduction of testimony, to the refusal of the court to direct a verdict against the plaintiff, to instructions given by the court, and to the failure of the court to set aside the verdict on motion and grant a new trial. Practically all the errors assigned revolve around appellant's claim that the record conclusively showed that Zeigler had been discharged long prior to his death, that he was not an employee of the Railroad Company at the time of his death, and was not, on that account, within the provisions of the group policy of insurance issued to the Railroad Company. This proposition presents the only substantial question in the case.

Policies of group life insurance are relatively new and have not been, to a very wide extent, the subject of judicial consideration. Moreover, the policy contracts are so different in their terms, and the machinery devised and used for the collection of premiums and distribution of benefits are so varied, that only a limited aid can be obtained by an examination of precedents. Such policies are, however, contracts and, like other contracts, must be enforced according to their terms. And being contracts for insurance, if need for construction arises, they must, in accordance with a well-established rule, be construed liberally in favor of the insured.

The policy in the instant case, after providing that the insurance of the employee shall automatically cease upon termination of his employment with the employer, contained this exception: " except that the employer may elect that all employees who, while insured hereunder, are temporarily laid off or given leave of absence or are disabled or are retired on pension, shall be considered to be in the employment of the employer during such period." The policy also contained a provision that the employee, upon leaving the service of the Railroad Company, should have the right to convert the insurance without examination to any other form of life insurance which the Insurance Company issued except term insurance.

The record before us shows that Zeigler, shortly after the receipt of the letter referred to above, prepared a letter to be sent to the Insurance Company requesting a conversion that before the letter was mailed, a Mr. Segner, who occupied the position of foreman of locomotive engineers for the Railroad Company and had been Mr. Zeigler's immediate superior, and who had been a member of the group of railroad officials which had investigated the wreck near Austin, Minn., and which was responsible for placing the blame on Zeigler which resulted in his discharge, called on Zeigler at his home; that Segner then told Zeigler not to convert his insurance, that he would be back to work in thirty or sixty days, and to send in his monthly premium to the Railroad Company. Zeigler did send in the premium payments required of him each month thereafter until his death. Such premium payments were received and accepted by the Railroad Company, and the Railroad Company paid Zeigler's premium to the Insurance Company in full, supplementing the amount contributed by Zeigler with its own portion of the premium payment. Moreover, the same Mr. Fowler who had written the letter of dismissal to Zeigler continued to report each month to the auditor of the railroad for certification to the Insurance Company...