51 Ga. App. 341 | Ga. Ct. App. | 1935
Lead Opinion
Tom Ferguson sued the Prudential Insurance Company of America for alleged wrongful cancellation of an insurance policy, the petition as amended alleging, in part, that as an employee of the Georgia Railroad he became the owner of certificate No. 1101 of group policy No. 1819, issued by the defendant company on August 1, 1925, for which he paid $2.05 each consecutive month from August 1, 1925, to December 31, 1931, the date of the alleged wrongful cancellation of the policy; that on January 1, 1932, a new certificate, No. 614 of group policy No. G-3690, was issued and delivered to him in lieu of certificate No. 1101; that the second certificate remained in force until May 31, 1932, when he was discharged from the service of the Georgia Railroad because of physical disabilities; that the monthly premium on both certificates was the same, and the policies were substantially the same, except that the first policy provided for total and permanent disability or physical incapacity, while the second policy contained no such disability clause; that prior to the cancellation of certificate No. 1101, and while he was less than sixty years of age, he became totally and permanently disabled or physically incapacitated by reason of described diseases, and is still so permanently disabled and incapacitated, and that said certificate was wrongfully canceled by the defendant; that the defendant did not reserve the right to cancel said certificate No. 1101, either in the certificate, or in group policy No. 1819, or in any other manner, and that there was iio mutual agreement or assent for said policy to be canceled; that he was never consulted about a cancellation or advised that the company considered said insurance contract canceled, nor was any request made of him to deliver the certificate for cancellation; that his employer deducted the regular monthly premium from his salary from August 1, 1925, to May 31, 1932, the date of his discharge on account of physical incapacity; that no consideration was offered or paid him to relinquish his valuable rights under certificate No". 1101; that he believed that the premiums deducted from his salary were paid defendant to keep in force certificate No. 1101;
To the petition as amended the defendant filed a demurrer, a part of which was overruled, and on this ruling the defendant assigns error. The contentions of the demurrer are substantially as follows: That if plaintiff was totally disabled prior to December 31, 1931, the certificate matured prior to that date, and any rights of petitioner to disability benefits thereunder became fixed, and no cancellation or attempted cancellation could be effective, and it could not damage the plaintiff; that the petition did not allege any renewal or attempted renewal for a period subsequent to December 31, 1931, and in the absence of such renewal the policy lapsed by its own terms; that the facts alleged to show wrongful cancellation are as a matter of law insufficient for that purpose; that the failure to pay premiums after December 31, 1931, would have caused the policy to lapse in any event; that the petition does not allege that 'more than 75 per cent, of the employees of the-railroad companies, or more than fifty of such employees, were insured under said policy. In the absence of such number being insured, the policy, by its terms, gave the defendant a right to refuse to renew.
The foregoing statement of facts sufficiently presents the main issues involved, but does not purport to set out all the averments of the petition or demurrer. Where necessary, omitted averments will be referred to in the opinion. In considering the question
The canceled policy provides that “If any person insured under this policy shall become totally and permanently disabled . . at any time after the payment of the first premium on account of such insurance, while this policy is in full force and effect, and the said person is less than sixty years of age, . . the company will, in addition to waiving the premiums, pay to the said person at its home office the amount insured on his (or her) life in twenty-four monthly installments during two years, each installment to be of the amount of $42.55 per $1000 of insurance payable.” The plaintiff alleged that his wages would have entitled him to $2000 insurance, that his premiums were paid, that he was less than sixty years of age, and that he was totally and permanently disabled prior to December 31, 1931, the date of the cancellation of the policy. The petition makes no claim for disability benefits as such, but the suit is for damages for a wrongful breach of the contract, and these allegations are material in determining the damages resulting from the breach, as the plaintiff must allege and prove what damage he has sustained by reason of the breach. In other words, the value of the policy to the plaintiff at the time of the cancellation is material in showing the damage he sustained because of the cancellation.
As quoted approvingly in Farrow v. State Mutual Life Insurance Co., 22 Ga. App. 540 (96 S. E. 446) : “The measure of damages
“Where there is a breach of a contract of insurance by the insurer, as where an insurance company refuses to accept a premium on a life and health insurance policy tendered in accordance with the terms of the contract, and thus repudiates the contract, the insured may recover any damage he has sustained by reason of the breach, and ordinarily his measure of damages is the premiums paid, with interest thereon. Alabama Gold Life Ins. Co. v. Garmany, 74 Ga. 51; Order of Railway Conductors v. Clark, 159 Ga. 390, 392 (125 S. E. 841); Glover v. Bankers Health & Life Ins. Co., 30 Ga. App. 308 (117 S. E. 665, 48 A. L. R. 111). While, as a general rule, where the action of the insurance company does not amount to a repudiation of the contract of insurance, but amounts merely to a refusal to pay, as required by the policy, sick benefits accruing under its terms, the right of action of the insured
None of these reasons for cancellation existed in the instant case. “ Where a valid contract of insurance has been effectuated, the company can not cancel the policy without the consent of the assured, except where it may be permitted to do so by statute or by reservation in the policy itself. Such a reservation is valid, but, under the general rule, it will be strictly construed against the company.” 32 C. J. 1245, § 431. Even where a policy reserves the right of cancellation (and the policy in the instant case did not reserve this right), such right can not be properly exercised merely because of the bad health of the insured, when, on account of such physical condition, he can not obtain other insurance, as alleged in the in
If the insurer in that case could not repudiate the contract by changing the by-laws and lessening the benefits when the assured’s policy stated that the consideration therefor was full compliance with by-laws “existing or thereafter adopted,” then, a fortiori, an insurer can not lessen the benefits of an insurance contract containing disability protection, by cancelling the entire contract and issuing another policy without the disability protection, where there is no right of cancellation reserved in the policy or agreement of the assured for this to be done. As quoted in the Jordan case, supra, if this were allowed, it would indeed be an easy way for the company to relieve itself of its just obligations.
The ground of demurrer that the petition did not allege any renewal for a period subsequent to December 31, 1931, and that in the absence of such renewal the policy lapsed by its own terms, is without merit. The original policy shows that the three-months-renewal clause contained therein was primarily a provision for computing premiums, the policy providing that during the first term (three months) they should be computed upon a stated basis, and that “at the eiid of each succeeding term thereafter the company will adjust the premium rates upon which renewals may be effective at the respective ages nearest the birthday attained by the assured.” Moreover, the original policy containing the disability clause was dated August 1, 1925, and, therefore, the three-months terms would end on the 1st of November, February, May, and August of each year. The company did not wait for the end of the term to- cancel the plaintiff’s policy, but canceled it on December 31st, one month before the expiration of the three months term according to the date of the plaintiff’s certificate, and issued a new and different policy without the disability clause on January 1, 1932. Furthermore, the policy did not lapse by its own terms at the end of each three months by virtue of the provision therein that
The instant petition alleged that all the premiums had been paid when the original policy was canceled on December 31st, but even if they had not been paid at that time, the thirty-one days of grace provided for in the policy would have extended it to February 1st; so under no existing circumstances could the policy be properly canceled for nonpayment of premiums. Moreover, the petition set out ample facts to show that the original policy was repudiated by the company on December 31st, and declared to be “no longer of force,” and this relieved the insured of tendering premiums after that date. Code of 1933, § 20-1104; Pilgrims Health & Life Ins. Co. v. Scott, 12 Ga. App. 749 (3) (78 S. E. 469); Southern Life Ins. Co. v. Logan, 9 Ga. App. 503 (2) (71 S. E. 742); Industrial Life & Health Co. v. Thomas, 43 Ga. App. 679 (159 S. E. 885). Under the foregoing authorities, there is no merit in the contention that the policy lapsed for nonpayment of premiums after December 31st.
The petition was not defective because of its failure to allege that more than 75 per cent., or more than 50, of the employees of the company were insured- This is purely a matter of defense,
The court did not err in overruling the grounds of demurrer, of which complaint is made.
Judgment affirmed.
Rehearing
ON MOTION EOR REHEARING.
The language in the opinion, ruling that the petition was not defective because of its failure to allege that more than 75 per cent., or more than 50, of the employees of the company were insured, has been substituted for the language first used by this court. The plaintiff having attached a copy of the policy of insurance to the petition and alleged a prima facie case, the burden of showing how many of the employees in question were insured was upon the insurance company.
Rehearing denied.