Title: Watts v. Minnesota Mutual Life Insurance Co.
Citation: 402 S.W.2d 111
Docket Number: 5-3708
State: Arkansas
Issuer: Arkansas Supreme Court
Date: April 11, 1966

402 S.W.2d 111 (1966) Lorene WATTS, Appellant, v. MINNESOTA MUTUAL LIFE INSURANCE CO., Appellee. No. 5-3708. Supreme Court of Arkansas. April 11, 1966. Rehearing Denied May 24, 1966. *112 Donald Poe, Waldron, for appellant. Daily &amp; Woods, by Ben Core, Fort Smith, for appellee. HOLT, Justice. This case stems from the interpretation of a group life insurance policy carried with the appellee by the Waldron Furniture Manufacturing Corporation on its employees. The appellant's husband was an employee of the corporation and insured by the terms of the policy. Payment of premiums was made by the corporation; however, contributions were deducted by the employer from the wages of each employee. Upon appellee's refusal to pay the death benefits provided in the policy, the appellant as beneficiary sought judgment against the appellee for the face amount of the policy, $2,500.00, plus statutory penalty and attorney's fee. Appellee's motion for a summary judgment was granted, from which comes this appeal. Appellant first contends for reversal that a genuine fact issue exists and, therefore, appellee's motion for summary judgment should not have been granted. Appellee insists that no justiciable fact issue actually exists and that the proper disposition of this case is a summary judgment for the appellee. On appeal the appellant also argues that the admitted facts result in policy coverage or a case of liability on the part of appellee. To that extent both parties seem to agree that only a question of law is presented and that the proper disposition of the issue of liability in this case would be by summary judgment. According to the uncontroverted facts, the insured employee, Watts, who was under sixty years of age, became totally disabled from cancer on May 17, 1963, requiring discontinuance of his employment. This total disability continued until he died on October 27, 1963. It appears that payments on his policy were discontinued on July 1, 1963. The group policy was cancelled effective August 31, 1963. There was compliance with the policy requirements concerning proof of disability and death. The policy was made an exhibit to the pleadings. The appellant predicates her claim for recovery upon the first portion of the Extended Insurance provision found in the Master Policy and the Employee's Certificate. This portion reads: Other paragraphs relate to total disability which must exist for nine months, notices, recovery from disability and refusal to furnish requested proof. Appellant contends that under the quoted provisions of Extended Insurance coverage the appellee was liable for death benefits because the policy continued in effect from the time the insured became totally disabled until his death which was within one year following the disability. The appellee, however, contends that the last paragraph of the Extended Insurance provision precludes recovery. It reads: The appellee disavows any liability since the policy was terminated by the employer on August 31, 1963 and the death of the insured employee occurred following cancellation of the unconverted policy. The appellant takes the position that the decedent's rights to life insurance coverage became vested upon his becoming totally disabled which necessitated discontinuance of his employment and premium payments. This contention finds support in Appleman 1, Insurance Law and Practice, § 47, p. 74, where we find these general statements: In § 126, p. 190, it is said: See, also, Atlas Life Ins. Co. of Tulsa, Okla. v. Wells, 187 Ark. 979, 63 S.W.2d 533; Home Life Ins. Co. v. Keys, 187 Ark. 796, 62 S.W.2d 950, and Home Life Ins. Co. v. Ward, 189 Ark. 793, 75 S.W.2d 379. In the circumstances we are of the view that the insured's life insurance coverage *114 vested upon the occurrence of his inability to continue working. Thereafter, the discontinuance of his premium payments and cancellation of the policy by his employer could not and did not destroy his acquired rights. Upon the facts now in the record the appellant would be entitled to recover. Further, another answer to the insurer's disclaimer of policy coverage is a provision in a booklet distributed to the insured employees. The Life Insurance Benefits provision contains this paragraph: This information in the booklet is further elaborated upon in the lengthy Master Policy and the Employee's Certificate, both of which appellee invokes in denying coverage. The exclusion of benefits in the Master Policy and Employee's Certificate, i.e., the provision that cancellation of the policy automatically terminates all benefits, is much broader than the explanation in the booklet. This booklet provision is inconsistent with the broader provisions of the Master Policy and Employee's Certificate. These three instruments were drafted and furnished by the insurance company. In the circumstances we think the reasoning in our recent case of Lawrence v. Providential Life Ins. Co., 238 Ark. 981, 385 S.W.2d 936, is applicable. It is well settled that when exceptions or words of limitation are used a strict construction is required favorable to the insured. Washington Fire &amp; Marine Ins. Co. v. Ryburn, 228 Ark. 930, 311 S.W.2d 302. Also, see Travelers' Protective Association of America v. Stephens, 185 Ark. 660, 49 S.W.2d 364. The judgment is reversed and the cause remanded for further proceedings consistent with this opinion. Reversed and remanded.