Court Opinion

ID: 9570118
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:20:17.866843+00
Date Added: 2024-06-11T12:04:58.852944
License: Public Domain

NEELY, Chief Justice,
dissenting:
I find that I must dissent to Part II of the majority opinion because the evidence indicates conclusively that the State, and not Blue Cross, cancelled the contract. The “grace period” that is provided in insurance contracts, and that is required by statute, is an “anti-lapse” provision designed to prevent insureds who are late in paying premiums from being without coverage. It has long been the rule in other jurisdictions, both federal and state, that a grace period: “Does not contemplate free insurance, or operate to continue the policy in force after it expires by agreement of the parties.” Miller v. Travelers Ins. Co., 143 Pa.Super. 270, 17 A.2d 907, 909 (1941).
Indeed, a grace period, is actually a sale of insurance upon credit. It is a grant of permission to defer payment, and not a gift of insurance. Interstate Fire Insurance Company v. United States, 215 F.Supp. 586, 594 (1963). Such clauses are inserted in insurance contracts for the purpose of preventing an immediate lapse upon failure to pay a stipulated premium. Because *610most insureds do, in fact, renew their policies, there is only a minimal cost in providing a grace period. And, to the extent that insureds take advantage of thirty extra days of coverage without renewing their policies, the cost can be passed on to policyholders as a class. The majority’s opinion seems to indicate that a grace period is designed to provide “baker’s dozen” insurance. It is not.
In the case before us the State said that it did not want Blue Cross’ insurance. In insurance contracts, as in other areas of contractual agreements, the rules of contract apply. Blue Cross-Blue Shield of Alabama v. Caudle, 404 So.2d 684, 685 (Ala.Civ.App.1981). Thus, when an insured tells his insurer that he does not want the latter’s product, the insurer is under no obligation to continue to provide the product.
Furthermore, I disagree with Syllabus Point 1 except as a general rule applicable in the most extreme cases. Certainly state officials and those contracting with the State may not collude to the public’s detriment nor deliberately violate clear legal provisions. Nonetheless, business must be able to contract with the State in roughly the same fashion that it contracts with other, sophisticated commercial parties. It is not the place of vendors to insist upon supplying a service to the State that the State’s officers and agents absolutely refuse to accept simply because of the vendors’ view of the current state of contract law.
In this context, a private firm that does business with the State is in the same position as an ordinary, innocent citizen who finds himself looking down the barrel of a .357 magnum revolver in the hand of a state trooper who is arresting him. The honest citizen understands that he is the victim of a false arrest, but at the same time he realizes there is something inherently counterproductive about asserting his rights too vociferously and consequently, having his head blown off. To-wit the following limerick:
This is the story of John McGrey,
Who thought he had the right-of-way,
He was right, dead right, as he sped along,
But he’s just as dead as if he’d been wrong.
Blue Cross could have parsed the contract at issue here until the cows came home. Blue Cross could have adamantly insisted that it understood the State’s interest better than the State’s agents. And Blue Cross could have spent hundreds of thousands of dollars in litigation costs to vindicate its eleemosynary impulses. But that is not how any reasonable party in the private sector conducts himself; it is only how some judges’ fantasy of the law’s favorite creature, the reasonable man, conducts himself. Alas, Blue Cross’ agents are but ordinary mortals with a normal instinct for commercial self-preservation. In this case they did everything that reasonably could be expected of them. It is unfortunate that the majority concludes they are culprits instead of victims.