Charles C. Myre v. Connecticut General Life Insurance Company, a Corporation

501 F.2d 609, 1974 U.S. App. LEXIS 7547

• Court: Court of Appeals for the Eighth Circuit
• Decided: July 19, 1974
• Docket: 74-1043
• Status: Published

Opinions

GIBSON, Circuit Judge.

Plaintiff, Charles Myre, brought this diversity action against Connecticut General Life Insurance Company for $50,000, the amount he claims is due him under a group life insurance policy issued by the defendant to his former employer Braniff Airways, Inc. Defendant does not contest its liability under the policy for $10,000, but strenuously asserts that plaintiff is only entitled to a waiver of premiums on the remaining $40,000 of the face amount. The District Court¹ rendered final judgment for the plaintiff for $50,000 and defendant appeals.

Plaintiff, a former airline pilot, became totally and permanently disabled May 7, 1970. Under provisions of the group life insurance contract (No. 221416-06) issued by defendant he was entitled to the “amount of insurance in force on the Employee’s life on the day he became Permanently Totally Disabled.” ²

Other provisions of the policy provide:

The total amount of life insurance actually in force at any time on the employee is shown on the Braniff International Employee Insurance Statement and consists of term insurance or paid-up insurance or a combination thereof * * *. If the employee has not, at anytime, purchased paid-up insurance, his amount of insurance will consist of term insurance only.

Term Insurance is defined in the policy as:

The amount of term insurance in force on an employee at any time while he is insured for term insurance will equal the sum of the Basic and Additional amounts, if any, shown on the Statement.

The plaintiff contends that the clear wording of the policy provisions requires a finding that he is entitled to the full $50,000 of term insurance in force at the time he became Permanently Totally Disabled. The company, however, points out that the disability provision appears on a page containing the following endorsement:

The provisions set forth on this page shall apply only to amounts of term insurance excluding amounts of Additional Insurance.

The determination of what amount plaintiff is entitled to rests upon the construction of this endorsement. It is clear that without the endorsement plaintiff would be entitled to the entire $50,000 “amount of insurance in force” as per the waiver clause. The insurance company contends that this endorsement limits plaintiff’s recovery to only the Basic term amount ($10,000), excluding the Additional term amount ($40,000). The District Court disagreed; a Florida District Court of Appeals has disagreed;³ and we must disagree.

The District Court reached its conclusion by determining that the language of the endorsement creates an ambiguity. With this we agree and note the language of the endorsement might be construed consistent with plaintiff’s claim. “Term insurance” was defined by the company as the sum of the basic and additional amounts. “Additional insurance” is nowhere defined in the policy ; further, there could be several types of additional insurance as this group policy included, in addition to term life insurance, paid-up life insurance, disability income insurance, and medical insurance. Had the insurance company wished to clearly exclude recovery of the additional term insurance, it could easily have worded its exclusionary endorsement to apply “only to amounts of Basic term insurance excluding amounts of Additional term insurance.” [emphasized words inserted].

The failure to do so leaves the meaning of the endorsement ambiguous. Whether “additional insurance” as used in the endorsement refers to additional term insurance or one of the other coverages of the group policy is not made clear. Such an uncertainty is within the concept of ambiguity,⁴ which ambiguity under long standing rules of construction we must resolve against the insurer. Bergholm v. Peoria Life Insurance Co., 284 U.S. 489, 492, 52 S.Ct. 230, 76 L.Ed. 416 (1932); Looney v. Allstate Insurance Co., 392 F.2d 401, 405 (8th Cir. 1968).

Another permissible construction would recognize that the employee has two types of possible life insurance coverage, term and paid-up. The payment clause of disability provision provides that the company will pay “the amount of insurance in force on the Employee’s life” which had been previously defined as the sum of term and paid-up insurance. The endorsement thus can be seen as excluding recovery of paid-up insurance in the event of disability but not negating the recovery of the full $50,000 Myre had in term insurance.⁵

The insurance company raises one further argument. It argues that this was a negotiated contract and thus any ambiguity should not be resolved against it and in favor of the insured. This claim is entirely devoid of any factual support in the record, whatever its merits as a legal argument.

The judgment of the District Court is affirmed.

1 . The Honorable Miles Lord, United States District Judge, District of Minnesota.

2 . This policy provision provides :

Upon receipt by the Insurance Company of due proof that an Employee, prior to his 60th birthday and while insured under this policy has become Permanently Totally Disabled, the Insurance Company, in lieu of all other benefits and options provided under this policy, will waive further premiums for the insurance on that Employee and will pay to the Employee the amount of insurance in force on the Employee’s life on the day he became Permanently Totally Disabled.

3 . Moore v. Connecticut General Life Insurance, 277 So.2d 839 (Fla.App.1973), cert. denied, 291 So.2d 204 (Fla.Sup.Ct.1974).

4 . In Arkansas Amusement Corporation v. Kempner, 57 F.2d 466, 472 (8th Cir. 1932) we stated:

The term “ambiguous” means doubtful and uncertain. 1 Bouvier’s Law Dictionary 117 defines ambiguity: “Duplicity, indistinctness, or uncertainty of meaning of an expression used in a written instrument.”

Minnesota law is in accord. Resler v. Rogers, 272 Minn. 502, 139 N.W.2d 379, 382 n. 1 (1965) ; Employer’s Liability Assurance Corp. v. Morse, 261 Minn. 259, 111 N.W.2d 620, 624 (1961).

5 . This was noted by the Florida court in Moore, supra, 277 So.2d at 842:

In the absence of some such wording to express an intent in those respects the language in the clause that the provisions on that page of the policy “will apply only to amounts of term insurance excluding amounts of additional insurance,” was equally if not more susceptible to be interpreted to mean that the provisions on that page would apply to the term insurance (which in this instance was $50,000 of such insurance) and that the “additional insurance” to which the exclusion related had reference to insurance other than the “term insurance” to which the clause stated the provisions on that page would apply. (emphasis in original).