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Florence v. Travelers Ins. Co.

MAY 24, 1965.

ELLEN FLORENCE, PLAINTIFF-APPELLANT,

v.

THE TRAVELERS INSURANCE CO. AND THE BALTIMORE AND OHIO CHICAGO TERMINAL RAILROAD CO., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County, Municipal Department; the Hon. NICHOLAS J. MATKOVIC, Judge, presiding. Affirmed.

MR. JUSTICE MURPHY DELIVERED THE OPINION OF THE COURT.

Plaintiff, under a Group Insurance Policy Contract which covered her deceased husband, seeks to collect a $4,000 death benefit. In the alternative, plaintiff seeks damages "occasioned by alleged negligence of defendants in advising the insured with respect to the disability premium waiver provisions of the contract." Summary judgment orders were entered in favor of defendants, and plaintiff appeals.

The orders appealed from were entered on plaintiff's verified amended statement of claim, Travelers' verified answer, interrogatories, affidavits and counteraffidavits, and supporting exhibits.

Jessie Florence, plaintiff's deceased husband, was employed by defendant Baltimore & Ohio Chicago Terminal Railroad Company. During his active employment by the B. & O., he came within the provisions of "Group Policy Contract No. GA 23000," in which defendant, The Travelers Insurance Company, is the "Insurer," and signatory "Employers and Brotherhoods collectively" constitute the "Policyholder." The policy provided benefits for "qualified" railroad employees and their dependents. The employees do not pay the premiums under the policy. The premiums for such insurance are paid by the participating railroad employers under procedures outlined in the policy.

Six Articles set forth three basic types of benefits for "qualified employees" and the separate "eligibility" requirements applicable to each type of benefit. In each instance, the Article defining the benefit is immediately preceded by an Article prescribing the specific "eligibility" requirement which applies to the particular benefit set forth in the Article which follows it. Article VI defines "Eligibility for Employee Benefits Described in Article VII." Article VII contains the employees' hospital and surgical benefits. Article VIII defines "Eligibility for Dependents' Benefits Described in Article IX." Article IX contains the dependents' hospital, surgical and other medical benefits. Article X defines "Eligibility for Life Insurance Benefits" and Article XI contains the $4,000 life insurance benefits. The portions of the "Articles" we are concerned with are as follows.

Article VIII, paragraph 1, reads, in relevant part:

"1. An Employee . . . shall be insured for Dependents Benefits as provided in Article IX hereof during and only during the month following a month for which the signatory Employer by which he is employed is required to make the appropriate payment to the Insurer . . . except that: (i) such payment shall be waived and insurance shall be continued in subsequent consecutive months when the requirements set forth in Paragraph 1 of said Article V cannot be met solely as a result of the Employee's disability which prevents him from performing work in his regular occupation; . . . provided, however, that . . . (b) no Employee shall be insured after the date on which his employment relationship is terminated other than for retirement, or after the date the Employee has failed to render compensated service for a period of One calendar year. . . ." (Emphasis supplied.)

Article X of the policy prescribes the requirement for "Eligibility for Life Insurance Benefits," and reads, in relevant part:

"Each Employee . . . shall be insured for an amount of life insurance, determined in accordance with Article XI, during and only during the period that he is insured in accordance with Article VIII, Paragraph 1 of this policy contract; provided, however, . . . (b) that such life insurance shall in no event continue in force after the date the Employee has failed to render compensated service for a period of one calendar year." (Emphasis supplied.)

Article XI provides for $4,000 Life Insurance Benefits and contains a "conversion privilege," as follows:

"Section 3. Conversion Privilege. In case of the termination of any life insurance under this policy contract at the expiration of the period specified in Article X above for any reason other than discontinuance or amendment of this policy contract, the Employee shall be entitled to have issued to him by the Insurer without evidence of insurability, and upon application made to the Insurer within Thirty-one days after such termination and upon the payment of the premium applicable to the class of risks to which he belongs and to the form and amount of the policy at his then attained age, an individual policy of life insurance without disability or other supplementary benefits, in any One of the forms then customarily issued by the Insurer, except term insurance, in an amount not in excess of the amount of such terminated insurance, less, in the case of an Employee who continues in employment with an Employer included under this policy contract, any amount of life insurance for which such Employee may be or may become eligible under any other group policy within Thirty-one days after the date of such termination and less any amount of life insurance in force under any individual policy previously issued to the Employee in accordance with the conversion privilege of this policy contract."

The active employment of Jessie Florence by the B. & O. ended on May 12, 1960, when he was disabled, and this was the final date upon which he "rendered compensated services" for his employer. He retired on April 11, 1961, and he died on May 11, 1962. Upon the refusal of Travelers to pay the amount allegedly due to plaintiff as beneficiary under the policy, plaintiff filed her statement of claim on January 11, 1963.

Count I of the amended statement of claim alleged the existence of a cause of action for $4,000 against Travelers for death benefits under the life insurance provisions of Group Policy GA 23000. It alleged that Travelers, without reasonable cause, had refused to pay the amount due under the policy, although the cause of the insured's death was one insured against in the policy, the plaintiff was the sole beneficiary of the policy, plaintiff and the insured had performed all the conditions prescribed by the policy, and the policy was in full force and effect at the time of the death of the insured.

Count II alleged the existence of a cause of action against both defendants. It alleged that on or about the time of insured's retirement, April 11, 1961, insured was disabled and entitled to disability premium waiver pursuant to the contract of insurance. At that time, it is alleged, the defendants, by their agents and servants, "carelessly, negligently and without regard to the consequences to said Jessie Florence and his beneficiary, advised, informed and represented to said Jessie Florence that pursuant to the terms of said disability premium waiver provision he was fully insured under said contract of insurance without further payment of premiums until the expiration of the calendar year 1962." It is further alleged that "by reason of said advice . . . and relying thereon . . . Jessie Florence paid no premiums in consideration of said insurance from the time of his said retirement until the time of his death . . . Had said Jessie Florence been correctly advised he would have paid ...


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