Opinion
No. 34243.
Filed July 25, 1958.
1. Contracts. A contract will ordinarily be construed according to the law of the place where the contract is made. 2. Evidence. It is the general rule that a foreign law or rights thereunder must be proved like any other fact, in the absence of which the law of the forum is ordinarily applied. 3. Insurance. Under applicable Illinois law a certificate of insurance which was issued to an employee by insurer under master policy of group life insurance, and which differed from master policy in several respects, constituted a part of the insurance contract. 4. Courts. In the absence of any conflicting decision by any other intermediate court of appeal or by the Supreme Court of a state, a decision of an intermediate court of appeal of such state must be accepted by the parties and by the courts of a sister state as stating the law of the state where the decision was made. 5. Insurance. Where the provisions of a contract of insurance are in conflict, or subject to more than one interpretation, the provision or interpretation most favorable to the insured will ordinarily be adopted.
APPEAL from the district court for Buffalo County: ELDRIDGE G. REED, JUDGE. On rehearing. For former opinion, see 165 Neb. 554, 86 N.W.2d 568. Former opinion withdrawn. Affirmed.
Stiner Boslaugh, for appellant.
Dryden, Jensen and Ginsburg, Rosenberg Ginsburg, for appellee.
Heard before SIMMONS, C. J., CARTER, MESSMORE, YEAGER, CHAPPELL, and WENKE, JJ.
This is an action at law brought by Hazel Exstrum as plaintiff against the Union Casualty and Life Insurance Company, defendant, in the district court for Buffalo County, to recover on a group life insurance policy under which it is alleged that Clayton D. Exstrum became insured with the plaintiff as the named beneficiary. Proof of the death of her husband was made by the plaintiff, and the defendant company refused payment on the ground that as deceased was not in active employment on January 1, 1955, and did not return to active employment prior to his death, he was not eligible for insurance coverage. A jury was waived and a trial had to the court. After the trial, judgment was rendered for the plaintiff. The defendant has appealed.
On December 6, 1957, an opinion affirming the judgment of the district court was filed. Exstrum v. Union Casualty Life Ins. Co., 165 Neb. 554, 86 N.W.2d 568. A motion for a rehearing was granted and a reargument had. We withdraw the former opinion and reconsider the case on the merits.
There is no substantial dispute in the material facts. Prior to 1954 a trust agreement had been entered into between the Central States Area Employers Association, and ten others, as first party, and Central States Drivers Council, Southern Conference of Teamsters, and their affiliated local unions, acting on behalf of their members then or thereafter employed as drivers, helpers, or in such other capacities as would be mutually agreed upon, as the second party. The first party will be hereafter referred to as employer, and the second party as the union.
The trust was denominated Central States, Southeast and Southwest Areas Health and Welfare Fund. Its purpose was to receive the contributions of employers as provided in the agreement between the employers and the unions in order to provide and pay for life insurance for drivers and helpers represented by the unions. The trust fund thus created was under the joint control of representatives of the employers and the unions. Brown Transfer Company was an employer within the agreement. Clayton D. Exstrum was employed by Brown Transfer Company on March 5, 1954, and on September 13, 1954, became a member of the union.
The trustees purchased a 1-year renewable term nonparticipating life insurance policy for the term beginning April 1, 1952, and ending March 31, 1953. The policy was amended as of April 1, 1953. The policy as amended was renewed from year to year and was in full force and effect during the period involved in this action. Employees in Exstrum's classification were eligible for life insurance upon compliance with conditions precedent in the policy. The trustees were the sole procurers of the insurance and they were the insured under the terms of the policy. Premiums were paid by the trustees to the insurance company. Employees were under no contractual obligation to pay insurance premiums, such premiums being paid by the trustees from the fund maintained by the contributions of the employers pursuant to their agreement with the unions.
Four amended provisions of the policy are cited by the insurance company in support of its claim of nonliability. They are as follows:
"1. The effective date of this policy as to an employer becoming a Contributing Employer after April 1, 1952 shall be the first (1st) day of the calendar month following two (2) full calendar months from the date such employer becomes obligated to make his contributions to the Policyholder. The effective date as to such Contributing Employer may be a date earlier than that set forth by agreement between the Contributing Employer, the Policyholder, and the Company.
"2. Each employee employed on the effective date of his employer's insurance, for whom contributions have been made for two (2) full calendar months on his behalf prior thereto, is insured on such effective date.
"3. Each employee not insured on the effective date of his employer's insurance is insured on the first (1st) day of the calendar month following two (2) full calendar months of contributions made by his employer on his behalf.
"4. Each employee not in active employment on the effective date of his insurance after the effective date of this policy shall be insured on the first (1st) day of his employment."
Placing the most favorable construction on quoted paragraph 3, the first day of the calendar month following 2 full calendar months of contributions by his employer would be December 1, 1954. The evidence shows, however, that Exstrum became ill on November 20, 1954, and never returned to active employment thereafter prior to his death on January 19, 1955. It would appear therefore that Exstrum had never qualified for insurance under the terms of the group policy. The evidence discloses, also, that the trustees, nor anyone else with authority to do so, had not certified to the insurance company that Exstrum had qualified for the insurance, nor had the trustees, or anyone else, paid any premium to the insurance company for insurance on the deceased, Exstrum. It would appear, as contended by the insurance company, that Exstrum had neither qualified nor become insured under the terms of the group policy.
The evidence shows that the insurance company issued a certificate of insurance to the deceased, Exstrum, prior to his death, an act required by the policy and the applicable Illinois statute. The certificate was found among the papers of the deceased after his death. The insurance company admits the certificate was issued and asserts that it was issued through mistake, although there is no evidence to sustain this contention. The pertinent part of the certificate is: "Union Casualty Life Insurance Company * * * Certifies that it has insured certain employees of Contributing Employers to the Trustees * * * for Group Life Insurance under Group Life Policy Number L.I.T.-90, and that Clayton D. Exstrum an employee, is insured for the sum of $2,500.00 payable in event of death of such employee to Hazel Exstrum — wife beneficiary designated by the employee to receive such benefits as are payable in the event of the death of the employee. Effective Date Oct 1 1954 * * * (Provided Employee is then regularly performing the duties of his occupation)." The evidence is uncontradicted that Exstrum regularly performed the duties of his occupation after October 1, 1954, and until November 20, 1954. It is not disputed that Exstrum became ill on November 20, 1954, and that he died on January 19, 1955, within the 6-months termination period provided in the policy when the termination of his employment is due to illness. The question to be determined is the effect of the issuance of the certificate of insurance on the liability of the insurance company under the facts recited.
The contract of insurance is an Illinois contract. As such it is governed by the laws of that state. The applicable Illinois statute provides that no policy of group insurance shall be issued or delivered in that state unless it contains the following: "(b) A provision that the policy, the application of the employer or trustee of any association of employees and the individual applications, if any, of the employees insured shall constitute the entire contract between the parties, * * *." Smith-Hurd Ill. Ann. St. Ch. 73, 843(b), p. 325. The foregoing statute was pleaded by the insurance company in support of its allegations that the certificate was not a part of the contract of insurance.
The insurance company contends that under the foregoing statute the certificate of insurance is not a part of the contract and that the provisions of the master policy control the result in this case under the law of Illinois. It is the general rule that a foreign law or rights thereunder must be proved like any other fact, in the absence of which the law of the forum is ordinarily applied.
We have been cited to no decision of the Supreme Court of Illinois interpreting the pleaded statute of that state; nor has our research revealed the existence of any such decision. We conclude that the question has not been before the Supreme Court of that state. We are cited to the case of Thieme v. Union Labor Life Ins. Co., 12 Ill. App.2d 110, 138 N.E.2d 857, in which the court held: "The Illinois Appellate Courts for three different districts, while not having the precise issue before them, have determined the rights of an insured under a policy of group insurance by treating both the master policy and the certificate as integral parts of the contract. (Citing cases.) As we have heretofore stated, in the absence of a provision to the contrary in the master policy, we should apply the law of Illinois and under that law we are of the opinion that the certificate is a part of the contract." We point out that this case was released for publication on January 8, 1957, a date subsequent to the enactment of the statutes of Illinois herein cited. We necessarily conclude that the certificate of insurance is a part of the insurance contract under the law of Illinois for the reasons stated in Thieme v. Union Labor Life Ins. Co., supra.
The insurance company contends that plaintiff failed to plead the law of Illinois and hence she should not be heard to assert for the first time on reargument that there are decisions of the appellate courts of Illinois holding that the certificate of insurance is a part of the insurance contract. We do not think this contention is meritorious. We point out that the statutes of Nebraska dealing with group life insurance contain no such provision as Smith-Hurd Ill. Ann. St., Ch. 73, 843(b), p. 325. Under the law of Nebraska the certificate of insurance is a part of the insurance contract. Hemmer v. Metropolitan Life Ins. Co., 131 Neb. 14, 267 N.W. 153; Uptegrove v. Metropolitan Life Ins. Co., 145 Neb. 51, 15 N.W.2d 220. To avoid the effect of these decisions the insurance company pleaded the quoted Illinois statute. The determination of the law of Illinois is a question of fact upon which both parties may submit evidence. The plaintiff, assuming that the group policy was an Illinois contract, produced the appellate court decision of Illinois to establish that the certificate of insurance was a part of the insurance contract under the law of that state. This, plaintiff has a right to do to establish that under the statute pleaded by the insurance company the plaintiff had a right to recover.
The question immediately arises as to the sufficiency of the proof of the law of Illinois. Is the decision of an intermediate appellate court sufficient to establish the law of a sister state? This question does not appear to have been previously before this court. The rule appears to be that such a decision is not only sufficient but should be followed in the absence of a conflicting decision by any other intermediate court of appeal, or by the Supreme Court of the state. The rule is well stated in Fritz v. Metropolitan Life Ins. Co., 50 Cal.App.2d 570, 123 P.2d 622, wherein the court said: "As the contract was issued in Missouri, its interpretation is governed by the laws of that state, and so we turn to the decisions of that state for support of what we have said. The only decision from that jurisdiction, on the point here involved, which has come to our attention is that of an intermediate court of appeal. In the absence of any conflicting decision by any other intermediate court of appeal or by the Supreme Court of that state, and we know of none, the decision must be accepted by the parties as well as by this court as stating the law of Missouri. (Six Companies of California v. Joint Highway etc. of California, 311 U.S. 180 [61 Sup. Ct. 186, 85 L. Ed. 114]; Stoner v. New York Life Ins. Co., 311 U.S. 464 [61 Sup. Ct. 336, 85 L. Ed. 284]; Fidelity Union Trust Co. v. Field, 311 U.S. 169 [61 Sup. Ct. 176, 85 L. Ed. 109]; West v. American Telephone Telegraph Co., 311 U.S. 223 [61 Sup. Ct. 179, 85 L. Ed. 139, 132 A. L. R. 956].) This is a universal rule. The Supreme Court of the United States has made it plain in the above cited cases that it regards a decision of an intermediate court of appeal of a state as stating the law of the state, unless it is in conflict with the decision of another co-ordinate court, even though such decision is not binding on the highest court of appeal of the state, so long as that court has not pronounced otherwise. In view of that holding the full faith and credit clause would require us to follow it, even if we were of a different view, which we are not."
In Fidelity Union Trust Co. v. Field, 311 U.S. 169, 61 S. Ct. 176, 85 L. Ed. 109, the Supreme Court of the United States in dealing with this question stated: "While, of course, the decisions of the Court of Chancery are not binding on the Court of Errors and Appeals, a uniform ruling either by the Court of Chancery or by the Supreme Court over a course of years will not be set aside by the highest court `except for cogent and important reasons.' Ramsey v. Hutchinson, 117 N.J.L. 222, 223; 187 A. 650. It appears that ordinarily the decisions of the Court of Chancery, if they have not been disapproved, are treated as binding in later cases in chancery (Philadelphia Camden Ferry Co. v. Johnson, 94 N. J. Eq., 296, 297; 121 A. 900), but there is always, as respondent urges, the possibility that a particular decision of the Court of Chancery will not be followed by the Supreme Court (see Flagg v. Johansen, 124 N.J.L. 456, 461; 12 A.2d 374) or even by the Court of Chancery itself. See Kicey v. Kicey, 112 N.J. Eq. 459, 461; 164 A. 684. It is the function of the court of last resort to resolve such conflicts as may be created by decisions of the lower courts, and except in rare instances that function is performed and the law is settled accordingly. Here, however, there is no conflict of decision. Whether there ever will be, or the Court of Errors and Appeals will disapprove the rulings in the Thatcher and Travers cases, is merely a matter of conjecture. See West v. American Telephone Telegraph Co., supra. At the present time the Thatcher and Travers cases stand as the only exposition of the law of the State with respect to the construction and effect of the statutes of 1932, and the Circuit Court of Appeals was not at liberty to reject these decisions merely because it did not agree with their reasoning."
The Supreme Court of Illinois dealt with this question in Moscov v. Mutual Life Ins. Co., 387 Ill. 378, 56 N.E.2d 399, wherein it said: "Plaintiffs also urge that the Farmers Trust Co. case is of but little authority because rendered by an intermediate court of review of the commonwealth. Royal League v. Kavanagh, 233 Ill. 175, invoked by plaintiffs, held that, in advance of its announcement by the Supreme Court of another State, this court cannot assume the common law in the sister State will be declared to be different from the common law as construed in Illinois. The reason for the existence of this rule has been abolished by the Uniform Judicial Notice of Foreign Law Act. (Ill. Rev. Stat. 1943, chap. 51, pars. 48g-48n.) When the reason for a rule disappears the rule should likewise disappear. In West v. American Telephone and Telegraph Co., 311 U.S. 223, the Supreme Court of the United States said, `Where an intermediate appellate state court rests its considered judgment upon the rule of law which it announces, that is a datum for ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise.' If Courson v. New York Life Ins. Co., 295 Pa. 518, be deemed not decisive of the issue made with respect to the question of Theodore Moscov's alleged mental incapacity, we must accept the decision of the intermediate court of review as stating the law of Pennsylvania, in the absence of any conflicting decision by another appellate court of co-ordinate jurisdiction in that commonwealth or by its highest court of review."
It seems clear that the decision in Thieme v. Union Labor Life Ins. Co., supra, although a decision of the intermediate appellate court of Illinois should be accepted as stating the law of Illinois and, as such, is applicable to the situation before us. We are required to hold, under the law of Illinois, the certificate of insurance is a part of the insurance contract in the case presently before us.
It is readily apparent that differences exist in the provisions of the master policy and the certificate. The most important difference is that under the master policy, giving it the construction most favorable to the insured, the effective date as to Exstrum was December 1, 1954, while under the certificate of insurance the effective date was October 1, 1954. If the effective date was December 1, 1954, Exstrum had not qualified for insurance and the insurance company has no liability. If the effective date was October 1, 1954, Exstrum had been thereafter actively employed and was qualified for the insurance, and the basis of the rejection of the claim was without merit. The law is that where a party gives a reason for his conduct and decision touching anything involved in a controversy he cannot, after litigation has begun, change his ground, and put his conduct upon another and a different consideration. O'Neil v. Union Nat. Life Ins. Co., 162 Neb. 284, 75 N.W.2d 739.
Under the law of Illinois the certificate of insurance is a part of the insurance contract. The provisions in the two instruments are in conflict, particularly with reference to the effective date of the policy. It is a universal rule that where provisions of a contract of insurance are in conflict, or subject to more than one interpretation, the provision or interpretation most favorable to the insured will ordinarily be adopted. In Koehn v. Union Fire Ins. Co., 152 Neb. 254, 40 N.W.2d 874, this court stated the rule as follows: "If the contract was prepared by the insurer and contains provisions reasonably subject to different interpretations, one favorable to the insurer and one advantageous to the insured, the one favorable to the latter will be adopted."
We hold therefore that the group policy of insurance here involved is an Illinois contract, that under the law of Illinois the certificate of insurance is a part of the insurance contract, and the effective date of the policy is controlled by the provisions of the certificate of insurance under the rule of construction herein cited. The defense that the deceased Exstrum had never qualified for insurance under the terms of the policy contract is without merit under the law of Illinois. The judgment of the district court finding for the plaintiff for $2,500, with interest and costs, is therefore correct. An attorney's fee of $500 is allowed the plaintiff for the services of attorneys in this court to be taxed as costs against the defendant.
AFFIRMED.