Opinion
Filed 22 November, 1961.
Insurance 16 — Insurer is entitled to cancel a policy of group insurance for failure of the employer to pay the premium, and all employee may not thereafter recover on his certificate notwithstanding that the employer has deducted from his salary his pro rata part of the premium.
APPEAL by plaintiff from Gwyn, J., February 6, 1961, Civil Term, RANDOLPH Superior Court.
Ottway Burton, Linwood T. Peoples, for plaintiff, appellant.
Bryant, Lipton, Strayhorn Bryant, By: F. Gordon Battle, for defendant, appellee.
The plaintiff instituted this action before a Justice of the peace to recover her hospital expenses beginning April 2, and ending April 8, 1960. The plaintiff claimed the liability arose by reason of the defendant's Group Hospital Expense Policy No. GH-1900, issued to Smart Style, Inc., the plaintiff's employer. The plaintiff incurred hospital expenses of $183.35 for treatment beginning April 2, 1960. The justice of the peace rendered judgment for the plaintiff for the amount of her claim. The defendant appealed to the superior court.
In the superior court the parties waived jury trial. Judge Gwyn found these facts: The policy was issued on December 15, 1959. It required Smart Style, Inc., to make monthly premium payments in advance. These payments were made on December 15, 1959, and January 15, 1960. Smart Style, Inc., failed to make any payments thereafter. The policy terminated at the end of a 30-day grace period, or on March 17, 1960.
The plaintiff had elected to participate in the group plan and her employer, Smart Style, Inc., deducted from her salary her proportionate part of the premium due on the policy and continued to make the deductions through April 1, 1960. The plaintiff had no notice of her employer's failure to pay the premiums as the policy required. Judge Gwyn entered judgment for the defendant, from which the plaintiff appealed.
The group policy was a contract between the insurance company and the employer. The plaintiff was a third party beneficiary. Her right against the insurance company terminated at the end of the grace period by reason of the failure on the part of her employer to keep the contract alive by paying the required premium. Although the plaintiff paid her employer, who defaulted, her recourse is not against the insurance company.
The judgment of the superior court is
Affirmed.