Gaulden v. Pilot Life Insurance Company

98 S.E.2d 355 (1957)

246 N.C. 378

Mrs. Thomas T. GAULDEN v. PILOT LIFE INSURANCE COMPANY.

No. 603.

Supreme Court of North Carolina.

June 7, 1957.

*357 S. Bernard Weinstein and Robert S. Cahoon, Greensboro, for plaintiff-appellant.

Wharton & Wharton, Greensboro, for defendant-appellee.

DENNY, Justice.

The sole question posed for decision on this appeal is whether or not the court below committed error in concluding as a matter of law, upon the facts stipulated *358 and the terms and provisions of the policy of insurance involved, that the plaintiff is entitled to recover only $2,000, rather than $4,000 for which she brought her action.

The provisions in the group policy bearing on the question under consideration are as follows:

"All persons directly employed on a full-time basis and compensated for services by the Policyholder may be insured under this policy. "Eligibility "Each person described in the preceding provision shall be eligible for insurance hereunder on July 1, 1955, * * * "Effective Dates "The insurance hereunder of any person shall become effective on: "1. the date of such person's eligibility, if he makes written application for such insurance on or before the date of his eligibility, or "2. the date of receipt by the Policyholder of such person's written application for insurance, if such written application is made after the date of his eligibility and on or before the thirty-first day following the date of his eligibility, provided, in either case, such person is actively at work on that date. "The insurance on any person not actively at work on the date when his insurance hereunder would otherwise become effective shall become effective on the date such person begins or returns to active work. For the purpose of insurance hereunder, if the effective date of insurance with respect to any person falls on a day which is not a scheduled working day for such person, and if such person was actively at work on the last preceding scheduled working date, the insurance shall become effective as if the person were actively at work on such effective date. "Endorsement "Notwithstanding any provision herein to the contrary, if any person eligible for insurance hereunder on July 1, 1955 was not actively at work on that date, the amount of insurance in force on his life, if any, on June 30, 1955 under the Group Policy which this policy replaces shall continue in force under this policy until the earliest of the following dates: "(a) the date of the termination of his employment with the Policyholder, "(b) the date of the expiration of the period for which he last makes the required contribution to the cost of his insurance, if he fails to make any such contribution when due, "(c) the first date on which he is both actively at work and enrolled for insurance under this policy, and "(d) the thirty-first day following his return to active work. * * * Individual Terminations of Insurance "The insurance on any person insured hereunder shall automatically cease on the date of the termination of employment of such person in the class or classes eligible for insurance hereunder. "Cessation of active work shall be deemed to constitute termination of employment except as provided in the following paragraphs. "If any person is absent from active work as a result of injury, sickness or retirement, his employment may be deemed to continue, for the purposes of insurance hereunder, until terminated by the Policyholder. *359 "If any person is absent from active work on account of leave of absence or temporary lay-off, his employment may be deemed to continue, for the purposes of insurance hereunder, but not for longer than twelve months during such absence, following which, unless he returns to active work with the Policyholder, his insurance hereunder shall terminate automatically."

With respect to the effective date of the insured's eligibility, the facts disclose that he made written application on 6 June 1955 for coverage under the new policy of insurance, which became effective on 1 July 1955, and that such application was duly delivered to and received by the defendant insurance company, and the City of Greensboro deducted from his salary the amount required to pay the insured's part of the increased premium for the month of July 1955, and remitted it to the defendant.

The endorsement set out above simply provides that if any person eligible for insurance under the terms of the policy on 1 July 1955 was not actively at work on that date, the amount of insurance in force, if any, on 30 June 1955, under the old group policy, would be continued in force under the new policy until the earliest of the dates enumerated thereunder. The facts applicable to the provisions under the above subsections (a), (b), and (c) reveal that, (a) the policy was never terminated by the policyholder; (b) the date of the expiration of the period for which the insured made his last contribution for the cost of his insurance was 31 July 1955; (c) the insured was enrolled for insurance under the new policy on the date it became effective, to wit, 1 July 1955; and, if the insured was actively at work on that date within the meaning of the provisions of the policy, we think the plaintiff is entitled to recover the $4,000 provided thereunder.

It will be noted that under the provisions prescribing what shall constitute individual termination of insurance under the new policy, it is expressly provided that "cessation of active work shall be deemed to constitute termination of employment except as provided in the following paragraphs."

One of the paragraphs referred to above provides, "If any person is absent from active work on account of leave of absence or temporary lay-off, his employment may be deemed to continue, for the purposes of insurance hereunder, but not for longer than twelve months during such absence, following which, unless he returns to active work with the Policyholder, his insurance hereunder shall terminate automatically."

The appellee does not contend that the terminal leave granted to the insured terminated his employment. In our opinion, the leave of absence granted to the insured, which began on 10 May 1955 and was to continue until 31 July 1955, at which time the insured was to be retired, beginning 1 August 1955, is the identical type of "leave of absence or temporary lay-off" which was not to be deemed "cessation of active work," so as to affect the status of the insurance held under the policy, and we so hold.

Here we have an insured who had been an employee of the City of Greensboro for 28 years. He was 64 years of age on 29 June 1955. He applied for terminal leave and retirement prior to 9 May 1955. He was eligible for both. Under the terms of his employment he was entitled to terminal leave at full pay for the period from 10 May 1955 through 31 July 1955, a period which was equal to the total of his unused annual leave or vacation and his unused sick leave. He was entitled to full pay during this period, since, under the terms of his employment, he had already earned the right thereto.

An insurance policy is only a contract and the intention of the parties is the controlling guide in its interpretation. Stanback v. Winston Mut. Life Insurance *360 Co., 220 N.C. 494, 17 S.E.2d 666; Bailey v. Life Insurance Co. of Virginia, 222 N.C. 716, 24 S.E.2d 614, 166 A.L.R. 826.

If an insured, under the policy involved herein, is absent from active work on account of an earned leave of absence under the terms of his employment, and the employment under such circumstances, according to the provisions of the policy of insurance, may be deemed to continue, for the purposes of insurance, during such leave, we see no reason why the increased insurance coverage provided in the policy should not apply.

The judgment of the court below is

Reversed.

JOHNSON, J., took no part in the consideration or decision of this case.

PARKER, J., dissents.