Richard L. Elsey, Appellant, v. Prudential Insurance Company of America, Appellee, 262 F.2d 432 (10th Cir. 1958)

Richard L. Elsey, the named beneficiary of a $5,000 certificate of insurance issued pursuant to the terms of a group life insurance policy, brought this action to recover the amount of the certificate. The case was tried to the court without a jury, and judgment was entered for the defendant insurance company. The main question on this appeal arises out of the policy provisions relating to the effective date of the insurance.

There is no dispute as to the essential facts. On June 1, 1956, The Prudential Insurance Company of America issued a group life insurance policy to the Community State Bank of Tulsa, Oklahoma. The policy contained these provisions:

"Each full-time Employee entering the eligible classes after the effective date of this Rider shall be eligible for insurance hereunder from the completion of three months of continuous service on a full-time basis with the Policyholder. * * *

"In any instance when an Employee is not actively at work on full time on the date he would become insured in accordance with the above provisions, the commencement of the Employee's insurance shall be deferred until return to active work on full time."¹ 

The plaintiff's wife became an employee of the bank on July 26, 1957, and sometime thereafter made application for life insurance coverage under the group policy. She was issued a certificate of insurance stating that its effective date was October 26, 1957. That date fell on a Saturday, a day when the bank was closed and the employees were not at work. The insured worked on October 24th but, for personal reasons, did not report for work on October 25th. She became ill on October 26th and died October 29th. The trial court found that the insured was not actively at work on October 26, 1957, the effective date of the insurance, or at any time thereafter,²  and concluded that she never was insured under the certificate issued to her.

The plaintiff argues that the insured had completed three months of continuous service as a full-time employee; that she had fulfilled all the requirements of the policy except being actively at work on the effective date inserted in her certificate; and that the only reason she was not actively at work on that date was because the bank was closed, it being a Saturday holiday, and that therefore the insurance was in effect. It is also urged that there is a conflict between the provision in the certificate fixing a certain date as the effective date of insurance and the provision that the insured must be actively at work on full time on the effective date. There is no conflict between these provisions, and thus no ambiguity which, under the well settled rule, would have to be resolved in favor of the insured. See Equitable Life Assur. Soc. of United States v. Hoover, 187 Okl. 134, 101 P.2d 632. In unmistakable language, the policy and the certificate provide that if the insured is not actively at work as a full-time employee when the three month period expires, "the effective date of the insurance evidence by [the] certificate will be deferred until [she] returns to active work on full time." When the provisions of the policy and the certificate are read together, it is evident that the parties intended that the effective date inserted in the certificate was conditioned upon the insured being actively at work on that date. To construe the policy and certificate as suggested by the plaintiff would negative the provision that if the employee is not actively at work on the effective date of the commencement of the insurance, it "shall be deferred until return to active work on full time." See Shira v. New York Life Ins. Co., 10 Cir., 90 F.2d 953.³  "A contract of insurance rests upon and is controlled by the same principles of law applicable to any other contract. What the contracting parties intended, mutually agreed to, and their minds met upon, is the measure of their obligations." Mofrad v. New York Life Ins. Co., 10 Cir., 206 F.2d 491, 493. The parties to an insurance contract may fix the terms as they see fit, and they will not be rewritten by the courts. Lentin v. Continental Assur. Co., 412 Ill. 158, 105 N.E.2d 735, 44 A.L.R.2d 463.

Being "actively at work" on October 26, 1957, was a condition precedent to an effective contract as of that date. Rushing v. Manhattan Life Ins. Co., 8 Cir., 224 F. 74; Atlas Life Ins. Co. v. Schrimsher, 179 Okl. 643, 66 P.2d 944; American Bankers' Ins. Co. v. Thomas, 53 Okl. 11, 154 P. 44. "Actively at work on full time" means actually on the job and performing the employee's customary work. Being on the payroll is not enough. Colantonio v. Equitable Life Assur. Soc., Ohio Com.Pl., 100 N.E.2d 716; Boyer v. Travelers Ins. Co., 7 Cal. 2d 615, 61 P.2d 925; Vol. 2, Words and Phrases, p. 222, et seq. The purpose of the restrictive clause is clear. Without it, a regular employee could be absent from work on the date when the insurance became effective, or for some time prior thereto, for various reasons including illness, and would be insured if death occurred after the effective date stated in the certificate and before the employee's return to work.

Okl.Stat.Ann., Title 6, § 110.1 (Supp.1957), provides that any bank doing business in Oklahoma may close on any one business day of each week, in addition to any other legal holiday, and any act authorized, required or permitted to be performed on the day which the bank is closed may be performed on the next succeeding business day, without the loss of any rights resulting from the delay. The statute has no application here. Its purpose is to prevent forfeitures or liability which might occur as a result of a person being unable to perform banking business on a day when the bank is closed. Furthermore, if the statute did apply, it would only have extended the right of the insured to perform the required act — that is, being actually at work — on the next succeeding business day. This was a right which she already had under the terms of the policy.

Affirmed.