Organized Security Life Insurance v. Munyon

John A. Fogleman, Justice.

This appeal questions the correctness of action of the trial court in denying appellant’s motion for summary judgment and granting appellee’s. Appellee Munyon commenced the action, seeking to recover weekly total disability payments under a policy issued him by American Alliance Life Insurance Co. He alleged that: Munyon’s claims were paid by American Alliance through November 1, 1967; thereafter, American Alliance was declared insolvent by the Insurance Commissioner while it was indebted to appellee on account of his total disability; on February 13, 1968, appellant assumed, agreed to pay and became liable for performance of all obigations imposed upon American Alliance under said policy, as evidenced by a Certificate of. Assumption executed and delivered to Munyon. Appellee sought to recover for benefits accrued after the date of the assumption agreement, statutory penalty and attorney’s fees.

The policy and Certificate of Assumption were exhibited with the complaint. The latter document contained a statement that Organized Security assumed appellee’s American Alliance policy, together with amendments thereto and agreed to carry out the obligations of American Alliance.

Appellant, by answer, admitted that the policy exhibited with the complaint was a true copy of that policy, that appellee became totally disabled after January 9, 1967, and that his claim for benefits was honored by the issuing company through November 1, 1967. It denied that the Certificate of Assumption was anything other than an assumption of obligations under the policy for claims arising after the assumption date and denied liability for disability benefits accruing after February 13, 1968. Appellant stated, in its original answer, that inasmuch as the disability of Munyon appeared to be total and permanent, no useful purpose could be served by continued payment of premiums and tendered the return of two premiums paid by Munyon. A reinsurance agreement between the Insurance Commissioner, as Receiver for American Alliance, and Organized Security was exhibited with the answer. Under this agreement the latter company agreed to reinsure all outstanding policies of the type issued to appellee in accordance with their terms and to assume all liabilities of the former company under these policies, excluding all claims incurred under such policies before the “assumption of risk time and date.” Appellant also agreed to assume and carry out the several obligations of American Alliance expressed by and contained in the policies and to hold American Alliance harmless from any and all obligations in said policies arising on or after the effective date of the contract which was February 13, 1968.

Appellee Munyon moved for summary judgment-His affidavit in support of his motion also exhibited a copy of the Certificate of Assumption, which he stated was issued to him, together with a letter transmitting it. He stated that he was totally disabled within the meaning of the policy since December 28, 1966, and that he had filed a claim for disability benefits beginning February 13, 1968, with appellant, but that the claim had been refused.

Thereafter, appellant filed a motion for leave to amend its answer, a response to appellee’s motion for summary judgment and its own motion for summary judgment. The proposed amendment to the answer contained a denial that appellee was disabled and alleged that if any disability existed, it was the result of a diabetic condition specifically excluded under the American Alliance policy. A supporting affidavit was made by appellant’s attorney of record. Therein he stated that the reinsurance agreement attached to appellant’s original answer was a true and correct copy of the original agreement and that an exhibited “Waiver Rider” was attached to the original policy, but was not included with the policy attached to appellee’s affidavit. He asserted, in the affidavit, that when total permanent disability commences, the loss occurs at that time and may be considered a single claim, so that no cause of action was stated by appellee. The waiver rider stated an agreement that the terms of the policy should not apply to any disability caused, directly or indirectly, wholly or in part, by diabetes and any disease or disorder caused directly or indirectly from diabetes. It bore signatures by the president and assistant secretary of American Alliance, but no acceptance by appellee, although there was a blank space indicated for signature indicating acceptance.

Appellee then filed an amendment to the motion for summary judgment together with his affidavit that the waiver rider was not attached to or made a part of Ms policy at the time of its issuance and delivery, and that there was no agreement that such a rider was to be made a part of his policy. He exhibited Ms application,1 his receipt for the policy, his proof of loss executed February 6, 1968, his attending physician’s statement dated May 22, 1967, a letter from American Alliance dated May 26, 1967, transmitting a check for six weeks’ disability payments and requesting a claimant’s statement for each month, his physician’s statement dated February 6, 1968, a letter from appellant dated April 1, 1968, and vouchers showing payment of a total of $2,200 at the rate of $50 per week by American Alliance on appellee’s claim for disability. Later appellee filed another affidavit exhibiting a statement by his attending physician dated January 21, 1969. No further controverting affidavits or other matter was filed by appellant.

Each of the physician’s statements mentioned stated that the nature of appellee’s sickness was: (1) acute myocardial infarction (2) arteriosclerosis (3) diabetes (or diabetes with retinitis) (4) blindness, left eye can only discern light, right eye — 20/400, cannot read. Under the heading “Remarks” the last statement included the following:

“His total disability can be due either to his heart disease (Cardiac Disease, coronary insufficiency and arteriosclerosis, class III-D,) or to blindness. His heart disease could have developed either on account of Diabetes or not on account of it.”

The letter from appellant to appellee dated April 1, 1968, read as follows:

“Enclosed you will find a claimant’s statement form DI100CF which is to be filled out by you on the side marked claimant’s statement and by your doctor on the side for the attending physician’s statement. We would like to have as complete an account of your disability as possible for our records here.
Also, I am enclosing a few supplementary proof of loss form DI100CFS one to be completed each month and returned to us.
This company took over the policies and any liability under the policies commencing with the date of February 13, 1968. Any prior claims will be paid by the Deputy Receiver, Mr. W. W. Barton of Hot Springs. As soon as we receive the completed forms, we will send you a check for the amount due from the date of February 13th on.”
Appellant relies on two points for reversal. They are:
I
“AS A MATTER OF LAW DEFENDANT IS NOT LIABLE UNDER THE REINSURANCE AGREEMENT DATED FEBRUARY 13, 1968, FOR PLAINTIFF’S CLAIM FOR TOTAL DISABILITY SINCE PLAINTIFF’S CLAIM WAS A CLAIM INCURRED BY AMERICAN ALLIANCE PRIOR TO FEBRUARY 13, 1968.
II
GENUINE ISSUES OF MATERIAL FACT WERE RAISED BY THE PLEADINGS, EXHIBITS, AND AFFIDAVITS, WHICH COULD NOT BE DISPOSED OF BY SUMMARY JUDGMENT.”

In support of the first point, appellant argues that the exclusion of all claims, incurred under American Alliance policies before the assumption of risk time and date,2 left it without liability, as a claim and loss arising December 28, 1966, and a liability of the issuing insurance company.

Assuming, without deciding, that the exclusionary clause in the reinsurance agreement is subject to the construction urged by appellant, it is also subject to a construction making it liable for the monthly payments to appellee and others similarly situated as they become due. Appellant can hardly say that it was unaware of appellee’s claim. The reinsurance agreement required that the Insurance Commissioner deliver to appellant all of American Alliance Life Insurance Company’s books and records pertaining to its policies and policyholders and its card file. Appellant promptly forwarded its Certificate of Assumption to appellee. In this Certificate, appellant agreed “to carry out the obligatiQns of the American Alliance Life Insurance Company under individual policies issued under the terms of such policies.” (Policy No. 6-H-115)

Appellant’s letter of April 1, 1968, clearly recognizes that appellant was aware of appellee’s claim and acknowledged that it had taken “over the policies and any liability under the policies commencing with the date of February 13, 1968.” Appellee was also advised that, when the completed forms requested were received, appellant would send ‘ ‘ a check for the amount due from the date of February 13th on. ” It is clear that appellant did not then construe its reinsurance agreement as it now does. Thereafter, appellee paid at least two quarterly premiums which were returned to appellee with appellant’s original answer filed December 10, 1968.

Even where a contract is ambiguous in its terms, the parties will be hound to the construction which they themselves have placed upon it. Arlington Hotel Co. v. Rector, 124 Ark. 90, 186 S. W. 622.

In support of the second point, appellant argues that there is a genuine issue of fact as to whether the waiver rider mentioned in and attached to the affidavit of its attorney of record in this case was attached to and a part of the insurance policy issued by American Alliance. It might well be correct in this respect if its response and motion were supported as required by statute, even though appellee by affidavit categorically denied appellant’s assertion in this respect. The only support for this assertion was that of appellant’s attorney. He did not state in his affidavit, when he became attorney for appellant, that he had personal knowledge of the attachment of the waiver rider or, if he did, how he acquired this knowledge. An affidavit by an attorney is not to be considered under summary judgment procedures when the affidavits do not show that the attorney had personal knowledge of the facts set out and that he was competent to testify to them. Ark. Stat. Ann. § 29-211(e) (Supp. 1967); Mercantile National Bank v. Franklin Life Ins. Co., 248 F. 2d 57 (5th Cir. 1957); Subin v. Goldsmith, 224 F. 2d 753 (2nd Cir. 1955).

It must be affirmatively shown, or appear from statements contained in any affidavit supporting or opposing a summary judgment, that it is based upon personal knowledge of the affiant, that the facts stated therein would be admissible in evidence and that the affiant is a witness competent to state these facts in evidence. Zampos v. United States Smelting, Refining & Mining Co., 206 F. 2d 171 (10th Cir. 1953); Marion County Co-op Assn. v. Carnation Co., 114 F. Supp. 58 (W. D. Ark. 1953), aff’d., 214 F. 2d 557 (8th Cir. 1954); Young v. Atlantic Mutual Insurance Co., 38 F. R. D. 416 (E. D. Penn. 1965); Walpert v. Bart, 280 F. Supp. 1006 (D. C. Md. 1967), aff’d., 390 F. 2d 877; Couillard v. Charles T. Miller Hospital, 253 Minn. 418, 92 N. W. 2d 96 (1958). The affidavit of an attorney of record is not prohibited, but it is subject to the same tests as those of any other affiant. Here, the attorney’s affidavit is deficient. It does not indicate in any way how he acquired his knowedge of, or information about, the rider or its attachment to the policy. There was no error in finding that there was no issue of fact on this point. Furthermore, the copy of the rider attached to the deposition is neither a sworn or certified copy as required hy statute. Ark. Stat. Ann. § 29-211 (e) (Supp. 1967).

Since we find no merit in either point, the judgment is affirmed. Appellee requests allowance of an attorney’s fee in addition to the $500 allowance by the trial court. We allow an additional $500.

Jones, J., dissents.

Appellee stated in this application that he had diabetes, that he had been treated for this condition about 1959 by the same physician who made reports to the insurance companies and that he consulted this doctor about once a year.

February 13, 1968