Cantrell v. Benefit Ass'n of Railway Employees

MR. JUSTICE ANGSTMAN

delivered the Opinion of the Court.

This is an appeal by defendant from a judgment in favor of each plaintiff for individual claims alleged to be due each of them under a contract of group insurance. The contract covered hospital and medical expense incurred by those insured.

The contract was originally drafted on May 12, 1952, and was made effective from May 1, 1952, until May 1, 1953.

It contained this clause: “In event the number of insureds hereunder becomes less than twenty-five, the Association shall decline to renew this policy at the expiration of the current insurance year. If the number of Insureds hereunder becomes less than 75 c/0 of the eligible employees, the Association reserves the right to cancel this policy on any premium due date by giving thirty days’ notice of intent to cancel.”

Obviously, under this clause the notice of intent to cancel had to be given thirty days before the time fixed for the cancellation date.

On April 9, 1953, a rider was attached to the policy to be effective as of May 1, 1953, which increased the premium rates and contained a clause to the effect that the first $50 of expenses incurred by each insured was not covered by the policy of insurance.

Likewise the rider contained this clause:

‘ ‘ 1. Said contract is renewed for a period of one month from May 1, 1953, and thereafter for periods of one month each by the payment of the required premiums in advance until terminated by the Association by giving notice in writing of the de*430sire for such termination at least thirty days prior to the date such termination is to become effective.”

It also contained the following clause:

“3. If the number of Insureds under said contract on May 1, 1953, is less than 75 % of the eligible employees, said contract shall be cancelled as of May 1, 1953. If the number of Insureds under said contract, becomes less than 75% of the eligible employees on or after June 1, 1953, the Association reserves the right to cancel said contract on any premium due date by giving thirty days’ notice of intent to cancel.”

It was the practice for the employer, the Anaconda Company, to deduct premiums for the insurance from the pay checks of its employees and remit them to the insurer. In May of 1953, when most of the claims in controversy here arose, the union had a membership' of 432. The number of employees eligible to participate in the group insurance fluctuated since, under the contract, an employee was not eligible until he had been employed for at least 90 days.

Premiums had been deducted from pay checks of 239 employees for the May premium and these had been transmitted to the insurer.

On May 29, 1953, defendant wrote a letter to the recording secretary of the union stating that the premiums for the month of May had been received but that they would be held in abeyance until “satisfactory arrangements for the continuation of the group insurance contract covering the members of your union are completed.” Evidently defendant did not consider the contract of insurance as having been cancelled. It held the May premiums and the June premiums until June 18, 1953, when they were returned to the employer.

The evidence is not clear as to the exact number of employees eligible for coverage as of May 1, 1953. There is some evidence that that number was 325; 75% of that number would have called for a coverage of 243 whereas there were only 239 who *431paid premiums for May 1953. Hence, it is a fair conclusion that there was not a 75% coverage on May 1, 1953.

But it does not follow that the contract was at an end as contended by defendant. Much of the time during the life of the original contract, there was less than 75% coverage and yet the defendant took no steps to cancel the policy. The conduct of the insurance company indicated that it was concerned more with an increase in the premium rate, which became effective May 1, 1953, than with the number of insured, since that number was at all times well in excess of the minimum of 25 specified in the original contract. It did not stand on the rider and declare the policy cancelled on May 1st as it might have done, but on the contrary it held the premium and in effect led the insured employees to believe that the contract was still effective.

The provisions in the rider, with respect to notice of cancellation, are ambiguous and hence must be construed most strongly against the party responsible for the ambiguity which in this case is the defendant since, it drafted the rider. One thing is certain and that is that if the average fell below 75% on or after June 1, 1953, the defendant had the right to cancel the policy on any premium due date by giving 30 days’ notice of intent to cancel. Likewise it is plain that the contract of insurance, as well as the rider, recognized the need to give notice of cancellation in order to terminate the contract.

The only effect of the clause providing for cancellation of the contract, if the coverage was less than 75% as of May 1, 1953, was to obviate the necessity for thirty days’ notice. It did not obviate the necessity of notifying the insured that they were no longer insured and that the contract was can-celled. The insured were entitled to be notified that the contract was cancelled in order to be enabled to obtain other insurance if they so desired.

Here, instead of notifying the insured that the policy was cancelled, defendant retained the premiums and led the insured to believe that they were covered by the contract as *432theretofore. The purpose of the notice of cancellation is to enable the insured to obtain insurance elsewhere. 29 Am. Jur., Insurance, section 284; Poch v. Equitable Life Assur. Soc., 343 Pa. 119, 22 A. (2d) 590, 142 A.L.R. 1279; Shears v. All States Life Ins. Co., 242 Ala. 249, 5 So. (2d) 808.

We do not regard the cases of Wilson v. Royal Union Mutual Life Ins. Co., 137 Iowa 184, 114 N.W. 1051; Zaunczkowski v. Travelers Ins. Co., 3 N. J. Super. 442, 66 A. (2d) 463; Keane v. Aetna Life Ins. Co., 22 N.J. Super. 296, 91 A. (2d) 875, and others relied on by defendant as applicable to a situation such as we have here. In those cases the contract provided that an event known to the insured or brought about by his action would cancel the policy without any notice.

Here the insured individuals did not know whether or not there was 75 percent coverage, but had the right to assume that there was since defendant Avithheld the premium and treated the contract as fully effective so far as each individual insured was concerned until it finally returned the premiums in June 1953.

There is no merit in defendant’s contention that the contract, under the facts here shown, was terminated on May 1, 1953.

Defendant contends that the court erred in overruling its demurrer to the amended complaint on the ground of misjoinder of parties plaintiff.

All the plaintiffs are employees of the Anaconda Company at its lumberyard at Bonner, Montana. The policy of insurance was made directly with such employees Avho paid the required premium. There was only one contract. The principal issue in the ease is whether that contract was in effect in May 1953 or whether it had been cancelled. All plaintiffs were interested in that question.

R.C.M. 1947, section 93-2811, provides: “All persons having an interest in the subject of the action, and in obtaining *433the relief demanded, may be joined as plaintiffs, except when otherwise provided in this chapter.”

And under section 93-2821, it is provided that: “Of the parties to the action, those who are united in interest must be joined as plaintiffs or defendants.”

An exception is there made in a case where the parties are so numerous that it is impracticable to bring them all before the court in which ease one or more may sue or defend for the benefit of all. Here all plaintiffs are united in interest in that they are interested in a finding that the contract was in effect in May 1953.

“* * * there is but one cause of action, persons who have an interest therein may join as plaintiffs notwithstanding their interests are distinct and severable.” 67 C.J.S. Parties section 19, page 933, note 28; Johnson v. Wright, 175 Minn. 236, 220 N.W. 946, and “their interests need not necessarily be equal.” 67 C.J.S., Parties, section 19, page 933, note 19; and section 21, page 937, notes 88 and 89.

Statutes such as section 93-2811. must be liberally construed. 67 C.J.S., Parties, section 21, page 935, note 61.

Ohio has a statute practically identical with our section 93-2821, and the Supreme Court of Ohio in Smith v. Kroeger, 138 Ohio St. 508, 37 N.E. (2d) 45, quoted with approval from the earlier ease of Haggerty v. Squire, 137 Ohio St. 207, 28 N.E. (2d) 554, as follows:

“Where a number of persons have separate and individual claims and rights of action against the same party, but all such claims arise from a common source and represent a like interest, the whole matter may be litigated in a single action brought by all of the claimants as co-plaintiffs, or, in ease the parties are numerous making it impracticable to bring them all before the court, by one or more of them suing for himself or themselves and on behalf of the other claimants.” [37 N.E. (2d) 47.]

Statutes on joinder of parties plaintiff similar to our *434sections 93-2811 and 93-2821, have in effect, adopted the equity rules governing joinder of parties. 39 Am. Jur., Parties, section 26, page 885. See also National Surety Co. v. City of Louisville, 165 Ky. 38, 176 S.W. 364; Dixie Fire Ins. Co. v. American Confectionery Co., 124 Tenn. 247, 136 S.W. 915, 34 L.R.A., N.S., 897, and eases therein cited; Pomeroy’s Equity Jurisprudence, Vol. 1 (5th ed.) sections 257, 261(a).

Here all persons having claims against defendant, arising after May 1, 1953, and before the contract was terminated on June 18, are interested in the question as to whether the contract was cancelled on May 1. One determination of that question should settle it for all interested parties and thus prevent a multiplicity of actions.

As is stated in 39 Am. Jur., Parties, section 27, page 887,

“The principle which underlies this doctrine of equity is that every judicial controversy should, if possible, be ended in one litigation, and that the decree pronounced in a single suit should determine all rights, interests, and claims, should ascertain and define all conflicting relations, and should forever settle all questions pertaining to the subject matter.”

And in 39 Am. Jur., Parties, section 26, page 886, it is said:

“Statutory provisions on the subject of joinder of parties must be allowed considerable flexibility to meet the requirements of justice and convenience in the cases as they arise. In many instances it may be said that the question who shall be made parties in a given cause is one of convenience and discretion rather than of absolute right, to be determined according to the exigency of the particular ease.”

Here the court did not abuse its discretion in overruling defendant’s demurrer on the ground of misjoinder of parties plaintiff.

Defendant also contends that the court erred in overruling its motion to require plaintiffs to separately state and number their causes of action and its motion to make the complaint more definite and certain.

*435Here there is but one cause of action, viz., the existence or nonexistence of the group insurance contract in May 1953. That affected all the parties plaintiff and the defendant. The fact that the contract gave rise to different claims to each plaintiff did not make of it several causes of action, but if so, they were properly joined under section 93-3203 since they affected all the parties.

The next point raised by defendant is that even if the contract was in force during May and June 1953, the plaintiffs did not show that they are entitled to any sum whatsoever, and hence that its motion for nonsuit should have been sustained.

Plaintiff, by its Exhibit 4, submitted the written claims of all the plaintiffs but offered no evidence to substantiate the claims. No witness was examined as to the correctness of the claims and defendant was not afforded the right of cross-examination of any of the claimants or any other witness touching upon the question of the merits of the several claims.

Under the circumstances the motion for nonsuit should have been sustained. Also defendant pleaded in its answer that 14 of the 29 claimants failed to furnish to defendant affirmative proof of loss within ninety days after the. date of such loss. Since the cause must be remanded for a new trial this issue must also be determined upon evidence bearing upon the point.

We call attention also to two of the claims which cannot be sustained under any theory. One claim was by Carl Holson which appears on its face to be a claim for $250 for entering the hospital on June 26, 1953, which was after the policy was cancelled by the giving of notice on June 18 and return of the premiums. Another is by Robert J. Gow for surgery on June 29, and this too was after the policy had been cancelled.

The cause is remanded and a new trial ordered.

MR. JUSTICE BOTTOMLY and MR. JUSTICE ADAIR concur.