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Keane v. Aetna Life Insurance Co.

Decided: October 3, 1952.

ALICE P. KEANE, PLAINTIFF-APPELLANT,
v.
AETNA LIFE INSURANCE COMPANY OF HARTFORD, CONNECTICUT, A CORPORATION OF THE STATE OF CONNECTICUT AND GENERAL ANILINE & FILM CORPORATION, A CORPORATION OF THE STATE OF DELAWARE, IN THE ALTERNATIVE, DEFENDANTS-RESPONDENTS



Jayne, Proctor and Schettino. The opinion of the court was delivered by Schettino, J.s.c. (temporarily assigned).

Schettino

This is an appeal from a summary judgment entered in favor of both defendants.

Plaintiff is the beneficiary named in a certificate issued to her husband, Anthony P. Keane, by defendant Aetna Life

Insurance Company of Hartford, Connecticut (hereinafter called "the insurer") under a group life insurance policy issued by the insurer to Keane's employer, the defendant General Aniline & Film Corporation (hereinafter called "the employer"). Plaintiff brought this action against the insurer upon the certificate and basic group policy to recover the sum of $8,000, the amount specified in the certificate. Alternatively she sought judgment against the employer on the charge that the employer breached its duty in respect hereinafter mentioned, as the result of which the insurance protection was lost.

The group policy was written under a plan whereby both the employer and employee contributed to the cost of the insurance. The policy provides for payment of the total premium by the employer, and requires the employer to collect the employee's contributions. To that end, Keane executed a form authorizing the employer to make a monthly deduction "from my wages or salary."

On June 17, 1949, Keane was laid off for lack of work. The employer paid the premium for the month of June, but made no payment on behalf of Keane thereafter. The policy contained a grace period of 31 days with respect to nonpayment of premium, and also permitted conversion to an individual policy within a like period after termination of employment. No application for conversion was made. Keane died on August 11, which was 11 days after the expiration of coverage on the thesis advanced by the insurer.

At the time of the lay-off, Keane was paid $70.40 in lieu of vacation. Subsequently, beginning four weeks after the lay-off, he was paid "severance pay" in four weekly installments, totaling $228.48, the last payment being made on August 8. The employer made deductions from those payments for unemployment insurance, social security benefits and income tax, but made no deduction for the insurance premium.

I

CLAIM AGAINST INSURER

Plaintiff seeks to recover from the insurer upon two theses. The first is that Keane's employment was not terminated within the meaning of the policy; that the employer was bound to deduct the premium contribution from the vacation and severance pays; that the insurer is chargeable with the employer's failure on the hypothesis that the employer was insurer's agent for payment; and that there was a "clerical error" within the meaning of the policy provision. The second is that the insurer may not terminate an employee's coverage without notice of such termination and of his right to convert, and that no such notice was here given. We will take the contentions in the stated order.

The group policy provides:

"INDIVIDUAL TERMINATIONS

In the event any employee fails to make the required contribution for the insurance under this policy, the insurance of such employee will automatically cease at the end of the period for which contribution is made.

Insurance of any employee will automatically cease thirty-one days after termination of employment. * * * If an employee is absent on account of sickness or injury, or is temporarily laid off, granted leave of absence, pensioned or retired, employment shall be deemed to terminate when premium payments for such employee's insurance are discontinued."

It will be observed that under the quoted provisions, the insurance of any employee will terminate during his active employment if he "fails to make the required contribution." It is independently provided that insurance ceases 31 days "after termination of employment," but with respect to the classes of termination of active work set forth in the second sentence of the second quoted paragraph, the insurance may be continued but "employment shall be deemed to terminate when premium payments for such employee's insurance are discontinued." We note that with respect to this last provision,

the termination hinges upon the non-payment of premium rather than upon the employee's failure to make contribution, as in the case of the first quoted paragraph. We will return later to this difference of phraseology.

The initial step in plaintiff's first thesis is that Keane was temporarily laid off and that such termination of active work did not per se constitute a termination of employment within the meaning of the policy provision. The insurer asserts that the lay-off was permanent and hence resulted in termination of insurance 31 days after the lay-off whether or not premiums were paid.

The policy does not define the words "temporarily laid off" and hence necessarily shifts the inquiry to the transaction viewed as between employer and employee. We note that in the policy as originally drawn it was provided that "in any event employment shall be deemed to terminate not later than two months following cessation of active work when a lay-off or leave of absence exceeds a two months' period." The substitution by rider of a provision devoid of specific time limitation indicates that the period of lay-off during which employment may be deemed not to be terminated was intended to be a variable period ascertainable solely by the events which occur between employer and employee. Defendant's affidavits state that Keane was notified that he was being laid off for lack of work and would be "given notice to return for re-employment" if work became available. The Works Agreement between the employer and the union nowhere defines lay-offs in terms of temporary or permanent lay-offs. The Works ...


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