Court: Supreme Court of Alabama; June 1, 1990; Alabama; State Supreme Court
Carleen Gillespie, widow of Ward Gillespie, filed a lawsuit against Safeco Insurance Company for death benefits under her husband’s life insurance policy. After the trial court granted Safeco a summary judgment, Gillespie appealed, and the appellate court reversed and remanded the case for trial. Upon remand, the trial court directed a verdict in favor of Safeco, prompting another appeal from Mrs. Gillespie.
Ward Gillespie had purchased a policy from Safeco in 1972 with a face value of $200,000 and accidental death benefits of $150,000, naming Carleen as the beneficiary. The policy required annual premiums due on August 24. On June 27, 1984, Ward Gillespie acquired a replacement policy from Equitable Insurance Company. On August 7, 1984, a sales agent, William I. Davis, prepared a letter for Gillespie to cancel the Safeco policy, which Gillespie signed and Davis later sent to Safeco on September 18, 1984. Safeco received this cancellation request along with the policy on September 21, 1984.
However, on September 28, Safeco issued a notice indicating that the policy had lapsed due to non-payment, while Ward Gillespie died in an accident on September 22, 1984. Carleen Gillespie filed a claim on October 11, 1984, which Safeco denied, leading to the lawsuit.
The central issue was whether the insurance policy was active at the time of Ward Gillespie's death. Under Alabama law, policies remain effective during a 30-day grace period for premium payments, which applied in this case. Since Gillespie died within this grace period and Safeco failed to act on the cancellation letter, a genuine issue of material fact existed regarding the policy's status at the time of death. Consequently, the appellate court found that the trial court erred in granting summary judgment to Safeco and reversed the decision.
The court's judgment was reversed and remanded for further proceedings, with Justices Jones, Almon, Shores, and Adams concurring, Justice Houston concurring specially, and Justice Maddox dissenting.
