Goldman v. N.Y. Life Ins. Co.

• Decision Date: 26 March 1934
• Citation: 171 A. 541
• Parties: GOLDMAN v. NEW YORK LIFE INS. CO.
• Court: New Jersey Court of Chancery

171 A. 541

GOLDMAN

v. NEW YORK LIFE INS. CO.

Court of Chancery of New Jersey.

March 26, 1934.

Syllabus by the Court.

1. The waiver of premium clause under consideration reads as follows:

"The Company, by endorsement hereon, will waive payment of the premiums thereafter becoming due if the insured, before attaining the age of 60 years and after paying at least one full annual premium and before default in the payment of any subsequent premium shall furnish proof satisfactory to the Company that he has become wholly and permanently disabled by bodily injury or by disease so that he is and will be permanently, continuously, and wholly prevented thereby from performing any work for compensation or profit, or from following any gainful occupation." Held:

2. That the waiver clause is not ambiguous in its terms, but clearly sets forth the contract between the parties.

3. That furnishing of proof of disability to the insurer by the assured is a condition precedent to the waiver of premium payments, and that the event of total disability does not operate to put into effect the waiver clause.

4. Premiums paid after the occurrence of the disability, but before the furnishing of proof thereof, are not recoverable.

5. Where contract of reinstatement of a life insurance policy is procured by fraudulent representations as to state of health, the insurance company is entitled to rescind.

Suit by Simon Goldman against the New York Life Insurance Company.

Bill of complaint dismissed.

Thompson & Hanstein, of Atlantic City, for complainant.

Starr, Summerill & Lloyd, of Camden, for defendant.

SOOY, Vice Chancellor.

The bill of complaint originally contained two counts; the subject-matter of the first count being a $5,000 life insurance policy, and the second count a $15,000 life insurance policy. The second count has been abandoned.

The complainant alleges and the proofs show that there was issued to him by the defendant company a life insurance policy providing for the payment to the beneficiary of $5,000 upon proof of death. This policy contained among its provisions a clause known as a "waiver of premiums" clause, which reads as follows: "The Company, by endorsement hereon, will waive payment of the premiums thereafter becoming due if the insured, before attaining the age of 60 years and after paying at least one full annual premium and before default in the payment of any subsequent premium shall furnish proof satisfactory to the Company that he has become wholly and permanently disabled by bodily injury or by disease so that he is and will be permanently, continuously, and wholly prevented thereby from performing any work for compensation or profit, or from following any gainful occupation."

On the 2d day of September, 1922, which was before the complainant attained the age of 60 years, he suffered a paralytic stroke, and the evidence discloses that from that time continuously to the present time complainant has been permanently and wholly prevented, by reason of the stroke, from performing any work for compensation or profit or from following any gainful occupation, and that he will continue so to suffer until his death.

Defendant, on February 19, 1931, notified complainant that it "elects to and does hereby rescind the reinstatement of said policy," and as a consequence complainant has filed his bill seeking to compel a reinstatement of the policy and for a return of premiums paid by complainant in ignorance of his alleged right to have the benefit of the waiver of premiums after his illness of September, 1922.

The reason relied upon by defendant for the rescission of the policy was fraud on the part of complainant in a reinstatement of the policy, which lapsed in May of 1930 by reason of nonpayment of the April, 1930, premium.

On December 31, 1930, complainant, by letter, notified defendant company of his total disability. He contends that he also procured a written notice thereof to be sent by his son in November of 1922. From the evidence I find that, if the letter claimed to have been mailed at that time was, in fact, written, it never readied the defendant company, and, if it did, its contents did not furnish proof of total disability as required by the waiver clause.

Complainant also contends that on frequent occasions, starting about six months after his stroke, he visited the Philadelphia offices of the company, and that his condition was evident to the employees of that branch, and that through these visits the company had notice of his condition.

The waiver clause provides, for proof satisfactory to the company of a condition of total disability, and I conclude that his visits to the Philadelphia office and business transactions there did not constitute such proof.

These findings of fact result in this situation—a stroke in September of 1922 and an attempted proof of total disability mailed December 31, 1930.

In the meantime the policy had lapsed twice by reason of nonpayment of premiums. With the first lapse I am not concerned because defendant bases its rescission on what happened when the policy lapsed for nonpayment of the April 22, 1930, premium.

This premium was due on April 22, 1930, and the policy provided for 31 days of grace in its payment, which would make the last day for payment the 23d day of May. From the evidence, it clearly appears that this premium could not, by any possibility, have been paid before the 24th day of May, and it is also quite evident from the testimony that it was not received by the company until May 28th. The check itself was dated May 24, 1930, and the envelope bearing the remittance, according to the records of the defendant company, was postmarked May 27, 1930. This check, when received by the Philadelphia office, was found to be a few cents short, and was not credited until some time after May 27th, when the deficiency was made up in cash. The policy, by its terms, was therefore lapsed and the effort on the part of complainant to show otherwise by the evidence totally fails. There was a weak attempt to prove that the premium check above mentioned was sent after a premium notice was received by the assured, which premium notice was alleged to have indicated that the final day for payment was of a subsequent date to the final date as fixed by the policy. I disregard this evidence because of its inconclusive nature, and, taking that view of it, it is unnecessary to decide whether or not such an erroneous premium notice would change the terms of the policy.

The policy being lapsed for nonpayment of premium complainant, on the 31st day of May, 1930, signed an application for reinstatement, and the reinstatement was recommended as of June 3, 1930, and in pursuance of the recommendation the policy was reinstated.

On the application for reinstatement, complainant, in response to printed questions, answered under his own hand that he was "to the best of his knowledge and belief, in the same condition of health as he was when the policy was issued" and that "within the past two years he had had no illnesses, diseases," etc., and still over his signature, he said, "I hereby certify that the foregoing answers are full, complete and true and agree that the company, believing them to be true, shall rely and act thereon."

Complainant, of course, knew of his condition at the time he made the above representations, and on the 19th day of February, 1931, the company rescinded its contract of insurance because of the false representations upon which this reinstatement was secured, and tendered to complainant a refund of premium and interest. This was done after the notice of disability of December 31, 1930, as a result of which notice the company instigated its investigation which resulted in the rescission.

Complainant says that when he signed the application for reinstatement and made the untrue answers to the questions asked therein, that he thought it was a mere matter of form and did not mean anything, but the fact is that any thought that he may have had in that respect was not the result of anything said or done by the defendant company or any of its representatives. The application for reinstatement was signed in Atlantic City and not in the presence of the defendant's representatives.

That the company had a right to rescind for fraud in connection with the reinstatement is well settled. Chuz v. Columbian National Life Insurance Co., 162 A. 395, 10 N. J. Misc. 1145; Acacia Mutual Life Ass'n v. Kaul, 114 N. J. Eq. 491, 169 A. 36.

Complainant says that the policy should be reinstated because the benefit of the waiver of premium clause inured to him upon the happening of the stroke in September of 1922 and not upon the furnishing of proof thereof. He also contends that the evidence would support the finding that he had furnished other proofs than the letter of December, 1930, but in this factual question I have decided against him.

If the waiver clause should be construed to go into effect upon the happening of the disability, the policy did not lapse for nonpayment of the April premium, and the policy should be reinstated.

I proceed to a construction of that clause, and recognize that in approaching the question of a construction of the waiver of premium clause I am bound by certain well recognized legal principles, such as Harris v. American Casualty Company, 83 N. J. Law, 641, 85 A. 194, 44 L. R. A. (N. S.) 70, Ann. Cas. 1914B, 846; Michler v. New Amsterdam Casualty Company, 104 N. J. Law, 30, 139 A 725, affirmed 104 N. J. Law, 663, 141 A. 920; Gans v. Columbia Insurance Company, 99 N. J. Law, 44, 123 A. 240, affirmed 100 N. J. Law, 400, 126 A. 923; Smith v. Fidelity & Deposit Company, 98 N. J. Law, 534, 120 A. 322; Bohles v. Prudential Insurance Company, 84 N. J. Law, 315, 86 A. 438; Hampton v. Hartford Fire Insurance Company, 65 N. J. Law, 265, 47 A. 433, 52 L R. A. 344.

With these rules in mind, as laid down in the above cases, I must...