Franklin Life Insurance Company v. Bieniek
| Citation | 312 F.2d 365 |
| Decision Date | 27 December 1962 |
| Docket Number | No. 13899.,13899. |
| Parties | FRANKLIN LIFE INSURANCE COMPANY, Plaintiff-Appellant, v. Mary E. BIENIEK and Sewickley Savings & Loan Association, Defendant-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (3rd Circuit) |
COPYRIGHT MATERIAL OMITTED
Gilbert J. Helwig, Pittsburgh, Pa. (Robert W. Scrivner, Reed Smith Shaw & McClay, Pittsburgh, Pa., on the brief), for plaintiff-appellant.
Wilbur F. Galbraith, Pittsburgh, Pa. (John F. Roney, Washington, Pa., on the brief), for appellee Mary E. Bieniek.
Thomas W. Neely, Jr., Pittsburgh, Pa., for appellee Sewickley Savings & Loan Ass'n.
Before STALEY and FORMAN, Circuit Judges, and LANE, District Judge.
Franklin Life Insurance Company of Illinois (Company) was the plaintiff in an action in the United States District Court for the Western District of Pennsylvania against Mary E. Bieniek and Sewickley Savings & Loan Association (Sewickley), both of Pennsylvania, for a judgment declaring a policy of insurance issued by it on the life of the husband of Mrs. Bieniek, the late Brownie J. Bieniek, to be null and void. After a hearing without a jury, judgment was entered dismissing the complaint of the Company and this appeal followed. Jurisdictional diversity and amount are present.
The background of the litigation is as follows: In early 1958 Sewickley granted the Bienieks a mortgage loan of $15,000 in connection with the purchase of a home. On March 13, 1958 Mr. Bieniek applied to the Company for a twenty year reducing term policy in an amount sufficient to provide for monthly payments of $80.17, intending that the insurance would secure the repayment of the mortgage loan in the event of his death. As part of the application he answered certain questions concerning his prior medical history and state of health, which were recorded and certified by him in the application. On March 13, 1958 Mr. Bieniek was examined by the Company's physician, Dr. P. M. Haver, who reported his findings to the Company stating that he considered him to be in good health. On March 21, 1958 the Company executed a policy of insurance, which was delivered to Sewickley as assignee, in accordance with Mr. Bieniek's instructions and a certificate as to the issuance and delivery of the policy was sent to him.
On May 4, 1959 Mr. Bieniek died. On June 3, 1959 the Company notified Mrs. Bieniek that it would not honor the policy because of material, false representations knowingly made by Mr. Bieniek in his application and at the same time tendered a return of the premiums paid. The Company filed its suit on March 14, 1960.
In its opinion, reported at 199 F.Supp. 838 (1961), the District Court concluded that the statements of Mr. Bieniek were "plainly (1) false (2) material and (3) made with knowledge of their falsity on the part of the insured." Nevertheless it held that answers to two questions1 were so clearly erroneous in nature that the Company was put on notice that it should have made further inquiry failing which it waived the misrepresentations in the application.
The District Court also alluded to the question of whether the Company had contested the payment of the policy within the time limit of the incontestability clause therein, but did not pass upon the point.2
It seems orderly to resolve this issue first. Preliminarily it should be determined whether the letter of June 3, 1959 with the accompanying refund of premiums is sufficient notice of a contest.
That the policy was delivered in the State of Pennsylvania, the place of residence of the insured, is unquestioned. Therefore Pennsylvania law governs its interpretation. New York Life Ins. Co. v. Levine, 138 F.2d 286 (3 Cir., 1943).
In Feierman v. Eureka Life Ins. Co., 279 Pa. 507, 124 A. 171, 32 A.L.R. 646 (1924), in a dictum, actual suit was not considered necessary to convey the insurer's intent to contest the policy. The court said:
"The great weight of authority supports the position that the insurer must at least disavow liability within the contestable period to be relieved — not necessarily by legal action, but some definite step, specifying the ground of complaint, in such form as to effect a cancellation of the contract." 279 Pa. at 508-509, 124 A. at 171, 32 A.L.R. 646.
Later, a Pennsylvania Superior Court, consistent with the majority of jurisdictions, held that notification by letter is insufficient and that a suit must be commenced or an answer interposed. In Prudential Ins. Co. v. Ptohides, 122 Pa. Super. 469, 186 A. 386 (1936), it was said:
The court quoted copiously from Killian et al. v. Metropolitan Life Insurance Company, 251 N.Y. 44, 166 N.E. 798, 64 A.L.R. 956 (1929) including the conclusion of Justice Cardozo that:
"`* * * For present purposes it is enough to say that a contest begins when the contestants, satisfied no longer with minatory gestures, are at grips with each other in the arena of the fight. When the fight is a civil controversy, the arena is the court.\'"3 122 Pa.Super. at 478, 186 A. at 389.
In 1940, in Ulakovic v. Metropolitan Life Insurance Co., 339 Pa. 571, 16 A.2d 41, the Pennsylvania Supreme Court noted the foregoing cases of Feierman v. Eureka Life Ins. Co., supra, Prudential Ins. Co. v. Ptohides, supra, and Killian v. Metropolitan Life Ins. Co., supra, but found it unnecessary to discuss them since it decided the case before it on another point.
In 1948, in New York Life Ins. Co. v. Del Bianco, 161 Pa.Super. 566, 568, 56 A. 2d 319, the ruling in Prudential v. Ptohides, supra, adopting the language in Killian v. Metropolitan Life Ins. Co., was specifically approved.
The direction pointed by the Pennsylvania Superior Court and the weight of authority in other jurisdictions lead to the conclusion that the letter of the Company of June 3, 1959 does not constitute notice of the contest, but that occurred only with the filing of the suit on March 14, 1960.
It next becomes necessary to ascertain the "date of issue" of this policy. Was it on March 13, 1958, as indicated in the policy or was it on March 21, 1958, when the policy was executed by the Company?
The policy itself does not define the "date of issue" as such. At its heading it contains the words:
The first premium was payable on the beginning of the first policy year, March 13, 1958, and subsequent premiums were payable on the anniversary of said date in every year thereafter. The grace period of thirty-one days ran from the due date of all premiums after the first. Upon examination any apparent ambiguity in the "date of issue" of the policy diminishes rapidly. Obviously it was the intent of the parties that the effective date of the policy should be March 13, 1958, the date that the "First Policy Year Begins", as recited in the policy. To regard March 21, 1958, the date upon which the policy was formally signed by the Company, as the "date of issue" would impart an artificiality to the acts of the parties that they never intended. Lloyd v. Franklin Life Insurance Co., 245 F.2d 896 (9 Cir., 1957).
This brings us to the final question under this issue: When did the two year period of the incontestability clause expire, on March 12th or March 13th, 1958?
The Company contends that it does not matter which date governs because those two days are respectively Saturday and Sunday and are excluded from the computation of the two years. It asserts that under the Pennsylvania law, Act of May 17, 1921, P.L. 682, as amended, 40 P. S. § 510(c), policies issued or delivered in Pennsylvania are required to contain a two year incontestability clause.4 It then refers to the Pennsylvania computation of time statute, 46 P.S. § 538, which provides:
As amended 1959, Aug. 11, P.L. 691, § 1.5
The Company contends that it is clear that since a period of time is referred to in the insurance law (40 P.S. § 510(c)) it is subject to the computation of time rule enunciated in 46 P.S. § 538. It urges that the provision of the insurance policy incorporating the requirement must also be subject to the same rule.6
The argument fails when it is considered that 46 P.S. § 538 is a general statute providing for a uniform computation of time periods in "any law", i. e. any statute, and does not have reference to a contract provision or clause. In Gordon v. Home Indem. Co., 121 Pa. Super. 241, 245, 183 A. 427, 429 (1936),...
To continue reading
Request your trial
-
Melville v. American Home Assur. Co., Civ. A. No. 73-1398.
......Barry MELVILLE . v. . AMERICAN HOME ASSURANCE COMPANY. . Civ. A. No. 73-1398. . United States District Court, ... This is a suit on a policy of insurance covering accidental death. The jury, instructed as to the ...They relate to the life and times of the insured, Josiah Marvel ("Jay") Scott, ... nor on Crawford, but instead reverted to Franklin Life Insurance Co. v. Bieniek, 312 F.2d 365, 367-368 (3d ......
-
Woodson v. Scott Paper Co.
...plaintiff] was not prejudiced in its ability to respond." (internal quotations omitted)). For example, in Franklin Life Insurance Co. v. Bieniek, 312 F.2d 365, 371-72 (3d Cir.1962), we found that the defendants' fraud defense had not been waived, even though it was not pleaded, because the ......
-
Arment v. Commonwealth Nat. Bank, Civ. A. No. 80-3178.
...liberally, McKnight v. Southeastern Pennsylvania Transportation Authority, 583 F.2d 1229 (3d Cir. 1978), Franklin Life Insurance Co. v. Bieniek, 312 F.2d 365 (3d Cir. 1962), and in their entirety, Banco Continental v. Curtiss National Bank of Miami Springs, 406 F.2d 510 (5th Cir. 1969), ind......
-
Cumis Ins. Soc., Inc. v. Girard Bank
...count. See n.11, supra. Furthermore, viewing the plaintiff's complaint with the requisite liberality, see Franklin Life Ins. Co. v. Bieniek, 312 F.2d 365, 372 (3rd Cir. 1962), sufficient facts are alleged to raise an inference of negligence and lack of good faith on the part of the bank. Se......