First Pa. B. & T. Co. v. United States Life Ins. Co., City of NY

• Decision Date: 17 November 1969
• Docket Number: No. 17610.,17610.
• Citation: 421 F.2d 959
• Parties: The FIRST PENNSYLVANIA BANKING AND TRUST COMPANY, E. Marshall Nuckols, Jr., and Orville C. Dewey, Jr., Executors Under the Will of Orville C. Dewey, Deceased v. The UNITED STATES LIFE INSURANCE COMPANY IN the CITY OF NEW YORK, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

421 F.2d 959 (1969)

The FIRST PENNSYLVANIA BANKING AND TRUST COMPANY, E. Marshall Nuckols, Jr., and Orville C. Dewey, Jr., ExecutorsUnder the Will of Orville C. Dewey, Deceased v.The UNITED STATES LIFE INSURANCE COMPANY IN the CITY OF NEW YORK, Appellant.

No. 17610.

United States Court of Appeals, Third Circuit.

Argued April 8, 1969.

Decided November 17, 1969.

Rehearing Denied December 10, 1969.

Owen B. Rhoads, Dechert, Price & Rhoads, Philadelphia, Pa. (R. Neal Risley, Philadelphia, Pa., Peter J. Flanagan, New York City, on the brief), for appellant.

Walter R. Milbourne, Obermayer, Rebmann, Maxwell & Hippel, and Ralph B. Umsted, Philadelphia, Pa., for appellees.

Before KALODNER, GANEY and VAN DUSEN, Circuit Judges.

OPINION OF THE COURT

GANEY, Circuit Judge.

This is an appeal from the granting of a motion by the plaintiffs for summary judgment entered by the court below.The pertinent pleadings are as follows: On August 26, 1966, the plaintiffs filed a complaint asking for a declaratory judgment on a group policy of life insurance, No. G-9955-L, covering some 14 employees of Dewey Brothers, Inc., an insurance firm in the city of Philadelphia, under which the plaintiffs claimed the sum of $20,000, alleging that all the terms and conditions of the group life insurance policy had been met and fully complied with.On November 9, 1966, an answer was filed by the defendant, The United States Life Insurance Company in the City of New York, wherein, inter alia, it was denied that Orville C. Dewey, plaintiffs' decedent, was an employee within the terms of the policy at the time of his death or at any relevant time, and that any amount was due under the policy as a result of Orville Dewey's death.The case was listed for trial and plaintiffs' and defendant's pretrial memoranda were filed, as well as plaintiffs' request for admissions of fact and the defendant's answer thereto.Plaintiffs, thereafter, on June 11, 1968, filed a motion for summary judgment and defendant filed affidavits in opposition to the plaintiffs' motion.On October 7, 1968, by order of the court below, summary judgment was granted in favor of the plaintiffs.

The relevant facts are as follows: Orville C. Dewey, on the date of his death, September 21, 1965, was a citizen of Pennsylvania, and the executors of his estate were The First Pennsylvania Banking and Trust Company, a corporation chartered under the laws of the State of Pennsylvania, and two Pennsylvania citizens.Application was made through John Dewey, President of the company, who was the official negotiator for the group, for a policy of group life insurance, to the defendant, United States Life Insurance Company in the City of New York, on October 31, 1960, wherein it was stated that there were 14 men to be included in the policy who were on full-time employment, among which was the decedent, Orville C. Dewey.This number could not be less than 10 for, under Group Policy, Pennsylvania Law40 P.S. Sec. 532.2(3), it was so required.Upon receipt of the application, the names of those to be insured by the defendant were referred by it to the Retail Credit Company, an independent research bureau, for a report thereon.Pending receipt of a report from Retail Credit Company, the defendant wrote the President of Dewey Brothers as follows: "The application you signed indicated that you have fourteen employees who regularly work thirty hours a week or more for your firm.This being the case, your insurance plan was effective November 1, 1960.Of course, if this requirement were not met, the insurance would not have become effective."However, on November 10, 1960, the report received on Orville Dewey by the defendant, United States Life Insurance Company, recited as follows: "Orville C. Dewey is the assistant treasurer for the above Dewey Brothers incorporated a reputable insurance brokerage in this city.The business was founded in 1934 by the brother of the applicant.He is the assistant treasurer of the firm.He is also known to be employed by the United States government, the exact connection in this capacity is not known.He is well regarded."On November 16th, six days after its initial report, the Retail Credit Company gave the defendant the result of its interview with John Dewey, the President of Dewey Brothers and a brother of Orville Dewey, in which it was stated that Orville Dewey worked forty hours per week, confirming the information in the application.Thereafter, the defendant-insurance company, on November 21, 1960, got a report saying that 3 of the 14 employees did not work full-time and, therefore, would not be included in the policy, but the plaintiffs'-decedent was not one of the three.Additionally, the report stated, "We have more detailed inspections on the other employees, in process, and shall notify you of the results as soon as they become available."In view of the report from the Retail Credit Company, the defendant-insurance company retained Dun & Bradstreet, another independent research bureau, to again interview and investigate Dewey Brothers.This interview was held on November 22, 1960 and the report said, with final assurance, that "all the officers worked a standard forty-hour week."During this interview with John Dewey, President of Dewey Brothers, he evidenced annoyance with the continued investigation concerning the employment of its officers, of which Orville Dewey was one.However, on December 7, 1960, as indicated, the defendant notified Dewey Brothers that the policy would be effective as of November 1, 1960.The policy eliminated the three individuals whom the Retail Credit Company found not working full-time and also provided exclusion from coverage of all persons who "do not regularly work at least thirty-hours per week as an employee of the employer."The policy also contained a one-year incontestability clause, in conformity with PennsylvaniaStat. 40 P.S. § 510(c), covering Group Policies, which reads as follows: "This policy shall be incontestable except for non-payment of premiums, as to insurance in force at the date hereof after two years after the date of issue of this contract, and as to insurance thereafter issued after one year from the time such insurance takes effect as herein provided."

On September 29, 1961, John Dewey, President of Dewey Brothers, was advised that they were below the ten persons requisite to be insured under the policy and was also advised that defendant-insurance company would cancel the policy unless the full complement required under the policy was restored.However, the policy was never canceled and the insurance was maintained in full effect as a list of 10 persons was submitted on November 1, 1961.On at least two occasions, on September 8, 1962, and again on October 20, 1965, the defendant's Group Service Manager, in writing, concerning the rate policy of the company, stated as follows: "We wish to take this opportunity to remind you that the group insurance coverage in force under your policy covers all eligible, full-time employees.A full-time employee is one who regularly works at least 30 hours each week as an employee of your firm."

As indicated, Orville Dewey died on September 21, 1965, and to the proof of claim submitted to the insurance company there was attached a death certificate showing his occupation with the Central Intelligence Agency, and this was the first knowledge the defendant had of his employment with the Agency.While the President, John Dewey, conceded that the beneficiary, Orville Dewey, was a permanent employee with the Federal government, with CIA, he also testified that he was away quite often from the office on numerous occasions, but the record is absent as to any type of work he was performing inasmuch as it contains nothing respecting the division of work which the decedent performed while away from the office, since he may well have been soliciting business, as well as doing some work for the CIA, which, it must be conceded, is a very confidential Government agency, whose employees are not permitted to disclose any of the aspects of their work.Furthermore, while it was conceded by the plaintiff that at times Orville Dewey's work was irregular, there is nothing in the record to show that, while he was a permanent employee of the CIA, he was working the full thirty hours a week for the company, as, after being closely questioned about the regularity of his work, the President conceded that it was "hard to say."

The policy was delivered in the State of Pennsylvania, the place of residence of the insured, and, accordingly, Pennsylvania law governs its interpretation.Franklin Life Insurance Co. v. Bieniek, 312 F.2d 365, 367-368(C.A.3, 1962).

Further, it is now well settled that a district court cannot grant summary judgment under F.R.Civ.P. 56(c), when there are unresolved "genuine issues of material fact."Bolt Associates, Inc. v. Alpine Geophysical Associates, Inc., 365 F.2d 742(C.A.3, 1966);Associated Hardware Supply Co. v. Big Wheel Distributing Co., 355 F.2d 114, 17 A.L.R.3d 998(C.A.3, 1966).Summary judgment may not be granted under the federal rule if there be an issue presented as to existence of any material fact; and all doubts as to existence of a genuine issue as to a material fact must be resolved against the party moving for summary judgment.Sarnoff v. Ciaglia, 165 F.2d 167(3 Cir., 1947).Also, in ruling on a motion for summary judgment, the movant not only has the burden of demonstrating clearly the absence of any genuine issue of material fact, but the court should not draw factual inferences in favor of the moving party, and should not resolve a genuine issue of credibility.Moore's Federal Practice, ¶ 56.7(27) at 2215-2216.

Accordingly, the focal point of our inquiry is whether the district court, as a matter of law, can say that the plaintiffs were entitled to summary judgment on the issue we deem to be a factual one, as to whether the...