Hamlin v. Mutual Life Ins. Co.

• Decision Date: 14 December 1984
• Docket Number: No. 83-273,83-273
• Citation: 487 A.2d 159,145 Vt. 264
• Court: Vermont Supreme Court
• Parties: Donald HAMLIN v. The MUTUAL LIFE INSURANCE CO.

Page 159

487 A.2d 159

145 Vt. 264

Donald HAMLIN v. The MUTUAL LIFE INSURANCE CO.

No. 83-273.

Supreme Court of Vermont.

Dec. 14, 1984.

Kolvoord, Overton & Wilson, Essex Junction, for plaintiff-appellee.

Lawrin P. Crispe and Theodore C. Kramer of Crispe & Crispe, Brattleboro, for defendant-appellant.

Before HILL, UNDERWOOD, PECK and GIBSON, JJ., and LARROW, J. (Ret.), Specially Assigned.

UNDERWOOD, Justice.

Plaintiff, Donald Hamlin, as a claimed beneficiary under a policy of insurance allegedly issued by the defendant, The Mutual Life Insurance Company of New York (Mutual), on the life of his son, Geoffrey Hamlin, brought suit on the policy to recover benefits as a result of his son's accidental death.

Defendant, by way of an answer to plaintiff's complaint, admitted that Geoffrey Hamlin applied for a policy but argued that, because plaintiff and Geoffrey Hamlin had each cancelled the application for the policy of insurance, no policy was issued. It filed eight affirmative defenses, including, inter alia, statute of limitations, failure to state a claim upon which relief can be granted, estoppel, waiver, cancellation and nonissuance of the alleged policy.

Thereafter, defendant filed a motion for summary judgment on the grounds that Geoffrey Hamlin had revoked his application for life insurance before the application had been accepted by the defendant.

Plaintiff opposed the defendant's motion for summary judgment on the grounds that there was no direct evidence that Geoffrey Hamlin had revoked his application for a life insurance policy with the defendant. Plaintiff filed a cross-motion for summary judgment, contending that the defendant had waived all defenses to formation of the insurance contract, except its claim that Geoffrey Hamlin failed to pay the first full premium. Since the first full premium was not due until twenty-two days after the date of defendant's formal notice of cancellation, plaintiff insisted that he was entitled to judgment as a matter of law.

The trial court found that the defendant had, by law, waived all defenses to the formation of the insurance contract except for nonpayment of the first full premium; that this defense had not been included among defendant's affirmative defenses; and lastly, that there was no dispute concerning the fact that the payment of the first full premium was not due until after the date of the defendant's attempted cancellation of the insurance policy. After a hearing on these two motions, the trial court filed findings of fact and conclusions of law and denied the defendant's motion for summary judgment, granted the plaintiff's motion for summary judgment, and ordered a hearing on the issue of damages. There being no dispute as to the amount of damages, the trial court then entered a final judgment for the plaintiff in the amount of $55,056.55. Defendant filed a timely notice of appeal to this Court from that portion of the judgment order dealing with the issue of liability only.

The record, from the pleadings, affidavits and depositions, discloses that on May 30, 1974, Geoffrey Hamlin applied to defendant for a $15,000 whole life insurance policy, which named his father as the sole beneficiary. This application was accompanied by a $25.00 payment, in return for which the defendant issued a document entitled "Partial Payment Conditional Receipt." Under the terms of this instrument, Geoffrey Hamlin was to be covered for a period of 60 days, provided that the company approved his application and that the balance of the first premium was paid within 60 days of May 30, 1974. On June 11, 1974, Geoffrey Hamlin applied to another insurance company, the Metropolitan Life Insurance Company (Metropolitan), for a life insurance policy. In a letter from the plaintiff, dated June 13, 1974, addressed to Mutual's field underwriter, the plaintiff indicated that his son, Geoffrey Hamlin, had made an error in applying to Mutual for life insurance, and that his son had intended to apply to Metropolitan. There is nothing else in the record which directly indicates the intent of Geoffrey Hamlin concerning the disposition of his application for a life insurance policy with Mutual. On July 8, 1974, Geoffrey Hamlin was killed in a traffic accident. On July 9, 1974, the plaintiff received a letter from Mutual, dated July 8, 1974, addressed to his son. That letter stated that his son's life insurance policy with Mutual had been issued, but because he had elected not to pay the first full premium and establish the policy, the life insurance policy had never been in force. Enclosed with that letter was a refund of the $25.00 initial payment.

The basic guideline to be followed by a trial court in deciding upon the disposition of a motion for summary judgment is set forth in V.R.C.P. 56(c):

Judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.

The standard for our review of a trial court's granting of a motion for summary judgment is the same as the standard to be applied by the trial court: "A summary judgment is appropriate only when the material before the court clearly shows there is no genuine issue as to any material fact." Braun v. Humiston, 140 Vt. 302, 306, 437 A.2d 1388, 1389 (1981) (citations omitted). In order to determine whether there was any genuine issue as to any material fact, we must first determine the legal basis for the trial court's judgment. It is only when we establish this basis that we can then determine which facts are material, and, subsequently, whether there was a genuine issue as to those facts found to be material.

The trial court determined, as a matter of law, that the defendant's letter of July 8, 1974, which was addressed to Geoffrey Hamlin, limited the scope of the defendant's available defenses to the single defense it raised in that letter: namely, that it had cancelled Geoffrey Hamlin's life insurance policy due to his nonpayment of the initial premium. While there was perhaps no genuine issue as to any material fact relating to that single defense, we find that the trial court misapplied the insurance defense waiver rule and thus never considered whether there were genuine issues as to any material facts relating to the other affirmative defenses properly raised by the defendant.

The trial court relied on the insurance defense waiver rule as established by this Court in Cummings v. Connecticut General Life Insurance Co., 102 Vt. 351, 148 A. 484 (1930), hereinafter referred to as Cummings II, ¹ and as applied in Segalla v. United States Fire Insurance Co., 135 Vt. 185, 373 A.2d 535 (1977), and Armstrong v. Hanover Insurance Co., 130 Vt. 182, 289 A.2d 669 (1972).

Cummings II involved a claim upon an insurance policy on the life of plaintiff's deceased wife. In that action, the defendant raised two defenses to the plaintiff's complaint: first, that the decedent had made false representations in regard to her state of health, and second, that neither the decedent nor her husband had paid the defendant, during the decedent's lifetime, the first quarterly premium on the decedent's life insurance policy. The first defense was raised in letters from the defendant to the plaintiff, and later, to the plaintiff's counsel and was relied upon as the sole defense in Cummings I; these letters were silent on the second defense later raised by the defendant's amended answer in Cummings II.

The opinion in Cummings II, supra, 102 Vt. at 359, 148 A. at 486, implies that the defendant's second defense (that involving the alleged nonpayment of premium) was raised for the first time in its amended pleadings, prior to the second trial. There is no...