Kaufman v. New York Life Ins. Company
| Decision Date | 23 April 1934 |
| Docket Number | 223 |
| Citation | 172 A. 306,315 Pa. 34 |
| Parties | Kaufman v. New York Life Insurance Company, Appellant |
| Court | Pennsylvania Supreme Court |
Argued April 10, 1934 [Copyrighted Material Omitted]
Appeal, No. 223, Jan. T., 1934, by defendant, from judgment of Superior Court, Oct. T., 1933, No. 283, reversing judgment of M.C. Phila. Co., June T., 1931, No. 684, in case of Leon Kaufman v. New York Life Insurance Company. Judgment of Superior Court affirmed.
Assumpsit on policy of life insurance. Before CRANE, J.
Finding of trial judge for plaintiff for full amount of claim. Judgment entered for defendant n.o.v. Plaintiff appealed to Superior Court.
The facts are stated in the opinion of the Superior Court by CUNNINGHAM, J., which was as follows:
This appeal is by the plaintiff below from a judgment entered "upon the whole record" in favor of the defendant life insurance company in an action by which appellant, as the insured, sought to recover the sum of $420. For the purpose of this appeal, that amount may be treated as a balance of the "cash surrender value" which [plaintiff] averred was still due him under the provisions of his policy. At the conclusion of the trial, counsel agreed there were no issues of fact for the jury.
The substantial question here involved does not seem to have been definitely ruled by our appellate courts. It arises out of these circumstances:
On July 21, 1910, defendant issued to [plaintiff], then twenty-one years of age, a "Twenty Payment Life Policy" in the amount of $2,000, in consideration of the payment by him of an annual premium of $60.04. In a printed "Table of Loan and Surrender Values" upon the third page it was stated, inter alia, that the cash surrender value, "after policy has been in force" twenty years, would be $678 for each $1,000 of insurance.
[Plaintiff] paid the stipulated premium regularly for twenty years and then elected to take the cash surrender value of his policy and demanded $1,356 -- the amount indicated upon the face of the contract.
It was then discovered by defendant for the first time that, by mistake, it had utilized a printed form of policy intended for applicants aged forty-one, and that if it had used the proper form the cash surrender value, as set out in its rate book for 1910, would have appeared thereon as only $468 per thousand of insurance, or $936 for a two thousand dollar policy at the end of the twenty year period. The difference of $420 is attributable to the fact that an insured forty-one years of age would pay a higher annual premium, thereby creating a greater equity.
Two grounds of defense were asserted: First, that a mutual mistake had been made by the parties, which entitled defendant to a reformation of the contract; and second, that the statutes of this State, in force at the time the policy was issued, forbade such a discrimination between [plaintiff] and others of like age as would exist if he were allowed to recover the higher cash surrender value. The court below adopted both of these contentions in its memorandum opinion. For the reasons presently stated, we are unable to agree with either conclusion.
As was said in Boyce v. Fire Ins. Co., 24 Pa.Super. 589
The court below found such a mutual mistake existed because, to quote from its opinion, "both parties hereto contracted with reference to the existing published rates, and both intended that the policy as issued and delivered should conform to such rates; neither intended that the plaintiff should receive a benefit from his policy that every other policyholder of the same class could not receive." The difficulty we have with this conclusion is that it is not supported by the facts. These indicate merely that [plaintiff] made written application for a twenty payment policy in the amount of $2,000; that a policy was delivered to him showing the cash surrender value which he now claims, and that he continued to pay the premium for a period of twenty years, in the belief that he would receive the benefits set forth in that policy. There is no evidence that [plaintiff], before taking out the insurance, was informed as to what the cash surrender value at the end of any given year would be.
In several instances the court below uses the expression, "published rates," and "existing published rates," of the defendant company. Under the evidence, the rates of defendant in 1910 were not "published" in any correct sense of that term. They were merely printed in a "rate book" furnished agents and employees of defendant, and were filed with the insurance commissioners of the states in which it was doing business. [Plaintiff] testified positively, and without contradiction, that the agent of defendant who obtained his application for the policy did not show him "any rate book" and that knowledge of its contents was never communicated to him. The presumptions attendant upon a contract by a patron with a public utility which has filed, posted and published its rates do not arise in this case. Under all the circumstances, we think it cannot properly be said that [plaintiff] consciously "intended" to contract with reference to any of defendant's then existing rates, except the annual premium rate, or that he had any knowledge concerning the "relation between premiums paid, surrender values and reserves," stressed by the court below. His intent, to be significant, must have been a particular intent; and the only evidence of an intent of that character was his request for a $2,000, twenty-payment policy. Indeed, if any inference is to be drawn, the normal one would be that he intended to keep in force a policy which guaranteed the exact payments shown therein.
The facts do not disclose an antecedent agreement to fix the cash surrender value at the figure now put forward by the defendant and an inadvertent substitution of other figures, contrary to the intention of both parties. We therefore conclude that no such mutual mistake existed as would justify a reformation under the settled principles of equity jurisprudence.
Defendant has cited several decisions from other jurisdictions, in which reformation was decreed to permit the correction of clerical or actuarial mistakes. The ostensible reason given in support of reformation in certain of these cases is in harmony with defendant's argument that a mutual mistake existed because the insured, in each instance, must have intended to contract in accordance with the company's published rates; and defendant urges that this line of reasoning is equally applicable to the present case. As above stated, we are not convinced that the theory is correct in the normal situation. Moreover, a careful examination of the cases referred to will show that most of them are distinguishable upon their actual facts, which were such as to make recovery for the face amount of the policy clearly inequitable in those cases.
A brief reference to certain of them will make the distinction apparent. Thus, in Columbian Nat. Life Ins. Co. v. Black, 35 F.2d 571 (), application was made by the insured for a $10,000 policy. By mistake, the printer had used the form for an ordinary life policy for the first page, but on the reverse side had erroneously used the form for an endowment policy. Each of these had a table of values setting out the options given to the insured at the end of each year. Under the table on the first page, the assured was correctly given an option of receiving $3,040 in cash at the end of twenty years, while under the provisions applicable to the endowment policy, he was given $10,000 in cash at the end of the same period. As the court correctly pointed out, there was a patent and manifest absurdity on the face of the policy, and reformation was consequently allowed to rectify the error.
In Hibbard v. North American Life Ins. Co., 212 N.W. 779 (Wis.) also relied upon below, the life insurance policy contained a table of cash surrender values, ending with the twentieth year at $4,640. The surrender value for the tenth year was $2,070. The policy also contained a series of four options, which by mistake were guaranteed at the end of ten rather than twenty years. One of these options allowed the insured to surrender the policy for cash payment of $4,640. Here again there was an obvious ambiguity on the face of the policy, since if the insured had read the document he would have discovered that the figures given in the table of cash surrender values were in direct conflict with the figures specified under the option provisions.
In Hemphill et al. v. New York Life Ins. Co., 243 S.W. 1040 (Ky.) the insurance company neglected to deduct the amount of money borrowed upon the original policy, and consequently gave the insured paid up insurance of $1,289 instead of $225.
In New York Life Ins. Co. v. Gilbert et ux., 256 S.W. 148 (Mo.) paid up insurance was given in the amount of $768, whereas it should have been $296.
In Buck v. Equitable Life Assurance Society, 165 P. 878 (Wash.) the cash surrender value through a clerical error was stated to be $1,000 instead of $408.
In Berry v. Continental Life Ins. Co. of Missouri, 33 S.W.2d 1016 (Mo.) the cash surrender value was stated to be $2,000 whereas it should have been $952.
It will...
To continue reading
Request your trial