Metropolitan Life Ins. Co. v. Quilty, 6288.

• Decision Date: 19 November 1937
• Docket Number: No. 6288.,6288.
• Citation: 92 F.2d 829
• Parties: METROPOLITAN LIFE INS. CO. et al. v. QUILTY.
• Court: U.S. Court of Appeals — Seventh Circuit

92 F.2d 829 (1937)

METROPOLITAN LIFE INS. CO. et al. v. QUILTY.

No. 6288.

Circuit Court of Appeals, Seventh Circuit.

November 19, 1937.

Nathaniel Rubinkam and William S. Allen, both of Chicago, Ill., for appellant Metropolitan Life Ins. Co.

Thomas Francis Howe and Henry S. Rademacher, both of Chicago, Ill., for appellant General Motors Corp.

Patrick J. Lucey and William K. Tell, both of Chicago, Ill., for appellee.

Before SPARKS and MAJOR, Circuit Judges, and LINDLEY, District Judge.

SPARKS, Circuit Judge.

By this action appellee sought to recover upon a certificate issued by the Metropolitan Life Insurance Company to John M. Quilty, her deceased husband. The certificate was issued under a group policy issued by the Insurance Company to the General Motors Corporation, which covered the employees of that corporation and its subsidiaries. Appellee was named as the beneficiary in her husband's certificate. The company and the corporation were joined as defendants. The cause was tried to a jury and at the close of all the evidence all the parties separately moved for a directed verdict. Thereupon the court discharged the jury and entered a finding and judgment in favor of appellee against both appellants. From that judgment this appeal is prosecuted.

The deceased was an employee of the Hertz Drivurself Corporation, an affiliate of General Motors. For many years he had been insured as such employee under the group policy referred to, and his salary was such that his certificate called for $20,000 insurance. Under the policy he was not entitled to disability benefits.

The policy provided that it might be discontinued by the General Motors Corporation (termed the employer), and further provided that the life insurance on any employee insured thereunder, who should cease to be in the employ of the employer, should be discontinued thirty-one days after the date such employee actually left the employ of the employer.

On May 1, 1933, the policy was amended to provide for an extended death benefit in all cases where a person formerly insured died within twelve months of cancellation of his coverage following a continuous total disability. Subsection (c) of Section 1, and Sections 11 and 12 of the original policy were affected by this amendment. Those portions of the amendment which are regarded by either the appellants or appellee as pertinent to the questions presented are set forth in the margin.¹ They refer to the respective subjects of extended death benefits, discontinuance of insurance, and conversion privilege.

John M. Quilty never availed himself of the conversion privilege, and did not convert his group coverage to any other form. Upon written notice of these proposed amendments by General Motors Corporation, John M. Quilty who was then an employee of, and in charge of the Philadelphia office of Hertz Drivurself Corporation, returned to General Motors Corporation the following communication:

"To General Motors Corporation:

"I have read the foregoing announcement of a change in the Group Life Insurance Plan for the Employees of the General Motors Corporation effective May 1, 1933, and return herewith my Certificate to be exchanged for a new Certificate in accordance with such announcement."

"(signed) John M. Quilty. "Date, April 28, 1933."

Quilty thereupon returned his original certificate to the office of the Hertz Drivurself Corporation, at Pontiac, Michigan, and a new certificate as described in the written notice of the amendments was issued and forwarded to him.

He terminated his employment with the Hertz Corporation on January 26, 1934, and thereafter was employed by Oursman Chevrolet Company until the date of his death on April 1, 1934. The last named company was an independent company not affiliated with or a subsidiary of General Motors Corporation. He was not totally and continuously disabled from the date of the termination of his employment with General Motors or at any time thereafter.

On July 6, 1934, the General Motors Truck Company, of Pontiac, Michigan, received its first notice of decedent's death by letter from Mrs. Quilty's attorney. It was directed to Mr. J. B. Babcock and stated, among other things not here pertinent: "I have been informed by Mrs. Quilty that either you or someone acting for you gave notice to the Metropolitan Life Insurance Company of the death of Mr. Quilty. I wonder if you would be good enough to give me the details of the notification which you gave, if you did notify the Metropolitan Life Insurance Company and what response, if any, you received from them. This is quite important, as, from the reading of the clause above cited, there might be a possibility if notice was actually given to the company, that we may collect some money for Mrs. Quilty * * *"

A reply to this letter was made by the Insurance Division of General Motors Corporation on July 20, 1934, but the query as to notice was not answered. It stated that the attorney's letter had been referred to the Metropolitan Life Insurance Company who desired information as to the name of the independent Chevrolet dealer with which Quilty became affiliated in January, 1934; the exact date of such affiliation; the cause of his death; and the name and address of the attending physician during his last illness. This information was supplied by a letter of Mrs. Quilty's attorney on July 23, 1934, stating that decedent entered the employ of Ben Oursman, Washington, D. C. on January 27, 1934, and died April 1, 1934. Proof of death was made and forwarded by appellee to the insurance company on August 1, 1934.

On August 8, 1934, the Metropolitan Life Insurance Company notified appellee's attorney that under the terms of the contract all insurance on Quilty's life ceased thirty-one days following his cessation of employment by General Motors Truck Corporation, and that no claim was allowable.

With respect to appellant, General Motors Corporation, the complaint avers:

"* * * that during the said period of employment of the said John M. Quilty, deceased, all of the payments of premiums on behalf of said benefit group policy on his behalf were deducted from salaries due and owing to the said John M. Quilty by the Employer, and that it was and became the duty of the Employer under the terms of said policy to notify the Insurance Company of the termination of the employment of said John M. Quilty and later of his death, but...