Millard v. New Jersey Life Ins. Co., Civ. A. No. 87-0106-WD-A.

• Decision Date: 04 April 1989
• Docket Number: Civ. A. No. 87-0106-WD-A.
• Parties: Jeannette D. MILLARD, Plaintiff, v. NEW JERSEY LIFE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Massachusetts

709 F. Supp. 29

Jeannette D. MILLARD, Plaintiff, v. NEW JERSEY LIFE INSURANCE COMPANY, Defendant.

Civ. A. No. 87-0106-WD-A.

United States District Court, D. Massachusetts.

April 4, 1989.

Jeffrey A. Newman, Charles R. Capace, Boston, Mass., for plaintiff.

Jeff Armstrong, George A. Berman, Miles E. Hoisington, Posternak, Blankstein & Lund, Boston, Mass., for defendant.

OPINION

BAILEY ALDRICH, Senior Circuit Judge.^*

This is an action on a policy of insurance (No. 139,911) issued on the life of Donald A. Millard, Sr., by defendant New Jersey Life Insurance Company, payable to plaintiff. The insured died on May 30, 1986. The annual premium due April 2, 1986 admittedly was not paid within the 31 day grace period. It is a term policy, with no reserve value to maintain it, and defendant moves for summary judgment. The following facts it concedes for this limited purpose.

On May 28, 1986 the insured received from defendant a document entitled Late Payment Offer. On the face this showed the due date of the premium, and its amount, and a typed statement, "Payment of this premium automatically renews your policy for a 1 year period." On the back, however, was considerable, plainly readable, printing, including a statement that the policy had lapsed, (unless otherwise provided by the terms of the policy, which it was not), and that the offer was conditioned on payment of the premium "no later than 45 days from date due." It also stated, "This offer ... shall not create a precedent for waiving of the conditions of the policy in regard to reinstatement or payment of any subsequent premium."

The late payment offer, presumably mailed about May 1, was improperly addressed, owing to defendant's fault, it having been notified by the insured of an error in its records a number of times.¹ However, except for the question of estoppel, post, defendant was not obliged to make the offer at all, and plaintiff acquired no rights from the fact that the insured received it too late to meet its terms because of careless record-keeping on defendant's part. The policy did not require such an offer and, again apart from estoppel, since defendant had no duty to make it, it could be as careless as it pleased as to delivery without incurring liability in tort or contract. Plaintiff's contention that the insured could, and did, accept the offer made on the front side of the paper, and disregarded the rest, should qualify for Mr. Guinness's well-known book.

Plaintiff's only possible claim is equitable estoppel, based on the contention that defendant had led the insured to believe, as allegedly he did believe, that if he forgot to pay the premium — of which, admittedly, he had received due notice — within the grace period, he would receive an offer of late payment, and would have 14 days to accept by paying. The asserted basis for this claim is that the insured had received such offers before, and counted on their repetition. Defendant says there was insufficient reason to warrant that expectation.

Plaintiff originally had two insurance policies; this one, and No. 142,108. In the spring of 1983 no notice was received of the annual April 2 premium due on the 139,911 policy, but on May 13 a late payment offer was received. The insured promptly tendered the premium within the 14 days after the policy's 31 day grace period had expired, and it was accepted.

The 142,108 policy's annual premium was due on October 8. No premium notice was received in 1983, but a late payment offer was received on November 16. The insured tendered the premium within the requisite 14 days after the expiration of grace, and it was accepted.

No problem arose in the spring of 1984, but that fall no notices of any kind were received on the 142,108 policy, and the insured tendered no premium. After the 45 days a formal lapse notice was received, galvanizing him to try to pay. Defendant, however, refused to accept late payment and to reinstate the policy unless he could pass a new medical. He tried, and failed, and the policy remained lapsed.

The next problem was the present one. Itemizing the facts asserted as justifying estoppel, and thus permitting the insured to pay after the 45 days because of the late offer, they are these.

(1) An internal company practice, in existence ever since the policies were issued, to send late payment offers and to accept late payment within the 45 days.

(2) The furnishing the insured a late payment offer on Policy 139,911 in May, 1983, and accepting the premium within the 45 days.

(3) Furnishing the insured a late payment offer on Policy 142,108 in November, 1983, and accepting the premium within the 45 days.

(4) The offers were on a printed form, evidently standard.

The facts asserted as defeating estoppel are,

(1) There was nothing in the policy, and the insured had no knowledge of any company practice other than what he could reasonably infer from the above...