Novern v. John Hancock Mut. Life Ins. Co.

• Decision Date: 03 December 1969
• Citation: 107 N.J.Super. 570,259 A.2d 504
• Parties: Dolores E. NOVERN, Plaintiff, v. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, Defendant and Third-Party Plaintiff, v. Christel NOVERN, Third-Party Defendant.
• Court: New Jersey Superior Court

Page 570

107 N.J.Super. 570

259 A.2d 504

Dolores E. NOVERN, Plaintiff, v.JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, Defendant and Third-Party Plaintiff, v.Christel NOVERN, Third-Party Defendant.

Superior Court of New Jersey, Law Division.

Dec. 3, 1969.

Hespe & Hespe, Ridgefield Park, for plaintiff.

Stein & Stein, Newark, for third-party defendant.

BRESLIN, J.D.C. (temporarily assigned).

This action was originally commenced by plaintiff filing a complaint against defendantJohn Hancock Mutual Life Insurance Co. seeking recovery of the sum of $7,500 as the named beneficiary by virtue of policy No. 11649--GTC issued by defendant on the life of one Thomas M. Novern who died on August 23, 1968.An answer and counterclaim for interpleader was filed by John Hancock.The counterclaim contended that one Christel Novern was asserting a claim to the proceeds of the policy.A third-party complaint was thereafter filed by John Hancock against Christel Novern.By order of March 19, 1969John Hancock was directed to pay the fund into court and jurisdiction was retained for the purpose of determining the rights of plaintiff and third-party defendant to the proceeds.

Plaintiff contends that she was the wife of Thomas M. Novern until she divorced him on May 22, 1968, and that there never was any change of beneficiary made in compliance with the provisions of the policy.

Third-party defendant contends that the interest of plaintiff as named beneficiary terminated when Thomas M. Novern ceased his employment with Yale Transportation Company on November 30, 1964.She further contends that in March 1967Thomas M. Novern was reinstated as a member of Local 641, International Brotherhood of Teamsters, and again became eligible to the benefits of the policy in question; that at that time the third-party defendant was named as beneficiary under the group insurance policy, and as a consequence of said change she is entitled to the proceeds of the policy.

The following provisions of the policy are pertinent to the issue as to which party is entitled to the proceeds:

A.Beneficiary.Any employee insured under the Policy for Life Insurance shall have the right to designate a beneficiary, and from time to time may revoke or change such designation by filing written notice thereof with the Trustee(s), but such designation, revocation or change shall not be valid unless it is in writing, on forms supplied for that purpose by the Company, or satisfactory to the Company, and is on file with the Trustee(s).After such written notice has been received by the Trustee(s), it shall relate back to take effect as of the date the employee signed said written notice whether or not the employee be living at the time of the receipt of such written notice.

B.If an employee does not designate a beneficiary for Life Insurance under this Policy on a form supplied by the Company or satisfactory to it the Company may at its option pay the Life Insurance to the person last designated as beneficiary by the Employee in writing on forms supplied for that purpose or satisfactory to the Company and on file with the Trustee(s) with respect to former insurance of the employee under any of the other group policies previously issued to the Trucking Employees of North Jersey Welfare Fund, Inc., the Trucking Employees of Passaic and Bergen Counties Welfare Fund, the Affiliated Truckers TrusteeFund, Inc., or the Local 560, Salesmen & Mechanics Division Welfare Fund and which group policies terminated before the date the employee became insured hereunder.

C.If any employee, whose Life Insurance under this Policy ceased, again becomes insured hereunder for Life Insurance and there is a designated beneficiary of such employee with respect to Life Insurance under this Policy on file with the Trustees, such designation shall continue to be the designation of his beneficiary unless and until revoked or changed by the employee, in the manner described above.

The proofs establish that the insured became a member of Local 641 on or about April 1, 1964 by virtue of his employment with Yale Transportation Company.By reason of that membership he was entitled to the benefits of group insurance policy No. 11649--GTC issued by John Hancock to the trustees of the Trucking Employees General Welfare Fund.The insured named plaintiff as the beneficiary in his application for group insurance under that policy.In November 1965 the insured ceased his employment with Yale and was employed by Schulman Air Freight Co., which was not a member of Local 641.In May 1968he became employed with R.C. Motor Lines, Inc. and was reinstated in Local 641.His application for membership in Local 641, dated March 26, 1967, set forth Christel Novern as his next of kin and beneficiary and stated that she was his wife.No change in beneficiary was ever made on forms supplied by John Hancock.Plaintiff obtained a final decree of divorce against the insured on May 22, 1968.Under the terms of the decree the insured was ordered to pay weeekly sums for her support and two children of the marriage.

I

Did the interest of plaintiff as named beneficiary cease upon termination of the insured's employment with Yale Transportation Company in 1965?

It is well settled in New Jersey that when the policy so provides, the termination of employment of an employee insured under a group insurance plan terminates the insurance coverage.Mau v. Union Labor Life Ins. Co., 31 N.J.Super. 362, 106 A.2d 748(App.Div.1954);Keane v. Aetna Life Ins. Co., 22 N.J.Super. 296, 91 A.2d 875(1952);Shaffer v. Metropolitan Life Ins. Co., 133 N.J.L. 53, 42 A.2d 575(1945).In order to effect a discontinuance of the insurance, the termination of employment must be a clear and complete severance of the relationship of employer and employee.Ambrose v. Metropolitan Life Ins. Co., 18 N.J.Misc. 42, 10 A.2d 479(Cir.Ct.1939).And it has been held that when an insured is discharged from employment and subsequently rehired, he retains no rights under his original policy certificate where the group policy expressly provides that a reemployment is to be classed as a new employment, accompanied by the issuance of a new policy certificate.Shaffer v. Metropolitan Life Ins. Co., supra.

The instant group policy, under the caption 'Discontinuance of individual insurance for Employees,' provided for cessation of an employee's coverage upon the date of termination of his employment.The date of termination is defined in the policy as 'The last day of any calendar month during which such employee failed to work at least eight days.'

Accordingly, when decedent quit his job with Yale Transportation Company in November 1964 and simultaneously gave up his membership in the contributing local union, and gained employment with another firm through a noncontributing union, he also relinquished his rights under his former union's policy.It necessarily follows that his beneficiary, at that time, likewise retained no interest.

However, when decedent was thereafter reinstated to membership in his original local union and obtained employment with a trucker who had a collective bargaining agreement with that local, the policy was revived and decedent's coverage was resumed.It is the court's duty to enforce an insurance contract as written when its terms are clear and unambiguous. kook v. American Surety Co. of New York, 88 N.J.Super. 43, 210 A.2d 633(App.Div.1965);Rotwein v. General Accident Group, 103 N.J.Super. 406, 247 A.2d 370(1968); and the language of the policy in question is, indeed, clear that a rehired employee is covered under the policy and subject to its provisions.Page T--10 of the policy, marked in evidence, provides:

Each employee in the eligible class in Groups 1A, 1B, or 2 who does not become eligible under this policy on December 1, 1954, and Each such employee who became insured under this policy but whose insurance hereunder ceased in accordance with the provisions entitled 'discontinuance of Individual Insurance' contained herein, shall thereafter become eligible under this policy on the first day of the calendar month immediately following a calendar month during which such employee works at least eight days.* * * (Emphasis added).

Obviously, the policy provisions were meant to apply to those persons, such as decedent, who were in a reemployment situation, and they, by virtue of the renewed coverage, were bound by its provisions.

One such provision, anticipating reemployment possibilities and their effect upon a former designation of beneficiary under the policy is found on page A--4 of the policy.It states:

If any employee, whose life insurance under this policy ceased, again becomes insured hereunder for life insurance, And there is a designated beneficiary of such employee with respect to life insurance under this policy on file with the Trustees, such designation shall continue to be the designation of his beneficiary unless and until revoked or changed by the employee in the manner described above.(Emphasis added).

Again the policy is clear.When the insured decedent left the union local, the individual policy terminated and his designated beneficiary held no further interest in it.Upon his subsequent reinstatement in the local, he was again insured under the policy and...