Occidental Life Insurance Company of California v. Fried

• Decision Date: 08 July 1965
• Docket Number: Civ. No. 9481.
• Parties: OCCIDENTAL LIFE INSURANCE COMPANY OF CALIFORNIA, Plaintiff, v. Alice FRIED, Defendant.
• Court: U.S. District Court — District of Connecticut

245 F. Supp. 211

OCCIDENTAL LIFE INSURANCE COMPANY OF CALIFORNIA, Plaintiff, v. Alice FRIED, Defendant.

Civ. No. 9481.

United States District Court D. Connecticut.

July 8, 1965.

Frank E. Callahan, of Wiggin & Dana, New Haven, Conn. (Robert F. Cavanaugh, of Wiggin & Dana, New Haven, Conn., on the brief), for plaintiff.

Maurice J. Magilnick, of Magilnick & Elstein, Bridgeport, Conn., and Edward G. Burstein, of Burstein & Goldman, Bridgeport, Conn., for defendant.

TIMBERS, Chief Judge.

Plaintiff, Occidental Life Insurance Company of California, brought this declaratory judgment action, founded on diversity jurisdiction, seeking an adjudication that a $100,000 life insurance policy issued by it on the life of Max Fried (the insured), deceased husband of defendant, is null and void because of material misrepresentations made by him concerning his health in an application for reinstatement of that policy after it had lapsed for non-payment of premiums.

Defendant's answer denied the falsity of the insured's statements in the reinstatement application and alleged as special defenses (i) that the language of Question 8 in the reinstatement application,¹ which seeks information concerning applicant's health, is ambiguous, and (ii) that plaintiff, upon demand by the insured for a copy of his reinstatement application, failed within thirty days thereafter to furnish him with a copy of it and therefore, pursuant to Section 38-158 of the Connecticut General Statutes,² is barred from using any allegedly false statements contained therein.

Plaintiff has moved, pursuant to Rule 12(f), Fed.R.Civ.P., to strike both special defenses as legally insufficient.

The standard of legal sufficiency to be applied under Rule 12(f) has been stated by Professor Moore as follows:³

"A motion to strike a defense will be denied if the defense is sufficient as a matter of law or if it fairly presents a question of law or fact which the court ought to hear."

It is well established that a motion to strike may not be used to determine disputed and substantial questions of law⁴ or fact.⁵ The legal insufficiency of defendant's special defenses must be "clearly apparent" before plaintiff's motion to strike them may be granted.⁶

FIRST SPECIAL DEFENSE

Plaintiff claims that the phrase in Question 8, "date of the application for the policy", can be interpreted reasonably as referring only to the date the insured applied for the original policy sought to be reinstated. Defendant contends that the disputed phrase may be construed with equal plausibility as referring to another time, such as "the date the insured received the reinstatement application" or "during the last three or five years."⁷ The phrase being susceptible of these other interpretations, defendant argues, the issue of ambiguity should not be summarily adjudicated on a Rule 12(f) motion, but should be determined at trial by the trier of the facts.

When the language of the reinstatement application is read with the provision of the policy itself setting forth the conditions for reinstatement,⁸ it is apparent that the disputed phrase in question 8 refers to the date of application for the original policy. Plaintiff, in its form of application for reinstatement, seeks further evidence of insurability to complement that which it obtained in the application for the original policy.

That question 8 requires disclosure of an insured's medical history since his application for the original policy sought to be reinstated, is further evidenced by the parenthetical qualification of question 8—"policy issued first if more than one." The latter phrase indicates that plaintiff sought medical history not already contained in its files, that is, medical history subsequent to the insured's application for the original policy issued to him.

In view of the purpose for which the information was sought in question 8, the conditions for reinstatement set forth in the policy, the context in which the disputed phrase appears in the reinstatement application, and the reasonableness of plaintiff's requesting and the insured's furnishing medical history since the date of application for the original policy, the Court concludes that plaintiff's construction of the phrase in question is the only permissible one as a matter of common sense and that there is no ambiguity.⁹

The legal insufficiency of the defense of ambiguity being clearly apparent, plaintiff's motion to strike defendant's first special defense is granted.

SECOND SPECIAL DEFENSE

Defendant alleges that plaintiff, having failed to furnish the insured a copy of his application for reinstatement within thirty days of his demand therefor, is barred, pursuant to Section 38-158 of the Connecticut General Statutes,¹⁰ from relying on statements made therein to establish its claim of misrepresentation. Defendant urges the applicability of Section 38-158 on the ground that the statutory phrase, "the application upon which such policy was issued", encompasses an application for reinstatement as well as the application for the original policy. Plaintiff contends that the phrase applies only to the application upon which the original policy was issued. The critical dispute boils down to whether the word "issued" refers only to issuance of the original policy or whether it reasonably can be interpreted to encompass reinstatement of a lapsed policy.

For the purpose of testing the legal sufficiency of defendant's second special defense pursuant to a motion to strike, facts well pleaded by defendant must be accepted as true.¹¹ For the purpose of its motion, therefore, plaintiff will be deemed to have admitted defendant's allegation that it failed to furnish the insured a copy of his application for reinstatement within 30 days of his demand therefor.

The statutory language in question has never been construed by the Connecticut Supreme Court of Errors, nor by any Connecticut state court, so far as this Court has been able to ascertain.¹² The Court, therefore, must "make its own determination as to what the state courts would probably do,"¹³ exercising "its independent judgment as to what the statute means, guided by analogous decisions, if any, and the court's own reasoning as to the intended public policy."¹⁴

The Court finds Judge Cornell's decision in New York Life Ins. Co. v. Wegner,¹⁵ a Connecticut Superior Court case involving a factual situation virtually identical to that of the instant case and involving construction of a policy provision comparable to that of Section 38-158, persuasive in ascertaining the meaning of the disputed statutory phrase in the instant case. The court in Wegner construed a provision in a life insurance policy stating, "The policy and the application therefor * * * constitute the entire contract. * * * No statement shall avoid the policy or be used in defense of a claim under it, unless it is contained in the written application and a copy of the application is endorsed upon or attached to the policy when issued." The court held that this policy provision did not bar the insurer, in its action to cancel the policy, from relying on misrepresentations made by the insured in his application for reinstatement of the policy.¹⁶ In so holding the court relied on decisions of the courts of other states construing statutory and policy provisions which Judge Cornell found analogous to the provision in the Wegner policy.

The statutes relied upon in the Wegner decision provide, as do the statutes in a large number of states, that a policy shall contain the entire contract between an insured and insurer, and therefore nothing in the application for issuance of a policy shall be incorporated in the policy or be admissible in evidence unless a copy of such application shall be attached to the policy when issued. These provisions are referred to as "entire contract" or "attachment" statutes. In a majority of the states which have the so-called entire contract or attachment statutes, the courts, construing either the statutes or policy provisions inserted pursuant thereto, have held that they do not apply to applications for reinstatement.¹⁷ Some of these decisions, as defendant points out, are grounded on the difficulty of requiring insurers to attach a reinstatement application to the policy when, at the time of reinstatement, the policy ordinarily is under the control of the insured.¹⁸ A number of courts in reaching the same conclusion, however, have relied on other factors relevant to this Court's interpretation of the Connecticut statute, such as the absence of express statutory or contractual reference to applications for reinstatement,¹⁹ the use of the word "application" in the singular,²⁰ and, with reference to the word "issued", the fact that a policy is issued long before application for reinstatement ordinarily is made.²¹

Since the Connecticut statute, on its face, does not appear to be an entire contract or attachment statute, defendant argues that the interpretations given such statutes in other jurisdictions are not applicable here. The Court agrees with the premise of defendant's argument: Section 38-158 is not, strictly speaking, an entire contract or attachment statute. The Court does not agree with the conclusion drawn by defendant from that premise: that the Connecticut legislature by enacting Section 38-158 intended to provide an insured with greater protection than that furnished by entire contract or attachment statutes.

Defendant's conclusion as to the intent of the Connecticut legislature is pure conjecture. The essential difference between the Connecticut statute and the typical entire contract or attachment statute is a mechanical one; in lieu of requiring physical annexation of an application to a policy, the Connecticut statute requires an insured to demand a copy of his application. The Court is not persuaded that the Connecticut statute should be given broader application than that uniformly given to...