Rosenbloom v. New York Life Ins. Co.

• Decision Date: 08 May 1946
• Docket Number: No. 3698.,3698.
• Citation: 65 F. Supp. 692
• Parties: ROSENBLOOM et al. v. NEW YORK LIFE INS. CO.
• Court: U.S. District Court — Western District of Missouri

65 F. Supp. 692

ROSENBLOOM et al. v. NEW YORK LIFE INS. CO.

No. 3698.

District Court, W. D. Missouri, W. D.

May 8, 1946.

Philip L. Levi and Solbert M. Wasserstrom, both of Kansas City, Mo., for plaintiffs.

Richard S. Righter and Howard A. Crawford, both of Kansas City, Mo., for defendant.

RIDGE, District Judge.

Both parties have filed motions for summary judgment under Rule 56, F.R.C.P., 28 U.S.C.A. following section 723c. The supporting affidavits filed with each of said motions reveal no essential facts, for a determination of the issues here involved, to be in dispute.

The action is in two counts. In the first count plaintiffs seek to obtain specific performance of a certain annuity contract issued by defendant to Jay R. Rosenbloom, and to compel defendant to issue a policy of insurance on the ordinary life plan, with death benefits of $7,151, upon the life of Jay R. Rosenbloom, without a war clause contained therein. In the second count plaintiffs seek to collect the amount of the death benefits under said ordinary life policy, together with damages for vexatious delay, by defendant, in refusing to pay said claim and for attorney's fees.

On December 22, 1938, defendant issued to Jay R. Rosenbloom, who was then 13 years of age, an annuity policy. The policy provided:

"This policy is free of conditions as to residence, travel, occupation, and military or naval service."

"* * * The annuitant may exchange this Policy for a Policy on the Ordinary Life, Limited Payment Life or Endowment plan of insurance, issued by the Company at the time this Policy takes effect, at a total premium as high as that charged under this Policy, but not more than twenty per cent in excess thereof, upon presentation at the Home Office of evidence of insurability satisfactory to the Company. The exchange shall be effective upon surrender of this Policy and the payment to the Company of the difference in premiums with compound interest at the rate of six per cent per annum from the due date of each premium to the date of exchange; allowance will be made for any larger dividends, on the new plan. The new Policy will take effect as of the effective date of this Policy and the premium will be at the rate which would have been charged if this Policy had been issued originally on the new plan."

At the time said annuity policy was issued in 1938, no war clause was then inserted in any of the policies then being issued by defendant; on the contrary, at that particular time all of the policies then issued by defendant specifically provided that they were "free of conditions as to military or naval service." The negotiations for the annuity policy in question were carried on by Mr. Joe W. Rosenbloom, the father of Jay R. Rosenbloom, with one Mr. Abe Rogell, a soliciting agent for defendant. Late in 1943 Mr. Joe W. Rosenbloom told Mr. Rogell, who was still acting as a soliciting agent for defendant, that "Jay" (the annuitant) wanted to exchange his annuity policy for an ordinary life policy, carrying the largest possible amount of death benefits, and that he (Jay) wanted his father named as beneficiary. Jay Rosenbloom was then 17 years of age and would be 18 on June 19, 1944, and subject to Selective Service in the armed forces of his country. When Mr. Joe W. Rosenbloom contacted defendant's soliciting agent, Mr. Rogell, he (Rogell) stated "that he would transmit our request to the proper officers of the New York Life Insurance Company." Thereafter Mr. Rogell requested one Mr. T. R. Naughton, the General Correspondence Clerk at the Company's Kansas City Branch Office, whose duty it was to handle all general correspondence with the home office of defendant, to write the home office for figures for four conversion plans of life insurance into which Jay's annuity policy might be converted, and to inquire of the home office whether such converted policies would contain a war clause. This Mr. Naughton did. In reply, on January 17, 1944, the home office of defendant sent certain memoranda to Mr. Naughton, giving figures for conversion of said annuity policy into any one of four plans of life insurance and stated, on each of said forms, that the converted policy would contain a war and aviation clause. On receipt of said home office communications Mr. Naughton delivered them to Mr. Rogell. Mr. Rogell, in turn, delivered them to Mr. Joe W. Rosenbloom. Mr. Joe W. Rosenbloom examined said memoranda and he and "Jay" selected the one based upon the ordinary life plan of insurance, with death benefits in the sum of $7,151. After so doing Mr. Joe W. Rosenbloom again contacted Mr. Rogell and told him that he and his son Jay had decided on the ordinary life plan with the above death benefits and "that they would comply with all the requirements indicated on the Company's memoranda and that the money adjustments were satisfactory; however, I also told him emphatically that we would not agree to the insertion of a war clause" in the converted policy. Mr. Rogell then stated to Mr. Joe W. Rosenbloom that he would take up the matter again with the Company. About March 1, 1944 Mr. Rogell again asked Mr. Naughton to inquire of the home office of defendant whether the Company would insist on the inclusion of a war clause in said converted policies. In answer thereto Mr. Rogell received the following communication which he, in turn, delivered to Mr. Joe Rosenbloom:

"March 1, 1944 "Mr. Abe Rogell Pol. #214 095 & #214 120 "T. P. Naughton, For Rosenbloom Cashier. "TPN:OMR

"We return herewith the outlines of the different changes in connection with the above numbered Retirement Annuity contracts, as the Home Office has reiterated that any change in connection with these retirement annuity contracts to a form of permanent life insurance must contain the Company's present War and Aviation Clause.

"We regret that we have no better word for you."

Mr. Joe W. Rosenbloom again repeated, to Mr. Rogell, that "Jay was willing to undergo a medical examination, to submit reports and forms required by the company, and to submit the annuity policy for cancellation, provided the Company would issue the $7,151 ordinary life policy, without a war clause." There matters rested until Jay R. Rosenbloom enlisted in the United States Merchant Marine and United States Naval Reserve. In December 1944, while Jay R. Rosenbloom was in active service and outside the United States, Mr. Joe W. Rosenbloom paid the annual premium falling due on the life annuity policy of Jay's, so as to keep it in force until Jay's return. On April 9, 1945, Jay R. Rosenbloom was killed in a ship explosion at Beri, Italy, while in the service of "his country at its time of greatest need." On June 18, 1945, demand was made on defendant for payment of the amount of the ordinary life policy that Jay and Mr. Joe W. Rosenbloom selected for exchange for the annuity policy originally issued to Jay by defendant. On July 17, 1945, defendant, replying to said demand, denied liability on the ground that the annuitant in said policy "did not comply wtlh the terms, provisions and conditions of said annuity relating to change of other plans of insurance."

In the view we now take of this matter a decision on the motions for summary judgment depends on the determination of one issue only, to-wit: Did defendant under the terms of the annuity contract issued by defendant to Jay R. Rosenbloom have the right to insist upon the inclusion of a war clause in any life insurance policy which it might issue pursuant to the conversion privilege contained therein?

Plaintiffs contend that by the terms of the conversion privilege contained in said annuity policy, and the admitted fact that defendant did not insert a war clause in any of the policies of insurance issued by it at the time said policy became effective, the defendant was obligated to issue to annuitant a life insurance policy in exchange for said annuity policy, without a war clause contained therein. Such contention requires the construction of the conversion provision contained in said annuity policy, in the light of the circumstances surrounding the parties at the time said annuity policy was issued. In other words, we must determine, from the policy itself, what the contract was between the parties. If we can give effect to their agreement from the terms expressed therein we perform our judicial duty for neither party contends that the language of the contract is ambiguous.

The annuity policy issued to Jay R. Rosenbloom, by defendant, is a Missouri contract. Liebing v. Mutual Life Insurance Company of New York, Mo.Sup., 226 S.W. 897, judgment affirmed Mutual Life Insurance Company of New York v. Liebing, 259 U.S. 209, 42 S. Ct. 467, 66 L.Ed. 900; Schuler v. Metropolitan Life Insurance Company, 191 Mo.App. 52, 176 S.W. 274. Consequently the rights and liabilities of the parties herein must be determined according to the law of Missouri.

An annuity contract is not a policy of life insurance. State ex rel. Aetna Life Insurance Company v. Lucas, 348 Mo. 286, 153 S.W.2d 10-12; 29 Amer.Jur. p. 52, Sec. 6. The risk assumed in an annuity contract is to pay to the annuitant an annuity so long as he lives, while the risk assumed in a life insurance contract is to pay upon insured's death. Equitable Life Assurance Society of the United States v. Johnson, 53 Cal.App.2d 49, 127 P.2d 95, 99. In Carroll v. Equitable Life Assurance Society of the United States, D.C.Mo., 9 F.Supp. 223, 224 it is said: "the granting of annuity contracts is in the nature of an investment and has very little to do with mortality tables. The only case where a mortality table would be involved is where an annuity is granted for the life of an individual. In such case, the grantor would, of course, take into consideration the `expectancy' of such person under accepted mortality tables."

It is the law of Missouri that when an insured exercises the privilege given to him to exchange his policy for...