Salzman v. Prudential Ins. Co. of America

• Decision Date: 17 April 1947
• Citation: 72 N.E.2d 891,296 N.Y. 273
• Parties: SALZMAN et al. v. PRUDENTIAL INS. CO. OF AMERICA.
• Court: New York Court of Appeals Court of Appeals

296 N.Y. 273

72 N.E.2d 891

SALZMAN et al.

v.PRUDENTIAL INS. CO. OF AMERICA.

Court of Appeals of New York.

April 17, 1947.

Appeal from Supreme Court, Appellate Division, Fourth Department.

Action by Morris Salzman, after whose death Eva Salzman and others, as administrators of deceased's estate, were substituted as plaintiffs, against the Prudential Insurance Company of America for total disability benefits under a life insurance policy. From a judgment of the Appellate Division, 270 App.Div. 980, 62 N.Y.S.2d 819, affirming by a divided court a judgment of the Supreme Court for defendant on a decision at an Equity Term, Cribb, J., dismissing the complaint on the merits, substituted plaintiffs appeal.

Judgments modified and affirmed as modified. John A. Millener and Charles P. Maloney, both of Rochester, for appellants.

Dallas C. Newton, of Rochester, for respondent.

CONWAY, Judge.

The question presented involves the right of an insured to payments for total and permanent disability. In order to reach that question other problems must first be considered. The insured, who died after the action was tried, obtained from defendant in 1926 a policy of insurance upon his life in which were included provisions for payments in the event of disability and for waiver of payment of premium during continuance of such disability. The insured paid the annual premiums required including the one which became due on March 2, 1941. When the next annual premium became due, he failed to pay it and permitted the grace period to expire. On the last day of grace, April 2, 1942, his son mailed a check which was dated April 3, 1942. That was one day too late. Struhl v. Travelers Ins. Co., 281 N.Y. 584, 22 N.E.2d 162. An automatic extended insurance clause (with no provision for disability) continued the life insurance far beyond the date of the death of the insured which occurred on January 4, 1945, and we are thus not concerned with payment of the face amount of the policy.

Whether or not the policy had lapsed or been declared forfeited by reason of the failure to pay the March, 1942, annual premium within the grace period was important in determining whether the insured was entitled to claim disability payments thereafter under the applicable policy provisions. Unless a proper notice had been sent to the insured in compliance with section 92 of the Insurance Law, Consol. Laws, c. 28, as amended by Laws 1918, c. 130 (now ss 151, 208), the policy of insurance would not lapse and could not be declared forfeited within one year from the failure to pay the premium. As the policy was written in 1926, section 92 of the Insurance Law, as it then read, was deemed to have been a part of the insurance contract as though written into it. Adam v. Manhattan Life Ins. Co. of New York, 204 N.Y. 357, 360,97 N.E. 740, 741, 742. If the notice under section 92 had been given, that would be the end of this litigation. If the notice were not given, the insured could have paid the premium within the year and saved his policy. The insured testified that he had not received such notice. The defendant, although it had pleaded the giving of the notice, made no proof of that fact but rested at the end of the plaintiff's case. It was a matter for pleading and proof by the defendant (Baxter v. Brooklyn Life Ins. Co., 119 N.Y. 450, 456,23 N.E. 1048, 1049, 1050,7 L.R.A. 293;Fischer v. Metropolitan Life Ins. Co., 167 N.Y. 178, 183,60 N.E. 431, 432, 433;Imbrey v. Prudential Insurance Co. of America, 286 N.Y. 434, 36 N.E.2d 651) and we must assume, therefore, that the notice was not given.

In that state of the record we consider now the occurrences subsequent to April 2, 1942. An agent of the defendant orally advised the insured that the policy had lapsed, and on April 8, 1942, obtained the signature of the insured on a form designated ‘Application for Reinstatement of an Ordinary Policy.’ Thereafter the defendant deposited and received payment of the check dated April 3d. Upon examination by the doctor selected by the defendant, reinstatement was refused and still later the sum collected on the April 3d check was tendered back. All this is undisputed and we turn to a sentence in the application for reinstatement upon which defendant relies to establish that the policy had lapsed. That sentence is: ‘I hereby apply for the reinstatement of the above numbered policy, which was lapsed for non-payment of the premium due 3-2-42 and make the representations contained in my answers to the following questions'.

Defendant contends that the insured by signing, was concluded as to the lapsing of the policy by expressly admitting it. Defendant phrases it thus: ‘Plaintiff, by Exhibit 4, agreed that the policy ‘was lapsed for non-payment of the premium due 3/2/42’, and that the ‘policy shall not be in force’ until the premium in arrears is paid and the application for reinstatement is approved.' Such is not the law. Putting aside the questions whether there was here a ‘voluntary giving up of a known right’ and thus a waiver (Lord Construction Co. v. Edison Portland Cement Co., 234 N.Y. 411, 415, 138 N.E. 39, 40, 41;Alsens American Portland Cement Works v. Degnon Construction Co., 222 N.Y. 34, 37,118 N.E. 210, 211) and whether in fact the merely purported to recite what the company asserted it had done, the general rule is that a statute such as the Insurance Law, section 92, is grounded on public policy formulated by the Legislature and that such statutory conditions precedent to lapse or declaration of forfeiture may not be waived by a policyholder. The rule is well expressed in Griffith v. New York Life Ins. Co., 101 Cal. 627, 36 P. 113,...