Schwartz v. Mutual Ben. Life Ins. Co.

• Decision Date: 01 March 1961
• Citation: 28 Misc.2d 367,212 N.Y.S.2d 359
• Parties: Samuel SCHWARTZ, Plaintiff, v. MUTUAL BENEFIT LIFE INSURANCE CO., Defendant.
• Court: New York Supreme Court

Page 359

212 N.Y.S.2d 359

28 Misc.2d 367

Samuel SCHWARTZ, Plaintiff, v. MUTUAL BENEFIT LIFE INSURANCE CO., Defendant.

Supreme Court, Trial Term, Bronx County, Part III.

March 1, 1961.

Jacob Schechner, New York City, for plaintiff.

Littlefield, Miller & Cleaves, New York City (A. Amasa Miller, New York City, of counsel), for defendant. SAMUEL H. HOFSTADTER, Justice.

The plaintiff, as the surviving beneficiary of a group life insurance policy on the life of his late business associate, Jack Krohn, sues to recover the amount payable thereunder on death. The defense is that the insurance had been duly terminated more than a year before Krohn's death.

The plaintiff Schwartz, Krohn, and one Steinlauf, were the sole stockholders, directors and officers of a New York corporation, Ace Auto Luggage Co., Inc. (Ace), each owning one-third of its total stock. Ace was a member of a trade association, Luggage and Leather Goods Manufacturers of America, Inc. (Association). By formal written agreement of September 14, 1955, between the Association's officers, as Trustees, its contributing employer members and the Association, provision was made for the establishment of a group life insurance fund. We refer herein interchangeably to the Trustees and the Fund. Pursuant to this agreement, a group life insurance policy was obtained in a company other than the defendant; we are not here concerned with that policy. Thereafter it was determined to increase the insurance coverage and in December, 1957, Ace sent a letter to the administrator, in which it applied for an additional $20,000 individual life insurance coverage, making a tatal of $25,000, for each of its three officers. The additional insurance was eventually obtained through the increase of the amount of insurance with the first company and the issuance by the defendant of its policy for $15,000 on the life of each person insured thereunder. The defendant's policy was issued on the written application of the Trustees of the Fund, named the Trustees as the policy holder, and took effect on February 15, 1958. The policy conforms to the applicable requirements of section 204 of the Insurance Law.

Ace paid its proportionate share of the premiums on this policy for the period from February 15 to April 14, 1958. On the receipt of the Fund's invoice, dated March 14, 1958, for the premium for the period from April 15 to May 14, 1958, Steinlauf, Ace's president, in a telephone conversation with the Fund's Administrator, told the latter that Ace wished to cancel its insurance unlee it could obtain coverage of less than $25,000 on each of its officers. Steinlauf assigned the high premium cost as the reason for Ace's position. The Administrator replied that the Fund's rules did not permit the Trustees to comply with Ace's request and that the issued insurance had to be carried in full or not at all. By an exchange of letters of March 31 and April 2, 1958, between Ace and the Administrator, the substance of the foregoing was confirmed, Ace's letter returning 'Your Invoice as of 3/14/58 for cancellation.' In answer to the Fund's letter of April 2, 1958, Ace, under date of April 4, 1958, advised that 'we are cancelling our Insurance as per 4/14/58 as stated in your letter' and regretting the inability to get the $5,000 coverage. The letters of March 31 and April 4, 1958 are on Ace's letterhead and bear the typewritten signatures of Ace and of Steinlauf, as president, and in addition the latter's signature in handwriting above the typewritten...