Simpson v. Jefferson Standard Life Insurance Company, 72-1150.

• Decision Date: 25 August 1972
• Docket Number: No. 72-1150.,72-1150.
• Citation: 465 F.2d 1320
• Parties: Dorothy Jane SIMPSON, Plaintiff-Appellant, v. JEFFERSON STANDARD LIFE INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

465 F.2d 1320 (1972)

Dorothy Jane SIMPSON, Plaintiff-Appellant, v. JEFFERSON STANDARD LIFE INSURANCE COMPANY, Defendant-Appellee.

No. 72-1150.

United States Court of Appeals, Sixth Circuit.

August 25, 1972.

G. A. Piacentino, Marion, Ohio, for plaintiff-appellant; John H. Harpen, Boggs, Boggs & Boggs, Toledo, Ohio, on brief.

J. G. Jamra, Eastman, Stichter, Smith & Bergman, Toledo, Ohio, for defendant-appellee.

Before WEICK and PECK, Circuit Judges and O'SULLIVAN, Senior Circuit Judge.

WEICK, Circuit Judge.

Plaintiff-Appellant has appealed from an order of the District Court granting partial summary judgment in favor of defendant, and from a judgment upon a directed verdict in favor of the defendant at the close of plaintiff's evidence on the remaining issue, in an action to recover the death benefits on a life insurance policy containing provisions for waiver of premium in the event of total and permanent disability.

Jurisdiction of the Court was based on diversity of citizenship. The case is governed by Ohio law.

Plaintiff was the widow of Paul Gemmill Simpson, Jr., and the named beneficiary in a decreasing term life insurance policy numbered 1 905 618 on his life, which was issued in Marion, Ohio on January 25, 1965 by the defendant company through a local agent, one Jay P. Isaly. (The policy was originally purchased in February of 1964 but was amended in 1965 to the present policy.)

This policy provided that in consideration of the payment of a quarterly premium of $14.23 for a period of 30 years, Simpson's life was insured for a sum certain; included in said premium were the premiums charged by the company for waiver of premium in the event of total and permanent disability as defined in the policy.

All premiums until the one due on April 25, 1968 were timely paid. Defendant, through an affidavit of its Second Vice-President and Associate General Counsel stated that the quarterly premium notice for the premium due April 25, 1968 was mailed on April 5, 1968 to plaintiff at his residence in Painesville, Ohio. Until May 6, 1968 plaintiff and her husband had resided in Painesville, but on May 8, 1968 they moved to Columbus, Ohio. Plaintiff, by affidavit, states that the notice of the premium due on April 25, 1968 was never received.

On May 20, 1968 the insured became seriously ill and on May 24 entered Grant Hospital at Columbus, Ohio. On May 25 the insured was confined to the hospital's intensive care unit in an oxygen tent and was completely disabled. On May 26, a tracheotomy was performed and he died on May 30, 1968. According to the Death Certificate, the immediate cause of death was pulmonary edema (3-4 hours) as a consequence of bilateral lobar pneumonia (10-11 days). A contributory cause of death was coronary atherosclerosis. He was attended by a physician May 23, 1968-May 30, 1968.

The insurance policy contained a 31-day grace period which expired on May 25, 1968. The policy's disability clause specified that "Disability shall be deemed total when the insured is prevented thereby from engaging in any occupation or employment whatsoever for remuneration or profit. Such total disability shall be presumed to be permanent . . . when it is present and has existed continuously for not less than six consecutive months." It also specified that complete loss of use of both eyes, hands, feet or one hand and one foot was total disability.

Shortly after the expiration of the policy's grace period, the Company mailed a "Late Remittance Offer" to plaintiff's Painesville home, which offer was to expire on June 10. The day following receipt, June 4, plaintiff paid the $14.23 pursuant to this offer by money order. Shortly thereafter, after cashing the money order, defendant tendered this payment back to the plaintiff and denied liability under the policy.

A few days after the death of Mr. Simpson, agent Jay P. Isaly, on his own initiative, went to plaintiff's temporary residence in Marion, Ohio, obtained the death certificate from Mrs. Simpson, had plaintiff sign an agent of record form and sent these papers to the defendant's Columbus, Ohio branch office. He also called that office shortly thereafter for the necessary forms but they were not sent to him or to the plaintiff. Although the defendant company's formal agency relationship with Isaly had terminated on August 31, 1967, nevertheless with the consent of the company he had continued to service that company's policies which he had previously solicited, and he had a monetary interest in each premium paid on these policies.¹

I

Ohio law requires that an insurance company give notice of a premium due to "the person whose life is insured." In addition, the Ohio legislature has changed the common law in O.R.C. § 3909.07 and has made proof of mailing of such a premium-due notice conclusive proof of its receipt:

"Proof of the mailing of the notice to the policyholder, assignee, or owner by the company or its agent, to the last address as given by the policyholder, assignee or owner to the company, is conclusive proof of its service."

The District Court in granting partial summary judgment for defendant, held that the affidavit of the Company's Second Vice-President Koonts was sufficient to establish mailing of the notice, and thus that the conclusive presumption took effect. The portion of Koonts' affidavit relevant to this mailing, to wit, sections 3 and 4, state as follows:

"3. On April 5, 1968, defendant mailed the notice for the quarterly premium due April 25, 1968 to the insured, Paul Gemmill Simpson, Jr., at his residence address of 6145 Althea Drive, Painesville, Ohio.

4. Said mailing address was the same address to which defendant mailed all previous quarterly premium notices for the quarterly premiums due from and after October 25, 1966. . . ."

Plaintiff Simpson, in her affidavit, denied receipt of the premium due in April, 1968.

Where the Supreme Court of a state has not spoken on an issue, it is the duty of the federal courts to ascertain how the highest state court would decide the question; decisions of intermediate state courts must be followed by the federal court unless there is reason to believe they would not be followed by that state's highest court. Moore's Federal Practice, 2d ed., § 0.307(1) p. 3301 et seq.; West v. American Tel. & Tel., 311 U.S. 223, 61 S.Ct. 179, 85 L.Ed. 139 (1940); Gettins v. United States Life Ins. Co., 221 F.2d 782 (6th Cir. 1955).

Ohio law clearly dictates that if notice was not given here, the insurance cannot be declared forfeited. Manhattan Life Ins. Co. v. Smith, 44 Ohio St. 156, 5 N.E. 417 (1886); Gleason v. Mass. Mutual Life, 43 F.Supp. 824 (N. D.Ohio 1942).

Under the common law rule, which Ohio has followed, to establish mailing in order to benefit from the presumption that a letter has been received, proof of three things was required: That (1) the letter was properly addressed, (2) had sufficient postage and (3) was properly deposited in the mails. Wigmore on Evidence, 3rd ed. § 95 p. 524; 21 O.Jur.2d § 123; 30 Am.Jur.2d § 1116 p. 283.

"Ordinarily, the deposit of a notice of cancellation in the mail would be delivered to the insured at the address stated in the policy, and it has been held that proof of the mailing of a letter properly stamped and addressed affords prima facie evidence of its receipt by the addressee." Griffin v. General Accident Fire and Life, 94 Ohio App. 403, 410, 116 N.E.2d 41, 45 (1953).

"It must be remembered that when it is sought to prove the preparation and mailing of a document, four things must be shown. They are the instrument\'s execution, its inclosure in a proper container correctly addressed and stamped, that it was placed in the mails, and, where time is of the essence, that it was mailed in time." Hitz v. Ohio Fuel Gas Co., 43 Ohio App. 484, 490, 183 N.E. 768, 770 (1932).

Nevertheless, evidence that a letter was not received was generally regarded as sufficient to rebut this presumption and create a jury issue, for the presumption was one of fact. 21 O.Jur.2d § 134 p. 145; 20 Am.Jur. 200, Evidence § 201; 29 Am.Jur.2d Evidence § 193 p. 246. But under O.R.C. § 3909.07 the Ohio legislature made this presumption of receipt conclusive, to preclude litigation of whether or not a premium notice has been received once mailing was established.

A distinction, however, must be made between the issue of whether or not the letter was received and whether or not it was mailed. Under O.R.C. § 3909.07 mailing must be proved and when that is done receipt is established. And testimony of non-receipt is some evidence of non-mailing.

"But suppose that the addressee testifies in denial of the receipt? If this denial be believed, then is not the nonarrival of the letter some evidence that it was never mailed? The presumption . . . (of receipt) rests upon the supposed uniform efficiency of the postal service in delivering letters duly stamped, addressed, and mailed into its custody; if therefore the efficiency is operating, does not the non-arrival of an alleged letter indicate that such a letter was never given into the postal custody? Add to this, that the testimony to mailing comes usually from the mouth of persons who are vitally self-interested in proving the fact of mailing . . ." Wigmore on Evidence, 3rd ed. § 2519 pp. 432-3. See also 29 Am.Jur.2d 246, Evidence, § 193.

Although we find no Ohio case directly in point, we feel that this states the preferred rule, and the one which the Ohio courts would adopt if faced with the question. Consequently, we hold that the District Court erred in granting summary judgment for the defendant on this issue, for the plaintiff's affidavit of non-receipt created an issue of fact as to whether or not the premium notice was mailed.

Under the Ohio common-law rule prior to O.R.C. § 3909.07, Koonts' affidavit is insufficient to invoke the presumption of receipt for it does not establish that he had personal knowledge of the fact that the...