Venigalla v. Penn Mut. Ins. Co.

• Decision Date: 22 May 1987
• Parties: Vijaya Lakshmi VENIGALLA, Appellant, v. PENN MUTUAL INSURANCE COMPANY, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 939

515 N.Y.S.2d 939

130 A.D.2d 974

Vijaya Lakshmi VENIGALLA, Appellant, v. PENN MUTUAL INSURANCE COMPANY, Respondent.

Supreme Court, Appellate Division,

Fourth Department.

May 22, 1987.

Gross, Shuman, Brizdle & Gilfillan, P.C. by Leslie Greenbaum, Buffalo, for appellant.

Damon & Morey by J. David Sampson, Buffalo, for respondent.

Before DOERR, J.P., and BOOMER, PINE, BALIO and DAVIS, JJ.

MEMORANDUM:

On July 12, 1984, Dr. Venigalla S.K. Prasad completed an application for a flexible premium adjustable life insurance policy in the amount of $965,000, payable in the event of his death. Defendant insurance company's agent, Dennis J. McNerney, accepted Dr. Prasad's check for $1,000, the initial premium payment. Sometime after making this application, Dr. Prasad had a physical examination and defendant concedes that he met their insurability standards. However, before the policy could be delivered, Dr. Prasad died suddenly and unexpectedly on July 29, 1984. Plaintiff, Dr. Prasad's widow and named beneficiary, made a demand for the proceeds of the insurance policy on or about August 1, 1984. Defendant refused to pay the face amount of the policy, relying on a clause printed in the prepayment receipt which purportedly limited the company's pre-delivery liability to members of Dr. Prasad's age group to $500,000. Plaintiff commenced this action to recover the face value of the policy, and subsequently moved for summary judgment, arguing that the terms of the policy were ambiguous. Special Term granted defendant's cross motion for summary judgment, holding that the terms of the policy were clear and unambiguous. We reverse.

Where the provisions of an insurance contract are clear and unambiguous they must be enforced as written (see, State of New York v. Home Indem. Co., 66 N.Y.2d 669, 671, 495 N.Y.S.2d 969, 486 N.E.2d 827; Breed v. Insurance Co. of North Amer., 46 N.Y.2d 351, 355, 413 N.Y.S.2d 352, 385 N.E.2d 1280, rearg. denied 46 N.Y.2d 940, 415 N.Y.S.2d 1027, 388 N.E.2d 372; Prince v. ITT Life Ins. Corp., 89 A.D.2d 779, 780, 453 N.Y.S.2d 495). However, "where the meaning of a policy of insurance is in doubt or is subject to more than one reasonable interpretation, all ambiguity must be resolved in favor of the policy-holder and against the company which issued the policy" (Little v. Blue Cross of Western N.Y., 72 A.D.2d 200, 203, 424 N.Y.S.2d 553). This rule is enforced even more strictly when the language at issue purports to limit the company's liability (Breed v. Insurance Co. of North Amer., supra, 46 N.Y.2d p. 353, 413 N.Y.S.2d 352, 385 N.E.2d 1280; Thomas J. Lipton, Inc. v. Liberty Mut. Ins. Co., 34 N.Y.2d 356, 357 N.Y.S.2d 705, 314 N.E.2d 37; Matter of Hanover Ins. Co. (Saint Louis), 119 A.D.2d 529, 532, 501 N.Y.S.2d 347, appeal dismissed 68 N.Y.2d 751, 506 N.Y.S.2d 336, 497 N.E.2d 703; Little v. Blue Cross of Western N.Y., supra). If an ambiguity exists, the insurer bears the burden of establishing that the construction it advances is not only reasonable, but also that it is the only fair construction (see...