Zayc v. John Hancock Mutual Life Insurance Co. of Boston
| Decision Date | 06 May 1940 |
| Docket Number | 16 |
| Citation | 338 Pa. 426,13 A.2d 34 |
| Parties | Zayc, Admr., Appellant, v. John Hancock Mutual Life Insurance Company of Boston |
| Court | Pennsylvania Supreme Court |
Argued March 20, 1940.
Appeal, No. 16, March T., 1940, from judgment of C.P Allegheny Co., Oct. T., 1936, No. 245, in case of John Zayc administrator, v. John Hancock Mutual Life Insurance Company of Boston, Mass. Judgment affirmed.
Trespass. Before KENNEDY, J.
The facts are stated in the opinion of the Supreme Court and also in the lower court opinion, reported in 30 D. & C. 34.
Verdict for plaintiff and judgment entered for defendant n.o.v Plaintiff appealed.
Error assigned was entry of judgment n.o.v.
Judgment affirmed.
William S. Doty, with him Thomas A. Thornton, of Doty & Thornton, and Michael W. Huron, for appellant.
D. C. Jennings, for appellee, was not heard.
Vosburg & Vosburg, for amicus curiae, for intervenor.
Before SCHAFFER, C.J., MAXEY, DREW, LINN, STERN, BARNES and PATTERSON, JJ.
The question for determination on this appeal is whether an insurance company is liable in an action ex delicto for neglect or unreasonable delay in acting upon an application for insurance where but for such delay the application would have been approved and the insurance issued in time to have protected the applicant against a loss which occurred to his damage during the period of such unreasonable delay.
Appellant, John Zayc, administrator of the estate of Jacob Zayc, deceased, instituted a trespass action against the John Hancock Mutual Life Insurance Company of Boston, appellee, to recover damages claimed to have been sustained by his decedent, Jacob Zayc, as a result of appellee's failure to act upon an application for life insurance within a reasonable time. The statement of claim averred that on June 25, 1931, Jacob Zayc made application to an agent of the appellee insurance company for a twenty payment life insurance policy in the sum of $2,000, with double indemnity provision, and that he paid four dollars as a deposit on the first premium; that after June 25, 1931, Zayc was interviewed by agents of other companies, but, relying upon an alleged custom of insurance carriers to accept or reject applications within a reasonable time, the application made by him with appellee's agent, and appellee's retention of his deposit, he refrained from making any other application; that appellee did not reject or refuse the application on or before August 24, 1931, on which date Zayc was accidently killed, and did not theretofore offer to return his four dollar deposit; and that by reason of the negligence of appellee in failing to advise Zayc within a reasonable time that a policy would or would not be issued, he was deprived of life insurance protection which he otherwise would have had.
Appellee filed an affidavit of defense in the nature of a statutory demurrer, asserting that the statement of claim failed to set forth a cause of action. The court below overruled the demurrer saying (Zayc v. John Hancock Mutual Life Ins. Co., 30 D. & C. 34), The court directed that appellee file an affidavit of defense on the merits, which it did, denying that Zayc had applied for insurance, but admitting that his mother, Mary Zayc, who was also to be named beneficiary, had made such an application and that at the time she had paid to an agent for appellee the sum of four dollars as a deposit on account of the first premium. The case went to trial, and, at the close of appellant's evidence, appellee moved for compulsory non-suit. This motion was denied, whereupon appellee rested, without offering any testimony, and submitted a point for binding instructions, which was likewise refused.
The jury brought in a verdict for appellant in the sum of $2,881, the face amount of the policy plus interest less the amount of the first premium. Appellee filed a motion for judgment non obstante veredicto. After a reconsideration of the position taken by it in overruling appellee's statutory demurrer, the court below granted this motion and entered judgment for appellee on the ground that the company's delay in acting upon the application did not constitute actionable negligence, and on the further ground of material variance in that whereas appellant's statement of claim averred an application by Jacob Zayc, its proof showed an application by his mother, Mary Zayc. From judgment so entered the present appeal was taken.
It is the established rule in Pennsylvania, as in most jurisdictions, that mere delay, however great, in passing upon an application for insurance cannot be construed as an acceptance thereof by the insurer which will support an action ex contractu, notwithstanding payment of the premium at the time application is made. : Insurance Co. v. Johnson, 23 Pa. 72, 75. " : Munhall v. Travelers Insurance Co., 300 Pa. 327, 333. See also Ripka v. Mutual Fire Ins. Co., 36 Pa.Super. 517, 526; Anno. 15 A.L.R. 1026.
But, appellant does not seek to enforce his claim for damage on any contractual basis. He asserts a right to recover on the theory that where an application has been made and there has been delay on the part of the agent in forwarding, or on the part of the insurance company in accepting or rejecting the application, such delay constitutes a tort. Manifestly appellant's attempt in this manner to hold the insurer responsible in damages for the amount of a policy because of delay, and thereby to accomplish by indirection that which the law has persistently refused to permit to be done directly, in an action ex contractu, cannot prevail, unless, independently of statute or contract, a legal duty devolved upon the insurance company either to accept or reject the application for insurance within a reasonable time. It is fundamental that negligence and liability therefor cannot be predicated upon a state of facts which does not impose any legal duty. : McCauley v. Logan et al., 152 Pa. 202, 204. "A jury cannot be permitted to find anything negligent which is less than the failure to discharge a legal duty": Bardis v. Phila. & Reading Ry., 267 Pa. 352, 355.
A number of jurisdictions where the question has arisen have found tort liability to exist, largely in reliance upon Boyer v. State Farmers Mutual Hail Ins. Co., 86 Kan. 442, 121 P. 329, and Duffie v. Bankers Life Ass'n Co., 160 Iowa 19, 139 N.W. 1087. [1] In the former, an insurance company was held liable for its agent's omission promptly to forward an application for hail insurance as a result of which no policy had been issued when the applicant's crops were destroyed. No reason was stated for the existence of the obligation to forward an insurance application other than that "there was sufficient danger to the plaintiff to be apprehended from delay in closing the transaction that a reasonably prudent business man, guided by the considerations which ordinarily regulate conduct, would have acted with diligence." In the latter case the view of the Boyer case that the insurance company was under a legal duty to act promptly was adopted, but because the company held a franchise from the state. On the other hand, the existence of the duty has been denied in a number of jurisdictions. [2] This sharp divergence of judicial opinion as to the existence of any duty upon which to predicate an action against an insurer for delay in dealing with an application requires that the legal principles involved, as well as the reasoning of those decisions which permit an action ex delicto to be asserted, be carefully examined.
The mere fact that a reasonably prudent business man would have acted with diligence is clearly not a satisfactory basis for imposing liability upon an insurer for delay in issuing a policy of insurance after the making of an application. As a general proposition it is true, as was said in Bisson v Kelly, 314 Pa. 99, 110, that "It is a primary social duty of every person...
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