D'Allessandro v. Durham Life Insurance

HESTER, Judge,

dissenting:

I respectfully dissent.

This case was decided by the lower court on the basis of a stipulation of facts in support of cross motions for summary judgment, including the following narrowly-stated issue: “May Mr. D’Allessandro’s application for insurance be used by Durham Life Insurance Company to contest the claim of Mrs. Barbara D’Allessandro?”

The parties also stipulated that Mr. D’Allessandro signed an application for the purchase of a group life insurance policy in the amount of $50,000 on March 21, 1975. In this application, Mr. D’Allessandro knowingly made material misrepresentations to Durham Life Insurance Company concerning his medical history and his then physical condition, specifically concerning his chronic coronary disease and recurring chest pains.

Mr. D’Allessandro died of a coronary artery disease less than seven months after he applied for the insurance. The matters misrepresented on the application actually resulted in his death.

*621Mrs. D’Allessandro was named the sole beneficiary on the policy. She claims that she had no knowledge of the application or policy prior to her husband’s death.

The parties also stipulated that Mr. D’Allessandro received a copy of his signed application along with the original insurance policy, prior to his death. This receipt would satisfy any requirement of the Act of May 11, 1949, P. L. 1210, Section 6, as amended, 40 P. S. Section 532.6(3)1 which, if applicable, would have required Durham to furnish a copy of the application to either Mr. D’Allessandro or Mrs. D’Allessandro as a condition precedent to the use of the application, or any statement therein, by Durham to contest its obligation to pay on the policy.2

*622As correctly decided by the court below, this case does not involve the application of the minimum requirements of either Pennsylvania or Missouri law. The case must be decided by interpreting the insurance policy which, like that of any written contract, is a question of law for the Court.

The relevant section of the policy in question reads as follows:

“Incontestability—Statements by Insured Persons. The insurance of any person shall be incontestable after it has been in force for two years. All statements made by any of the persons insured hereunder shall be deemed representations and not warranties and no such statement shall be used in defense of a claim hereunder unless it is contained in a written instrument signed by him and unless a copy of the instrument containing the statement has been furnished to the person making the claim.”

Since Mr. D’Allessandro died less than seven months after he applied for the insurance, the first sentence of this provision is not applicable. The lower court held that the insurance application contained obviously false representations, but that Durham could not use it to contest the claim based on this provision of the policy. In reaching its conclusion the lower court has obviously equated the words “beneficiary” with “the person making the claim”.

Mrs. D’Allessandro is the designated beneficiary on the certificate of insurance. She is also “the person making the claim”, and the parties have so stipulated. Durham admits that “in most cases” the “beneficiary” will also be “the person making the claim”. However, as recognized by the court below, there are numerous instances where the “beneficiary” is not “the person making the claim”. For example, if Mrs. D’Allessandro had predeceased her husband or had been declared mentally incompetent prior to his death, her personal representative would become “the person making the claim”.

*623If an insurance policy designates a class of beneficiaries, e. g., “to all of my children who are then living”, then it is clear that the person or persons who may ultimately make a claim can not be determined until the death of the named insured. Furthermore, in the case of minor beneficiaries, the person actually making the claim would be the guardian of the minor child.

In all of these circumstances, it would be unreasonable to expect Durham or any insurance company to ascertain the identity of all potential personal representatives, guardians or other persons who may make a claim on the policy.

Simply stated, a person cannot make a claim unless there is an unconditional cause of action to be stated. In the instant case, there was no claim to be made under the policy until the death of Mr. D’Allessandro. Upon his death, Mrs. D’Allessandro, who was previously named as the designated beneficiary, became vested or entitled to make a claim under the policy. She became a claimant. At that time, Durham furnished her a copy of the application in order that it could then contest the claim on the basis of the intentional misrepresentations of Mr. D’Allessandro.

In reaching its decision, the lower court relied on Layman v. Continental Assurance Company, 430 Pa. 134, 242 A.2d 256 (1968), where the Supreme Court held that Pennsylvania law required the insurance company to furnish a copy of the application to the insured or the beneficiary, prior to the insured’s death, in order to preserve the insurance company’s right to use the application to contest payment. 40 P. S. Section 532.6(3). Since it is possible the beneficiary under an insurance policy, and not the insured, could be the owner of the policy, it would be reasonable to require the insurance company to provide a copy of any statement made by the insured to the beneficiary, in order to preserve the insurance company’s right to utilize the statement to contest payment.

However, in the instant case, Mrs. D’Allessandro had no knowledge that the policy existed until following her husband’s death. Obviously, she was unaware of any potential claim that she had until following his death.

*624Layman, supra, is inapposite since Mrs. D’Allessandro did not become “the person making the claim” until her husband’s death.

If Durham had supplied a copy of the application to Mrs. D’Allessandro prior to her husband’s death, she would not have been able to preserve her right to recover since notification of Durham of the misstatements would have resulted in a cancellation of the policy. Her husband, a party to the contract, had the opportunity to inform his wife about the policy, if he so desired.

The language in the policy is unambiguous, and it is not, therefore, necessary to utilize a presumption or rule of construction in order to interpret the policy. Poole v. Great American Insurance Company, 407 Pa. 652, 182 A.2d 509 (1962), Restatement of the Law of Contracts, Section 236, Blocker v. Aetna Casualty and Surety Company, 232 Pa.Super. 111, 332 A.2d 476 (1975).

The parties have stipulated that Mrs. D’Allessandro is “the person making the claim”. The parties also stipulated that Mrs. D’Allessandro was furnished a copy of the application in question once she became entitled to make a claim.

Durham has clearly complied with the relevant provision of the policy.

Furthermore, since Durham was induced to enter into the contract by means of the material misrepresentations of Mr. D’Allessandro, there was no validity of assent between the parties at the inception of the contract. Therefore, the policy in question is voidable at the option of Durham without any interpretation of any provision of the policy itself. College Watercolor Group, Inc. v. William H. Newbauer, Inc., 468 Pa. 103, 360 A.2d 200 (1976), Iacoponi v. Plisko, 412 Pa. 576, 195 A.2d 362 (1963), DeJoseph v. Zambelli, 392 Pa. 24, 139 A.2d 644 (1958), Greenwood v. Kadoich, 239 Pa.Super. 372, 357 A.2d 604 (1976), Stringert and Bowers, Inc. v. On-Line Systems, Inc., 236 Pa.Super. 196, 345 A.2d 194 (1975).

*625Mr. D’Allessandro not only misrepresented his medical history and physical condition, he also, as stipulated below, intentionally and fraudulently concealed the identity of the numerous doctors who had attended him during the five previous years. As a result, Durham had no opportunity to investigate his medical history and condition.

A person guilty of intentional fraud should not be permitted to benefit from his misrepresentations, to the detriment of an innocent party.

Accordingly, I would reverse the order of the court below, grant summary judgment to Durham, and order Durham to pay to the Estate of John D’Allessandro the sum of $400.65, representing a refund of all premiums paid by Mr. D’Allessandro prior to his death.

. § 532.6 Standard policy provisions

No policy of group life insurance shall be delivered in this State unless it contains in substance the following provisions, or provisions which in the opinion of the Insurance Commissioner are more favorable to the persons insured, or at least as favorable to the persons insured and more favorable to the policyholder:

(3) A provision that a copy of the application, if any, of the policyholder shall be attached to the policy when issued, that all statements made by the policyholder or by the persons insured shall be deemed representations and not warranties, and that no statement made by any person insured shall be used in any contest unless a copy of the instrument containing the statement is or has been furnished to such person or to his beneficiary.

. Since the parties stipulated that the policy in question was delivered in the State of Missouri and also stipulated that the D’Allessandros were residents of Pennsylvania, the court is initially confronted with a question of conflict of laws. The record from the court below would not enable the reviewing court to adequately answer this question. However, after reviewing the laws of both Missouri and Pennsylvania, this issue need not be addressed since the above-cited provision of Pennsylvania law was satisfied by the receipt of a copy of the application by Mr. D’Allessandro prior to his death. There is no provision of Missouri law which, as a minimum, would require Durham to furnish a copy of the application to either Mr. or Mrs. D’Allessandro in order to preserve its right to use the application to contest its obligation to pay.

The only section of Missouri law which may be relevant to this matter is Section 376.580 Missouri Statutes Annotated which states: “No representation made in obtaining or securing a policy of insurance on the life or lives of any person or persons, citizens of this state, shall be deemed material, or render the policy void, unless the matter misrepresented shall have actually contributed to the contingency or event on which the policy is to become due and payable,

*622As stated above, the parties have stipulated that “... the matter misrepresented shall have actually contributed to the contingency or event on which the policy is to become due and payable.”