28 Misc. 2d 367 | N.Y. Sup. Ct. | 1961
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 corpora
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 unless 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 “ Tour 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 handwritten above the typewritten signature. The letters were
Ace did not, either within the grace period or at any time thereafter, pay, tender or offer to pay either the Fund or the defendant the premium due on April 15, 1958 or attempt to secure the reinstatement of its policies. Nor, so far as here appears, did Ace take action in disaffirmance or repudiation of the letter of April 4,1958, canceling the insurance, except insofar as the institution of an action by the plaintiff and Krohn on December 29, 1958 to recover on the Steinlauf policy may be regarded as disaffirmance. In that action the complaint raised the issue of Steinlauf’s authority to bind Ace by the letters of March 31 and April 4, 1958. This was, however, almost nine months after those letters were written and after the Fund and the defendant had already committed themselves to the termination of the insurance, an unreasonably long period within which to assert Steinlauf’s want of authority. Ace was a closely held corporation and, in the absence of contrary proof on behalf of the plaintiff—and there is no such proof whatever—it must reasonably be assumed that all three of its officers knew at the time of so important a transaction as the cancellation of insurance of $25,000 on each of their lives for which Ace was paying the premium. Any other inference defies common experience.
Even were the validity of the plaintiff’s contention that neither Ace nor he is bound by the trust agreement, which unquestionably justified the Fund in acting as it did, accepted, for the sake of argument, the plaintiff may not recover. The Fund, not Ace, was the policyholder and, therefore, the defendant was entitled to rely in good faith on the information furnished to it by the Fund, as it has been found it did (Degnan v. Metropolitan Life Ins. Co., 178 Misc. 312). It follows that the defendant lawfully terminated the Ace policies and is not liable to the plaintiff on the policy on Krohn’s life.
The foregoing views make it unnecessary to pass on the defendant’s motion to dismiss for failure to make out a prima facie case. The plaintiff’s nine objections to testimony and exhibits are overruled, with exception to him in each instance. The defendant is entitled to a dismissal of the complaint on the merits, with costs, and the entry of judgment to that effect is directed. The foregoing constitutes the decision in accordance with section 440 of the Civil Practice Act.