48 N.J. Super. 1 | N.J. Super. Ct. App. Div. | 1957
The opinion of the court was delivered by
Plaintiff recovered against the defendant in the Law Division as beneficiary under a group
The policy recites that it is delivered in New York and is governed by the laws of that jurisdiction. It automatically covers any employee of an employer-member of the plan when such employee completes 20 days on the payroll of one or more employers within any period of six consecutive calendar months. At its inception the policy language, so far as here material, had the effect of automatically terminating the life insurance of an employee on the last day of the second calendar quarter following the calendar quarter in which his last day of employment occurred. On August 18, 1954 the policy was amended so as to change the foregoing reference to the second calendar quarter, etc., to the first calendar quarter, etc. The policy, moreover, provides that any employee, upon written application to the company within 31 days after the termination of his insurance, “shall be entitled to have issued to him by the company, without evidence of insurability” an individual policy of life insurance for the same amount as under the group policy, provided payment of the premium is made within the same
Savoyne’s last services as an employee of any employer under the policy were rendered August 20, 1954. He was never given notice of the amendment referred to. It is agreed by the parties that if the amendment is legally effective in his case, his death on February 2, 1955 occurred too late for recovery of the death benefit; per contra, if a proper construction of the policy called for notice to Savoyne of the amendment as a condition of its applicability in his case.
The original policy provides: “Termination of this Policy or amendments thereto shall not require the consent of any employee or beneficiary.” The physical contract document is a printed form which contains the language “or notice to,” but stricken out, after the words “consent of.”
At the trial a Hew York lawyer testified for defendant and gave it as his opinion, citing court decisions, that under Hew York law the amendment was effective without notice to the insured. In a letter opinion finding in favor of plaintiff the trial court found that there was no Hew York decision applicable to the case presented but concluded that the giving of notice was an implied requirement of the amending procedure in view of the deletion of the verbiage concerning notice in the original document and of the fact that on one prior occasion when the policy was amended notices were sent to all employees insured.
The controversy presented by this case falls into the general field of inquiry as to whether and when cancellation, modification or substitution of a master group policy requires consent by or notice to an insured employee. See Annotation, 142 A. L. R. 1288 (1943), which reflects the wide contrariety of viewpoint to be found in the reported
As noted, the policy is to be construed under the law of New York. No New York cases are cited or discoverable, however, which appear to be in point. Section 204, par. 3 of the New York Insurance Law (27 McKinney’s Consol. Laws of N. Y., Part 2, p. 39) requires that a certificate-holder under a group policy containing a right of conversion to another type of life insurance within a specified time after the happening of an event be notified of the privilege, within certain specified periods after the happening of the
The gross unfairness to an insured of effectuation of such a policy amendment as that here involved without notice to the insured, under the circumstances obtaining, while not
While no decided cases in Hew York or elsewhere are precisely in point, there are several decisions which in rationale support a construction of the policy which would permit recovery here. In Poch v. Equitable Life Assurance Society, 343 Pa. 119, 22 A. 2d 590, 142 A. L. R. 1279 (Sup. Ct. 1941), involving a group insurance policy providing for both life and disability insurance, it was held that the insurance company and the contracting employee association would not be permitted to modify the policy so as to eliminate the disability provision without giving the employee notice thereof. The provision for notice was implied so as to permit the employee to “timely exorcise any conversion privilege which may be available to him under the terms of the policy or, where such privilege is not given, in order that he may seasonably obtain similar insurance protection on his own account elsewhere” (22 A. 2d, at page 594). In Emerick v. Connecticut General Life Insurance Co., 120 Conn. 60, 179 A. 335, 105 A. L. R. 413 (Sup. Ct. Err. 1935), it was held that there could be no termination of life insurance under a group policy based upon the termination of employment by the employer during a layoff period, without notice to the employee, where the policy contained a provision, similar to that in the policy sub judice, giving the employee 31 days after termination of employment to convert to individual insurance. The court pointed out that this was necessary in order to assure the employee his opportunity to continue his insurance without having to re-establish insurability. Basically in accord are Nick v. Travelers Insurance Co., 354 Mo. 376, 189 S. W. 2d 532 (Sup. Ct. 1945); Thompson v. Pacific Mills, 141 S. C. 303, 139 S. E. 619, 55 A. L. R. 1237 (Sup. Ct. 1927); Hinkler v. Equitable Life Assurance Soc. of United States,
The only New York case we find dealing' in any way with the problem of notice to the insured in a group insurance situation is Chrosniak v. Metropolitan Life Insurance Co., 121 Misc. 453, 201 N. Y. Supp. 211 (Sup. Ct. 1923), affirmed 209 App. Div. 846, 204 N. Y. Supp. 898 (App. Div. 1924). There the policy provided for immediate termination of insurance upon cessation of “active employment” and the court held that when the employee went on strike he was no longer actively employed and therefore no longer covered by the policy, without the necessity of express notification to him by the company of that status. The decision has no application here. Neither have any of the other New York cases cited by the defendant. The decisions dealing with the rights of the beneficiary vis a vis the insured are not relevant in this ease. Here the beneficiary takes through the insured, and it is the rights of the latter which are being essentially determined in this litigation.
We consider that the striking of the words, “or notice to,” from the original policy, as noted above, is not without some significance in construing the policy before us. Where the language of a contract is ambiguous and the excision of
There being no reliable indication of the law of New York as to this matter to be found in New York sources, we are obliged to apply the common law. This, in our judgment, requires the conclusion that the policy before us is properly to be construed to preclude the effectuation of the amendment in question as to this insured and beneficiary without notice to the insured.
Judgment affirmed.