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Tulipano v. United States Life Insurance Co.

Decided: October 7, 1959.


Goldmann, Freund and Haneman. The opinion of the court was delivered by Goldmann, S.j.a.d.

Plaintiff, the named beneficiary under a group life insurance policy on the life of Frank Van Zevenhuyzen, sued defendant insurance company to recover the proceeds. The county district court dismissed the complaint in view of the provisions of N.J.S.A. 17:34-31(A)(4) which prohibits an employer from being named beneficiary. Plaintiff appeals.

The Trustees of Local Joint Executive Board of Hudson County Welfare Funds applied to defendant for a policy insuring the lives of employee-union members in the amount of $750 each. The policy was issued March 1, 1951, effective as of January 15 preceding, to the "Trustees of the Local Joint Executive Board of Hudson County Welfare Fund," known as the "assured." It covered all full-time employees of the contributing employers. However, coverage would not extend to an employee who was not a member in good standing of the Hotel & Restaurant Employees and Bartenders International Union, Locals 1 or 4. Further, coverage of an employee was to terminate automatically 31 days after termination of employment. Cessation of active work was to be deemed termination of employment, except that while an employee was "absent on account of sickness or injury, employment shall be deemed to continue until premium payments for such employee's insurance are discontinued."

A "contributing employer," as defined in the policy, was an employer of union members who was making payments into a trust fund administered by the assured (the Trustees) for the purpose of providing the life insurance for the employee-union members pursuant to a collective bargaining agreement between the union and that employer. Plaintiff was one of the contributing employers under the policy. The policy also provided that the employees were to contribute no monies toward the cost of the life insurance. The Trustees were to act "for and on behalf of the employers in all matters pertaining to the policy."

The deceased, Frank Van Zevenhuyzen, was employed by plaintiff sometime prior to October 1952. He died May 23, 1953. He was an employee-union member covered under the policy up to October or November 1952. On the date of his death plaintiff was the designated beneficiary of the decedent.

Defendant refused to pay plaintiff the $750 under its policy, contending that (1) the policy was issued pursuant to N.J.S.A. 17:34-31(A)(4), which prohibits the plaintiff, as decedent's employer, from receiving the proceeds as a beneficiary; and (2) the policy coverage had terminated prior to Van Zevenhuyzen's death by reason of his termination of employment, and also because decedent, at the time of his death and for sometime prior thereto, had failed to pay his union dues, and therefore ceased to be a union member in good standing, as required by the contract of insurance.

We are informed that when the matter came up for trial the defenses were discussed with the trial judge. It was agreed that the first of the two defenses just mentioned would be decided as a matter of law, since it might be dispositive of the entire case. The trial judge then ordered each of the parties to submit a statement of facts sufficient to decide whether or not plaintiff was within a class of persons precluded from recovering as beneficiary on the group policy in question. The trial judge, in a letter opinion, found that plaintiff could not be named as beneficiary under the policy, since this was specifically prohibited under N.J.S.A. 17:34-31(A)(4). He also held that the incontestability clause of the policy "cannot breathe life into a contract which is obviously unenforceable because violative of statutory mandate." Accordingly, he entered final judgment dismissing the complaint.

At the time the policy was issued N.J.S.A. 17:34-31 provided that

"(A) No policy of group life insurance shall be delivered in this State unless it conforms to 1 of the following descriptions:

(3) A policy issued to a labor union , which shall be deemed the policyholder, to insure members of such union for the benefit of persons other than the union or any of its officials, representatives or agents, subject to the following requirements:

(4) A policy issued to the trustees of a fund established by 2 or more employers in the same industry or by 1 or more labor unions, or by 1 or more employers and 1 or more labor unions, which trustees shall be deemed the policyholder , to insure employees of the employers or members of the unions for the benefit of persons other than the employers or the unions, subject to the following requirements: * * *" (Italics ours)

Plaintiff concedes that N.J.S.A. 17:34-31 is applicable, but contends that the policy in question is controlled by subsection (A)(3) and not (A)(4). He makes the preliminary claim that "The submitted facts were not clear and concise for the court below to infer that this group policy was issued in accordance with R.S. 17:34-31(A)(4)." The record on appeal does not show that this issue was raised below, and it may not be raised on appeal. In any event, the trial court expressly found as a fact, and not as a mere inference, that subsection (A)(4) was applicable, and this on the ...

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