Plaintiff brings this action for the cancellation of a receipt which it issued in connection with an application for life insurance filed by Frank John De Chiaro (herein referred to as decedent), and to require his widow, the defendant, to accept $19.50, the consideration paid by the decedent on account of the premium when he made the application, and received the receipt. She counterclaims for the face amount of the insurance policy applied for ($25,000), asserting that the receipt is a contract of interim insurance. Cross-motions for summary judgment have been made.
Plaintiff's soliciting agent, Vernon S. Taylor, Jr., and Robert L. Jackson, assistant manager of the Newark Office, together called upon decedent to sell him insurance. Following this visit decedent submitted to a medical examination and furnished a medical history to Dr. Dean C. Shore of Morristown, the local examining physician selected by plaintiff and unknown to decedent. The medical information was incorporated in Parts II and III of decedent's application for insurance which was filled out by Dr. Shore on June 2, 1959, the date of the examination.
On June 4 Mr. Taylor again visited decedent at which time Part I of the application for insurance was completed, signed by decedent and witnessed by Mr. Taylor. The application stated in part:
"(4) if no premium is paid with this application, no insurance shall become effective unless and until a policy is issued and delivered to the Applicant, and the first premium thereon is paid while all persons on whom insurance is requested are in good health, and the information in Part I, * * * and * * * Part II hereof remains unchanged; (5) if premium payment is made with this application, insurance shall become effective only as provided in the Receipt bearing the same number as this application; (6) no contract
of the Company can be made, modified or discharged, nor can any of its rights or requirements be waived, except in writing signed by its President, Vice President, Secretary or Assistant Secretary; * * *."
Upon signing Part I of the application decedent paid Mr. Taylor $19.50, one-twelfth the annual premium due on the policy applied for. He received the following receipt:
"IF PAYMENT IS MADE WITH APPLICATION, THIS RECEIPT MUST BE COMPLETED AND GIVEN TO THE APPLICANT. OTHERWISE IT MUST NOT BE DETACHED.
NO. L 74543 RECEIPT FOR PAYMENT OF PREMIUM WITH APPLICATION
Received from Frank B. De Chiaro, Applicant to Life Insurance Company of North America for insurance as applied for on an application bearing the same number as this receipt, the sum of $19.50 on account of the first premium, upon the following conditions:
If the sum paid with respect to any policy applied for in the application bearing the same number as this receipt, as stated in such application, is at least one-twelfth (1/12) of an annual premium on such policy but not less than $10.00: (a) insurance under the terms of such policy but, in the case of a Life Insurance Policy, not in excess of $100,000, shall take effect from the date of application, if the Company at its Home Office shall be satisfied that on that date the Proposed Insured, and his wife and all dependent children, if family insurance is requested, and the Applicant, if Payor Insurance is requested, was or were insurable at standard rates under its rules and practices, and shall approve without modification insurance for the amount, and on the plan, applied for; (b) if the sum paid is less than the first premium for the payment period selected, the remainder of the first premium may be paid within sixty days from this date, without further evidence of insurability, but subject to approval of the application as above; but (c) if any such balance is not paid, any insurance becoming effective shall terminate after that fraction of such payment period, which is equal to the fraction of the premium for that period represented by the sum paid.
If the application is declined, or if it does not receive the Company's approval within sixty days of its completion, no insurance will have been effected and the amount paid will be returned.
Dated at Morristown, N.J. this 4th day of June 1959.
Vernon S. Taylor, Jr., Agent
THE COMPANY WILL RECOGNIZE NO OTHER RECEIPT THAN THIS BEARING THE SAME NUMBER AS THE APPLICATION."
On June 8, 1959 Mr. De Chiaro suffered a rupture of a congenital aneurysm and was hospitalized. The following day plaintiff was advised by Retail Credit Company of Morristown, doing a report for it on Mr. De Chiaro, that he had died from a heart attack. The underwriter's work sheet used by Donald S. Vincent, Chief Underwriter for plaintiff, in evaluating Mr. De Chiaro's application for insurance, has on its face the following notation:
"6-9-59 D S V -- Mgr. R C C
Morristown advised me by phone that this applicant had a coronary and died this A.M. BLB"
Immediately below is written:
"Decline -- not acceptable on std. Basis as applied for. Refund prepayment /DSV
In the space entitled "Underwriting Action": is written: