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Kampf v. Franklin Life Insurance Co.

Decided: October 13, 1961.

JEAN D. KAMPF, PLAINTIFF,
v.
THE FRANKLIN LIFE INSURANCE COMPANY OF SPRINGFIELD, ILLINOIS, A CORPORATION OF THE STATE OF ILLINOIS, DEFENDANT



Pindar, J.s.c.

Pindar

[69 NJSuper Page 300] Plaintiff sues as beneficiary under a contract of insurance issued by defendant on the life of her husband, Morton Kampf, who died April 22, 1958. The policy provides that the beneficiary will receive a monthly income of $100 from the insurer payable from the death of the insured until the expiring date. It is dated September 21, 1956 and had an expiration date of September 21, 1976. Premiums were to be paid quarter-annually. An original effort to recover the insurance fund was previously litigated and determined in plaintiff's favor by our trial court, 56 N.J. Super. 185 (Ch. Div. 1959), but reversed on appeal, 33 N.J. 36 (1960). The Supreme Court held that an adjudication by way of an assumed judicial interpretation

of the contract provisions fixing the due date on which the premium was payable was erroneous. The trial court found the aforementioned due date was March 24, 1958, and recognized the extended grace period of 31 days; that the insured's death on April 22, 1958 occurred within the period when the policy was in force and effect. The reversing court determined that the language of the contract respecting the provisional due date, that "subsequent premiums are payable on the anniversary * * * date," was clear, certain and unambiguous and accordant with appropriate contractual terms to conclude that the questioned due date was March 21, 1958, with inevitable reason to further conclude that insured's death on April 22, 1958 postdated insurance coverage under the policy, and at page 44 said: "We therefore hold that the grace period expired on April 21, 1958, one day before the insured's death." That conclusion must be considered the law of this case and no reference to the pertinent provisions is necessary.

But, as expressed in the opinion of Justice Schettino, speaking for the court, it was considered that complete justice required that the cause of contractual liability, as to the insurance fund, have further judicial review for effectual adjudication on remand. The appeal court, upon noticing in a supplementary agreement (in consideration of extra premium charge) that the insurance contract contained a rider provision designated "Waiver of premium," required reargument and briefs thereon. As this aspect had not been before the trial court, being initially raised on appeal, the issue here is limited to the determination of the effect of this rider. The pertinent provision of the contractual right is set forth as follows:

"WAIVER OF PREMIUM: The Company agrees to waive the payment of each premium becoming due under said Policy after the commencement of such disability, provided however, that no premium shall be waived, the due date of which is more than six months prior to the date of receipt at the Home Office of the Company of written notice of claim hereunder. Any premiums so waived shall not be deducted from the sum payable in any settlement

of said Policy. During the continuance of disability the manner of premium payment may not be changed."

In the light of this supplementary undertaking by the court the opinion discloses the purpose, character, and extent which would control the trial court upon remand. That situation will be better understood by the following quoted portion of the Supreme Court's opinion as contained at pages 44, 45:

"We next consider whether payment was here excused. The supplemental agreement to the policy contains a waiver of premium provision for which an extra charge was made. It provides that if, after the first premium payment is made and before there is a default in any following payment, the insured furnishes the insurance company at its home office proof of total disability resulting from bodily injury or disease, the insurance company waives premium payments which become 'due * * * after the commencement of such disability'; that an insured is totally disabled when he 'is and will be continuously and wholly prevented thereby from performing any work or transacting any business for compensation or profit and that such disability has already continued uninterrupted for a period of at least six months (such disability of such duration being treated as permanent only for the purpose of determining the commencement of the benefit hereunder) * * *.' The agreement attempts to restrict the waiver provision by stating 'provided, however, that no premium shall be waived, the due date of which is more than six months prior to the date of receipt * * * of written notice of claim hereunder.' It further provides that if the insured has defaulted in a premium payment without having given prior notice of disability, payment of that premium will nevertheless be waived if the insured's disability occurred before the due date or before expiration of the subsequent grace period and if the insured presents notice of his claim within six months of the due date. The notice of claim must be presented during the insured's lifetime and during continuance of his disability. But, failure to supply notice within such time does not invalidate the claim 'if it shall be shown that it was not reasonably possible to give such notice within such times and that such notice was given as soon as reasonably possible.'"

And, at page 49:

"Plaintiff is not barred from recovering because death intervened before the insured had been disabled for six months for virtually the same parenthetical clause is present in this policy as in the ones

construed in Commonwealth Life Ins. Co. v. Francis, supra [278 Ky. 343, 128 S.W. 2 d 742 (Ct. App. 1939)], and in Lenkutis [v. New York Life Ins. Co.] supra [374 Ill. 136, 28 N.E. 2 d 86 (Sup. Ct. 1940)]. In accord with those opinions we hold that * * * the six-month requirement as to duration could not have been designed for any other purpose than to insure the requisite permanency of disability."

The above quotation produced specific judicial expressions of plaintiff's burden of proof that (a) the element of disability existed, and (b) total disability started before the end of the grace period (April 21, 1958). Likewise, the court referred to the type of total disability intended by the waiver of premium provisions and in the light of ...


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