Goldmann, Kilkenny and Collester. The opinion of the court was delivered by Collester, J.A.D. Goldmann, S.j.a.d., concurring in the result.
[83 NJSuper Page 225] Defendant Metropolitan Life Insurance Company appeals from a judgment of the Law Division, following a non-jury trial, awarding plaintiff Anne D. Allen damages in the sum of $12,000, together with lawful interest thereon from June 1, 1960. The award represented the face value of a policy of life insurance for which plaintiff's husband, Harley Allen, had made application, naming plaintiff
as his beneficiary. Harley Allen (hereafter referred to as the decedent) signed the application, paid the first full annual premium and received a conditional receipt therefor. He died before the application was formally approved by the defendant insurance company, which subsequent to his death refused to issue the policy applied for.
Plaintiff, as executrix of decedent's estate, and individually as beneficiary named in the application, brought suit. In a four-count complaint she alleged that (1) defendant breached an agreement with decedent to issue a $12,000 life insurance policy in consideration of decedent's paying a premium of $576.42; (2) defendant, by not returning the premium within a reasonable period of time, led decedent to believe that the insurance policy applied for was effective; (3) defendant negligently failed to notify decedent of its alleged rejection of the application, wherefore decedent assumed he had been accepted as an insurance risk and that the policy would issue, as a result of which he made no attempt to secure insurance from another company, and (4) defendant fraudulently represented to decedent that upon payment of the premium he was immediately insured for $12,000.
The pertinent facts are as follows. On April 4, 1960 Frank J. Cafaro and Richard F. Tambouri called at the home of Allen in Hillsdale, New Jersey, for the purpose of selling him a life insurance policy. Cafaro was assistant manager of the Westwood district office of defendant, and Tambouri was an agent in said office. Also present at the interview, in addition to Allen, were plaintiff and Joseph Daskivich, plaintiff's brother.
Decedent agreed to purchase a whole life policy with a face amount of $12,000 in which plaintiff was to be named beneficiary. Part A of the application, consisting of personal data required of the applicant, was filled out by Tambouri, who asked questions of Allen and wrote the answers on the application, which was then signed by decedent. Part A contains the following provision:
"4. The Company will incur no liability by reason of this application, except as may be provided in a Conditional Receipt given on and bearing the same date as this application, until a policy has been delivered and the full first premium specified in the policy has actually been paid to and accepted by the Company during the lifetime and continued insurability of the Applicant, in which case such policy will take effect as of the date of issue recited therein." (Emphasis added)
Upon signing the application decedent gave Tambouri a check in the amount of $576.42 in payment of the first annual premium, and the latter then signed and turned over to decedent a conditional receipt.
The conditional receipt issued pursuant to the above-stated provision in the application, provides:
" If the amount received on this date is equal to the full first premium on the policy applied for and (1) the application as originally submitted is approved at the Company's Home Office for the policy applied for, either before or after the death of the Life Proposed, then in such circumstances the policy applied for will be issued effective as of this date or (2) if the Life Proposed dies within 30 days from this date as a result of accidental bodily injury caused by external violence, then, provided that a death benefit does not become payable under a policy issued pursuant to (1) above or under a policy other than the one originally applied for, the Company will pay the amount of life insurance applied for (not including any additional accidental means death benefit) subject to the following conditions: (a) the aggregate amount payable under this provision and similar provisions of all conditional receipts issued by the Company in connection with applications on the Life Proposed shall not exceed $25,000, (b) payment will be made in one sum to whoever would have been entitled to payment if a policy had been issued, (c) no such payment will be made if death occurs as the result of suicide.
The amount received will be refunded if the application is declined or if a policy is issued other than as applied for and is not accepted." (Emphasis added)
Harley Allen was 52 years of age on the day he signed the application. Since the defendant insurance company would not issue a life insurance policy to one of that age without a medical examination, a discussion ensued concerning an appointment for such an examination by Dr. William Spranz of Oradell, defendant's examining physician.
On April 8, 1960 decedent was examined by Dr. Spranz and Part B of the application pertaining to the applicant's medical history was filled out and signed by Allen. Decedent disclosed that less than three weeks before he had signed Part A of the application, he had been hospitalized in the Pascack Valley Hospital for a period of seven days, beginning March 11, 1960, and that he had been absent from work until March 24. Part B contains the following recital:
"Mar. 11, 1960. Complained of pain localized to pit of stomach. Pain severe admitted to Pascack Hospital, Westwood, N.J. Had electrocardiogram twice, gastro intestinal X-rays and gall bladder X-rays. Only positive finding sluggish gall bladder. Treatment low fat diet -- still on diet plus medication. No recurrence of pain. No present symptoms. Hospitalized 7 days."
Dr. Spranz' report of his medical examination of decedent, set forth on Part C of the application, was essentially negative except for a finding that the applicant was overweight.
The application containing Parts A, B and C was sent to the home office of the insurance company in New York, where it was received on April 12, 1960. Thereafter it was processed through several underwriters. On April 19 Gerald Chamberlin, a senior underwriter, sent for and reviewed Allen's application for another policy which had been issued to him in 1957. On April 21 Chamberlin sent the application for the present policy to the medical division with a direction that a hospital report be obtained from the Pascack Valley Hospital concerning the applicant's previous treatment.
On April 28 the medical correspondence division sent a written request to the hospital for a report of the treatment rendered to decedent, including results of the electrocardiogram and X-rays. Attached to said letter was a written authorization, which had been signed by decedent on April 8, directing that information relating to medical care and findings made be furnished to defendant. The hospital report, dated April 28, 1960, was received at defendant's home office on May 2, 1960. On May 3 Francis Baldwin, a staff underwriter, while processing the application made a notation
thereon as a reminder that the applicant's gall bladder history would require an extra premium, if the application was approved. He thereupon sent the application to the medical division for action by a medical doctor.
On May 5, 1960 the application was received by Dr. Paul S. Entmacher, defendant's associate medical director. He also had before him the report from Pascack Valley Hospital of Allen's condition and treatment during his hospitalization from March 10 to March 17, 1960. The report contained a diagnosis of acute cholecystitis and anginal syndrome. It stated that Allen suffered from substernal pain and had been given demerol on his admission. It further stated that he had received oxygen by nasal catheter and had been put on complete bed rest. The history of Allen having indicated an acute gall bladder condition and an anginal syndrome within two months before the doctor's review of the records, Dr. Entmacher declined to approve the application. His action was based on a company practice that an applicant who had suffered an anginal syndrome within six months prior to the application was not insurable, and that a combination of an acute gall bladder condition and anginal syndrome offered an even more compelling reason to decline the application.
On April 28, 1960 at about 5:10 A.M. Allen was stricken and died as a result of a coronary occlusion. (It is conceded that Dr. Entmacher was informed of Allen's death by a telephone call from Dr. Spranz on May 5, the day he declined to approve the application.)
Tambouri, unaware of Allen's death, had telephoned defendant's home office on April 28 to ascertain what was holding up approval of the application and learned that the medical division had requested a report from the hospital. He then telephoned the hospital to ask them to expedite the information. He thereafter telephoned the Allen home and spoke to Joseph Daskivich, plaintiff's brother, about having the hospital records sent to the home office. He was advised by Daskivich that Allen had died earlier that day. Tambouri reported Allen's death to one Nezzi, manager of the Westwood
office, who in turn telephoned defendant's home office to report the same.
On May 12 or 15, 1960 Tambouri and Nezzi went to Mrs. Allen's home and turned over to her a check for the proceeds of an insurance policy covering the life of the decedent, which had been issued in 1957. The 1960 application having been declined by the insurance company on May 5, they also tendered a check of $576.42 for return of the premium paid by decedent on April 4. It was refused by Mrs. Allen. Upon failure of defendant to pay plaintiff the face amount of the $12,000 policy, suit was instituted.
The trial court determined that the language of the conditional receipt was ambiguous and that the ambiguity must be resolved against defendant. Over the objection of defendant, the court permitted in evidence conversations between the decedent and defendant's representatives held on April 4, 1960 when the application was signed and the conditional receipt issued. In his oral opinion the trial judge stated that he allowed such testimony, not for the purpose of varying the terms of the written instruments, but to explain the circumstances under which the parties came together and to help decide and resolve whatever ambiguity might exist.
The judge noted that plaintiff and Daskivich stated there was an agreement for immediate coverage of decedent under the policy, while Tambouri and Cafaro, defendant's representatives, had stated that there was immediate coverage "provided there was nothing organically wrong" with decedent.
The court stated that the conditional receipt contained no condition that decedent must be insurable, and held that regardless of whether he was or was not insurable on the date of the application, he was covered by interim insurance. The trial judge found no evidence that decedent was uninsurable. He held that defendant did not show decedent was uninsurable under its "Impairment Guide," and that Dr. Entmacher's finding of uninsurability was influenced and motivated by the fact that he knew Allen was deceased at the time he made
such determination. He also found there was undue delay in processing the application.
Defendant contends that decedent was not insurable on the date the application was made; that the application would have been rejected regardless of his death; and that the determination by defendant that the applicant was not insurable was made in good faith and independently of the fact that the applicant had died. It alleges that the conditional receipt was binding only to the extent that if the application had subsequently been approved, life insurance coverage would have been retroactive to the date of the receipt.
Defendant asserts that the terms of the conditional receipt were not ambiguous; that it did not provide for interim insurance, and that plaintiff is bound by the terms of the receipt and the application. It further contends that plaintiff failed to prove a breach of contract by defendant. It also alleges that the ...