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Gresham v. Massachusetts Mutual Life Insurance Co.

Decided: May 1, 1991.


On appeal from the Superior Court of New Jersey, Chancery Division, Middlesex County.

Dreier and Landau. The opinion of the court was delivered by Dreier, J.A.D.


Defendant, Massachusetts Mutual Life Insurance Company (MML), appeals from a Chancery Division judgment enforcing an equitable contract of life insurance between MML and Allwin R. Gresham, plaintiff's late husband. Plaintiff, Linda Lee Gresham, contends that MML should be deemed to have issued a $110,000*fn1 life insurance policy.

Decedent had been employed by Hatco Chemical Corp. for 23 years, ending December 31, 1986. Hatco provided group life insurance giving decedent $110,000 coverage as part its employee benefit plan. The plan, as required by N.J.S.A. 17B:27-24, offered its employees the right to convert the coverage to an individual policy within 31 days of termination of employment, without the necessity of a medical examination. In this case, the 31-day period expired January 31, 1987. Here, Hatco gave decedent his "Notice of Right of Conversion" in mid-December, amply complying with this requirement. The notice clearly stated in part:

If you desire to convert your life insurance, you must act promptly by making application and paying the first premium to Massachusetts Mutual Life Insurance Company within THIRTY-ONE DAYS following the date of termination of employment.

If you elect to convert, you should contact the closest Massachusetts Mutual Agency either in person or by mail . . . .

On January 26, 1987, five days prior to the expiration of the 31-day period, decedent telephoned MML's Saddle Brook, New Jersey agency and spoke to Ronald Nalven, acknowledged to be a full-time agent employed directly by MML. He informed

Nalven that he wished to convert his policy, and requested that Nalven come to his home for that purpose. According to decedent's phone records, he spoke to Nalven for approximately three minutes. According to Nalven, during this time he told decedent that his (Nalven's) schedule would not permit the home visit, but that decedent should go to an MML office, sign the conversion form and pay the first premium. Alternatively, he stated that he could schedule an appointment with decedent after the conversion period expired, but in such event, he could provide information only concerning policies that would require evidence of insurability. Nalven asked whether decedent, then 42 years old, was in good health, and was assured that he was. Obviously, neither anticipated decedent encountering any problems in obtaining coverage even after the conversion date.

Although the issue is contested by MML, the judge found that Nalven actually went to decedent's home on January 29, 1987, two days before the conversion period expired.*fn2 Since Nalven testified that he recalled meeting with decedent after January 31, 1987, he remembered no discussion of converting the group policy. Although we do not have decedent's recollections, plaintiff testified that after the meeting decedent told her that Nalven informed decedent it was then too late to convert the policy. This statement was admissible not only to prove decedent's then state of mind under Evid.R. 63(12), but also to prove the included hearsay of Nalven's statement as an admission by defendant's agent, Evid.R. 63(9)(a). The evidence also could be admitted as a trustworthy statement of a decedent,

Evid.R. 63(32), if notice of the intent to introduce this statement had been given defendant.

There is no dispute that Nalven failed to bring with him forms for the conversion of the group policy and information concerning the premium for any converted policy. Instead, he had prepared and left with decedent descriptions of various new insurance policies and the amount of the premiums therefor. Decedent signed an application dated February 4, 1987 for one of the new policies which Nalven submitted to MML. The application was denied in late March, but was then resubmitted by Nalven. It was again (and finally) denied for underwriting reasons relating to decedent's health. Decedent's cancer was diagnosed the next month; he died December 12, 1987. When no insurance benefits were forthcoming, plaintiff ...

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