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SALLY A. HELFAER ET AL. v. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY (05/16/68)

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FOURTH DEPARTMENT 1968.NY.41660 <http://www.versuslaw.com>; 290 N.Y.S.2d 40; 30 A.D.2d 102 May 16, 1968 SALLY A. HELFAER ET AL., RESPONDENTS,v.JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, APPELLANT, ET AL., DEFENDANT Helfaer v. John Hancock Mut. Life Ins. Co., 51 Misc. 2d 869, reversed. Ohlin, Damon, Morey, Sawyer & Moot (James S. McAskill of counsel), for appellant. Boniello, Gellman, McNulty, Halpern, Anton & Kellick (Harold M. Halpern of counsel), for respondents. Del Vecchio, J. Williams, P. J., and Henry, J., concur with Del Vecchio, J.; Marsh, J., dissents and votes to modify the judgment, and, as modified, affirm, in opinion in which Goldman, J., concurs. Author: Del Vecchio


Helfaer v. John Hancock Mut. Life Ins. Co., 51 Misc. 2d 869, reversed.

Del Vecchio, J. Williams, P. J., and Henry, J., concur with Del Vecchio, J.; Marsh, J., dissents and votes to modify the judgment, and, as modified, affirm, in opinion in which Goldman, J., concurs.

Author: Del Vecchio

 This is an appeal from an order pursuant to CPLR 3212 which struck out the answer of defendant insurance company and granted summary judgment for plaintiff, after the assessment of damages, in an action on an insurance policy alleged to have been issued on the life of Bertram M. Helfaer, which in fact was issued to United Funds, Inc.

On May 8, 1964 Helfaer, who was a physician, made an application to United Funds, Inc. for the purchase and the ultimate issuance of shares of the plan in consideration of monthly payments of $100, together with an initial payment of $500, aggregating $10,000. The application indicated that the purchase was to be accompanied by insurance, if available, upon the life of the applicant, the purpose of which was to satisfy the obligation of Dr. Helfaer's estate for the balance of payments due to United Funds in the event of his death. Attached to the application for the investment plan was a form entitled "Life Insurance Information For Periodic Investment Plan With Insurance", which was completed and signed by Dr. Helfaer. It contained a statement that he had not had any ailment, injury or disease within the last five years which kept him away from work more than 10 consecutive days, and that to the best of his knowledge and belief he was then in good health. He also represented that the statements on the form were true and should be the basis for the issuance of insurance on his life under a Group Creditor Life Insurance Policy. (The plan itself recited that arrangements had already been made with a life insurance company for insurance on the life of the planholder under a group form of policy, provided he was acceptable to the insurer.) In fact, Dr. Helfaer's statements as to no 10-day absence from work by reason of ailment, injury or disease during the preceding 5 years and his good health were untrue. Undisputed hospital records submitted in opposition to plaintiff's motion for summary judgment, together with an affidavit by the doctor's office nurse, reveal that between 1961 and June, 1964 he had been hospitalized four times and had been twice away from his work for more than 10 consecutive days by reason of lymphosarcoma.

That condition precipitated his death on May 27, 1965, approximately a year after his fund application.

In this action to recover benefits under the group creditor life insurance policy issued by defendant John Hancock to United Funds, defendant admitted that Dr. Helfaer became insured under the policy on or about May 8, 1964 but disclaimed liability upon the ground that the afore-mentioned misrepresentations were material and that the insurance was void and unenforcible by reason thereof. Special Term has granted summary judgment, striking out the defense of misrepresentation upon the ground that the application containing the false statements was not attached to the policy as required by subdivision 1 of section 142 of the Insurance Law and that a copy thereof was not furnished to the insured or his beneficiary pursuant to paragraph (a) of subdivision 1 of section 161 of the Insurance Law.

We are satisfied, as are the minority Justices, that subdivision 1 of section 142 of the Insurance Law has no application to the present situation. The master group life insurance policy under which Dr. Helfaer was covered was issued to United Funds on February 2, 1954 -- more than 10 years before the execution of the application by the deceased. Since the application was not even in existence at the time of the issuance of the policy, it is obvious that the requirement of subdivision 1 of section 142 - that the application be attached to the policy when issued -- is inapposite. As was recently said in Cutler v. Hartford Life Ins. Co. (28 A.D.2d 730, 731): "This provision is inapplicable both literally and under the historical purpose of the statute" to a group life insurance plan.

We are also satisfied that the requirement of paragraph (a) of subdivision 1 of section 161 of the Insurance Law -- which provides that in contesting the validity of insurance a statement relating to the insurability of the person insured must be contained in a written instrument, signed by such person, a copy of which must have been furnished to the person insured or to his beneficiary -- has been complied with. It is undisputed that a copy of the insurance information form signed by Dr. Helfaer and containing the misrepresentations relied upon by the company to void the policy was delivered by the latter to United Funds, although no copy was delivered to Dr. Helfaer.

In an arrangement of this kind, involving group creditor life insurance payable to the creditor, the creditor is deemed the policyholder (Insurance Law, ยง 204, subd. 1, par. [c]) and is the beneficiary to which a copy of the planholder's statement may be delivered under paragraph (a) of subdivision 1 of section 161 of the Insurance Law. (Robins v. John Hancock Mut. Life Ins. Co., 27 A.D.2d 188, app. withdrawn 20 N.Y.2d 772; Cutler v. Hartford Life Ins. Co., supra.) The master policy was issued to United Funds with which the insurer contracted. The application for the fund with insurance executed by Dr. Helfaer did not designate any beneficiary other than United Funds, and in fact the arrangement of insurance protection for the expressed purpose of satisfying a deceased planholder's estate's liability for remaining payments to the fund did not contemplate any beneficiary but the fund, to which the insurance proceeds were to be paid in satisfaction of the obligation for uncompleted payments.

The minority has concluded that the insurer was required to furnish a copy of the application form to the planholder by virtue of the statement printed on the insurance information portion of the application that "A copy of this form will be returned to you upon acceptance of your Plan." This argument has not been urged by respondent either in this court or at Special Term. If we regard the quoted statement as an enlargement of the obligation imposed on the insurer by paragraph (a) of subdivision 1 of section 161 of the Insurance Law -- which we are not required to decide in this action -- nevertheless the obligation has been fulfilled by delivery of a copy of the application to United Funds as agent of the planholder. The plan contains provisions which obviously made United Funds the agent of the planholders for securing and maintaining life insurance upon the latter. It provides that deductions shall be made from the initial and subsequent monthly payments to the plan in the amount necessary for payment of insurance premiums and such amount shall be remitted to the insurance company, and that the fund may, in its sole discretion, arrange to substitute another insurance company and policy for that in effect at the time of issuance of the plan. So far as appears, all dealings between the insurer and the planholder were carried on by and through the latter's agent, United Funds. The planholder received neither a copy of his application nor of the master policy itself; both of these were delivered by the insurer to and retained by the fund as beneficiary and agent of the planholder. Delivery to the agent constituted delivery to the principal and effected performance of any duty imposed by the statement on the life insurance information form.

Summary judgment should be granted in favor of defendant insurance company.

Disposition

Judgment and order reversed, on the law and facts, plaintiffs' motion for summary judgment denied and summary judgment granted to defendant John Hancock Mutual ...


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