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CLAYTON v. NATIONAL ELECTRIC PRODUCTS CORPORATION (05/24/66)

decided: May 24, 1966.

CLAYTON, APPELLANT,
v.
NATIONAL ELECTRIC PRODUCTS CORPORATION



Appeal from judgment of Court of Common Pleas of Beaver County, Sept. T., 1963, No. 306, in case of Bessie May Clayton, Mary E. Kemena, Martin M. Clayton, Jr. et al. v. National Electric Products Corporation, H. K. Porter Company, Inc., The Equitable Life Assurance Society of the United States et al.

COUNSEL

Ralph E. Smith, with him Rowley, Smith, Rowley & Lewis, for appellants.

Oran W. Panner, with him Panner, Holland and Autenreith, for appellees.

Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice O'Brien. Mr. Justice Musmanno dissents.

Author: O'brien

[ 421 Pa. Page 376]

This is an action of assumpsit by the beneficiaries of a group life insurance certificate against two insurance companies and the former employer of the decedent.

Martin M. Clayton had been employed by National Electric Products Corporation (National Electric) in 1935. In May of that year, National Electric entered into a contract with The Equitable Life Assurance Society of the United States (Equitable) for group coverage for its employees. This group coverage was of the type where both employer and employee contributed toward the payment of premiums. At its inception, this group coverage was for $8,000 and was subsequently increased to $15,000 on July 1, 1947. Mr. Clayton retired on February 1, 1949, having reached the age of 65, and, as the contract between National Electric and Equitable provided that retired employees could retain their group coverage, Mr. Clayton elected to do so.

In 1959, National Electric was purchased by H. K. Porter Company, Inc. (H. K. Porter) and the group

[ 421 Pa. Page 377]

    coverage formerly underwritten by Equitable was replaced by and thereafter underwritten by Metropolitan Life Insurance Company (Metropolitan).

Early in 1961, the International Brotherhood of Electrical Workers No. 1073 (I.B.E.W.), representing the employees of National Electric and H. K. Porter, requested H. K. Porter to make group insurance a part of its labor-management agreement. Prior to this time, group insurance had been outside the labor agreement. The union wanted a non-contributory group life insurance policy, that is, one on which H. K. Porter paid the entire premium. Mr. Clayton, during his employment, had been a member of the I.B.E.W. and the union was particularly desirous that this non-contributory group life insurance be made available to retired employees.

Mr. Clayton received a letter dated May 17, 1961 (this letter had been sent to all retired employees) from H. K. Porter informing him that an agreement had been reached between the union and the company, relative to group insurance for retired employees, and that this agreement had been made part of the contract. The pertinent parts of the letter read as follows:

"Effective June 1, 1961, if you are receiving pension benefits under the Company's Retirement and Disability Program, the Company is making available to you a Term Life Insurance policy in the amount of five thousand dollars ($5,000.) in the place of any company policy or policies you may now hold, which will be entirely paid for by the Company. You ...


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