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DOLORES I. REMPEL v. NATIONWIDE LIFE INSURANCE COMPANY (02/28/77)

decided: February 28, 1977.

DOLORES I. REMPEL, APPELLEE,
v.
NATIONWIDE LIFE INSURANCE COMPANY, INC. AND REID W. MCGIBBENY, APPELLANTS



COUNSEL

Charles H. Alpern, Weis & Weis, Pittsburgh, for appellants.

M. J. Seymour, Pittsburgh, for appellee.

Jones, C. J., and Eagen, O'Brien, Pomeroy, Nix, and Manderino, JJ. Roberts, J., did not participate in the consideration or decision of this case. Jones, C. J., and Eagen and Pomeroy, JJ., concur in the result.

Author: Manderino

[ 471 Pa. Page 406]

OPINION

In April, 1961, appellee's husband, Harry Rempel, purchased a thirty-year mortgage protection policy from appellant, Nationwide Life Insurance Company, Inc., through Nationwide's agent, appellant, Reid W. McGibbeny. The policy was designed to pay to the beneficiary, appellee, Dolores I. Rempel, an amount approximately equal to the outstanding mortgage balance, if any, on the Rempel home when the insured, appellee's husband, Harry Rempel, died. In July, 1961, appellee Rempel, upon instructions from her husband, again contacted McGibbeny and asked whether Nationwide could match a policy offered by a competing insurance company that would provide the same mortgage protection plus an additional $5,000 of life insurance, for only a few dollars a month in increased cost. McGibbeny, after consulting Nationwide, told the Rempels that a $5,000 whole life policy with a twenty-year family income rider would provide the protection sought for only a few dollars per month more than the cost of the original policy.

After a discussion in the Rempel home, an application form was signed by the insured Harry Rempel, in the presence of appellee and McGibbeny. Subsequently, a new policy was issued by Nationwide and sent to McGibbeny. McGibbeny personally delivered the policy to the Rempels but did not discuss or explain the policy to them. A premium of $16.75 per month was paid until the insured's death in 1970. At that time, appellee called McGibbeny, who went to her residence and told her she had a "good policy" that would pay her approximately $16,000. Since the outstanding mortgage was $11,100 at the time of Mr. Rempel's death, the $16,000 figure

[ 471 Pa. Page 407]

    matched Mrs. Rempel's expectation of receiving $5,000 in addition to having the mortgage balance paid off. A few days later, however, McGibbeny telephoned appellee and advised her that the policy would pay only a lump sum of $10,430.

Appellee filed an action in trespass against McGibbeny and Nationwide to recover the amount of the mortgage $11,100, and an additional $5,000. In the trespass action appellee contended that Nationwide's agent, McGibbeny, had either negligently or fraudulently misrepresented that the insurance coverage applied for and the policy received would provide for the payment of any outstanding mortgage balance on the Rempel home, if any, at the time of the insured's death, plus an additional $5,000 of life insurance. The trial court, with the consent of appellants and appellee, directed a verdict in favor of appellee for $10,430, the amount which Nationwide admitted owing, plus interest of 6% per annum. The trial court denied appellants' motion that the jury be instructed to return a verdict in their favor on the remaining portion of appellee's claim, but did withdraw the issue of fraudulent misrepresentation from the jury. Only the issue of negligent misrepresentation was submitted for the jury's consideration. The jury found in favor of appellee in the sum of $5,670 plus 6% interest per annum. Appellants' motion for judgment not withstanding the verdict was subsequently denied and judgment was entered on the verdict. Rempel v. Nationwide Life Insurance Co., Inc., 227 Pa. Super. 87, 323 A.2d 193 (1974). We granted appellants' petition for allowance of appeal, hence this appeal followed.

Appellants first contend that the trial court erred in "not granting [their] motion for binding instructions" arguing that appellee failed to establish a case of negligent misrepresentation.

[ 471 Pa. Page 408]

The elements of the tort of negligent misrepresentations are stated in Section 552 of Restatement of Torts:

"One who in the course of his business or profession supplied information for the guidance of others in their business transactions is subject to liability for harm caused to them by their reliance upon the information if

(a) he fails to exercise that care and competence in obtaining and communicating the information which its recipient is justified in expecting, and

(b) the harm is suffered

(i) by the person or one of the class of persons for whose guidance the information was supplied, and

(ii) because of his justifiable reliance upon it in a transaction in which it was intended to influence his conduct or in a transaction substantially identical therewith."

Appellants argue that binding instructions in their favor should have been given to the jury because McGibbeny made no misrepresentations to the Rempels, and even if he did, reliance by the Rempels on the misrepresentations was not justified. As to whether McGibbeny made any misrepresentations, the evidence was conflicting. McGibbeny testified that he did not misrepresent the contents of the application or the policy. Appellee Rempel, however, testified that McGibbeny stated that the coverage provided by the policy would pay off the mortgage balance plus pay an additional $5,000. Because of this conflict, a jury issue was presented. Under these circumstances, binding instructions, based on ...


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