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BANDURA v. FIDELITY & GUAR. LIFE INS. CO.

January 19, 1978

LINDA K. BANDURA, Plaintiff
v.
FIDELITY & GUARANTY LIFE INSURANCE COMPANY, Defendant v. JOSEPH J. BANDURA, Third Party Defendant



The opinion of the court was delivered by: WEBER

 This is an action originally brought in a state court by Linda K. Bandura, widow and designated beneficiary of an insured, against defendant, Fidelity & Guaranty Life Insurance Company, to recover all of the proceeds of a policy of insurance issued by the defendant on the life of Alan J. Bandura. After the suit was filed the defendant caused it to be removed to this court under 28 U.S.C. ยง 1441 on the basis of diversity jurisdiction. After the removal the defendant brought in Joseph J. Bandura as a third party defendant under both a cause of action in Interpleader for part of the proceeds of the policy which had not been distributed and also for a cause of action for unjust enrichment for part of the proceeds of the policy which had previously been paid to said third party defendant.

 Both the plaintiff and the third party defendant have moved for summary judgment under claims which will be discussed more fully later, and the defendant insurance company maintains that its position is that of a neutral stake holder.

 The undisputed facts here are set forth in two related documents, the application for insurance coverage under a group life insurance policy issued to the insured employer, and the certificate of insurance issued to the insured in consequence of the application. They form part of one contract as set forth under the terms of the Group Policy involved here.

 
Contract. The policy and the application of the Policyholder and the application of the Individuals, if any, shall constitute the entire contract between the parties. . . . (p. 9, Group Policy).

 The application is identified as "Group Enrollment Card", which is a printed form having two sides. On the front of the application there is a space for name of a beneficiary and this is filled in by hand printing as "Linda K. Bandura", and the next line provides for the entry of Relationship of Beneficiary and this is filled in as "wife". After both the printing "name of beneficiary" and the "relationship of beneficiary" there is an asterisk, and at the bottom of the card an asterisk precedes the following printed notation: "If death benefit is to be split show other beneficiaries, relationship and % of benefit for each in 'Remarks' on back of card." On the back of the card under "Remarks", there is filled in handprinting "Joseph J. Bandura, father, jointly with wife, 20,000 wife, 10,000 father."

 The Group Policy became effective July 1, 1974. The signed application of Alan J. Bandura, the insured employee, was dated July 2, 1974. Shortly thereafter a Certificate of Insurance was issued by the defendant insurance company to Alan J. Bandura which recites that "The individual named below is entitled to the benefits described in the Certificate." Under the space for Designated Beneficiary appears only the name of "Linda K. Bandura", relationship, "wife".

 The benefits provided under the policy were $30,000 life insurance, and an additional $30,000 for accidental death and dismemberment.

 The insured Alan J. Bandura died in an automobile accident on November 26, 1976 while the said policy was in force.

 The defendant insurance company has paid benefits of $20,000 to Linda K. Bandura, and $10,000 to Joseph J. Bandura, under the life insurance coverage provision of the policy. In face of the claims of both beneficiaries it has paid no part of the accidental death benefits but has impleaded that portion of the insurance coverage into court.

 Plaintiff Linda K. Bandura claims that she is entitled to the entire proceeds of the policy for both the life insurance coverage and the accidental death benefit. She acknowledges the receipt of the $20,000 on the life benefit. The third party defendant Joseph J. Bandura claims that he is entitled to the $10,000 already paid on the life insurance benefit and an additional $10,000 on the accidental death benefit.

 It appears to the court that the insured did everything that was required of him to designate the beneficiaries of the policy correctly. The asterisk printed beside the space for the name of the beneficiary referred to an asterisk at a footnote which instructed him that if the benefit was to be split, the other beneficiaries and their relationship and their percentage should be entered under "Remarks" on the reverse side of the card. He did exactly this by entering the names and their respective shares in dollar amounts under "Remarks" on the back of the card. While he did not specify the percentages of benefits of the whole insurance coverage, he made a two-third -- one-third division of the face amount of the policy in doing so. He failed to make any specific reference to the distribution of the accidental death benefit, but in the absence of any indication to the contrary we adopt the inference that he wished the entire proceeds of the policy to be divided in the same ratio that he indicated for the face amount. Nothing on the application card indicates that any distinction is to be made between the face amount of the policy and the accidental death benefit or to indicate that any separate treatment would be given to the accidental death benefit.

 We find nothing to support the argument that the division of the policy proceeds between the wife and the father as entered on the reverse side of the application card amounted to a request for change of beneficiary which never became effective. The insured took no subsequent action after filling out the original application form to show any intention to change the beneficiaries that he had originally designated on the card. In any event such a change of beneficiary must be made in accordance with the terms of the policy, including the signature and delivery by the insured of a written request for such action.

 The plaintiff, Linda K. Bandura, argues that the Certificate of Insurance issued to Alan J. Bandura, named only his wife Linda K. Bandura, as the designated beneficiary and the fact that the insured accepted and retained this policy for a period slightly over two years without voicing any protest or complaint or attempting to effect a change of beneficiary proves that he accepted and acquiesced in the designation of beneficiary appearing on the Certificate. Because we reject the argument that the notation of the shares of the two beneficiaries on the reverse of the application was an ineffective attempt to change beneficiaries we regard that body of case law dealing with the requirement for a change of beneficiary to be inapplicable here. Because the application card forms part of the policy and the application card was properly filled out according to the instructions of the insurance company to indicate that Linda K. Bandura was to receive $20,000 of the proceeds and Joseph J. Bandura was to receive $10,000 of the proceeds, we cannot find that the insured was bound by the mistake of the insurance company in noting on the certificate of insurance that Linda K. Bandura was the sole beneficiary. In McGinnis Appeal, 190 Pa. Super. 138, 152 A. 2d 784 [1959], where ...


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