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LINCOLN BANK v. NATIONAL LIFE INS. CO.

May 30, 1979

LINCOLN BANK
v.
NATIONAL LIFE INSURANCE COMPANY and JULES DEMCHICK



The opinion of the court was delivered by: NEWCOMER

FINDINGS OF FACT AND CONCLUSION OF LAW

FINDINGS OF FACT

 1. The plaintiff, Lincoln Bank (Lincoln) is a Pennsylvania corporation with its principal place of business in Philadelphia, Pennsylvania.

 2. National Life Insurance Company (National Life) is a mutual insurance company organized under the laws of Vermont with its principal place of business in Montpelier, Vermont. National Life is authorized to do business in Pennsylvania.

 3. Third-party defendant, Jules Demchick (Demchick), is an individual, and a citizen of the State of Florida.

 4. Jurisdiction is based on diversity of citizenship, 28 U.S.C. § 1332(a).

 5. On December 3, 1971, National Life issued a life insurance policy to Demchick in the face amount of $ 750,000.

 6. Demchick assigned the policy to Lincoln on January 24, 1972, as security on a loan in an amount in excess of $ 35,685. The loan was never repaid by Demchick and is currently due and owing. National Life acknowledged the assignment a short time thereafter.

 7. The events leading to this suit began in January, 1974, when National Life agreed to extend a loan to Demchick, provided that the cash surrender value of Demchick's policy be pledged as collateral for the loan.

 8. A form document entitled "Policy Loan Agreement", which was ordinarily used by National Life to effect such policy loans, was prepared on January 16, 1974.

 9. The Policy Loan Agreement specified:

 
(a) The amount of the policy loan was to be $ 32,547.16.
 
(b) The sole security for the loan was to be the cash surrender value of the Demchick policy.
 
(c) The loan was to be paid to Demchick.
 
(e) The assignment was to constitute a first lien on the policy.

 10. The Policy Loan Agreement bears the signature of both Doris Durnin, on behalf of Lincoln Bank, and that of Jules Demchick.

 11. The signature of Jules Demchick on the Policy Loan Agreement is authentic.

 12. Ms. Durnin was the assistant manager of the Bala 1 Branch Office of Lincoln Bank through which the Policy Loan Agreement was processed.

 13. Ms. Durnin had apparent authority to release the collateral in issue, although she was not expressly authorized by the bank's Board of Directors to do so.

 14. In reliance on the Policy Loan Agreement, National Life granted a loan to Demchick in the amount of $ 32,547.16, and mailed a check in that ...


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