form to Schneider because both the age and the relationship of the beneficiary was omitted.
Schneider testified that he visited Margaret Cipriani and obtained the information on her age and resubmitted the form to the district office. There was no testimony that anyone at the district office ever saw the resubmitted form. Mrs. Richardson testified that she was promoted to office manager between the time she had given the form back to Schneider to get the age and relationship and the time he said he brought it back to the office. She stated that she never saw the form again after she gave it to Schneider to get the relationship and age of Margaret Cipriani.
The last witness produced by the defendant was Robert Myers ("Myers") who testified that he has been employed by the defendant for 44 1/2 years, and is a senior agency manager. He and Schneider visited the deceased insured Edward Cipriani on April 26, 1982 for the purpose of selling him additional insurance. At that time he heard Schneider say that he had changed the beneficiary on the policy, which is the subject matter of this litigation, to the decedent's mother. Myers testified that he never saw the change of beneficiary form.
Under Pennsylvania law, a change of beneficiary on an insurance policy is ineffective unless there has been strict compliance with the policy's terms. Equitable Life Assurance Society v. Stitzel, 299 Pa. Super. 199, 445 A.2d 523 (1982). An exception to the strict compliance requirement may arise where, under the circumstances, the insured has made all reasonable efforts to comply with the policy's terms and thereby achieves substantial compliance. Prudential Insurance Company of America v. Bannister, 448 F. Supp. 807, 809 (W.D.Pa.1978). The essential inquiry, under the substantial compliance exception, is whether there has been a sufficient expression of the insured's intent to change beneficiaries so that effect should be given to it. Id. The defendant contends that the insured, Edward Cipriani, substantially complied with the policy's terms in changing the beneficiary to his mother. However, after considering the testimony and the cases which have applied the substantial compliance standard, the court disagrees with that conclusion.
In asserting that Edward Cipriani substantially complied with the policy's terms, the defendant principally relies on Provident Mutual Life Insurance Company v. Ehrlich, 508 F.2d 129 (3d Cir.1975) and Bannister, supra. Both cases were interpleader actions brought by the insurance companies to determine contesting claims to the proceeds of life insurance policies. In Bannister, the home office of the insurance company twice returned the change of beneficiary form to the local office because the policy was not submitted with the change form. The insured had been suffering from acute leukemia, and, under the circumstances, the court found that by signing the change form and mailing it to the company offices, the insured made a reasonable effort to comply with the policy's terms. 448 F. Supp. at 809.
In Ehrlich, the insured requested a change of beneficiary form from the insurance company. The company, however, refused to honor his request because it was acting under the mistaken belief that the insured could not change his beneficiary pursuant to the terms of his divorce decree. The Third Circuit held that the insured's attempts to obtain a change of beneficiary form from the company constituted substantial compliance. 508 F.2d at 133. As Bannister and Ehrlich demonstrate, the substantial compliance standard is not satisfied by a mere declaration of intent to change the beneficiary. "There must be shown a positive, unequivocal act toward such change . . ." Equitable Life Assurance Society v. Stitzel, 299 Pa.Super. 199, 203, 445 A.2d 523 (1982).
The evidence presented in the case sub judice does not indicate that the insured, Edward Cipriani, took any unequivocal action to change beneficiaries. No original or copy of any change of beneficiary form relating to Policy No. D764120 was produced. This case is, therefore, unlike Bannister where there was no question that the insured executed the change form and presented it to the company. The defendant, Sun Life, has attempted to prove that the insured executed a change of beneficiary form through testimony of three of its employees. Sun Life insurance agent Elwood Schneider testified that he brought a change of beneficiary form to the insured's mother. He further testified that he asked the insured's mother to witness her son's signature on the change form because he would not be present when the insured signed the form. He picked up the form two days later and delivered it to the district office. Regina Richardson of Sun Life's district office testified that she returned the form to Schneider because the age and relationship of the beneficiary were missing from the form. Myers testified that although he never saw the form he was present when Schneider told the insured that the beneficiary was changed to his mother.
The credibility of this testimony is somewhat impaired because Schneider, Richardson, and Myers are all employees of Sun Life which has a strong pecuniary interest in the outcome of this case. Assuming, however, that Sun Life's witnesses are credible, their testimony is not sufficient to show the substantial compliance of the insured. There was no testimony from Schneider, Richardson, Myers or anyone else that the insured had, in fact, signed the change of beneficiary form. Nor was there any testimony that the insured's mother witnessed the signing of the form. In sum, nothing in the testimony of the witnesses presented by the defendant establishes that the insured performed any unequivocal act which expressed a clear intent to change beneficiaries. Accordingly, the court holds that the insured did not substantially comply with the policy's terms in changing beneficiaries, and therefore finds in favor of the plaintiff.
Pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, the above Memorandum Opinion constitutes this court's Findings of Fact and Conclusions of Law.