APPEAL FROM THE ORDER ENTERED OCTOBER 5, 1984 IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY, CIVIL NO. 3008 YEAR 1979.
Wiley P. Parker, Lebanon, for appellants in No. 602 and appellees in No. 628.
Robert I. Cottom, Reading, for appellant in No. 628 and appellee in No. 602.
Wickersham, Cirillo and Johnson, JJ. Johnson, J., files a dissenting opinion.
[ 350 Pa. Super. Page 329]
Kathryn Blouch, seeking the proceeds of her deceased husband's life insurance policy, initiated this action in trespass and assumpsit against Aetna Life Insurance Company (hereinafter "Aetna"), Joel H. Zinn, an independent insurance agent, and Clifford R. Zinn and Son, Inc., in the Court of Common Pleas of Lebanon County. The jury found that credit had been extended to Mr. Blouch for the first premium due on his policy and returned a verdict in favor of Mrs. Blouch in the amount of forty-thousand dollars ($40,000.00), less two-hundred and thirty four dollars and eighty cents, the amount of the first premium. The same jury then determined that Aetna was not entitled to indemnity from Zinn and his corporation. Motions for judgment n.o.v. and/or a new trial were timely filed by both Aetna and
[ 350 Pa. Super. Page 330]
Zinn. The trial judge directed that judgment be entered on the jury's verdict in favor of Blouch, granted Aetna's motion for judgment n.o.v. as against Zinn on the indemnity verdict and denied Zinn's motions for new trial and/or judgment n.o.v. This appeal followed. We affirm in part and reverse in part.
Four issues are raised on appeal: 1) whether the trial court erred in granting Aetna's motion for judgment n.o.v. and entering judgment in favor of Aetna and against Zinn; 2) whether the trial court properly submitted the case to the jury under the theory that the unconditional delivery of the life insurance policy created a presumption that credit had been extended to Blouch for the initial premium; 3) whether the trial court erred in sustaining Zinn's objection to Blouch's interrogatory which sought to discover if Zinn had issued a personal check or a firm check within the past ten (10) years in payment of premiums for any client prior to receiving payment from insured; and 4) whether the trial court erred in sustaining Zinn's objection to Blouch's interrogatory which sought to discover if Zinn had paid within the past ten (10) years a homeowner, commercial or automobile policy premium on behalf of a client. Aetna only appeals on the second issue. Zinn appeals on the first and second issue and is joined by Blouch on the first. Blouch appeals individually on the third and fourth issues.
Eugene Blouch engaged in numerous transactions with Joel Zinn, an insurance agent. In a number of these transactions, Zinn extended credit to Blouch. Blouch was permitted to pay the premium after the effective date of the policy. In February 1979, Blouch submitted a written application for an Aetna life insurance policy to Zinn, an agent for Aetna. Zinn mailed the application along with a report of Blouch's physical examination to the local Aetna office. Aetna provisionally approved the application and forwarded the policy to Zinn.
Zinn's employee then mailed the policy to Blouch with an invoice attached. The invoice did not list the date the initial premium was due nor that the policy was ineffective until
[ 350 Pa. Super. Page 331]
the initial premium was paid. Zinn telephoned Blouch and informed him that the policy was in the mail and for Blouch to call if he had any questions. Zinn did not question Blouch about the payment of the first premium nor inform Blouch that the policy was ineffective until the premium was paid. Blouch died two weeks later. The following month Kathryn Blouch, decedent's wife, requested payment of the proceeds due under the policy. Aetna refused payment claiming the first premium was never paid and that the policy never became effective. Mrs. Blouch then initiated this claim against Aetna and Zinn.
In deciding whether the judgment n.o.v. was properly entered, our focus is on whether Aetna was liable for the payment of the proceeds based upon Zinn's extension of credit to Blouch and Aetna's ratification of such a practice. In asserting that Aetna and Zinn were liable under the life insurance policy, Blouch claimed that Zinn extended credit to decedent in prior casualty and homeowner insurance transactions, Zinn extended credit to other clients for life insurance with Aetna and that Aetna knew of this practice and ratified and accepted it.
Under Pennsylvania law, an insurance agent is precluded from offering or granting premium rebates, special advantages or other inducements to a prospective client to secure an insurance contract. See Act of May 17, 1921, P.L. 789, § 635, 40 P.S. § 275. This section provides in pertinent part:
No insurance agent, solicitor, or broker, personally or by any other party, shall offer, promise, allow, give, sell off, or pay, directly or indirectly, any rebate of, or part of, the premium payable on the policy or on any policy or agent's commission thereon . . . or any special advantage in date of policy or age of issue, or any paid employment contract for services of any kind, or any other valuable consideration or inducement . . .
Id. The object of this legislation is to outlaw unfair treatment of prospective insurance ...