Appeal from the United States District Court for the District of New Jersey, Newark, D.C. Civil No. 85-2095.
Before: SLOVITER and MANSMANN, Circuit Judges, and SCIRICA, District Judge.*fn*
The central issue we address in this diversity case is whether or not a policy insuring the life of Donald S. Kleckner became effective, and if so, what the effective date was, under New Jersey law. The district court, on cross-motions for summary judgment, granted the motion of Henrietta Kleckner, individually and as executrix of the estate of Donald Kleckner, entitling her to the proceeds of a $525,000 life insurance policy from Mutual Life Insurance Company of New York ("MONY"). Because the district court did not err, as a matter of law, in holding that the policy became effective on the date of delivery, we will affirm the judgment of the district court.
Donald Kleckner completed a two-part application for life insurance with the Mutual Life Insurance Company of New York on November 22, 1983. It is undisputed that at the time of application, all the representations were true to the best of Mr. Kleckner's knowledge. At that time Mr. Kleckner requested that MONY issue a $525,000 policy and an "alternate" $300,000 policy as well as financing papers from Key Resources, an insurance financing subsidiary. Mr. Kleckner requested the issuance of two policies because he was uncertain how much life insurance he could afford, and he was uncertain which policy would be most appropriate for his retirement goals. Kleckner was then examined by MONY'S Medical Examiner and found to be an insurable risk.
Both policies and finance papers were delivered to Kleckner on January 26, 1984 with the understanding that he was to examine the policies, select one for coverage, and return the rejected policy along with the signed papers for the accepted policy and an initial premium payment.
In April, 1984 Mr. Kleckner was diagnosed with terminal cancer. Thereafter, on May 11, 1984, he mailed an initial premium payment of $1,989 to the insurance agent, in order to "put the MONY $500,000 (sic) life policy into effect" and reject the $300,000 policy. This premium payment was intended to pay for coverage as of the January delivery date. he made two other payments on the $525,000 policy before dying of cancer on August 13, 1984.
In December, 1984 Kleckner's widow submitted a claim for the face amount of the policy. MONY denied this claim and returned all monies paid, on the grounds that coverage had been rescinded because Kleckner had materially misrepresented his health status to MONY at the time of payment of his first premium.
On cross-motions for summary judgment, Henrietta Kleckner, the beneficiary of the policy, was awarded the full value of the $525,000 policy.
Our standard of review on motions for summary judgment is plenary. "Inferences to be drawn from the underlying facts contained in the evidential sources submitted to the trial court must be reviewed in the light most favorable to the party opposing the motion. The non-movant's allegations must be taken as true, and when these assertions conflict with those of the movant, the former must receive the benefit of the doubt." Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 97 S. Ct. 732, 50 L. Ed. 2d 748 (1977).
Although the policy issued provides expressly that coverage became effective upon delivery of the policy (January 26, 1984), MONY argues that it could not have become effective until May 11, 1984 when Kleckner remitted his initial premium payment. At that point, MONY argues, Kleckner had a duty to inform MONY of his changed health status and his failure to do so amounted to a material misrepresentation warranting rescission of the contract.
MONY's position is based on the following statements signed by Kleckner in his application for insurance:
Part I, Paragraph 2 provides:
Payment of the 1st premium (if after the date below) will mean I represent that such statements and answers would be the same if ...