2000 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-27-2000

Guardian Life Ins Co v. Goduti-Moore

Precedential or Non-Precedential:

Docket 99-5165

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Recommended Citation

"Guardian Life Ins Co v. Goduti-Moore" (2000). 2000 Decisions. Paper 207.

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Filed September 27, 2000 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No: 99-5165 

GUARDIAN LIFE INSURANCE COMPANY OF AMERICA 

 Appellee 

v. 

DONNA M. GODUTI-MOORE, individually and as 

Executrix of the Estate of Kevin H. Moore 

 Defendant/Third-Party 

 Plaintiff 

v. 

ROBERT BECKETT, GUARDIAN AGENCY, 

NATIONAL PENSION CONSULTANTS, 

Donna M. Goduti-Moore, individually and as Executrix 

to the Estate of Kevin H. Moore, 

 Appellant 

On Appeal from the United States District Court 

for the District of New Jersey, Trenton 

AT NO. 97-1418 (MLC) 

District Judge: Honorable Mary L. Cooper 

Argued March 8, 2000 

BEFORE: ALITO and STAPLETON, Circuit Judges and 

POLLAK,* District Judge 

(Filed: September 27, 2000) 

_________________________________________________________________ 

* Honorable Louis H. Pollak, United States District Judge for the Eastern 

District of Pennsylvania, sitting by designation. 
 Steven P. Del Mauro, Esq. 

 Robert P. Lesko, Esq. (Argued) 

 Del Mauro, Digiamo & Knepper 

 8 Headquarters Plaza 

 North Tower 

 Morristown, NJ 07960 

 Counsel for Appellee 

 Guardian Life Insurance Company 

 of America 

 Donald R. Belsole (Argued) 

 Belsole & Kurnos 

 3 Prospect Street 

 Morristown, NJ 07960 

 Counsel for Appellant 

OPINION OF THE COURT 

POLLAK, District Judge: 

This appeal concerns a $500,000 life insurance contract 

("the policy") between appellee, The Guardian Life 

Insurance Company of America ("Guardian"), and Kevin H. 

Moore, the deceased husband of appellant, Donna M. 

Goduti-Moore. Guardian, a New York corporation, brought 

this diversity action against Ms. Goduti-Moore, a citizen of 

New Jersey, in New Jersey's federal district court seeking a 

declaratory judgment respecting the parties' rights and 

obligations under the policy. In particular, Guardian sought 

to determine whether the policy had lapsed on the day 

before Mr. Moore's death. The District Court granted 

Guardian's motion for summary judgment, holding that the 

policy had so lapsed, and we review that determination de 

novo. 

Facts 

The policy was signed by Guardian and Mr. Moore on 

October 4, 1994, with Ms. Goduti-Moore as its primary 

beneficiary. The policy's basic terms specified, inter alia: 

that premiums could be paid either yearly or by some 

mutually-accepted fraction of a year, that such payments 

 2 
had to be made prior to the applicable coverage period, and 

that each payment's "due date" would be followed by a 

thirty-one-day "grace period." As discussed infra, this 

appeal essentially turns on how the policy's due date and 

grace period provisions should be interpreted and applied. 

When the policy was issued and delivered, Mr. Moore and 

Guardian agreed to change the frequency of payment from 

an annual schedule to a monthly one, and Mr. Moore opted 

for a "Guard-o-Matic Premium Arrangement," by which

premiums were to be drawn automatically from his 

checking account with Growth Bank. Pursuant to this

Guard-o-Matic Premium Arrangement, Guardian made Mr. 

Moore aware that, although the policy specified payments 

as due on the fourth of each month, all Guard-o-Matic 

clients' payments were, as a practical matter, withdrawn on 

or about the fifteenth. Consistently with this practice, 

Guardian deducted premium payments from Mr. Moore's

designated account each month from January 16, 1995 1 

until July 15, 1996. On July 30, 1996, however, Mr. Moore 

closed his checking account with Growth Bank, and he did 

not arrange for the Guardian premiums to be paid from any 

other source. Consequently, on August 15, Guardian's draft 

demanding that month's premium was returned unpaid.

On August 21, Guardian notified Mr. Moore that he was 

being removed from the Guard-o-Matic program and that 

his method of payment was to be "changed to regular

billing." Among other information, the notice contained the 

following description of Mr. Moore's payment obligations: 

 Premium Due 08/04/96 113.50 

 Premium Due 09/04/96 113.50 

 Amount Due $267.00 

Mr. Moore never paid his August insurance premium, and 

he died on September 5, 1996. 

Discussion 

Appellee asserts, and the District Court held, that Mr. 

Moore died one day too late to collect benefits from the 

_________________________________________________________________ 

1. Mr. Moore apparently paid his first three premiums--for October, 

November, and December of 1994--by a check dated October 31, 1994. 

 3 
Guardian life insurance policy. Under this approach, Mr. 

Moore's due date for August of 1996 was, per the policy's 

terms, August 4; the grace period commenced the next day, 

on August 5; and the grace period expired thirty-one days 

after the due date, on September 4, causing Mr. Moore's 

policy to lapse and his coverage to cease. See generally 

Appellant App. at 89 ("If the premium is not paid by the 

end of the grace period, the policy lapses as of the date of 

default. Upon lapse, the policy has no value."). 

On the other hand, Ms. Goduti-Moore offers three 

reasons that the policy had not lapsed as of September 5. 

First, Ms. Goduti-Moore claims that, since the August 4 due 

date fell on a Sunday, certain state laws regulating 

contractual interpretation required that the due date be 

moved to Monday, August 5. Pursuant to this analysis, the 

grace period began on August 6, and Mr. Moore's death, on 

September 5, occurred during the grace period's last day. 

Second, Ms. Goduti-Moore argues that Guardian's notice of 

August 21, which described Mr. Moore's payment 

obligations, was ambiguous. The notice prescribed $113.50 

as due on August 4, 1996; $113.50 as due on September 

4, 1996; and an apparently total "Amount Due" of $267, for 

which no due date was articulated. Ms. Goduti-Moore

claims that the August 21 notice could reasonably have 

meant that Mr. Moore's August premium was, as part of 

the undated "Amount Due," due on the later date contained 

in the notice, September 4, rather than on the earlier date, 

August 4. Thus, Ms. Goduti-Moore claims that the policy's 

thirty-one-day grace period expired on October 5. Third, Ms. 

Goduti-Moore argues that, by its practice of making

automatic withdrawals on the fifteenth of each month, 

Guardian waived its right, provided by the terms of the 

contract, to demand payment on the fourth of the month. 

Hence, Ms. Goduti-Moore asserts that the policy's due date 

was August 15, and the grace period expired on September 

15. 

For the reasons given in the subsequent portions of this 

opinion, we agree with Ms. Goduti-Moore's first argument: 

Interpreting the contract's grace period in favor of the 

insured, and applying New York's statute regulating

contracts with Sunday due dates, we conclude that Mr. 

 4 
Moore's premium was due on Monday, August 5. Thus, the 

thirty-one-day policy's grace period provision began on 

August 6, and that period did not expire prior to Mr. 

Moore's death on September 5. Since this analysis decides 

the appeal in Ms. Goduti-Moore's favor, we think it

unnecessary to consider her other arguments. 

Premiums Payable on Sunday 

Since this diversity case involves the application of state 

statutory provisions regulating contractual interpretation, a 

natural starting point would be to determine which state's 

substantive law applied: New York's or New Jersey's. 

However, the District Court found it unnecessary to resolve 

the choice-of-law question; instead, it found a false conflict 

because the substantive law of New Jersey and the 

substantive law of New York seemed to the court to be 

materially indistinguishable. See Dist. Ct. Op. at 8. 

Neither party disagreed with the District Court's 

disposition of the choice-of-law question; moreover, in the 

presentation of this appeal, each of the parties has 

expressed the belief that the substantive law of New York 

(Guardian's place of business and state of incorporation; 

the place of negotiation and execution of the insurance 

contract; and the place of payment of premiums) and the 

substantive law of New Jersey (the decedent's domiciliary 

state) would both yield the same result.2 

Since the parties are satisfied with the District Court's 

determination that the applicable substantive law of New 

York and the applicable substantive law of New Jersey are 

equivalent, we will not go behind that consensus. To the 

contrary, we will assume--arguendo--that the parties' 

consensus is soundly based. Since the New York statute 

relating to the construction of contracts whose due dates 

_________________________________________________________________ 

2. At oral argument, Ms. Goduti-Moore's counsel, Mr. Belsole, stated, 

"The policy couldn't have lapsed on the 4th of August `96 because both 

New York and New Jersey law have a provision--a statutory provision-- 

that when a Sunday is a date of payment you go to Monday." And to this 

court's question, "I gather that you're in agreement with Mr. Belsole and, 

as I understand it, with the District Court, that this case will be 

decided 

the same way whether it's a matter of New York or New Jersey law?", 

Guardian's counsel replied, "Yes, I am." 

 5 
fall on weekends and holidays3 is, textually, more fleshed 

out than the New Jersey statute dealing with a portion of 

that subject matter,4 we will conduct our analysis within 

the framework of the New York statute.5 

Of the two New York statutes that regulate due dates 

falling on Sundays, the first is General Construction Law 

S 25, which governs the interpretation of private contracts: 

 S 25. Public holiday, Saturday or Sunday, in

 contractual obligation; extension of time where 

 performance of act authorized or required on Saturday, 

 Sunday, or public holiday. 

 Where a contract by its terms authorizes or requires 

 the payment of money or the performance of a

 condition on a Saturday, Sunday, or public holiday, or 

 authorizes or requires a payment of money or the 

 performance of a condition within or before or after a 

 period of time computed from a certain day, and such 

 period of time ends on a Saturday, Sunday, or public 

 holiday, unless the contract expressly or implicitly 

 indicates a different intent, such payment may be 

 made or condition performed on the next succeeding 

 business day . . . with the same force and effect as if 

 made or performed in accordance with the terms of the 

 contract. 

N.Y. Gen. Constr. Law S 25 (McKinney 1999) (hereinafter 

"S 25"). The second is General Construction Law S 25-a, 

which concerns public statutes and regulations: 

 S 25-a. Public holiday, Saturday or Sunday in statutes; 

 extension of time where performance of act is due on 

 Saturday, Sunday or public holiday 

 1. When any period of time, computed from a certain 

 day, within which or after which or before which an act 

 is authorized or required to be done, ends on a 

 Saturday, Sunday or a public holiday, such act may be 

_________________________________________________________________ 

3. N.Y. Gen. Constr. Law S 25 (McKinney 1999). 

4. N.J. Stat. Ann. 36:1-1 (1999). 

5. Within their appellate briefs and oral arguments, the litigants have 

focused attention almost exclusively on the application of New York law. 

 6 
 done on the next succeeding business day . . . except 

 that where a period of time specified by contract ends 

 on a Saturday, Sunday or a public holiday, the 

 extension of such period is governed by section twenty- 

 five of this chapter. 

N.Y. Gen. Constr. Law S 25-a (McKinney 1999) (hereinafter 

"S 25-a"). 

In briefing this appeal, Goduti-Moore has relied on S 25- 

a. The opening words of the caption of S 25 -"Public 

holiday, Saturday or Sunday, in contractual obligation" - 

strongly imply that S 25 has greater pertinence to the 

private contractual dispute presented in the case at bar 

than S 25-a, the opening words of whose caption are "Public 

holiday, Saturday or Sunday in statutes." This implication 

is markedly enhanced by the fact that S 25-a expressly 

defers to S 25 when a contract is involved. 6 At oral 

argument, Guardian attempted to justify its focus onS 25- 

a by contending that S 25-a and S 25 are equivalent. But 

appellee's argument on this point seems incomplete for two 

reasons. First, the text of S 25 is broader than S 25-a in 

potentially relevant ways. Section 25 has two clauses: one, 

which deals with specified dates that fall on Sundays, and 

another, which concerns periods of time that end on

Sundays. See supra. The terms of S 25-a, however, only 

include the latter of these clauses, which regulates time 

periods ending on Sunday; S 25-a does not appear to govern 

specified dates that fall on Sundays. Thus, even if S 25 and 

S 25-a were parallel with respect to periods of time, S 25-a 

has little direct relevance to the issue presented here, 

namely, treatment of a particular "due date" that falls on 

Sunday. 

Second, although S 25 and S 25-a were passed 

simultaneously and have similar general purposes, their 

different legal contexts -- one regulating private contracts 

and the other regulating public statutes -- implicate 

different norms and consequences, which further support 

reading S 25 more broadly than S 25-a. For example,

_________________________________________________________________ 

6. "[W]here a period of time specified by contract ends on a Saturday, 

Sunday or a public holiday, the extension of such a period is governed 

by section twenty-five of this chapter." 

 7 
Burgess v. Long Island Railroad Authority, 587 N.E.2d 269 

(N.Y. 1991) -- a S 25-a case on which Guardian relies -- 

concerned a statutory "stay" applied to the limitations 

period in suits against New York public authorities. Under 

New York law, plaintiffs suing such authorities were 

required to allege that the defendant had not acted on their 

grievance despite thirty days' notice thereof. According to a 

separate statute, this thirty-day notice period was excluded 

from the one year limitations period, operationally allowing 

plaintiffs one year and thirty days to commence their suit. 

In his case, Mr. Burgess claimed that the stay should be 

extended by three days beyond this year and thirty days, 

since his injury occurred on Friday evening, after the Long 

Island Railroad Authority had closed for the weekend. 

Thus, he was unable to file his grievance immediately after 

his injury occurred. Notwithstanding the fact that his suit 

accrued on Friday, Mr. Burgess asserted that his 

limitations period, including the thirty-day stay, should 

have begun on Monday, and he should have been allowed 

to file his lawsuit within a year and thirty-three days of his 

injury. 

The New York Court of Appeals rejected Mr. Burgess's 

argument, inter alia, out of respect for "the interests of 

uniformity" that arise in applying statutes of limitations to 

varied administrative contexts. Id. (disapproving any rule 

"whereby the time in which to commence an action against 

a public authority would vary case to case"). Because 

public regulations tend to regulate broad categories of 

actors and activities, providing a uniform standard was one 

apparent impetus for the Burgess court's interpretation of 

S 25-a. With respect to S 25, however, the affected contracts 

govern the actions of particular parties, who sign and have 

access to the particular details of said contracts. Thus, the 

interests in administrative uniformity and in respecting 

general public expectations, which seemed to concern the 

court in Burgess, appear substantially reduced in the 

context of S 25. Based on the two statutes' distinct 

language and their different legal contexts, we conclude 

that S 25 and S 25-a are not equivalent. Thus, the New York 

statute applicable to the present controversy isS 25, which 

regulates private contracts. 

 8 
As quoted more fully supra, S 25 provides that "[w]here a 

contract by its terms authorizes or requires the payment of 

money . . . on . . . Sunday, . . . unless the contract 

expressly or implicitly indicates a different intent, such 

payment may be made . . . on the next succeeding business 

day." N.Y. Gen. Constr. Law S 25. Thus, the vital legal 

question is whether the terms of Guardian's insurance 

policy could, when read in the light most favorable to Mr. 

Moore, as the insured, reasonably be construed as either 

"authoriz[ing]" or "requir[ing]" the payment of money on 

Sunday, August 4th, for purposes of S 25. 

The relevant portions of Guardian's policy read as 

follows: 

 Premium Payment 

 All premiums, including the first, are payable in 

 advance. After the first premium, premiums are 

 payable annually . . . . Premiums may be paid . . . 

 [semi-annually, quarterly, or] in any other manner 

 acceptable to Guardian. . . . [A] change [in payment 

 frequency] must result in a premium falling due on 

 each policy anniversary. 

 Due Date and Default 

 The premium due date is the date on which the 

 premium is payable. Any premium that is not paid on 

 its due date is in default; this due date is the date of 

 default. 

 Grace Period 

 Guardian allows a grace period of 31 days after the due 

 date for premium payments. 

Appellants App. at 89. 

In construing S 25, New York's courts apparently have 

not yet considered a case such as this, where an insurance 

contract's due date is followed by a grace period. 7 Our 

_________________________________________________________________ 

7. Guardian asserts that "New York decisions dealing with [S 25-a] clearly 

reject [appellant's] argument." However, cases analyzing S 25-a are not 

overly helpful with respect to the present appeal, which concerns a 

portion of S 25 that is not contained in S 25-a. Moreover, even if cases 

concerning S 25-a were legally pertinent, the three decisions cited by 

Guardian have materially distinct facts from the case at bar: 

 9 
analysis of this issue of first impression proceeds in two 

steps. First, we hold that the policy's ambiguous language 

_________________________________________________________________ 

Desmond-Americana v. Jorling, 153 A.D.2d 4 (N.Y. App. Div. 1989), 

applied S 25-a to New York's Administrative Procedure Act. The latter 

statute requires agencies to adopt proposed rules within 180 days of the 

last public hearing held, unless a continuation notice is filed before 

that 

time. An agency may file a maximum of two such notices, each of which 

would add 90 days to the original 180-day period. In DesmondAmericana, the Department of Environmental Conservation held its last 

hearing on November 9, 1987; two timely continuation notices were filed, 

which extended the adoption period through Thursday, November 3, 

1988; but the agency did not file its notice of adoption until Friday, 

November 4. The agency asserted that its notice was not untimely filed 

because the original 180-day adoption period had ended on Saturday, 

May 7, 1988. The agency argued that, since, underS 25-a, it could 

(counterfactually) have filed its continuation notice on Monday, May 9, 

two extra days should be added to the final adoption deadline of 

November 3. The Desmond-Americana court agreed that S 25-a would 

have allowed a timely extension notice on Monday, May 9. But the court 

held that, under the Administrative Procedure Act, the effect of a 

hypothetical extension filed on that date would only have been to add 90 

days to the 180-day period measured from the last public hearing. Thus, 

although the agency could have filed its continuation notice on Monday 

without penalty, the total number of days added by such filing, for 

purposes of the Administrative Procedure Act, would not have changed; 

the agency's notice of adoption still was required within 360 days of the 

last public hearing. 

Abrams v. Design Works, Inc., 198 A.D.2d 252 (N.Y. App. Div. 1993), 

applied S 25-a to N.Y. C.P.L.R. 214(5), which provides a three-year 

statute of limitations for personal injury suits, and to N.Y. C.P.L.R. 

203(b)(5), which allows a 60-day extension if a summons is delivered to 

the sheriff. In Abrams, the plaintiff 's action accrued on March 3, 1987; 

he forwarded the summons and complaint to the sheriff on February 28, 

1990, which extended the limitations period until Wednesday, May 2, 

1990; but the corporate defendant was not served until Friday, May 4, 

1990. Mr. Abrams argued that, since the initial three-year limitations 

period ended on Saturday, March 3, 1990, two days should be added to 

the end of the extension period. The Abrams court disagreed, holding 

that the effect of the statutory extension, which added sixty days to the 

ordinary three-year limitations period, was unchanged by the fact that 

the last day for obtaining such an extension fell on Saturday. The 

extension statute did not grant sixty days from the time said extension 

was filed; rather, it granted an extra sixty days from the date of 

accrual. 

Thus, regardless of S 25-a, the maximum total time available to Mr. 

Abrams, under N.Y. C.P.L.R. 203 and 214(5), was three years and sixty 

days from March 3, 1987. 
 10 
defining the term "due date" could reasonably be construed 

as "authoriz[ing]" or as "requir[ing]" payment on Sunday, 

August 4; either interpretation would suffice to justify 

applying S 25 to the policy's due date. Second, we hold that, 

by virtue of S 25, Mr. Moore could have paid his insurance 

premium on August 5 without being in default; therefore, 

the due date (per the contractual provisions quoted supra) 

_________________________________________________________________ 

Burgess v. Long Island Railroad Authority, 587 N.E.2d at 269, applied 

S 25-a to Pub. Auth. 1276(1) and (2), which provide a one-year 

limitations period for suits against public authorities and which require 

that grievances be presented directly to such authorities for thirty days 

before a lawsuit may be filed, and to N.Y. C.P.L.R. 204(a), which excludes 

this thirty-day "stay" from limitations period calculations. The Burgess 

plaintiff was allegedly injured on the tracks of the Long Island Railroad 

on Friday, September 2, 1988, after business hours. He did not serve the 

defendant with a summons and complaint until Tuesday, October 3, 

1989, which was one year and thirty-one days after his accident. The 

plaintiff claimed that his limitations period should be extended by three 

days because he could not have presented his grievance to the 

defendant, for purposes of Pub. Auth. 1276(2), until Monday, September 

5, 1988. The court rejected Mr. Burgess's argument because he had not 

been required, under any statute, to present his grievance to the agency 

on the very day of his accident. On the contrary, Mr. Burgess could have 

satisfied Pub. Auth. 1276(2) by presenting his grievance to the authority 

on any day within the statutorily allotted year. Thus, the court 

interpreted N.Y. C.P.L.R. 204(a)'s "stay" as merely having extended the 

ordinary one-year limitations period to one year and thirty days; and the 

court held that this extended period, measured from the accrual date, 

should have the same total duration, regardless of whether the action 

accrued on a Saturday. 

Each of the above cases involves a procedure for extending a statutory 

period of time, pursuant to which the lengthened period is measured by 

the event marking the original period's beginning. Thus, the fact that 

S 25-a grants such plaintiffs an "extra" day to seek their extension does 

not affect the date of the final, extended deadline; for, whether an 

extension were obtained with or without the aid ofS 25-a, the total 

duration allotted was simply the sum of the original period and the 

extension. In contrast, the grace period in Ms. Goduti-Moore's case is 

explicitly measured by the due date, i.e., the end of the standard 

payment period. Therefore, if S 25 granted Mr. Moore one additional day 

to pay his premium before going into default, that"extra" day would 

delay both the date on which the grace period began and the date on 

which the policy would have lapsed. 

 11 
also could be reasonably construed as August 5. Since the 

grace period began the day after the due date, i.e., on 

August 6, Mr. Moore's death on September 5 occurred

during the last day he was entitled to benefits under the 

policy. 

A. Mr. Moore's Payment Was "[A]uthorize[d]" on Sunday 

As the District Court correctly noted, the above-quoted 

terms of the policy are not ambiguous with respect to the 

numerical date they purport to specify. In Mr. Moore's case, 

the "policy anniversary" was October 4, and he had 

arranged for a monthly payment schedule; thus, premium 

payments would ordinarily be due on the fourth of any 

given month. Pursuant to S 25, however, if the terms of Mr. 

Moore's policy "authorize[d]" payment of money on a

Sunday, that payment could be made on the succeeding 

business day "with the same force and effect," unless the 

contract indicated some specific, contrary intent. 8 

We find that Guardian's policy is at least ambiguous as 

to whether the term "due date," as the "date on which the 

premium is payable," can be read as "authoriz[ing]" a 

premium payment on August 4 sufficiently for purposes of 

S 25. It might be argued on Guardian's behalf that the 

policy "authorize[d]" premium payments during the grace 

period, but not on the due date itself. Support for such an 

interpretation might arise from Guardian's practice, per the 

Guard-o-matic Premium Arrangement, of drawing payments 

on the fifteenth of each month, even though such 

withdrawals would occur during the policy grace period 

with respect to almost all of Guardian's clients. 9 Under this 

interpretation, the "due date," despite its apparently 

exhortative title, would be construed as a pure formality, 

which marks the beginning of the grace period, but which 

is not a date of any substantive significance in terms of 

"authoriz[ing]" payments. Thus, S 25 would not have

applied to the policy's due date provision; the premium 

_________________________________________________________________ 

8. Guardian has not argued that such contrary intent is indicated here. 

Indeed, Mr. Moore's policy does not appear to have contemplated issues 

surrounding Sunday due dates at all. 

9. The exception being any Guardian clients whose"policy anniversary" 

happens to fall on the fifteenth. 

 12 
would have remained due on August 4, per the policy's 

explicit terms; and the thirty-one-day grace period would 

have commenced on August 5 and terminated on 

September 4. 

But the language and operation of Guardian's policy also 

admits of another reasonable interpretation, pursuant to 

which the due date provision did "authorize[ ]" payment for 

purposes of S 25. The policy's definition of due date as the 

"date on which the premium is payable" seems explicitly to 

contemplate premiums' payment as being permitted and 

appropriate on that day. Indeed, it is difficult to understand 

a "date" on which when premiums are "payable" might be, 

if it were not a date on which such payments were 

"authorize[d]." 

The idea that premium payments were authorized on the 

policy's due date finds further support in the policy's 

requirement that payments must be rendered on the due 

date if an insured wishes to avoid default. Guardian 

suggests that the above interpretation of the policy's due 

date is inconsistent with the policy's grace period provision, 

which protects from financial burden any insureds who pay 

premiums after the due date, provided that such payments 

are made within thirty-one days. But it does not seem 

unreasonable, much less illogical, to suggest that both the 

due date and the grace period serve to "authorize[ ]" 

premium payments. Thus, interpreting the terms of the 

contract in favor of the insured, we conclude that the 

language and structure of the policy show that Guardian's 

insurance contract could reasonably be interpreted as 

"authoriz[ing]" payment on Sunday, August 4. And that fact 

alone is sufficient to bring the policy's due date provision 

within the scope of S 25. 

B. Mr. Moore's Premium Payment Was "[R]equire[d]" on 

 Sunday 

Parallel logic suggests that the policy also could be 

construed as "requir[ing]" payment on August 4 for 

purposes of S 25. By its terms, the "date on which 

premiums are payable" seems to "require[ ]" payment on the 

designated due date, and so does the contractual 

declaration that those who do not pay on that date are in 

"default." 

 13 
In response, it could be argued, on Guardian's behalf, 

that Mr. Moore's payment was not actually "require[d]" on 

August 4, since no financial penalty for non-payment could 

be imposed until after the grace period had expired. The 

interesting issue of statutory construction, however, is 

whether any such financial penalty is necessary for a due 

date to "require[ ] payment" underS 25. For two reasons, we 

hold that it is not. First, by placing the word"require" and 

"authorize" together, and by focusing on what a contract 

prescribes "by its terms," the statutory text suggests that 

any explicit, formal designation of a "require[d]" payment-- 

such as the designation in Mr. Moore's policy--is properly 

within the province of S 25. 

Second, a contrary interpretation of S 25, which would 

define the term "requires" as necessarily including a 

financial penalty of some kind, would demand that courts 

decide what form of penalty would be sufficient. One 

possible interpretation following this approach would hold 

that only a "substantial" penalty, relative to the total value 

of the contract, could truly "require" payment on a certain 

date. Presumably, under such analysis, if Mr. Moore were 

charged x percent of his premium for nonpayment on the 

due date, that due date would be deemed to have 

"require[d] . . . payment" for S 25 purposes, but if his 

penalty were some lesser percent, y, the due date would not 

have done so. Discerning what degree of financial burden 

would constitute a requirement under such a reading of 

S 25 would pose a formidable task for New York courts to 

undertake. Nothing in S 25's text, history, structure, or 

purpose appears to mandate that such delicate lines be 

drawn, however, and we further find no basis to conclude 

that such a task is implicit in the statute. 

Another possible interpretation of S 25 would demand 

only a de minimis financial penalty before a payment were 

deemed "require[d]." The necessity of some formal marker of 

the parties' intent--in the form of a de minimis penalty or 

otherwise--before invoking S 25 would seem curious,

however, since S 25 itself seems intended tofill contractual 

"gaps," where contractual intent has not been clearly 

expressed. Also the text, history, structure, and purpose of 

S 25 provide no indication that such an anomalous result is 

statutorily necessary. 

 14 
On the contrary, S 25's broad text--which seems to apply 

to all "require[d]" payments, not only to those whose default 

is financially penalized--is confirmed by the statute's 

general legislative purpose: protecting contracting parties 

from having to make payments on Sunday. A more urgent 

case for statutory protection would no doubt arise in cases 

where financial hardships followed from default, but we 

find no reason to believe that New York's statute was 

intended to apply only to such cases. Especially when the 

policy's terms are construed in the insured party's favor, 

Mr. Moore's contract with Guardian appears formally to 

have "require[d]" payment of his insurance premium on 

Sunday, August 4. And we find that New York law protects 

contracting parties from any "require[d]" payment on 

Sunday, even when no direct financial burden falls on 

those who fail to pay. 

C. Mr. Moore's Grace Period Began on Tuesday 

Having concluded that Mr. Moore could have paid his

premium on Monday, August 5 without falling into default, 

the final task is to explain how this conclusion affects the 

policy's grace period. Guardian's policy provides for "a grace 

period of 31 days after the due date for premium 

payments," and it further defines the term"due date" as 

"the date of default." Since the "date of default," by the 

operation of S 25, did not occur until Monday, August 5, it 

is reasonable to construe the contractually-defined "due 

date" as also having moved to August 5. Hence, by the 

policy's terms, the thirty-one day grace period began on 

Tuesday, August 6, and Mr. Moore's life insurance coverage 

with Guardian had not yet lapsed on September 5, the day 

he died. 

For the foregoing reasons, the District Court's decision 

granting summary judgment to Guardian is reversed, and 

the case is remanded for further proceedings consistent 

with this opinion. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 15