Court Opinion

ID: 8952307
Source: CourtListenerOpinion
Date Created: 2022-11-27 08:54:26.263785+00
Date Added: 2024-06-11T17:09:59.551341
License: Public Domain

SLOVITER, Circuit Judge,
dissenting.
Our role sitting in diversity in this case is to predict whether New Jersey, which has *1321never decided a case under facts similar to those before us, would uphold recovery on a $525,000 insurance policy selected by the insured after he learned he had terminal cancer. Although the majority relies on standard insurance and contract principles to uphold the beneficiary’s right to recover, I believe that the undisputed facts in this case require a different result.
The linchpin of the majority’s result is its conclusion that the policy was effective upon delivery. The majority relies upon the policy provision that “the policy will take effect on the date it is delivered.” Concededly, the $525,000 policy was one of two policies already delivered to Kleckner before he learned he had terminal cancer, and, therefore, at the time of its delivery, Kleckner’s representation on his application that he did not suffer from cancer was truthful.
We need not decide whether, if only one policy had been delivered, New Jersey would nonetheless preclude recovery because the application provides that payment of the first premium after signing the application “will mean I represent that such statements and answers would be the same if made at the time of such payment.” App. at 76. At the time Kleckner made the premium payment, he knew he had cancer, and, in fact, had already undergone surgery for the removal of his cancerous kidney. We can pretermit consideration of this knotty problem because I believe the majority erred in considering the policy as effective upon its delivery.
In this case we do not have the somewhat usual situation of delivery of a policy to a prospective insured so that he may review its terms. That “free look” period, which under the policy was limited to ten days, App. at 31, is not at issue here. The parties agree that Kleckner held both the $300,000 and the $525,000 policy for more than ten days. In fact, the policies were delivered in late January 1984 and Kleckner didn’t advise the company, through its agent, of his decision to select the $525,000 policy until May 11,1984, after his hospitalization and considerably more than ten days after delivery.
The undisputed fact that I find controlling and to which I believe the majority gives inadequate consideration is that in this case Kleckner requested not one policy but alternate policies in differing amounts. Kleckner’s application for the $525,000 policy states “please issue alternate policy same plan 300,000 amount with finance papers from Key Resources.” App. at 79. The uncontroverted affidavit of MONY’s agent states that:
3. On November 23, 1983 Klecker submitted a dual application for two life insurance policies with Mutual Life, one in the amount of $300,000 and the other in the amount of $525,000. This application was submitted in the alternative because Kleckner had not decided how much insurance he could afford after his retirement. Kleckner stated to me that his decision as to which policy to select could only be made after his entire post retirement financial plan was in place.
App. at 57.
Further, the agent’s affidavit states:
7. After the January, 1984 meeting in which I gave the two life insurance policies to Kleckner, I contacted Kleckner on several other occasions in an attempt to ascertain whether Kleckner desired to purchase either policy. On each of these meetings, I explained to Kleckner that it was important that he come to a decision on the life insurance question before he' completed the other aspect of his post-retirement financial plan, but he continued to be resistant to making any decisions as he remained uncertain as to whether he could afford either policy.
App. at 58-59 (emphasis added).
I believe that the majority overlooks the significance of the request for and delivery of alternate policies. Even Kleckner’s beneficiary does not argue that Kleckner was free to select both policies. Therefore, even if in the ordinary case we could treat the application for insurance as an offer, and delivery of the policy as an acceptance, the uncontradicted facts of record here preclude treating the delivery of alternate policies as an acceptance of Kleckner’s offer. Instead, the insurance company’s delivery of alternate policies from which Kleckner could select one, or indeed none, must be *1322viewed as the offer. Kleckner accepted the offer when he forwarded the premium and finance papers to the agent on May 11, 1984 and selected the $525,000 policy. Indeed, Kleckner so viewed the arrangement, since his cover letter on May 11, 1984 returning the $300,000 policy and enclosing the premium for the $525,000 policy stated: “[YJou are going to use this to put the MONY $500,000 [sic] life policy into effect.” App. at 61 (emphasis added).
I believe the majority would agree that if the policy was not effective upon delivery to Kleckner in January 1984, there could be no recovery. By the time Kleckner sent the premium, which I believe constitutes the intended acceptance of MONY’s offer, he was fully aware of his cancerous condition, thereby breaching the representation provision of the application and violating his common law duty to disclose material changes in his health subsequent to his application. See Weir v. City Title Insurance Co., 125 N.J.Super. 23, 308 A.2d 357 (App.Div.1973). Because I view the facts and applicable principles differently than does the majority, I would reverse the district court’s grant of summary judgment.