Court Opinion

ID: 5733578
Source: CourtListenerOpinion
Date Created: 2022-01-12 16:29:34.658094+00
Date Added: 2024-06-11T08:40:55.391608
License: Public Domain

Rabin, J. (dissenting).
I dissent and would annul the orders of the Superintendent of Insurance.
As I see it, the principal question to be resolved in these proceedings is whether the policies issued upon the exercise of the option are new, independent and separable contracts of insurance as is contended by the petitioners or whether they are merely part of “ one package, one transaction and one contract ” as is contended by the Superintendent. If they be “ new ” policies then I am of the firm opinion that subdivision 2 of section 155 of the Insurance Law precludes the action taken by the Superintendent. If, however, these policies are not “ new” but if they, together with the original policy, are one contract, then the Superintendent must be sustained in his determination that the suicide exclusion clause be omitted from the option rider.
While there can be no dispute as to the fact that the original option rider by its express terms denominates the prospective policies as “ new ”, it is recognized that such characterization does not of necessity make them so in legal contemplation. Nor, by the same token, does the fact that the prospective policies are born of the option rider in the original contract make them part and parcel of such contract. To the contrary I believe that once the option has been exercised the policy issued in consequence thereof becomes an entity separate and independent of the option rider and the policy in which it was contained. This conclusion reached as to the nature of these policies vis-a-vis each other is supported by an examination of their characteristic provisions. It is uncontroverted that the original and subsequent policies could differ as to plan, method and amount of premium payment, designated beneficiaries and the revocability rights with respect thereto, method of payment of the policy proceeds, and in many other respects. In addition, and *250what I deem to be of primary significance, the termination of the original contract would have no effect upon other policies which had already been issued pursuant to the option. Such policies would continue in force according to their own terms and conditions irrespective of the fact that the original policy and its option rider no longer had any vitality. The contra is likewise true, If there were to be a termination of the subsequent policies or any of them, such termination would in no way affect the existence of the original policy. It appears therefore that all the indicia point unmistakably to the fact that these policies are independent, separable and “new”. In Gans v. Ætna Life Ins. Co. (214 N. Y. 326) the Court of Appeals reached a like conclusion in determining that two policies-— albeit one was spawned of the other—-were independent contractual entities. The court pointed out the factors which motivated its conclusion when it said (p. 331): “ It [the second policy] expresses no dependence on or connection with the term [original] policy. Nor was it a restatement of the contents of the term policy. The premium to be paid, and the rights, privileges, advantages and obligations of both parties under it are essentially and substantially different from those under the term policy. ’ ’
Having concluded that the subsequent policies are “new” it must follow that subdivision 2 of section 155 grants to the petitioners the right to insert suicide exclusion clauses. While the Superintendent concededly has broad discretionary powers under section 141 — and I do not dispute his right in a proper case to withdraw a consent earlier given — such powers are not so broad as to permit such withdrawal merely because the insurance companies seek to exercise a right expressly conferred by statute.
It might well be that the Superintendent, within his broad discretionary powers, could refuse to permit the inclusion of any type of a guaranteed insurability option in any policies — there being no express statutory sanction for such option. And, such action could be taken in the discretion of the Superintendent for any of a number of reasons. He could determine for example that such option privilege would adversely affect the carriers from a financial standpoint or that such option rider, in toto, was unfair to policyholders. But, the Superintendent, having determined the option arrangement to be a desirable one and having permitted the inclusion of the option rider in the policy, may not now excise therefrom the suicide exclusion sanctioned by statute, which is all that the Superintendent seeks to have accomplished. The Superintendent’s area *251of discretionary action must perforce end at the outermost boundary of the legislatively declared policy which approves of a suicide exclusion clause in life insurance policies.
Nor may the action of the Superintendent be sustained upon the theory that the policyholders are misled or otherwise confused. At the outset, he concedes that the Massachusetts Mutual policy expressly informs the policyholders that the policies to be issued will contain a suicide exclusion clause. In fact, in one of his decisions and orders he states: It can be said that by clearly setting forth such language in its riders, respondent [Massachusetts Mutual] has obviated the contention that the policyholders may be misled.” Secondly, he could properly direct that such language be used in the option rider as will clearly and unmistakably inform policyholders that the policy to be issued will contain such clause. The Superintendent admits that the possibility that the policyholders might be misled is not the basis on which he rests his withdrawal.
Nor may the action of the Superintendent be sustained on the ground that the rider contemplates the issuance of a contract that is unfair to the policyholders. The Legislature has declared public policy to be to the contrary. As heretofore pointed out the Superintendent must either allow the policy rider or disallow it in the exercise of his broad discretionary powers, but not upon the sole ground that the proposed policies will contain suicide exclusion clauses. His disapproval of such clauses may not be converted into a finding of unfairness or prejudice to the policyholders. That he has so done is apparent from the position taken by him.
It might be well to add that I believe there is no merit to the argument that if a new suicide exclusion clause is permitted the policyholder is not getting the ‘ ‘ guaranteed insurability ’ ’ for which he paid. While it is true that suicidal tendencies are a factor considered by insurers in determining insurability, such tendencies may not be considered as a ground for refusing to issue a policy contemplated by the rider. For to do so would be in derogation of the guarantee of insurability. In other words, even were the insurers to conclude that the policyholder had suicidal tendencies they could not—nor is it contended that they could—refuse to issue a new policy under the option. The petitioners agree that they must in such case issue a policy for that is what they agreed to do in the original contract. But such inability to refuse to insure does not carry with it a release of the insurer’s right to include a suicide exclusion clause as contemplated by statute.
*252Accordingly, I believe the orders of the Superintendent were improperly made and should be annulled.
Valente and Bastow, JJ., concur with Stevens, J.; Babin, J., dissents in opinion in which Botein, P. J., concurs.
Determinations confirmed and the petitions dismissed, without costs.