Court Opinion

ID: 9693992
Source: CourtListenerOpinion
Date Created: 2023-08-25 17:16:59.685212+00
Date Added: 2024-06-11T12:06:25.408685
License: Public Domain

CLIFFORD, J.,
dissenting.
The Court has not done anything really cataclysmic in this case. I mean, it has not turned insurance law upside down or anything like that. So the damage inflicted by today’s decision is minimal (I greet it with greater serenity, probably, than will the defendant insurance company, to whom an adverse judgment of $256,133.05 plus $59,619.35 in pre-judgment interest may not be viewed as “minimal”). But it seems to me that my colleagues have gone out of their way to reach the wrong result. The strain shows. I therefore file this little dissent.
I
The Court first holds that the policy in question “did not lapse due to nonpayment of the premiums,” ante at 611 (footnote omitted), and that “[ujnless [the owner] otherwise surrendered or terminated her policy, it remained in effect on the date of the insured’s death.” Ante at 611. I agree with those propositions.
The majority then decides that to the extent that the policy language deals with “surrender,” the language is ambiguous, wherefore we must look to the conduct of the parties to determine whether this policy had been surrendered or terminated. Although I would not characterize the policy language touching surrender as “ambiguous” so much as non-existent (the policy contains no definition of “surrender” and speaks only of “cash surrender value”), I nevertheless agree with the Court that what really controls here, what is most revealing of the parties’ intent, is the conduct of the insured, of the policy *624owner, June Meier, and of the defendant company, New Jersey Life Insurance Company (NJL). On that score the majority concludes that NJL’s actions confirm that it did not consider the policy as having been surrendered, ante at 617; and as against the contention that the policy was terminated, the Court says:
Since [the owner] never returned the policy or a lost policy form, she did not fulfill the conditions for termination that NJL imposed. Accordingly, there was no meeting of the minds, and as a matter of well-recognized contract and insurance principles there was no termination of the contract by mutual consent. The policy was in effect at the time of Frank Meier’s death.
[Ante at 621.]
With those critical conclusions as to surrender and termination of the policy, I do not at all agree.
II
The background facts put the parties’ conduct in perspective. I consider the following to be the essential facts.
1. The policy in question, issued by NJL on the life of Frank Meier in the face amount of $250,000, was owned by the insured’s wife, plaintiff June Meier.
2. The policy contained an automatic premium loan (APL) provision, under which loans were automatically processed in the amount of unpaid premiums and the owner was notified of the “draw-down” in the policy’s value.
3. Premium payments came due each quarter. For 1980 those payments were due on February 11, May 11, August 11, and November 11. As of August 11, 1980, the premiums had been paid and the policy was in full force and effect.
4. Commencing with the premium payment due on August 11, 1980, NJL received no further premium payments. The explanation for this is clear: Meier’s insurance consultants, who rendered estate planning services and had in fact sold and serviced the NJL policies, recommended that those policies be replaced by policies of equal face amount but at lower cost; hence, on August 11, 1980, the premium-due date of the NJL *625policies, Meier became insured by Executive Life Insurance Company of New York in the amount of $250,000 (which was paid, of course, after Meier’s death). Significant in this regard is the reminder to Meier from his insurance consultants, on November 6, 1980, to “be sure that payments to New Jersey Life for [the subject policy] are discontinued.” In consequence of the foregoing conscious business decision, the premiums due on August 11 and November 11, 1980, were not paid by the owner of the policy but were paid by operation of the APL provision. The owner was notified of these transactions, each of which drew down the value of the policy to the extent of about $3500.
5. It is apparent that the insured and the policy owner became concerned, if not alarmed, by the continuing use of cash values to pay premiums on a policy that they had already replaced with an Executive Life policy affording the same dollar amount of coverage. The record does not inform us precisely when precisely who said precisely what to precisely whom; but on March 11, 1981, before the 31-day grace period for payment of the February 11, 1981, quarterly premium had expired, NJL received a one-sentence letter, dated March 9, 1981, from Sanford Feingold Agency, informing the company that the policy in question “had been surrendered.” (The Court labels this message as “cryptic,” ante at 608. There is nothing cryptic about it — it is unmistakably clear — but as everyone agrees, it surely fails if its intention was to effect surrender as of the date it was received.)
6. On March 13,1981, NJL sent a form letter, together with a cash-surrender form, to the policy owner, urging her to reconsider her intention, expressed in the March 9 communication from Sanford Feingold Agency, to terminate the policy. The form letter reads, in pertinent part, as follows:
If after due consideration you still wish to surrender your policy, please complete the enclosed cash surrender form and return it to our office with the policy itself. Upon receipt we will release the cash value to you promptly.
*6267. The cash-surrender form accompanying the form letter, completed and signed by June Meier, was received by NJL on March 26, 1981. That form, obviously backdated to March 10, 1981 (within the grace period for the February 11 premium), or completed on a different copy somehow obtained by the owner, was sent to NJL by the same Sanford Feingold Agency with the request that the “signed request for cash surrender value” be “process[ed] as quickly as possible.” The cash-surrender form reads, in full:
I hereby request that the cash surrender value of policy number 133624, which was issued on the life of Frank Meier, be paid to me.
I certify that I am legally competent to execute this instrument, that this contract is not now assigned to any person other than the undersigned, that no proceedings in bankruptcy or insolvency involving the undersigned are now pending.
I do hereby release, surrender, cancel, fully discharge and terminate said contract at Denville, New Jersey, this 10 day of March, 1981.
8. NJL thereupon, on March 27, 1981, acknowledged receipt of the “request to surrender” the policy. It also told the insured that before the “surrender values” could be released, the policy itself would have to be returned to the company or a lost policy agreement executed and returned. “Upon receipt of either the policy or the form, all values will be released promptly.”
9. Before the policy was located or the lost policy agreement signed and returned, Frank Meier died on April 13, 1981, eighteen days after NJL had received the form executed by June Meier by which she did “release, surrender, cancel, fully discharge and terminate” the subject policy.
Ill
From the facts recited above I would conclude that the rights of the parties were fixed as of March 26, 1981, the date NJL received the cash-surrender form executed by the policy owner. By the terms of that document June Meier unequivocally relin*627quished all further interest in and rights under the policy, in consideration of the cash surrender value.
As the Court correctly observes,
[w]here the insured is given the right under a life-insurance policy to surrender the policy and accept its cash surrender value, such right constitutes a continuing offer on the part of the insurance company, which, when accepted by the insured, fixes the rights of the parties without further action on the part of the company.
[Ante at 613.]
Alas, despite this encouraging step on the right foot, the Court immediately stumbles in the briarpatch of “ambiguous policy language.” Specifically, it declares that a policy that does not define “surrender” is “ambiguous as to whether the physical delivery of the policy is a condition precedent to its effective surrender.” Ante at 616. And once the touchstone of ambiguity has been dredged up, the predictable conclusions snowball: construe the language (here, the non-language) against the perpetrator, construe it against surrender or termination, construe it to keep the policy in force, etc., etc., and voila, there you have it: physical delivery of the policy is a condition precedent to surrender — a proposition that the trial court correctly rejected out of hand.
In support of these manifestly dubious propositions the majority opinion hearkens back to NJL’s March 13 letter (the “please reconsider” letter), and asks:
If Mr. Meier had died the day after receipt of this letter, would anyone argue that his beneficiary was not entitled to the full value of the policies?
[Ante at 617.]
Of course not. And nobody presumes to make any such contention. Its rejection by the Court is a no-weight make-weight.
But try it this way: if the insured had died the day after receipt, on March 26, of the “I release, surrender, cancel, fully discharge and terminate said contract” form, is there any doubt that his beneficiary was entitled to nothing under the policy and that the owner was entitled to exactly what she sought— the cash-surrender value? That is, in effect, this case.
*628Or, perhaps more to the point, this way: if the insured had not died and the company had continued, after March 26, to apply the APL to keep the policy in effect or otherwise reduce its value, would anyone contend that the insured was not entitled to the full cash-surrender value as of March 26? Sureíy not.
But to return to our reference point, ambiguity: what could be more wwambiguous than the executed release-surrender-termination-cancellation form? How more plainly could the owner express her earnest wish that the company cease depleting what was left of the policy’s value by its continuing resort to the APL provision? How could her acceptance of what the Court concedes is NJL’s ongoing offer be expressed more straightforwardly than it is on the executed form?
At that point — March 26, 1981 — the rights of the parties were established. The owner had accepted the company’s offer — and this was a matter of simple, basic offer-and-acceptance rather than, as the majority suggests in its mischaracterization of my position, unilateral cancellation of the insurance contract. NJL then told the policy owner that in fulfillment of her now-established right to the cash-surrender value, the policy or a lost policy agreement would have to be furnished — a classic example of a condition precedent to payment of a matured claim. No amount of after-the-event ineptness on the part of company personnel (of which there was plenty), short of something that would work a novation, could change the legal positions of the parties as they stood on March 26.
IV
For the foregoing propositions I have marshalled no authority, as the reader may have observed. I make the immodest assumption that so plain and common-sensical are those propositions that no authority is required. Not that the authorities do not exist — the briefs are crammed with them; but there is no need to resort to them for support of the conclusion that *629when, as in this case, the owner of a policy gives unequivocal notice of surrender of a life-insurance policy, that notice is sufficient to constitute exercise then and there of the cash-surrender option, and physical delivery of the policy is no more than a condition precedent to payment of the cash-surrender value.
There is, however, one authority that should be rescued from the abusive treatment to which the majority subjects it. Board of Trustees of Unitarian Church v. Nationwide Ins. Co., 88 N.J.Super. 136 (App.Div.1965), is relied on heavily, ante at 613-14, for the proposition that delivery of the policy is a condition precedent to surrender. First, we do not know what the policy language was in Unitarian Church. Second, the case is plainly distinguishable on its facts — and we are, after all, in an area characterized by exquisite fact-sensitivity — for in that case the insured died before the cash-surrender form and the policy had even been mailed to the company; the rights of the parties having been fixed as of the date of death, the insurance company was of course obligated to pay the face amount of the policy before receipt of the cash-surrender form and policy. Third, the decision was based on mutual mistake of fact, nowhere hinted at in this case. And fourth, the language relied on in Unitarian Church is pure dictum.
On a more agreeable note, however, I would add my voice to the majority’s encouragement of “more precise draftsmanship” of insurance contracts, ante at 622. Indeed, of more precise articulation in general. I am all for that. Always have been. See, e.g., 495 Corp. v. New Jersey Underwriting Ass’n, 86 N.J. 159, 171 (1981) (concurring opinion) (the insurer should, through the use of its “perceptive and competent counsel * * * skilled in the craft of explicit expression,” mold its policy forms to “accommodate * * * the realities of judicial interpretation”); see also State v. Lee, 96 N.J. 156, 167 (1984) (dissenting opinion) (bemoaning the “woeful lack of precision in our public discourse”); Oakwood at Madison, Inc. v. Township of Madison, 72 N.J. 481, 636-37 (1977) (concurring opinion) (quoting E. *630Newman, A Civil Tongue 69 (1976) (“We are all safer when language is specific. It improves our chances of knowing what is going on.”)). I would hasten to add, however, that even though a remarkable level of prescience on the insurer’s part might have produced language in the policy that specifically addressed the situation here, thereby obviating the dispute, the absence of such language does not affect the right result. Given the Court’s interpretation, however, the insurance company may be well advised to give the policy another look.
V
I would reverse the judgment of the Appellate Division and remand the cause to the trial court for entry of judgment in favor of defendant. If the parties are unable to agree on an adjustment of the premium to reflect coverage up to March 26, 1981, an issue nowhere addressed on this appeal, I would leave resolution of that question — a simple calculation — to the trial court.
For Affirmance — Chief Justice WILENTZ and Justices HANDLER, POLLOCK, O’HERN, GARIBALDI and STEIN— 6.
For reversal and remandment — Justice CLIFFORD — 1.