Court Opinion

ID: 9469894
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:51:36.13016+00
Date Added: 2024-06-11T17:41:37.146763
License: Public Domain

GARTH, Circuit Judge,
dissenting:
My disagreement with the majority opinion is a narrow one, yet it is fundamental to this appeal. The majority correctly observes that the dispositive issue in this appeal is whether the defendant insurance company, as required by Collister v. Nationwide Life Ins. Co., 479 Pa. 579, 388 A.2d 1346 (1978), established by clear and convincing evidence that Dr. Blair, the applicant, had no reasonable basis for believing that he was purchasing immediate insurance coverage (Maj. Op. 298). The majority, finding that Manhattan Life Insurance Company has met this burden, consequently affirms the district court’s order which denied plaintiff a judgment notwithstanding the verdict, since the district court submitted the case to the jury on an instruction which invoked the “clear and convincing” burden of proof mandated by Pennsylvania law.
*304Thus, my disagreement is a threshold one: while I do not fault the charge in terms of Collister that the district court judge gave to the jury, it is my view that the district court judge erred in his initial decision to permit the jury to consider the proofs.
In order to make clearer my disagreement with the majority, it is helpful to identify those matters on which we do not disagree. Both the majority and I agree on the authorities that control this case. We both agree that under Collister the insurance company had to prove by clear and convincing evidence that Dr. Blair had no reasonable expectation of purchasing insurance that was effective immediately upon his signing the application and tendering the advance payment. I think we agree also that under Pennsylvania law1 the standard of clear and convincing evidence is that:2
[defendant’s] witnesses must be found to be credible, that the facts to which they testify are distinctly remembered and the details thereof narrated exactly and in due order, and that their testimony is so clear, direct, weighty, and convincing as to enable the jury to come to a clear conviction without hesitancy, of the truth of the precise facts in issue.
Easton v. Washington County Insurance Company, 391 Pa. 28, 137 A.2d 332, 337 (1957). Finally, we agree that “whether the [defendant’s] evidence met this standard and so justified the submission of [its] case to the jury is again a question of law for the court.” Id. at 337.
The majority and I disagree, however, as to whether, at the time the evidentiary record was closed, Manhattan’s showing met the clear and convincing evidence standard of Pennsylvania law. If Manhattan met this burden, then the majority is quite right that the district court’s judgment should be affirmed. If, as I submit, Manhattan did not meet this burden, then the majority is in error and the judgment for the defendant should be set aside and judgment entered for the plaintiff.
Careful study of the record, and of Collister, supra, has convinced me that the proofs offered by Manhattan were insufficient, under Collister and Easton, supra, to allow submitting the case to the jury. The requirement of “clear and convincing evidence”, as defined by Pennsylvania law, was not satisfied.3 I would vacate the judgment for the defendant insurance company and direct that the district court judge enter a judgment notwithstanding the verdict for the plaintiff Margaret Blair.
The basis of my disagreement with the majority, therefore, lies in an assessment of the evidence before the district court when it submitted the case to the jury.
*305I.
In support of its holding that the defendant’s evidence satisfied a “clear and convincing” standard of proof, the majority relies on the following: (1) paragraph 11 of the application unambiguously states that no insurance would be issued until the insurance company approved the application; (2) Mr. Tripp, the broker who processed Dr. Blair’s application, had spoken to Dr. Blair about Blair’s heart problem and the difficulties that condition presented in obtaining coverage; and (3) Tripp “specifically remembered discussing the substance of the condition that the insurer must first approve coverage for it to be effective.” (Maj.Op. 302).
I read the record differently. First, although I admit that the language of paragraph 114 is not ambiguous on its face, it should be noted that this term appeared, not on the face of the application, but on the back, as the eleventh of thirteen clauses. On the face of the application appeared the following notations:
“Waiting period: present employees: NONE” and “Requested effective date of Insurance Sept. 15, 1975.”
Thus, in my opinion, this application, despite the majority’s characterization (see note 6, Maj. op.), is precisely the sort of “lengthy, complex, and cumbersomely written application[ ] ... [that] forces the consumer to rely upon the oral representations of the insurance agent,” Collister, 388 A.2d at 1353, that the court in Collister was concerned with. That the language of paragraph 11 is not by itself dispositive, appears also from the fact that in the Collister case the relevant term of the policy was just as unambiguous as, if not more so than, this provision of Blair’s policy, and that clause appeared on the face of the conditional receipt in capital letters. The Collister clause reads:
“NO INSURANCE WILL BECOME EFFECTIVE PRIOR TO POLICY DELIVERY UNLESS THE ACTS REQUIRED BY THIS RECEIPT ARE COMPLETED. NO AGENT OF THE COMPANY IS AUTHORIZED TO CHANGE ANY ACT REQUIRED.”
Collister, supra, 388 A.2d at 1357 (Pomeroy, J., dissenting).
Therefore I see no relevant difference between the restrictive term of the Collister receipt and that of the Blair application. Both state that the insurance is not immediately effective. Despite such a provision, the Pennsylvania Supreme Court in Collister held that the application does not control the relationship between the insured and the insurer. The Supreme Court held that “the dynamics of the transaction viewed in its entirety” must determine that relationship. Id. 388 A.2d at 1354. The crucial factor in the Collister case was the advance payment of premium made by the insured — a circumstance identical to that which occurred in this case.5
The second factor on which the majority relies is Mr. Tripp’s discussion with Dr. Blair about his heart problem. I suggest that, while this circumstance could have led to an inference that Blair’s expectation of obtaining immediate coverage was not reasonable, such an inference necessarily had to be dispelled by: (1) the Medical Examiner’s Report, which was submitted at the same time as the application, and which recommended that the insurer undertake the risk, and (2) the equivocality of Tripp’s testimony and recollections.6
The third factor in the majority’s analysis concerns the quality of Tripp’s testimony. *306His testimony and recollections are best examined in connection with the final bit of evidence on which the majority depends in holding that the insurance company met its heavy burden. The majority states that Tripp “specifically remembered discussing the circumstance of the condition that the insurer must first approve coverage for it [coverage] to be effective.” (Maj.Op. 302).
If the testimony of Mr. Tripp to this effect were “distinctly remembered” and the “details thereof narrated exactly” and “in due order” and if this testimony were “so clear, direct, weighty, and convincing as to enable the jury to come to a clear conviction, without hesitancy of the truth of the precise facts in issue,” see Easton, supra, 137 A.2d at 337, then I would have no more difficulty with affirming the district court’s order than the majority has. Tripp’s testimony, however, is not of that quality. Rather, what Mr. Tripp said on direct, he contradicted on cross; what he seemed to remember during some part of his testimony, he could not recall in later portions.
On direct examination, when asked whether he had explained Paragraph 11 to Dr. Blair, Mr. Tripp replied:
Yes. I did not read the provision itself, but I discussed the elements of the provision completely as it so states, perhaps in different terms, but I got across the point that was stated in there, yes.
App. 41a.
Yet, on cross examination, the following occurred:
Q In connection with taking an application for an applicant for an insurance policy do you make it a practice to advise an applicant that he is or is not insured?
A Never.
Q The fact that you advised Dr. Blair in this case that he was not insured? A I did not.
App. 51a.
Of course, the very “point” which, under Collister, Mr. Tripp was required to “get across” in explaining Paragraph 11, was that Dr. Blair was not insured until the policy was approved. It is this type of non-specific and contradictory testimony that is the antithesis of Pennsylvania’s requirement that the facts be “distinctly remembered and the details thereof narrated exactly and in due order.” See In re Estate of LaRocca, 411 Pa. 633, 192 A.2d 409, 414 (1963).
It also emerged, on cross examination, that Mr. Tripp did not “distinctly remember” the details of the transaction with Dr. Blair. He did not remember requesting a physician’s statement, nor did he remember including the physician’s statement with the application. He did not remember changing the amount of the requested insurance. The documents, however, revealed that he had done so. Transcript 58-66. Even on direct examination, Mr. Tripp testified that he did not recall the other policies he had sold Source, (Dr. Blair’s employer), since “this case is around six years old, and my memory is not that good, unfortunately.” App. 54a-62a.
Reading Mr. Tripp’s testimony alone, or in combination with the application and medical certificate, I conclude that at the most, the insurance company may have proved that Dr. Blair had no reasonable expectation of immediate insurance, but if it did so, it did so by no more than a “preponderance of evidence.” But, under Pennsylvania law, proof by a preponderance is not enough. The proof must meet Pennsylvania’s “clear and convincing” test. A review of the record demonstrates conclusively that Manhattan’s burden of proof by “clear and convincing evidence,” was simply not carried. Thus, the district court judge should not have given this case to the jury. But, having once submitted it to the jury, the district court should then have granted judgment notwithstanding the verdict on Mrs. Blair’s motion.
Collister holds that where an advance premium is paid the insurance policy is in immediate force. This is so, even though the application for insurance or the condi*307tional receipt for the premium, unambiguously provides that the policy, to be effective, must first be approved by the home office. We may not question this Pennsylvania doctrine, even though, were we writing on a clean slate, we might have reached a different result. Collister also holds, as I have pointed out, that the burden of proving explicit explanation of such a restrictive clause is on the insurance company. In this court, we may not question that doctrine either.
In both Collister and this case, advance premium payments were made and the attempt to delay the effective date of the respective policies were identical. In Collister, the attempt by the insurance company was held to be unsuccessful. Here, however, in the face of Collister, the majority has held that Manhattan’s attempt will succeed, even though it acknowledges that our court’s mandate is to apply the substantive law of Pennsylvania which is expressed in Collister.
Following Collister, I cannot agree that, under the most liberal reading of the record in this case, Manhattan, the insurance company, met its burden of showing by clear and convincing evidence that Dr. Blair did not have a reasonable expectation of immediate insurance coverage. I therefore respectfully dissent.

. Under the facts of this case, it is apparent to me that Manhattan’s burden must be measured by the Pennsylvania standard adopted in Collister. I do not understand the majority’s analysis to be otherwise. I would point out, however, that the question whether sufficiency of evidence to reach the jury is a state or federal matter has not in general been settled, for cases where those standards clearly differ. See Dick v. New York Life Ins. Co., 359 U.S. 437, 444-45, 79 S.Ct. 921, 926, 3 L.Ed.2d 935 (1959); Mercer v. Theriot, 377 U.S. 152, 156, 84 S.Ct. 1157, 1160, 12 L.Ed.2d 206 (1964). Heretofore this Circuit has found it unnecessary to determine whether a state standard of sufficiency, if clearly different from the federal standard, must be followed because of the Erie doctrine. See Denneny v. Siegel, 407 F.2d 433 (3d Cir. 1969). For an excellent presentation of the view that a federal standard should govern, see Wratchford v. S.J. Groves & Sons Co., 405 F.2d 1061 (4th Cir. 1969) (Haynsworth, C.J.) and Planters Mfg. Co. v. Protection Mutual Ins. Co., 380 F.2d 869 (5th Cir. 1967) (cited approvingly in Boeing Co. v. Shipman, 411 F.2d 365 (5th Cir. 1969) (en banc) (adopting the rule that the federal standard applies)). For a perceptive and persuasive response to these arguments see Denneny, supra, at 437-39 (Aldisert, J.).

. In light of the fact that I find the standard as stated here has not been met, there is no need for me to discuss the majority’s conclusion that the “two-witness rule” does not apply to the present case.

. In Collister the Pennsylvania Supreme Court placed upon the insurer, not the insured, 'the burden of demonstrating that the provision had been explained to the insured and that the insured had understood its meaning. See Collister, supra, 388 A.2d at 1353-54.

. Paragraph 11 reads:
“that no insurance ... shall take effect until this application has been approved and accepted in writing ... and insurance as specified in the Schedule has been approved for coverage in writing by the insurer.” (App. 79(a)).

. The Collister court reasoned that the advance payment was the vital consideration in determining whether immediate insurance coverage had been afforded by the insurance company. It said: .
Courts must also keep in mind the obvious advantages gained by the insurer when the premium is paid at the time of application. An insurer should not be permitted to enjoy such benefits without giving comparable benefit in return to the insured.
Collister, supra, 388 A.2d at 1354.

. Tripp testified:
“Q. Did you discuss these difficulties with him?
A. Yes. Not specifically, but I said it probably would be difficult.”
App. 36a.