Court Opinion

ID: 5699590
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:38:36.05998+00
Date Added: 2024-06-11T08:40:18.216909
License: Public Domain

Halperu, J.
(dissenting in part). I concur in all of Presiding Justice Poster’s opinion except the last four paragraphs, finding that the appellant’s right to rescind the policy had been waived by its receipt and retention of a premium after it had served notice of its election to rescind the policy.
It appears that on October 13,1954, the claim manager of the appellant’s Syracuse office called at the respondent’s home and notified him that the company had ‘£ cancelled ’ ’ the policy because of the false representations made by the respondent, The appellant’s claim manager left with the respondent a check in the amount of $160.28, representing a refund of all premiums paid, less previous disability payments. The respondent thereupon consulted his attorney and the attorney returned the check to the appellant the same day, enclosed in a letter advising the appellant that a refund of the premiums would not be accepted and that the respondent intended to make ‘ ‘ full and complete claim against your company under the terms of the policy ’ ’. The respective positions of the parties were thus made plain and the lines were drawn for the battle which was expected to ensue in the courts.
It appears that it is the practice of the appellant company to mail premium notices from its principal office in Omaha, Nebraska, where it services several million outstanding policies, *108The premium notice consists of a standard printed form addressed to the insured by means of an addressograph plate or a similar reproducing device. A notice in this form was sent by the Omaha office to the respondent on or about October 15, 1954, in accordance with its regular practice, advising that a quarterly premium in the amount of $18.40 would be due on November 1, 1954. A routine reminder notice was subsequently sent by the Syracuse office. The respondent testified that he consulted his attorney after the receipt of the November premium notice and that he paid the premium by money order, with his attorney’s approval, on November 26, 1954. The money order was received at the Syracuse office of the appellant and was deposited in its bank account. Subsequently, sometime in the month of December, the appellant’s claim manager called upon the respondent’s attorney and discussed the rescission of the policy by the company and notified the respondent’s attorney that the appellant still insisted upon the rescission of the policy. The respondent’s attorney maintained his position that the policy “was valid in all respects ” and refused, on behalf of his client, to consent to the rescission. The present action was instituted on February 28, 1955, and the defendant-appellant interposed an answer setting up a counterclaim for rescission.
It is clear beyond question upon this record that, despite the mailing of the November premium notice and the . acceptance of the money order, the appellant did not, in fact, intend to abandon its rescission or to change its position in any other way. The mailing of the notice and the acceptance of the premium were apparently the result of excessive automation in the appellant’s offices. The Omaha office apparently mailed out the premium notice before the claims department had had an opportunity to notify it of the rescission of the policy. The mailing of the reminder notice by the Syracuse office and the acceptance of the premium by that office were obviously the result of mistake or inadvertence. The claims department had apparently failed to notify the premium collection department of the controversy with respect to the policy, or the latter department had failed to mark the account appropriately so that it would not accept any further payment of premiums.
In these circumstances, it seems to me that to hold that the appellant had waived its rescission of the policy by its acceptance of the quarterly premium is to apply the doctrine of waiver in an artificial and mechanical manner (Travelers Ins. Co. v. Pomerantz, 246 N. Y. 63). “ A waiver is an intentional abandonment or relinquishment of a known right * * * It is essentially a matter of intention. Negligence, oversight or *109thoughtlessness does not create it ” (Alsens Amer. Portland Cement Works v. Degnon Contr. Co., 222 N. Y. 34, 37). The doctrine of waiver should not be regarded as a rule in a game of forfeit, in which “every slip was fatal” (Wood v. Duff-Gordon, 222 N. Y. 88, 91).
Where a premium is inadvertently accepted by an insurance company, after it has served notice of its election to rescind the policy, the company is not chargeable with having waived, the rescission, if it repudiates the acceptance of the premium within a reasonable time after the payment comes to the attention of the responsible officers of the company (Travelers Ins. Co. v. Pomerantz, supra). The repudiation in this case took place within a reasonable time after the inadvertent receipt of the premium.
The type of waiver claimed by the respondent in this case is really an aspect of the doctrine of election of remedies. It is claimed in effect that, by acceptance of the premium, the company manifested an election to keep the contract alive, which was inconsistent with its rescission of.it. But a manifestation of an election of remedies is not necessarily final. If the election had been made inadvertently, it could be recalled provided that the other party had not taken any action in reliance thereon to his prejudice. The question thus becomes one of estoppel; “ some element of estoppel [is] the decisive factor ” (3 Williston on Contracts [rev. ed.], § 686, p. 1979). “ Indeed it is probable that some element either of ratification or of estoppel is at the root of most cases, if not all, in which an election of remedies, once made, is viewed as a finality ” (Schenck v. State Line Tel. Co., 238 N. Y. 308, 312, per Cardozo, J.). Here there obviously was no basis for an estoppel. In the circumstances, in view of the known controversy and the impending litigation, the respondent could hot have been misled by the acceptance of the premium into thinking that the appellant had changed its mind about canceling the policy. But even if he had been so misled, any such erroneous impression, was speedily dissipated by the explicit notice given to the respondent through his attorney in December that the appellant still insisted upon the rescission.of the policy. The respondent had not taken any action to his prejudice in the meantime so there is no reason to hold that the appellant was estopped from correcting its inadvertent error in accepting the November premium.
So far as the retention of the premium is concerned, it is apparent that a tender of its return would haye been useless. A tender of the premiums previously paid had been rejected by the respondent’s attorney and the November premium had been *110paid by tbe respondent with the approval of his attorney. The respondent, acting upon the same advice, would undoubtedly have rejected any tender of repayment of the November premium, in order to maintain a consistent position. A tender was therefore not required (Strasbourger v. Leerburger, 233 N. Y. 55, 60). Repayment of the premium can be adequately provided for by the court, in giving judgment on the appellant’s counterclaim for rescission, as (i a condition of its judgment ” (Civ. Prac. Act, § 112-g; see, also, Harris v. Equitable Life Assur. Soc., 3 Hun 724, affd. 64 N. Y. 196; 1946 Report of N. Y. Law Rev. Comm., p. 31 et seq.).
I would therefore reverse the judgment for the respondent and grant judgment in favor of the appellant, rescinding the insurance policy upon the repayment to the respondent of the premiums paid.
Bergan, CooN and GibsoN, JJ., concur with Foster, P, J,; Halpern, J,, dissents in part, in an opinion.
Judgment reversed, on- the law and facts, insofar as reformation is concerned and otherwise modified to provide that respondent is entitled to recover the sum of $625 under the policy with interest and costs, and as thus modified, is affirmed. Settle order.