Mutual Benefit Life Insurance Co. v. Jmr Electronics Corp

848 F.2d 30 (2d Cir. 1988)

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Nature of the Case

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Facts

On June 24, 1985, D submitted an application to P for a $250,000 'key man' life insurance policy on the life of its president, Joseph Gaon, at the non-smoker's discounted premium rate. P's 1985 Ratebook provides: 'The Non-Smoker rates are available when the proposed insured is at least 20 years old and has not smoked a cigarette for at least twelve months prior to the date of the application.' Question 13 of the application inquired about the proposed insured's smoking history. Question 13(a) asked, 'Do you smoke cigarettes? How many a day?' Gaon answered this question, 'No.' Question 13(b) asked, 'Did you ever smoke cigarettes? ' Gaon again answered, 'No.' Based on these representations, P issued a policy on Gaon's life at the non-smoker premium rate. Gaon died on June 22, 1986, within the period of contestability contained in the policy. P discovered that the representations made in the insurance application concerning Gaon's smoking history were untrue. P brought this action seeking a declaration that the policy is void. Judge Sweet granted P's motion for summary judgment, dismissed D's counterclaim for the proceeds of the policy, and ordered rescission of the insurance policy and return of D's premium payments, with interest.