Angulo v. Security Mutual Life Insurance

At issue on this appeal is the applicability of Insurance Law former § 151 to two life insurance policies that were in effect for less than three years and which provided for monthly payment of premiums. The insured died on January 10,1979, less than a year after he had defaulted on his premium payments and the defendant, which did not give the notice of lapse provided for in Insurance Law former § 151, now argues that the section was not applicable to the policies involved here. Relevant to our disposition of the case is the fact that at its 1984 session the Legislature recodified the Insurance Law (see, L 1984, ch 367), declaring in section 102 of the new law “that the purpose of this chapter is to recodify, without substantive change”, the Insurance Law previously in effect. The recodification has eliminated the very ambiguity in language that lies at the root of the current controversy where the parties dispute the meaning of former section 151. Under the rules of statutory construction, the 1984 amendment clarifies the meaning of the earlier sections and resolves the issues before us. The recodification replaced former section 151 with section 3211. Insurance Law § 3211 (a) (1) provides that unless prior written notice of lapse is given, no life insurance policy delivered in this State shall lapse in less than one year after default in premium payment. Insurance Law § 3211 (f) (2) declares that where the policy is to be paid for by monthly premiums or at shorter intervals, the prior written notice requirement is not applicable “provided in the case of policies of life insurance the insurer issuing such policy elects with respect to all such policies to mail a written notice within six months after termination or lapse to the insured * * * stating the type and amount of any automatic nonforfeiture benefit in force” (emphasis supplied). Since no prior notice of lapse was given and defendant did not send written notice of automatic nonforfeiture benefit to all its policyholders, under the provisions of section 3211, the instant policy would still have been in effect when the insured died. But [738] section 3211 had not yet been enacted at the time in issue here, and the question is whether the defendant was required to give the same notice under former section 151. Insurance Law former § 151 (7) (now § 3211 [f]) subjected the insurer’s obligation to give prior notice of lapse to the following exception. “The provisions of this section shall not apply to any policy of insurance requiring the payment of premiums monthly or at shorter intervals, provided in the case of policies of life insurance the insurer issuing such policy elects with respect to all such premium-paying policies to mail a notice of any non-forfeiture benefit after lapse in accordance with the provisions prescribed in the event of lapse of industrial life insurance policies by section one hundred fifty-two” (emphasis supplied). Former section 152 (1), which dealt with industrial life insurance, required a notice of automatic nonforfeiture benefits to be given to the insured within six months after lapse but limited its application to “such policies” as had been in force for three years. The ambiguity before us now derived from the fact that former section 151 provided for notice of nonforfeiture benefits to the holders of “all such premium-paying policies” while former section 152 provided that the notice need be given only to the holders of policies upon which three years of premium payments had been made. In eliminating the ambiguity, Insurance Law § 3211 (f) (2) requires notice of nonforfeiture benefit to be given to “all” life insurance policyholders within six months of lapse and omitted the requirement that three years of premium payments be made. Since the. recodification resolved the ambiguity and such amendatory action by the Legislature must be construed as reflecting what the actual intent of former section 151 was (see, Nelson v Hanna, 67 AD2d 820; Rozler v Franger, 61 AD2d 46, affd 46 NY2d 760; Jaffe Plumbing & Heating Co. v Brooklyn Union Gas Co., 51 Misc 2d 1083, affd 29 AD2d 1051, affd 26 NY2d 851), we now conclude that three years of premium payments was not a condition precedent to the requirement that all policyholders be given notice of nonforfeiture benefits. Since such notice was not given and prior notice of lapse is also absent, the instant policies were still in effect when the insured died. Plaintiff is thus entitled to summary judgment. Titone, J. P., Lazer, Niehoff and Rubin, JJ., concur.