Riordan v. Automobile Club of New York, Inc.

New York Supreme Court

Riordan v. Automobile Club of New York, Inc.

100 Misc. 2d 638, 422 N.Y.S.2d 811, 1979 N.Y. Misc. LEXIS 2520

CourtNew York Supreme Court

DecidedOctober 29, 1979

StatusPublished

Cited by5 cases

This text of 100 Misc. 2d 638 (Riordan v. Automobile Club of New York, Inc.) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Riordan v. Automobile Club of New York, Inc., 100 Misc. 2d 638, 422 N.Y.S.2d 811, 1979 N.Y. Misc. LEXIS 2520 (N.Y. Super. Ct. 1979).

Pincite

Opinion

OPINION OF THE COURT

Hortense W. Gabel, J.

In plaintiff John Riordan’s motion for summary judgment, he seeks to recover the proceeds of an accident insurance policy issued by the defendant Mutual of Omaha Insurance Company (Mutual) for the death of his wife, Charlotte Riordan. The defendants cross-move for summary judgment.

The issue appears to be novel in this State: Is an advertised mail-order solicitation of travel accident insurance an offer to sell insurance which can be accepted by the mailed return of an enrollment application and a check?

In May, 1976, the decedent, Mrs. Riordan, received by mail, the New York Motorist, which is a monthly publication sent to members of the defendant, the Automobile Club of New York, Inc. (AAA). Mrs. Riordan was a regular AAA member and John Riordan was a sustaining member.

The periodical carried an advertisement for Mutual travel accident insurance limited to "Members of the Automobile Club of New York and their families”. The advertisement is annexed hereto and made a part of the opinion. In large black lettering across the top of the advertisement was the statement, "enroll now . . . and Take Along This '365’ Travel Accident Insurance Wherever You May Go — Across the Street, Across Town or Around the World ... for Business or for Pleasure!”

[640]*640The advertisement then stated that "Your Club membership automatically qualifies you to enroll”. Below that statement in black letters is printed the statement "Covers you for these types of travel accidents”. The advertisement goes on to describe the types of covered travel accidents including loss of life as a driver or passenger riding in a private passenger automobile.

Also specified were three plans, providing different benefits for the same injuries with the required premium for each plan.

Included in the advertisement was an enrollment form to be clipped out and sent to the defendant Club Agency, Inc. (Club). At the top of the enrollment form and in print substantially smaller than other parts of the advertisement appeared the following: "Please enroll me in the '365’ Travel Accident Insurance Program underwritten by Mutual of Omaha Insurance Company. I have enclosed the annual premium for the coverage checked and understand that protection becomes effective the date my Certificate of Insurance is issued.”

In late May, 1976, Mr. and Mrs. Riordan jointly filled out and signed the enrollment form. They included both of their membership numbers on the form, and chose the $100,000 family coverage plan. On June 1 or June 2, 1976, immediately prior to commencing an automobile trip to Florida, Mrs. Riordan made out a check for the required premium of $29 and on June 1 or June 2, Mr. Riotdan mailed the enrollment form and check to the defendant Club.

At approximately 10:30 a.m. on June 3, 1976, the Riordans were involved in an automobile accident in South Carolina. Mrs. Riordan died about an hour after the accident.

Club received the enrollment form and premium check on June 4, 1976. There was no investigation of the Riordans or an examination of their medical history (none was requested) nor was there any verification of their membership numbers nor was any other act of investigation, or judgment performed.

The forms were merely checked to verify that the proper premium had been enclosed for the requested plan and that it contained an AAA membership number.

On June 4, 1976, a certificate of insurance denominated "365 Travel Accident Insurance, '365’ around the world around the clock”, was mailed to plaintiff by the Club. The terms of coverage contained in the certificate of insurance [641]*641mailed to the plaintiff provided that: "The initial term of this certificate begins on the Certificate Date at 12:01 a.m., Standard Time of the place where the insured resides, and ends at 12:01 a.m., the same standard time, on the renewal date. Each time this certificate is renewed, the renewal term begins at the same time the preceding term ends at 12:01 a.m., the same standard time, on the date the next renewal premium becomes due.”

In late June, the plaintiff received the certificate and submitted his claim.

The defendants deny liability, arguing that the submission of the enrollment form was not an acceptance of an offer but merely a proposal to contract for insurance which could only be accepted or "issued” by Mutual while Mrs. Riordan was alive so as to permit a "meeting of the minds”.

The plaintiff urges that the New York Motorist advertisement to AAA members was misleading and created a reasonable expectation that the mailing of the enrollment form with a check and AAA number would provide readers, including Mr. and Mrs. Riordan, with a contract of insurance. In other words, plaintiff claims that the advertisement constituted an offer by the defendant, which Mr. and Mrs. Riordan accepted when they mailed the enrollment form and Mrs. Riordan’s check.

While there are no New York cases involving mail-order insurance, New York, in Lachs v Fidelity & Cas. Co. of N. Y. (306 NY 357) has applied the reasonable expectation doctrine in a somewhat analogous situation, involving impersonal, machine-solicited and dispensed flight insurance. Lachs involved insurance purchased from a machine located directly in front of a "nonscheduled” airline’s counter. Language in the policy and on the machine itself restricted coverage to "scheduled” airlines. Nonetheless, the court held in favor of the beneficiaries of a decedent policyholder who flew on a "nonscheduled” airline.

The court used the expectations of a reasonable man as the standard governing the contract’s interpretation. The physical location and appearance of the machines to the potential insurance purchaser, which created the impression that the policy was applicable to nonscheduled airlines, was given considerable attention. The Court of Appeals required insurance companies operating in this manner to assume greater care in accurately describing their policies to purchasers. [642]*642The leading case of Klos v Mobil Oil Co. (55 NJ 117) involved mail-order solicitation of insurance through a brochure which contained an application form soliciting the decedent, as a Mobil credit card holder, to purchase accident insurance. In the New Jersey case, the Supreme Court noted the complete explanation of the coverage in the brochure, the emphasis on quick action by the individual, the absence of a physical examination requirement, and the limited underwriting procedures undertaken by the company. These factors convinced the court that the brochure and application were a complete offer and that deposit of the completed application into the mail constituted acceptance of the offer under the terms specified in the application. The New Jersey court (p 123) stated: "When Klos mailed in his completed application, he accepted American’s offer and a contract for insurance was consummated with all of the essential elements agreed upon.”

Thus, the Klos court used the layman’s reasonable expectations of coverage as the standard by which to determine whether a mail-order policy was in effect.

Fritz v Old Amer. Ins. Co. 354 F Supp 514) also involved mail solicitation of accident insurance.

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