Freeman v. Metropolitan Life, 468 F. Supp. 1269 (1979)

Relevant Facts: Pl, Mrs. Freeman was the named beneficiary of an insurance plan for her departed husband that was issued by his employer.  Mr. Freeman initially enrolled in the group plan when he started employment.  The life insurance portion included benefits equal in value to his basic annual earnings with a minimum of $2K and a max of $40K.  Deductions for the premium were to have been taken out of his check.  This did not occur for eight months, but the premiums were paid by the employer. The accountant caught the error and corrected it.  3 mos. later, according to the deposition testimony of the accountant, Mr. Freeman called and wanted to cancel his group policy. The accountant informed him that request must be in writing and Fre stated he would send it in, but terminated the policy and reimbursed Fre.  3 mos. later Freeman was killed.  The employers never received the written cancellation.

Legal Issue(s): Whether the statement of the accountant for the employer regarding cancellation of the deceased’s policy violates the hearsay rule?

Court’s Holding: It does not violate hearsay.

Procedure: Df’s motions for summary judgment

Law or Rule(s):   Hearsay is out of court utterances offered as evidence to prove the truth of the matter asserted and therefore inadmissible.

Court Rationale: Neither the crucial statements made in the conversations between Mattox, and Freeman constitute hearsay when recounted by Mr. Mattox in his deposition, because neither is being “offered in evidence to prove the truth of the matter asserted.”  The COA is for damages from the cancellation, allegedly done negligently and for breach of policy provisions, a contract. Therefore, the statements of the offer and acceptance that formed the contract were verbal acts or operative facts demonstrating the creation of the contract.  Freeman’s statement “I want to cancel,” the group policy with the employer constitutes a “verbal act.”  Whether Freeman wanted to cancel his coverage is irrelevant.  The statement made is important b/c it was made in Mattox’s presence, and bears on his reasonableness in acting in accordance with it.

Plaintiff’s Argument: The statements constitute hearsay and are inadmissible.