Present: All the Justices 

JAMES A. HILFIGER 

v. Record No. 980074 OPINION BY JUSTICE ELIZABETH B. LACY 

 September 18, 1998 

TRANSAMERICA OCCIDENTAL LIFE 

INSURANCE COMPANY 

UPON QUESTIONS OF LAW CERTIFIED BY THE UNITED STATES 

COURT OF APPEALS FOR THE FOURTH CIRCUIT 

Pursuant to our Rule 5:42, the United States Court of 

Appeals for the Fourth Circuit certified three questions of 

Virginia law to this Court regarding the enforceability of a 

life insurance policy. The questions involve the application 

of Va. Code §§ 38.2-302 and -319. We accepted the questions 

by order entered February 13, 1998. 

 The facts, as presented in the certification order, are 

as follows.* On January 28, 1995, James A. Hilfiger (Hilfiger) 

filled out an application for a life insurance policy with 

Transamerica Occidental Life Insurance Company (Transamerica) 

seeking insurance upon the life of his father, Paul L. 

Hilfiger. On the application form, Hilfiger answered all 

questions on his father's behalf, and where the form required 

the "signature of proposed insured," Hilfiger signed his 

father's name. Deborah C. Highsmith, a Licensed Resident 

 *

 Because the federal district court granted summary 

judgment in favor of Transamerica Occidental Life Insurance 

Company, the facts are presented in the light most favorable 
Agent of Transamerica, signed the application as a "witness to 

all signatures." Highsmith knew that Hilfiger was signing the 

application on behalf of his father. 

Hilfiger's father did not see the life insurance 

application, nor did he give Hilfiger written consent to sign 

his name. However, Hilfiger claims that he spoke to his 

father about the policy, and that his father gave him oral 

authorization to take out the policy. The application named 

Hilfiger as the sole beneficiary for the policy. 

In May 1995, Hilfiger's father underwent a medical 

examination in connection with the life insurance application. 

At the medical examination, Hilfiger's father signed a form 

entitled "PART II of an Application for Insurance to the 

Transamerica Occidental Life." This form did not identify the 

type of insurance applied for, who the proposed beneficiary 

was, or the amount of coverage sought. Transamerica issued 

the insurance policy on October 9, 1995. 

On November 13, 1995, Hilfiger's wife, Donna C. Hilfiger, 

became a broker for Transamerica. Shortly thereafter, she 

executed an amendment to the insurance policy as a 

Transamerica resident agent. As with the original 

application, Hilfiger signed his father's name to the form. 

 

to Hilfiger. United States v. Leak, 123 F.3d 787, 794 (4th

Cir. 1997). 

2
Hilfiger's father did not see the document, but Hilfiger 

asserts that he discussed the amendment with his father. Nine 

days after the amendment was executed, Hilfiger's father 

became ill. He died four days later on December 3, 1995. 

Transamerica refused to pay the proceeds of the life 

insurance policy. Hilfiger filed a motion for judgment 

against Transamerica in the Circuit Court of the City of 

Virginia Beach seeking the proceeds of the policy, additional 

damages, and costs. Transamerica removed the case to the 

United States District Court for the Eastern District of 

Virginia and later filed a motion for summary judgment. The 

federal district court granted Transamerica's summary judgment 

motion, concluding that the execution of the policy did not 

comply with Code § 38.2-302 and, therefore, was void. 

Hilfiger appealed to the Court of Appeals. 

In certifying the questions to this Court, the Court of 

Appeals stated that the answers would be determinative of the 

proceeding pending before it. We address the three questions 

in order. 

I. 

 The Court of Appeals first asks: 

Whether the son's signing his father's name as 

"proposed insured" violates Va. Code § 38.2-302, 

where the son discussed the policy with his father, 

had verbal authorization to apply for the policy, 

and his father later submitted to a medical 

3
examination and signed a form entitled "PART II of 

an Application for Insurance to the Transamerica 

Occidental Life?" 

At common law, a policy of insurance taken out on the 

life of an insured without the insured's knowledge or consent 

by someone other than the insured was usually held void as 

against public policy. 1 Bertram Harnett & Irving I. Lesnick, 

The Law of Life and Health Insurance § 3.04[1][a] (1997). The 

reason for this rule was the risk to the insured that a 

beneficiary would be tempted to "hasten by improper means the 

time when he will receive the benefits of the policy." Wood 

v. New York Life Ins. Co., 336 S.E.2d 806, 809 (Ga. 1985); 

Hopkins v. Hopkins, 614 A.2d 96, 100 (Md. 1992). 

Code § 38.2-302(A) codifies this common law principle, 

stating in pertinent part that: 

No contract of insurance upon a person shall be 

made or effectuated unless at the time of the making 

of the contract the individual insured, being of 

lawful age and competent to contract for the 

insurance contract (i) applies for insurance, or 

(ii) consents in writing to the insurance contract. 

The statute provides the requisite protection for an insured 

by identifying two alternative conditions for creating a valid 

contract of life insurance. The specific conditions 

identified by the General Assembly reflect an intent to 

require unequivocal evidence that an insured approved the 

creation of a contract of insurance on his or her life. With 

4
this purpose in mind, we conclude that the facts in this case, 

as recited in the certification order, do not establish proof 

of either condition. 

First, the evidence in this case, that Hilfiger's father 

knew about the policy and orally authorized Hilfiger to apply 

for the policy, does not constitute an application for the 

policy by the insured as required by the statute. 

At one time, the insured's knowledge of the policy alone 

was sufficient to establish compliance with the requirements 

of the Code. Former Code § 38.1-330, the predecessor to Code 

§ 38.2-302, provided in relevant part that "[n]o contract of 

insurance upon the person . . . shall be made or effectuated 

unless . . . the individual insured . . . applies therefor, 

has knowledge thereof, or consents thereto . . . ." In 1986, 

however, the General Assembly eliminated the phrase "has 

knowledge thereof," leaving the two current alternative 

conditions as the only means of creating a valid contract of 

life insurance. Acts 1986, ch. 562. 

We also conclude, as Hilfiger acknowledges, that orally 

authorizing another to take out a policy does not alone 

constitute "applying" for the policy. If oral authorization 

alone were enough to satisfy the application requirement, the 

written consent alternative would be rendered superfluous. 

5
Wren v. New York Life Ins. Co., 493 F.2d 839, 841 (5th Cir. 

1974)(interpreting a similar statute). 

Nevertheless, Hilfiger asserts that the application prong 

of the section was satisfied in this case because his father 

"materially participated" in the application process by 

providing a medical history and submitting to a medical 

examination. We disagree. "Material participation" in the 

application process is not synonymous with applying for the 

policy. As we have said, the purpose of the conditions 

required for a valid contract of life insurance is to 

eliminate any doubt that the insured knew about and agreed to 

the issuance of the insurance contract. Here, providing 

medical information in conjunction with the issuance of an 

insurance policy did not reflect consent to the contract of 

insurance. 

For the same reason, we reject Hilfiger's contention that 

his father's signature on the medical examination form 

qualified as a consent in writing to the insurance contract. 

The insured's signature on the medical form affirmed only that 

the information provided on the form was correct. Although 

the form itself stated that it was a part of an application 

for insurance, it contained none of the terms of the contract. 

It was not, and could not have been, a written consent "to the 

insurance contract" as required by Code § 38.2-302. 

6
For these reasons, we conclude that the facts of this 

case do not satisfy either alternative required by Code 

§ 38.2-302 for the creation of a valid contract of life 

insurance. Accordingly, we answer the first question in the 

affirmative. 

II. 

In the second certified question the Court of Appeals 

asks: 

Whether the insurance policy should be enforced 

on behalf of the beneficiary despite the violation 

of § 38.2-302, in light of Virginia Code § 38.2-

319's provision that "[a]ny insurance contract made 

in violation of the laws of this Commonwealth may be 

enforced against the insurer?" 

 We answer this question in the negative. If Code § 38.2-

319 required enforcement of a policy issued in violation of 

Code § 38.2-302, the protection for an insured intended by 

Code § 38.2-302 could never be realized, and Code § 38.2-302 

would be meaningless. Code § 38.2-319 does not compel such a 

result. 

By its own terms, Code § 38.2-319 applies to a contract 

of insurance which is "made" in violation of a law of the 

Commonwealth. Code § 38.2-302 declares that if the statutory 

requirements are not met, no life insurance policy can be 

"made or effectuated." Thus, in the absence of compliance 

with the provisions of Code § 38.2-302(A), no contract of 

7
insurance is created, and any policy issued under those 

circumstances must be void ab initio. Wood, 336 S.E.2d at 

809, 811-12 (interpreting a similar statute). Contra Jackson 

Nat'l Life Ins. Co. v. Receconi, 827 P.2d 118, 131 (N.M. 

1992). 

Here, no contract of life insurance was "made or 

effectuated" because there was no compliance with Code § 38.2-

302(A). Therefore, Code § 38.2-319 does not require 

enforcement of the insurance policy issued by Transamerica in 

this case. 

III. 

Finally, the Court of Appeals asks: 

Whether an insurance company can be estopped to 

rely on § 38.2-302 because its agent knew about the 

incorrectness of the signature on the application? 

Estoppel is an equitable principle that prevents one 

"whose action or inaction has induced reliance by another from 

benefiting from a change in his position at the expense of the 

other." Employers Commercial Union Ins. Co. of America v. 

Great American Ins. Co., 214 Va. 410, 412, 200 S.E.2d 560, 562 

(1973). Hilfiger argues that Transamerica should be estopped 

from relying on Code § 38.2-302 to avoid payment on the life 

insurance policy because it is charged with the knowledge of 

its agents, both of its agents knew that the insured did not 

sign the application form, and both agents failed to inform 

8
Hilfiger of the consequences of that omission. This failure, 

Hilfiger asserts, prevented him from taking the appropriate 

corrective measures to secure a valid life insurance policy 

for his father. 

We have addressed the application of equitable estoppel 

in the context of enforcing insurance policies against an 

insurer. Id.; Reserve Life Ins. Co. v. Ferebee, 202 Va. 556, 

118 S.E.2d 675 (1961); New York Life Ins. Co. v. Eicher, 198 

Va. 255, 93 S.E.2d 269 (1956); Gilley v. Union Life Ins. Co., 

194 Va. 966, 76 S.E.2d 165 (1953). And, as Hilfiger points 

out, we have applied the doctrine to enforce an insurance 

policy based on imputing to the insurer its agent's knowledge 

of false statements on the application. See Gilley, 194 Va. 

at 974, 76 S.E.2d at 170. These cases all involved the level 

of knowledge and complicity of both the agent and applicant in 

supplying such false information. None of these cases, 

however, involved consideration of whether the equitable 

doctrine of estoppel should be applied in a manner which 

negates a significant public policy codified by the General 

Assembly. 

Jurisdictions addressing that situation have not been 

unanimous in their conclusions or rationales. One court 

applied equitable estoppel based on the theory that the 

statutory requirements for a valid life insurance contract 

9
reflect a public policy to protect the insured and the 

beneficiary, rather than to preserve the public order and 

morals and, therefore, the statutory requirements can be 

waived by the beneficiary. Adam Miguez Funeral Home, Inc. v. 

First Nat'l Life Ins. Co., 234 So.2d 496, 499 (La. Ct. App. 

1970). Another court concluded that the failure to apply 

equitable estoppel under these circumstances would allow 

insurers to perpetrate a fraud upon policyholders by accepting 

premiums on a policy, knowing that the policy was void from 

the beginning. Holmes v. Nationwide Mut. Ins. Co., 244 

N.Y.S.2d 148, 153 (1963). 

In contrast, equitable estoppel has not been applied in 

these circumstances on the theory that its application would 

invite beneficiaries and insurers' agents to create a binding 

contract of insurance on the life of another in direct 

contravention of the policy addressed by the common law and 

statutes in imposing requirements for a valid policy. Hunt v. 

Pyramid Life Ins. Co., 732 S.W.2d 167, 169 (Ark. Ct. App. 

1987); Time Ins. Co. v. Lamar, 393 S.E.2d 734, 735-36 (Ga. Ct. 

App. 1990). 

We are persuaded that the better rationale is not to 

apply equitable estoppel to enforce a life insurance policy 

issued in contravention of Code § 38.2-302. That statute was 

not enacted for the protection of the beneficiary but to 

10
protect the insured against potentially improper motives of 

the beneficiary. Thus, contrary to the conclusion reached 

elsewhere, we conclude that a beneficiary is not entitled to 

waive the statutory requirements. As we have already stated, 

applying Code § 38.2-319 to enforce a contract which Code 

§ 38.2-302 renders void ab initio eliminates the very purpose 

of the statute. To apply equitable estoppel in these 

circumstances also: 

would permit the unreasonable result that [the 

conduct of an insurance company or its agent] would 

breathe life into an insurance contract which the 

General Assembly [for reasons of individual and 

public protection] intended to have no life, and 

would frustrate the strong public policy that no 

contract for life insurance should be made unless 

the insured applies for or consents in writing to 

the contract. 

Lamar, 393 S.E.2d at 736 (citing Wood, 336 S.E.2d at 812). 

 Accordingly, we answer the third certified question in 

the negative. 

First certified question answered in the affirmative.

 Second certified question answered in the negative.

 Third certified question answered in the negative.

JUSTICE KINSER, with whom JUSTICE KOONTZ joins, dissenting. 

 I would construe Code § 38.2-302(A) differently from the 

majority and would, therefore, answer the first certified 

question in the negative. I agree that the statute identifies 

“two alternative conditions” for making a valid life insurance 

contract, allowing a proposed insured either to apply for life 

11
insurance or to consent to such a contract. However, as I 

understand the majority’s position, a proposed insured’s oral 

authorization combined with “material participation” in the 

application process does not constitute “applying” for the 

insurance contract. I disagree.1

 The part of Code § 38.2-302(A) at issue provides that no 

life insurance contract is made or effectuated unless “the 

individual insured . . . (i) applies for insurance, or (ii) 

consents in writing to the insurance contract.” The statute 

fails to define “applies;” therefore, the term must be “given 

its ordinary meaning, given the context in which it is used.” 

Dep’t of Taxation v. Orange-Madison Coop. Farm Serv., 220 Va. 

655, 658, 261 S.E.2d 532, 533-34 (1980). “The context may be 

examined by considering the other language used in the 

statute.” City of Virginia Beach v. Bd. of Supervisors of 

Mecklenberg County, 246 Va. 233, 236-37, 435 S.E.2d 382, 384 

(1993). 

Examining the language chosen by the legislature, I find 

it significant that the phrase “in writing” appears after the 

disjunctive “or” and immediately following “consents” and that 

the two phrases, “applies for insurance” and “consents in 

 1

 Notably, the majority states only what action is 

insufficient to apply for a life insurance contract and fails 

to delineate or define specifically the requirements necessary 

to apply for insurance under Code § 38.2-302(A). 

12
writing,” are separately identified by the designations “(i)” 

and “(ii).” As a general rule, “proper grammatical effect 

will be given to the arrangement of words in a sentence of a 

statute,” Harris v. Commonwealth, 142 Va. 620, 624, 128 S.E. 

578, 579 (1925), and a presumption exists that the General 

Assembly understood basic rules of grammar when drafting the 

statute. Frere v. Commonwealth, 19 Va. App. 460, 464, 452 

S.E.2d 682, 685 (1995). Fundamental rules of grammar require 

the placement of a phrase so as to indicate clearly what the 

phrase modifies. John C. Hodges et al., Harbrace College 

Handbook 249 (12th ed. 1994). 

Applying this rule to Code § 38.2-302(A), the phrase “in 

writing” modifies “consents,” the word immediately preceding 

the phrase, and does not modify “applies.” But see Alleman v. 

Lincoln Nat’l Life Ins. Co., 636 F.2d 1195, 1196 (10th Cir. 

1981) (holding that writing provision in Utah statute, which 

states that “[n]o life . . . insurance contract . . . shall be 

made . . . unless . . . the individual insured . . . in 

writing applies therefore [sic] or consents thereto,” modifies 

not only “applies” but also “consents”). By choosing not to 

modify “applies” with the phrase “in writing,” the General 

Assembly intended not to restrict the method by which an 

individual can apply for insurance. See Forst v. Rockingham 

Poultry Mktg. Coop., Inc., 222 Va. 270, 278, 279 S.E.2d 400, 

13
404 (1981) (“When the General Assembly uses two different 

terms in the same act, it is presumed to mean two different 

things.”). Moreover, when the General Assembly has intended 

for a proposed insured to apply for insurance in writing, it 

has so stated. See Code § 38.2-3737(A) (“No contract of 

insurance upon a debtor shall be made or effectuated unless 

. . . the debtor . . . applies for the insurance in writing 

. . . .”). Thus, the General Assembly knows what language to 

use when it wants to condition the making of an insurance 

contract upon submission of a written application. 

Therefore, in my view, under the provisions of Code 

§ 38.2-302(A), consent to an insurance contract must be in 

writing, but the act of applying for insurance is not confined 

to any particular form. In other words, the mode of applying 

for a life insurance contract is not limited to a written 

application personally signed by the proposed insured. Accord

Walker v. Jackson Nat’l Life Ins. Co., 20 F.3d 923, 924-25 (8th

Cir. 1994) (holding that insured can apply for insurance 

without signing application).2

 2

 An example of a statute that plainly requires a 

written application signed by the insured is Mass. Gen. Laws 

Ch. 175, § 123 (1998). This section states that “[n]o life 

company shall issue any policy of life or endowment insurance 

. . . except upon a written application therefor signed or 

assented to in writing by the person to be insured . . . .” 

14
While rules of grammar are not permitted to defeat the 

purpose of a statute, Harris, 142 Va. at 624, 128 S.E. at 579, 

construing “applies” to denote more than the narrow meaning of 

an application signed by the proposed insured does not thwart 

the common law principle that Code § 38.2-302(A) embodies. A 

proposed insured’s signature on an application form is not 

critical to proving that the individual applied for insurance 

if other facts evidence the proposed insured’s intent to 

apply. See Walker, 20 F.3d at 925 (finding that signature of 

insured on insurance application was not crucial to proving 

his knowledge of policy and identity of beneficiary); Crump v. 

Northwestern Nat’l Life Ins. Co., 236 Cal. App.2d 149, 155 

(1965) (holding insured’s signature not essential where 

insured’s agent prepared application and insured later 

ratified insurance contract). In other words, if the facts 

show that the proposed insured acted with the purpose of 

obtaining life insurance, then no risk exists of “allowing one 

person to have insurance on the life of another without the 

knowledge of the latter.” Walker, 20 F.3d at 925. 

In the instant case, the actions of Hilfiger’s father 

show that he applied for insurance as contemplated by the 

provisions of Code § 38.2-302(A). Because the district court 

granted summary judgment to Transamerica, the facts and 

inferences must be construed in the light most favorable to 

15
Hilfiger. United States v. Leak, 123 F.3d 787, 794 (4th Cir. 

1997). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 

242, 249 (1986) (“at the summary judgment stage the judge’s 

function is not . . . to weigh the evidence and determine the 

truth of the matter”). The facts show that Hilfiger orally 

discussed the policy with his father and that the father 

verbally authorized his son to obtain the policy. As the 

United States Court of Appeals for the Fourth Circuit stated 

in its certification order, “we can infer that the insured 

father ‘authorized’ Hilfiger to sign for him and provided the 

answers which Hilfiger filled in on the application forms.” 

Moreover, the father underwent a medical exam during which he 

signed a form titled “Part II of an Application for Insurance 

to the Transamerica Occidental Life.” Thus, the evidence 

shows not only oral authorization, but also undisputed overt 

actions on the part of the father that not only corroborate 

his oral authorization but also establish his participation in 

the application process. This is not a case of mere oral 

authorization, which, as the majority observed, would render 

the written consent alternative superfluous. 

Given these facts, I conclude that Hilfiger’s signing his 

father’s name as the “proposed insured” does not violate Code 

§ 38.2-302. As the majority stated, “[T]he purpose of the 

conditions required for a valid contract of life insurance is 

16
to eliminate any doubt that the insured knew about and agreed 

to the issuance of the insurance contract.” That purpose is 

fulfilled in this case. 

Accordingly, for these reasons, I dissent.3

 3

 Because I would answer the first certified question in 

the negative, I need not address the remaining two questions. 

17