No. 14751 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

MARY E. CAMERON, individually and 

MARY E. CAMERON AS PERSONAL REPRESENTATIVE 

in intestacy of the estate of Archie H. 

Camerson, deceased, 

Plaintiffs and Appellants, 

VS. 

FIRST NATIONAL BANK IN BOZEMAN, a 

national banking association, and UNIVERSAL 

UNDERWRITERS LIFE INSURANCE COMPANY, a 

Stock Company, 

Defendants and Respondents. 

Appeal from: District Court of the Eighteenth Judicial District, 

Hon. W. W. Lessley, Judge presiding. 

Counsel of Record: 

For Appellants: 

Landoe, Brown, Planalp, Kommers & Lineberger, 

Bozeman, Montana 

Gene I. Brown argued, Bozeman, Montana 

For Respondents: 

Anderson, Symrnes, Brown, Gerbase, Cebull & Jones, 

Billings, Montana 

Rockwood Brown argued, Billings, Montana 

Drysdale, McLean, Screnar & Cok, Bozeman, Montana 

James J. Screnar argued, Bozeman, Montana 

i+ L: - Filed: 

Submitted: November 2, 1979 
Mr. Justice Gene B. Daly delivered the Opinion of the Court. 

This is an appeal from a summary judgment granted by 

the District Court of the Eighteenth Judicial District, 

Gallatin County, in favor of the defendants-respondents. 

Plaintiff-appellant Mary E. Cameron, as personal representative of her father's estate, brought an action to quiet 

title to a mobile home that was being purchased by her 

father from Premier Homes, Inc., under a retail installment 

sales contract at the time of his death. By this action 

she also sought to have defendants pay the remaining balance 

of the purchase price on the mobile home for their failure 

to provide her father, Archie Cameron, with a policy of 

credit life insurance. Summary judgment was granted in 

favor of respondents after both sides had answered interrogatories and after respondents had filed affidavits in 

support of their motion for summary judgment. The judgment 

was granted on the grounds that there never was a contract 

of insurance. 

Mary Cameron is the daughter of Archie Cameron and 

is the personal representative of his estate. Cameron died 

on January 20, 1978. One of the assets of his estate was a 

1972 Columbia mobile home which Cameron purchased from respondent Premier Homes, Inc., on August 10, 1976. On that 

date Cameron signed a retail installment contract with 

Premier to purchase the mobile home. Boid Lehman, Premier's 

salesman, handled the transaction. The retail installment 

contract contained the following provision regarding credit 

life insurance: 

"CREDIT LIFE AND DISABILITY INSURANCE is not 

required by Seller in connection with this 

transaction. Buyer as of the date hereof, is 

able to perform usual activities or occupation, 
and otherwise qualifies for such insurance. 

This insurance may be obtained through Seller 

for the term of this contract at the cost 

indicated below: 

( ) Credit Life Insurance $ 307.50 

( ) Credit Life and disability 

Insurance $ 

"I desire credit ( ) life and ( ) disability 

insurance. I AM UNDER 66 YEARS OF AGE. 

"Date 8-10-76 x /s/ Archie H. Cameron 

Signature of Insured 

Buyer 

"THIS IS NOT A COMMITMENT TO PROVIDE CREDIT 

LIFE OR CREDIT LIFE AND DISABILITY INSURANCE." 

The total deferred contract price included the $307.50 

premium for credit life insurance. The retail installment 

contract was assigned to respondent First National Bank of 

Bozeman the same day. The insurance policy was to be with 

respondent Universal Underwriters Life Insurance Company. 

Premier Homes, as part of its business selling mobile homes, 

had an agreement with Universal Underwriters Life Insurance 

Co. whereby Premier Homes acted as Universal's agent for 

the purpose of selling credit life insurance. 

Cameron did not receive an application for credit 

life insurance until September 14, 1976, when he completed 

and signed an application prepared for him by Boid Lehman. 

On the application Cameron indicated that he had high blood 

pressure and was under treatment, that he had been treated 

for arthritis, that he was not working at the time, and 

that he was drawing disability from the Three Forks Portland Cement Co. This application was forwarded to the 

main office of Premier Homes, where Helen Martin, an employee of Premier, determined that Cameron was ineligible 

for credit life coverage under rules dictated to Premier 

by respondent Universal Underwriters Life Insurance Co. 
In his affidavit, which the District Court accepted as 

being true, ~oid Lehman, the salesman who sold the mobile 

home to Cameron, stated that six days later, on September 

20, 1976, at the request of the manager of Premier's home 

office, he drove to Cameron's home in Three Forks and personally notified Cameron that he was not qualified for 

credit life insurance and that he did not have any coverage. 

This "request" was corroborated by the affidavit of Helen 

Martin, a fellow employee of Premier Homes. Cameron never 

received written notice that his application for credit 

life insurance with Universal Underwriters Life Insurance 

Co. had been rejected. No policy was ever issued to 

Cameron. His application was never forwarded by Premier 

to Universal, since Premier's employee Helen Martin determined that it should be summarily denied. The District 

Court found that Universal never had notice that an application had been made and that it was unaware that Archie 

Cameron ever existed or that credit life coverage was being 

claimed until a demand for payment on the policy was made 

by the attorney for the Cameron estate in a letter addressed 

to Premier on March 23, 1978. This demand was refused. 

Although Cameron's application for credit life insurance was rejected on September 20, 1976, the $307.50 premium 

for insurance which had been included in the contract price 

was not refunded or credited to his account until March 

1978, after Cameron's death and after the attorney for his 

estate had demanded payment on the policy. At that time 

a refund and credit of the $307.50 premium plus interest 

was made. 

Two principal issues are presented to this Court on 

appeal : 
1. Whether or not defendants-respondents were entitled to summary judgment as a matter of law if they failed 

to follow the provisions of section 33-21-204(2), MCA, and 

section 33-21-206 (3), MCA? 

2. Whether or not there remained any genuine issues 

of material fact making summary judgment improper in this 

case? 

Mary Cameron argues that summary judgment was improperly 

granted to respondents in this case because there remained 

genuine issues of material fact and because respondents 

were not entitled to summary judgment as a matter of law. 

Rule 56(c), M.R.Civ.P. The reason respondents were not 

entitled to judgment as a matter of law is that they failed 

to comply with the requirements of Montana's statutes regulating credit life insurance. Specifically, respondents 

failed to deliver an application for credit life insurance 

to Cameron at the time the indebtedness was incurred, August 

10, 1976, and they failed to either accept or reject his 

application within thirty days of that date, contrary to 

the provisions of section 33-21-204(2), MCA; although respondents "required" Cameron to make a payment of $307.50 

in connection with credit life insurance, a policy was 

never issued; although respondents allegedly gave oral 

notice in person, they failed to give him immediate written 

notice of that fact as required by the statute, section 

33-21-206(3), MCA; and, respondents failed to make an appropriate credit to his account promptly, not doing so until 

contacted by the attorney for Cameron's estate in March 

1978. Each of these actions or lack of action was contrary 

to the provisions of section 33-21-206(3), MCA. Respondent 
First National Bank in Bozeman is liable under these provisions as a "creditor" under section 33-21-103(3), MCA. 

Furthermore, respondents as the moving parties failed 

to meet their burden to establish the absence of any genuine 

issues of material fact and consequently are not entitled 

to summary judgment. 

Respondents contend that the summary judgment was 

proper as a matter of law. There never was a contract for 

insurance, as Cameron's application for credit life insurance was promptly rejected by respondents and personal 

notice of -- this rejection was -- given Q Premier's employee, 

Boid Lehman - on September -- 20, 1976. The payment of an 

insurance premium by Cameron as part of the total deferred 

price of the mobile home did not create a contract of 

insurance. No policy was ever issued, and respondent Universal Underwriters never knew of Cameron's application, as 

it had been summarily denied by Premier. Therefore, summary judgment was proper. Section 33-21-206(3), MCA, only 

applies where the creditor "requires" the debtor to carry 

credit life insurance. Since the retail installment contract provided that insurance was not required, this section is also inapplicable to the present case. (Even if 

this Court accepts appellant's argument that section 33-21- 

206(3), MCA, applies where the debtor is required -- to make 

a payment in connection with credit life insurance, appellant waived the advantage of the written notice requirement, 

which is intended solely for his benefit.) 

As a preliminary matter, it must be determined whether 

First National Bank of Bozeman ("Bank") and Universal 

Underwriters Life Insurance Company ("Insurance Company"), 

as well as Premier Homes, Inc. ("Premier") are proper 
parties to this action. Respondent Bank is potentially 

liable for the obligations of a "creditor" under section 

33-21-206(3), MCA, because it comes within the definition 

in section 33-21-103(3), MCA: 

"'Creditor' means the lender of money or 

vendor or lessor of goods, services, property, 

rights, or privileges, for which - payment - is 

arranged through a-credit transaction or any 

successor to the -- right, title, or interest 

--- of such a lender, vendor, - or lessor. " (Emphasis added.) 

Since the Bank took an assignment of the retail 

installment contract, it must comply with the requirements 

of section 33-21-206(3), MCA, as Premier's successor in 

interest. Respondent Insurance Company is not liable in 

any event because, even though Premier may have acted as 

its agent in passing upon Cameron's application for credit 

life insurance, the requirements of section 33-21-206(3), 

MCA, are directed at a creditor and not at an insurer. 

Appellant Mary Cameron contends that summary judgment 

was improperly granted to respondents in this case because 

there remained genuine issues of material fact and because 

respondents were not entitled to judgment as a matter of 

law. Rule 56(c), M.R.Civ.P., provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, 

together with the affidavits, if any, show that there is 

no genuine issue as to any material fact and that the moving 

party is entitled to judgment as a matter of law." 

The first issue in this appeal is whether or not respondents were entitled to judgment as a matter of law. 

Appellant urges that respondents were not entitled to summary judgment because they failed to comply with the requirements of sections 33-21-204(2) and 33-21-206(3), MCA, 
which are part of Montana's model act for the regulation of 

credit life insurance and credit disability insurance. 

Section: 33-21-204, MCA, provides in relevant part: 

"(1) All credit life insurance and credit disability insurance sold shall be evidenced by 

an individual policy or in the case of group 

insurance by a certificate of insurance, which 

individual policy or group certificate of insurance shall be delivered to the debtor at 

the time the indebtedness is incurred except 

as hereinafter provided. 

" (2) -- If the individual policy - or group certificate 

debtor 

- a COPY 

notice 

debtor 

of - insurance -- is not delivered -- to the 

---- at the time the indebtedness is incurred, 

of -- 

pp 

the application for such paicy or - - a 

of - proposed insurance, signed by the 

and setting forth the name and home office address of the insurer, the name or names 

of the debtor, the amount of payment by the 

debtor separately in connection with credit 

life insurance and credit disability insurance 

coverage, and a brief description of the coverage provided or to be provided, shall be -- delivered --- to the debtor ---- at the time such indebted- 

-- ness is incurred. The copy of the application 

for or notice of proposed insurance shall refer exclusively to insurance coverage and shall 

be separate and apart from the loan, sale, or 

other credit statement of account, instrument, 

or agreement unless the information required 

bv ~ .' this section is prominently set forth therein. 

Upon approval -- of the application, if any, or 

acceptance of -- the insurance - and within 30 zys 

--- of the date upon which indebtedness?^ incurred, the insurer shall -- cause the individual 

policy or group certificate of insurance -- to be 

delivered -- to the debtor. he application or 

notice of proposed insurance shall - - state that, 

upon acceptance by the insurer, the insurance 

shall become effective as of the date the indebtedness is incurred." (Emphasis added.) 

Subsection (2) applies only when the credit life insurance 

is not evidenced by a policy delivered to the debtor at 

the time the indebtedness is incurred. 

Appellant contends that since respondents failed to 

deliver a copy of the application for credit life insurance 

to Cameron on August 10, 1976, when the indebtedness on the 

mobile home was incurred, and did not provide him with an 

application until September 14, 1976, they have violated 
the provisions of this subsection. Furthermore, appellant 

argues that the third sentence of section 33-21-204(2), 

MCA, means that respondents were required to act on the 

application by either accepting or rejecting it within 30 

days from the date the indebtedness was incurred. since 

the installment sales contract was signed on August 10, 

1976, and Cameron did not receive an application until 

September 14, 1976, it allegedly was not acted upon within 

the time provided by statute. 

Contrary to appellant's contentions, it is clear that 

section 33-21-204, MCA, speaks only to the situation where 

a contract for credit life insurance has been entered, and 

the section is not applicable in this case where there was 

no contract and where no policy was ever issued. 

Archie Cameron's application for credit life insurance 

was denied, and no policy was issued. Mere payment of the 

premium does not create a contract of insurance. 43 Am.Jur.2d 

Insurance BS 195, 208, 210. Furthermore, the insurer's delay in accepting or rejecting an application does not create 

a contract of insurance. In Weaver v. West Coast Life Insurance Co. (1935), 99 Mont. 296, 304, 42 P.2d 729, 733, 

this Court observed: 

"It is a well-settled rule, established by 

the great weight of authority, that mere 

delay in passing upon an application for 

insurance cannot be construed as an acceptance thereof by the insurer so as to support an action - ex contractu." 

It is appparent that there was no contract of insurance 

in the case before this Court. A reading of the statute 

demonstrates that it is intended to apply only in the 

situation where a policy of insurance is ultimately issued 

by the insurer. Another statute, section 33-21-206(3), 
MCA, deals specifically with the situation involved in 

this case, where no policy of insurance was ever issued. 

Finally, the language of section 33-21-204(2), MCA, demonstrates that it is applicable only "[ulpon approval of the 

application, if any, or acceptance of the insurance . . ." 

The second statute which appellant claims was violated, 

so as to make summary judgment improper, is section 33-21- 

206(3), MCA, which provides: 

"(3) - If - a creditor requires - a debtor -- to make 

- a payment in connection with credit life 

insurance or credit disability insurance and 

an individual policy or group certificate of 

insurance is not issued, the creditor shall 

immediately give written notice to such 

debtor and shall promptly make an appropriate credit to the account." (Emphasis added.) 

Respondents contend that by its own terms, this provision is inapplicable because the retail installment contract expressly provided that "CREDIT LIFE AND DISABILITY 

INSURANCE is not required by Seller in connection with 

this transaction." Such an interpretation misreads the 

statute, which applies "[ilf a creditor requires a debtor 

to make a payment in connection with credit life insurance . . ." The critical words are "requires . . . payment," not "requires . . . insurance." Thus, even though 

credit life insurance was not required, if the purchaser 

selected to insure, payment of the premium allegedly was 

required. It is not disputed that payment of the $307.50 

premium was made at the time the contract was signed and 

that that amount was included in the total contract price 

to cover credit life insurance. 

What this all boils down to is a question of fact 

which was neither addressed nor resolved by the trial 

court--namely, was a payment required? If a payment was 

required, the statute applies; if no payment was required, 
the statute does not apply. Respondents do little more 

that argue that the statute does "require" insurance, not 

payment, to become effective, and we have rejected that 

argument. 

A determination on this point is necessary for the 

resolution of this matter and, as such, is a genuine issue 

of material fact. If payment was required, respondents 

could not be entitled to a judgment as a matter of law because of their failure to comply with section 33-21-206(3), 

MCA . 

It does not appear that the required standards were 

seriously applied here. We have an affidavit by the salesman, not a disinterested party, that he gave personal notice 

to a man now deceased who cannot answer. His co-worker, who 

cancelled the application for insurance, gave affidavit that 

the salesman was asked to notify Cameron, not that he did 

so. Thereafter, the affiants attempted to obtain insurance 

for Cameron; no attempt was made to refund the premium 

paid by Cameron. The most logical inference that flows 

from these facts does not favor respondents. If the inferences are correctly drawn against movant, there seems 

little doubt the present result could stand. 

We have the same situation in regard to the payment 

of the insurance premium in the first place. If all inferences are drawn against movant, the answer would be that 

Cameron was required to make the initial payment if he 

wanted the insurance. 

In a case of this kind when available evidence is 

flimsy at best and most of it subject to dispute only by a 

deceased person, equity and fairness demand more evidence 

than produced here before summary disposal. At the very 
least, a procedure should be followed which would in some 

manner test the credibility of the two witnesses against 

the word of a deceased person. Some effort should be made 

to determine if the deceased was required to make the premium payment when he did, therefore placing him under the 

protection of section 33-21-206(3), MCA. 

The summary judgment of the District Court is vacated 

as improperly issued and the cause remanded for further 

proceedings consistent with this opinion.,,d'' i 
Mr. Justice John C. Sheehy speci.211~ concurring: 

I agree that the summary judgment against Cameron must 

be vacated, and the matter remanded to the District Court 

for further proceedings, but on different grounds than set 

forth in the majority opinion. 

The District Court, in its memorandum attached to its 

order granting summary judgment, placed weight on the fact 

that in the application for credit to Premier Homes, Inc., 

there was contained the statement "THIS IS NOT A COMMITMENT 

TO PROVIDE CREDIT LIFE OR CREDIT LIFE AND DISABILITY INSURANCE. " 

It should be understood that the quoted statement, 

contained in the application for credit, has no bearing 

whatever insofar as the insurer, Universal Underwriters Life 

Insurance Company is concerned. The application for credit 

is not designed to be an application for insurance. It is 

designed to go to Premier Homes, Inc., the creditor, and 

eventually to its assignee, First National Bank of Bozeman. 

The application for credit has no part in the decision of 

Universal Underwriters as to whether it will issue credit 

life or disability insurance on this particular risk. 

The reason the language appears on the credit application 

form is an outgrowth of the federal Truth in Lending Act. 

Pub. L. 90-321, Title I, S106(b), 82 Stat. 148; 15 U.S.C. 

1605(b). Because that language appears in the application 

for credit, the creditor, Premier Homes, Inc., is not required 

to include the cost of insurance in computing the finance 

charge percentage which the creditor must disclose to the 

borrower under the federal Truth in Lending Act. When this 

purpose of the language on the application for credit form 

is understood, one sees that it has no bearing on whether 

Cameron is entitled to insurance. 
Because the credit application form itself is not an 

application for insurance, it was necessary, as the facts 

in this case show, for an agent of Premier Homes, Inc. to 

return to Cameron on September 14, 1976, to obtain a true 

application for insurance. It is this form which Cameron 

filled out, and truthfully indicated the fact that he was 

retired because of disability, and suffered from arthritis 

and other ailments. 

There is a second element in the memorandum opinion of 

the District Court which must at this point be explained away. 

The District Court held that because Premier itself refused 

the credit life application, "no notice or instruments were 

ever given to Universal Underwriters Life Insurance Company 

about the application, and likewise no policy was issued 

therefore. Universal Life Insurance Company was unaware that 

Archie Cameron ever existed, and had no knowledge whatsoever 

of claimed credit life coverage for this person." 

That finding of the District Court disregards the fact 

that Premier Homes, Inc. was an agent of Universal Underwriters 

Life Insurance Company. Universal is bound by the acts 

of its agent, and by the agent's knowledge. In fact, all 

knowledge of the agent relating to matters within the agent's 

authority A aae imputed to the insurance company. Section 

28-10-604, MCA. 

In this case Vniversal's agent collected the insurance 

premium, took the written insurance application, determined 

itself that the application did not fit the insurer's underwriting rules, and the agent on its own turned down the 

insurance for Cameron. But at that point, under the statute 

then in existence, it was the duty of the insurance company, 

through its agent or otherwise, to "immediately give written 
notice to such debtor" and to "promptly make an appropriate 

credit to the account." Section 33-21-206(3), MCA. 

The reason that those strict provisions of insurance 

law apply to credit life and disability business is because 

of the nature of this business in our present commercial 

world. In the credit life business insurers do not compete 

with each other to get insureds, but rather they compete 

with each other to get agents such as Premier Homes, Inc. 

Because the creditor, the lender, is also the agent of the 

insurance company writing credit life, the insurance company 

has enteto business it would not otherwise have. For 

this reason, insurance companies allow to such creditors as 

agents a substantial portion of the credit life premium for 

writing the business. This is one of the factors that cause 

premiums for credit life and disability to be quite high in 

relation to the risk assumed, That the procedure is successful 

is attested to by the fact that there is a high "penetration" 

of credit life and disability insurance in installment 

credit risks; some report as high as 90 to 95 percent. 

The National Association of Insurance Commissioners was 

aware of this when it proposed the model law that Montana 

has adopted as its credit life and disability insurance 

provisions. Section 33-21-101, et seq., MCA. 

Because of the prospective peril for borrowers-insureds 

in credit transactions, the model code incorporates strict 

provisions with respect to denial of coverage, and provides 

for immediate notice to the borrower, as well as return of his 

premium through a reduction of his debt account. 

If we ignore the plain mandates of these statutes relating to insurance, we negate the intention of the legislature 
in these matters, and substitute our own rules of insurance 

law instead of what the legislature established. The 

insurer, through its agent, did not follow the law in turning 

down the insurance coverage in this case. It kept for one 

and a half years the premium which it should have returned 

immediately. "Oversight" or "inadvertence" is not a legal 

excuse for thus ignoring the lawful duty imposed upon the 

insurer. The only lawful way that we can give effect to the 

intention of the legislature in these matters is to hold 

here that the insurance company, having failed in its lawful 

duty to give prompt written notice that the borrower was not 

insured, and failing to give prompt return of the paid premium, 

is estopped to claim now, after the death of the insured, 

that he is not covered by the insurer. 

We cannot condone the failures of the insurer when 

there are but three or four pages of statutes relating to 

credit life and disability insurance on our law books, by 

allowing it to shelter itself under the claims of oversight 

and inadvertence, when the duty of the insurer is to conduct 

its business in this state according to our laws. This is 

not too much to ask of such an insurer. 

The only fact issue upon which this case depends is 

whether the creditor required the debtor to make the premium 

payment in connection with his application for credit life 

insurance, under section 33-21-206, MCA. On the record, 

it appears that this was the case. If Premier Homes, Inc., 

at the time of the application in this case, made it a practice 

to add the cost of insurance to the borrower's debt in the 

usual case where Universal Life Underwriters was to be the 

insurer, it might then be concluded that the debtor was in 

fact required to make the premium payment. That is the single 

fact issue which I think is involved in this case, because 
otherwise it appears estoppel prevents the company from 

raising the no-contract issue. 

The claim of Premier Homes and Universal Underwriters 

that Cameron "waived" his right to written notice and immediate 

repayment of his premium cannot be sustained, because waiver 

is a "voluntary abandonment of a known right." There is 

no way that I can see, after the death of Cameron, to prove 

his knowledge of these factors. 

Justice