Case Name: Walter L. Gibbs, Plaintiff-Appellant, v. The North American Company for Life, Accident and Health Insurance, Defendant-Appellee
Court: Illinois Appellate Court
Jurisdiction: Illinois
Decision Date: 1971-11-17
Citations: 2 Ill. App. 3d 496
Docket Number: No. 70-224
Parties: Walter L. Gibbs, Plaintiff-Appellant, v. The North American Company for Life, Accident and Health Insurance, Defendant-Appellee.
Judges: 
Reporter: Illinois Appellate Court Reports, Third Series
Volume: 2
Pages: 496–504

Head Matter:
Walter L. Gibbs, Plaintiff-Appellant, v. The North American Company for Life, Accident and Health Insurance, Defendant-Appellee.
(No. 70-224;
Second District
— November 17, 1971.
T. MORAN, P. J., specially concurring.
Donald R. Hellyer, of Loves Park, for appellant.
Keegan & Gosdick, of Rockford, for appellee.

Opinion:
Mr. JUSTICE GUILD
delivered the opinion of the Court:
The plaintiff insured, Walter L. Gibbs, appeals from a summary judgment for defendant insurer, The North American Company for Life, Accident and Health Insurance. Judgment was entered in the circuit court of the 17th Judicial Circuit, Winnebago County, after defendant filed an affirmative defense alleging plaintiff had stated in an application for group credit accident and health insurance that he had no sickness or injury for which he had consulted or been treated by a physician, that the facts were contrary to plaintiff's declarations and, if known to defendant, the insurance would not have been issued.
Plaintiff contends that a return postcard which defendant designates an "application" for insurance is merely an authorization to charge premiums to plaintiff, that if it is construed as an application its contents nevertheless should not be considered as it was not attached to the policy or certificate of insurance, that defendant's promotional literature was misleading and disguised the import of lines on the return postcard which plaintiff simply left blank, and that in any event the policy had become incontestable because it had been in force for a period of two years prior to defendant's contest.
The matters and allegations hereinafter recited are drawn solely from pleadings and exhibits in the record as no transcript of hearing on the motion for summary judgment has been filed or abstracted.
Plaintiff purchased a 1966 Mercury automobile about September 27, 1966, financing it through Universal C.I.T. Credit Corporation. Shortly afterwards, he received a "Dear Customer" letter from H. C. Watkins, President of the Corporation which congratulated him on getting the car and thanked him for the chance to finance it. The letter stated it was a wise move to have already taken advantage of an extra service, the life protection plan, and it made the customer eligible for a further service— accident and health protection — which would make payments when the customer was laid up under a doctor's care. The letter concluded on the following persuasive note:
"All you have to do is sign the postage-paid card and drop it in the mail. No red tape at all. The postmark date on the card marks the start of your protection . Sign and mail the card now
An advertising piece covering both life and sickness or accident protection which apparently was enclosed and emanated from the defendant insurance company, said in part: "Simple to Set Up. Just sign and mail the enclosed authorization card."
The business reply card to Universal C.I.T. Corporation is postmarked October 13, 1966. The reverse side is dated October 12, 1966, signed by plaintiff, and indicates his age as 44 years. The text of the card is as follows:
"Yes, Mr. Watkins I accept the opportunity to be included in your Insured Payment Plan and desire the protection as indicated below:
14 Day Elimination Accident and Health Protection $3.08 per month.
I authorize Universal C.I.T. Credit Corporation to add the above charge, as indicated, which includes interest at permissible rate, to my contract and to my monthly payments, and promise to pay said charge as added. I am the person to be insured and certify that I am now in good health; also that I have no sickness nor injmy for which I have consulted or been treated by a physician except (give full particulars):
I acknowledge receipt of a copy of this form with Notice of Proposed Insurance describing coverage."
The meaning of the last sentence is obscure, because so far as the record discloses, the only copy of the form received by plaintiff may be the same reply postcard he signed and returned by mail to Universal C.I.T. Credit Corporation and the only Notice of Proposed Insurance describing coverage may be the advertising brochure. In due course, plaintiff received a credit insurance certificate indicating the effective date as 10/12/66, and expiration date as 10/10/69, a monthly benefit of $78.30, and a premium of $100.08. The phrase "Disability caused by preexisting conditions is not covered" is overprinted or stamped in large letters diagonally across the face of the certificate.
On March 4, 1968, while the policy was in full force and effect, plaintiff suffered a severe and disabling heart attack. His complaint was filed July 30, 1968, and a default judgment was entered September 11, 1968, for $1,330, costs and attorney's fees. Judgment was vacated on September 26, 1968, and defendant filed an answer generally denying the allegations of the complaint but not raising an affirmative defense. On that same date, however, defendant's attorney filed a supplemental affidavit in support of his motion to vacate which stated in part that the company denied plaintiffs claim because in his application for insurance he had represented that he had no sickness or injury for which he had consulted or been treated by a physician, whereas he had been treated for hypertension since 1963.
On April 16, 1970, defendant filed an amended answer denying certain allegations of the complaint and setting out in an affirmative defense plaintiff's declaration in his application for insurance, and alleging that contrary to the declaration, plaintiff had consulted and been treated for hypertension and high blood pressure on eleven occasions as shown by a medical report attached as an exhibit. The affirmative defense further alleged that had these consultations been known to defendant, the insurance certificate would not have been issued.
The medical report indicates a diagnosis of moderate essential hypertension, E.K.G.'s taken 13 Nov. 63 and 16 April 67 and interpreted as "Within Normal Limits," and treatment for hypertension. Blood pressure readings are indicated commencing on October 30, 1963, and continuing monthly to March, 1964. They are also recorded for July, August and September of 1964. The last three readings are recorded as June, 1965, February, 1966, and April, 1967, when the physicians services were terminated.
The briefs of the parties discuss at length the effect of misrepresentation in avoiding file policy, the applicable period of incontestability, and the proper manner of contesting a claim. We do not believe these considerations are relevant to the decision here as this case is controlled by Article IX-% of the Insurance Code, Credit Life and Credit Accident and Health Insurance (Ill. Rev. Stat. 1969, ch. 73, pars. 767.51 et seq.) adopted in 1959. The insurance purchased by plaintiff Gibbs is accident and health insurance under a group policy issued to the creditor insuring Gibbs for the term only of the indebtedness (about two years) with the proceeds payable to the creditor. In effect, Gibbs paid the premium to insure the creditor's account receivable.
Article IX-% adopted in 1959 (Ill. Rev. Stat. 1967, ch. 73, par. 767.51 et seq.) demonstrates a specific legislative concern to promote the public welfare by regulation of a particular form of insurance sold in connection with loan transactions of less than five years duration. In our opinion, it is not to be construed to include also the general and earlier adopted sec. 154 as well as Article XX of the Insurance Code (Ill. Rev. Stat. ch. 73, pars. 766 and 964 et seq.) A notable distinction between the types of health insurance regulated by Article IX-% and Article XX of the Insurance Code is that the proceeds of Article IX-%, Credit Health Insurance, are payable to the creditor whereas the proceeds of Article XX, Blanket Accident and Health Insurance, is payable to the insured, his beneficiaries, or his estate. Ill. Rev. Stat. 1967, ch. 73, par. 979 a (4).
Neither attachment of the application to the group policy or individual certificate, an incontestability period, nor avoidance of the policy for misrepresentation is provided in the statute for Article IX-% type accident and health insurance.
The courts have frequently been called upon to construe alleged misrepresentations of an insured and their effect in avoiding a policy of insurance. After opinions of the Appellate Court differed as to whether a showing of actual deceit on the part of the insured was required (Compare Joseph v. New York Life Ins. Co. (1920), 219 Ill.App. 452 with Tanner v. Prudential Ins. Co. of America (1935), 283 Ill.App. 210), the Illinois Supreme Court held that a material misrepresentation would avoid the policy even though made in good faith. Western and South Life Ins. Co. v. Tomasan (1934), 358 Ill. 496, 502, 193 N.E. 451.
Section 154 of the Insurance Code was subsequently adopted in 1937 as a provision in Article IX "Provisions Applicable to all Companies" apparently to eliminate the rather refined distinctions that had been applied in determining the effect of false warranties and misrepresentations. (See Campbell v. Prudential Ins. Co. of America (1959), 15 Ill.2d 308, 155 N.E.2d 9, citing the above cases. Section 154 of the 1937 Insurance Code provides that no misrepresentation or false warranty made by the insured shall defeat or avoid the policy unless it shall have been stated in the policy or endorsement or rider attached thereto, or in a written application therefor, "of which a copy is attached to or endorsed on the policy, and made a part thereof." (Ill. Rev. Stat. 1967, ch. 83, par. 766).
In Anderson v. John Hancock Mut. Life Ins. Co. (1942), 316 Ill.App. 338, 45 N.E.2d 39, the Court refused to construe the Code to require attachment of an application of an insured to an industrial life insurance policy (a type of insurance defined in Ill. Rev. Stat. 1967, ch. 73, Art. XX, par. 840) saying at 316 Ill.App. 343:
"Since there is no requirement in the Code or otherwise that applications be attached to policies of this character, we would not be justified in construing the Code to include such a requirement."
Following the reasoning of that court in refusing to expand the provision of Article XX for industrial type policies, we similarly must decline to expand the provisions of Article IX-% for credit health insurance. There is no provision in Article IX-V2 that misrepresentation in an application for insurance will avoid a claim under a credit health insurance policy. The insurer is entitled, of course, to rely upon the provisions of the policy disclaiming liability where a pre-existing condition causes the disability of the insured, if such be the case. Fraud would also avoid the policy, but certainly the record before us shows nothing even approaching fraud.
Either the insurer or the creditor fashioned the statement printed on the card signed by Walter Gibbs and which was so designed as to put words into his mouth and not alert him to the necessity of providing at least "yes" or "no" answers. Gibbs certainly inserted no untruthful information, and a Vermont court held that three irregular marks on the blank line following a statement that the applicant had received "no medical attention except" did not indicate there were no exceptions but rather that no statement as to exceptions was given. Stanyon v. Security Mut. L. Ins. Co. 91 Vt. 83, 99 A. 417.
More importantly though, the artful question merits close reading in the light most favorable to plaintiff as equivocal expressions in contracts of insurance are to be interpreted against the insurer (Joseph v. Neto York Life Ins. Co. (1923), 308 Ill. 93, 97, 139 N.E. 32 affg. 219 Ill.App. 452), and we believe it logical to apply this rule of construction to other papers used to complete the contract. Plaintiff was not asked whether he was consulting or being treated by a physician at the time the card was signed or for some prior period, nor was he asked whether he had high blood pressure at that time or previously. Rather the printed statement is: " I have no sickness nor injury [emphasis supplied] for which I have consulted or been treated by a physician ." There is no suggestion of injury in the record. Many a layman with high blood pressure, but otherwise functioning and carrying on normal activities might respond generally and in good faith that he was not "sick." Although plaintiff had earlier been seen by a physician at monthly intervals following a diagnosis of hypertension, this frequency of consultation ended in September, 1964, and thereafter plaintiff saw his physician once a year until 1967. This medical report may well mean his symptoms had abated by September, 1964, and thereafter he was seen yearly, not because he was necessarily "sick" but as a preventive or cautionary measure recognized in annual medical check ups.
As no fraud is attributable to plaintiff, the decision in this cause is reversed and the cause is remanded to the trial court with direction to vacate the summary judgment for defendant and to proceed with trial of this cause to determine whether plaintiff is entitled to recover under the provisions of the insurance policy and certificate of insurance only, without reference to the return postal reply card.
Reversed and remanded.
ABRAHAMSON, J., concurs.