Opinion ID: 2079158
Heading Depth: 2
Heading Rank: 2

Heading: Sufficiency of the evidence of estoppel.

Text: FFLIC urges that there was insufficient evidence to support a verdict against it on the basis of estoppel, so that it was error for the presiding justice to instruct the jury on that count of the complaint. The insurance company also makes a related argument that the only conduct upon which estoppel could be based was that of the agent Foster and that therefore it was error for the court to grant a directed verdict for him but not for FFLIC. We reject those contentions. We do not reach, and therefore express no opinion on, the question whether a jury verdict against the principal on a respondeat superior theory may be attacked on appeal solely on the ground the presiding justice took the case away from the jury so far as the co-defendant agent was concerned. In any event, FFLIC's estoppel liability in the case at bar was not derivative from that of the agent Foster; its liability was its own and not solely that of a principal responsible for its agent's acts. On this record the jury could well conclude that FFLIC was estopped not by what Foster did, but rather by the company's failure promptly to reinstate Brainard, while not warning him that he was not covered or that a physical examination would be needed. It was the receipt of the application for reinstatement and the collection of the overdue premium in combination with silence for an extended period that the jury may have found unreasonable. The insurance company sought to leave the risk with the Caverlys even while receiving and holding the premium; the jury could justifiedly have found it unreasonable for the insurance company to act thus, without telling the Caverlys that they were not protected  at least during an extended period of processing, which one of the FFLIC officials testified could have approached two months. An insurer's unreasonable delay in acting upon an application for a policy of insurance on which a premium has been paid is alone sufficient to estop the insurer from denying coverage, both because the insurer has sought to retain the premium without accepting the corresponding risk and because the insurer has significantly preempted the applicant from seeking coverage elsewhere. See O'Donovan v. Bankers Life & Casualty Co., 305 So.2d 643, 646 (La.App.1974); Lothrop v. Allstate Life Insurance Co., 62 Misc.2d 962, 310 N.Y.S.2d 631, 633-34 (1970); Funk v. Franklin Life Insurance Co., 392 F.2d 913, 917 (7th Cir. 1968); Kukuska v. Home Mutual Hail-Tornado Insurance Co., 204 Wis. 166, 235 N.W. 403 (1931). Here, there was a delay of 25 days between the time that Brainard Caverly submitted his application for reinstatement along with payment of the overdue premium and the time that he was told a physical examination would be necessary. An official of FFLIC explained the various steps that the company went through in that period, and while some might find those steps reasonable, we cannot hold that a rational jury, taking all factors into consideration, could not have found the delay to be unreasonable. Cf. O'Donovan v. Bankers Life & Casualty Co., supra (thirteen-day delay held to be unreasonable). The evidence tending to establish an estoppel against the insurance company was adequate to take that issue to the jury. In any event, even if FFLIC should succeed in persuading us that the evidence of estoppel was inadequate to support a jury verdict on that ground, FFLIC would take nothing on its appeal. The jury returned a general verdict against the insurance company for the face amount of the life insurance policy on Brainard's life. The parties sought neither special verdicts under M.R.Civ.P. 49(a) nor a general verdict accompanied by answer to interrogatories under M.R.Civ.P. 49(b). Since on appeal we cannot know whether the jury decided for plaintiff on the contract theory or the estoppel theory or both, we must affirm if the jury's result was justified on either theory. [5] As stated over 50 years ago by this court in London v. Smart, 127 Me. 377, 378, 143 A. 466, 467 (1928): Where there are two or more counts in the declaration it is not necessary that the evidence should support all the counts for if the evidence is sufficient to support one good count a general verdict will stand. Since, as we explain below, the jury could rationally have found facts supporting a verdict based on reinstatement of the insurance policy as a matter of contract law by the time of Brainard's death, the general verdict must be sustained on appeal on that ground, without even reaching the estoppel issue. Under the terms of the reinstatement clause, following the form required by 24-A M.R.S.A. § 2512 (Supp.1981), reinstatement of a life insurance contract is not dependent on the insurer's acting on or accepting the application. Reinstatement is defined in terms of the actions of the insured, and once he has met his responsibilities the contract is reinstated as a matter of law. It is true that in this case the reinstatement form signed by Brainard Caverly sought to condition reinstatement on its being approved at the Home Office of the Company. We join other courts in holding that this clause was invalid as a unilateral attempt by the insurer to modify the terms of the original contract without consideration. See Thompson v. Northwestern Security Life Insurance Co., 44 N.C.App. 668, 262 S.E.2d 397, 401 (1980); Bruegger v. National Old Line Insurance Co., 387 F.Supp. 1177, 1182 (D.Wyo.1975), modified on other grounds, 529 F.2d 869 (10th Cir. 1976). Here, FFLIC did not receive the physical examination report at its home office until after Brainard Caverly had died. That fact, however, did not preclude the jury from finding that the insurance contract had been reinstated. The court correctly instructed the jury that FFLIC was required to be reasonable in evaluating what evidence of insurability was acceptable to it under the contract: the insured's obligation was to furnish reasonable evidence of insurability. See Bruegger v. National Old Line Insurance Co., supra at 1182; Burnham v. Bankers Life & Casualty Co., 24 Utah 2d 277, 470 P.2d 261, 264 n. 6 (1970); Funk v. Franklin Life Insurance Co., supra at 917. The jury could have found that this requirement of the reinstatement provision was met on two occasions. First, the reinstatement application itself was in evidence and contained extensive medical information. It would not have been irrational for the jury to find that the application itself constituted reasonable evidence of insurability under the circumstances of the present case: only a year had passed since the policy was originally issued, and the original application involved two physical examinations; FFLIC's official Arnstein testified that the information on the application for reinstatement indicated no increase in risk; and FFLIC's agent Foster, who evidently knew Brainard and dealt with the Caverlys regularly on insurance matters, signed the application as a witness. Second, if the information in the application were not itself enough, it was supplemented by the report of the physical examination. The jury was free to conclude that the report was reasonable evidence of insurability. The fact that Brainard died (from causes unrelated to his insurability) before the report made its way to FFLIC's home office is of no significance. The insured had furnished the necessary information to the person designated by FFLIC to receive it and had thereby fulfilled his contractual responsibility. Further, we approve the rule stated in Bruegger, Funk, and Thompson, supra : insurability is to be determined as of the date the application for reinstatement was made. That rule addresses the same concerns we noted above with respect to the estoppel claim: it prevents the insurer from having the advantage of the premium while accepting no risk of loss, and it avoids the problem of the insurer's exposing the applicant to a period of risk while reducing his ability to seek coverage elsewhere. The fact that the applicant dies after applying for reinstatement is not relevant unless as a practical matter it prevents him from performing all obligations placed upon him by the reinstatement clause of the contract. In this case the evidence supported a finding that Brainard satisfied all the terms of the contract before he died. The entry is: Both appeal and cross-appeal denied. Judgment affirmed. All concurring.