Opinion ID: 1158921
Heading Depth: 1
Heading Rank: 2

Heading: Question: Is defendant bound by the error in including Amberg in the $40,000 insured group?

Text: Yes. Throughout the administration of the entire group life insurance program, first with Union Central and later with defendant, the insurer relied upon Westland and Roland Oldsmobile to determine eligibility of the employees for coverage. [6] The enrollment cards as they existed on April 1, 1964, as well as the list previously furnished defendant by Westland showing the persons insured under the Union Central policy, indicated that Amberg was eligible for $40,000 coverage [7] ; and it is clear that defendant agreed to accept the enrollment cards as maintained by Westland and Roland Oldsmobile on April 1, 1964, and give the same coverage as Union Central had. [8] It is also clear that defendant relied on Westland and Roland Oldsmobile to keep the enrollment cards up to date. Thus, under the unanimous holding of this court in Elfstrom v. New York Life Ins. Co., 67 Cal.2d 503 [63 Cal. Rptr. 35, 432 P.2d 731], defendant is bound by the error in including Amberg in the $40,000 insured group. In Elfstrom, the plaintiff was president of the employer (Fullerton Publishing Co.) and the father of the deceased employee (Brenda), as well as the beneficiary under his daughter's insurance certificate. Fullerton's bookkeeper, Mrs. Still, administered the group policy. She mistakenly included Brenda as an insured in monthly reports to defendant insurer when, in fact, Brenda was not eligible, because her employment at the minimum salary required had terminated before expiration of the waiting period necessary for coverage. The premiums were paid until Brenda's death, seven months after expiration of the waiting period. Under these facts, it was held that the duties of the employer, discharged by Mrs. Still, in administering the group life insurance policy, made it the agent of defendant insurer, and that the insurer was bound by the mistakes of the employer (per Mrs. Still) acting within the scope of the agency, provided the plaintiff (beneficiary) was acting in good faith in directing her to effect coverage for Brenda. Defendant's policy provided, among other things: Clerical error on the part of the Group Policyholder in furnishing such information [necessary to administer the policy] shall not invalidate insurance otherwise in force, nor continue insurance otherwise terminated. (Italics added.) Defendant argues that, as a result, once an insured in fact became ineligible according to the terms of the contract, he was automatically without that insurance coverage unless defendant by its conduct had led the insured to believe he was still covered. As hereinabove indicated, however, the record clearly shows that Westland had the duty of administering the policy upon the direction of the participating units, and that under such administration Amberg's $40,000 coverage was continued. Although the record does not show when Amberg's certificate was filled in by Westland, it may be inferred, since the blank certificates were forwarded to Westland by air express April 6, 1964, that the certificate was completed prior to April 14, 1964, the date of Amberg's death. In any event, however, whether the certificate was completed a few days before his death or shortly afterwards would have significance only as the juxtaposition of those events might bear on the question of fraud; and the trial court found that there had been no fraudulent intent in reporting that Amberg was insured for $40,000. The trial court found that Amberg received no notification from defendant, Union Central, Roland Oldsmobile, or Westland that his coverage had been terminated or changed in any way. As pointed out by the trial court, it is clear that the intent of all parties was that Amberg have the $40,000 coverage, and that if the point had been raised, it would have been a simple enough matter to comply with the technicalities required to continue his eligibility. [9] Under all the circumstances, there being no basis for concluding that a fraudulent intent existed on the part of anyone concerned, defendant is bound by the enrollment cards as maintained by Westland and Roland Oldsmobile and is liable to plaintiff under the policy, as found by the trial court. The judgment is affirmed.