Court Opinion

ID: 6915402
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:39:23.835553+00
Date Added: 2024-06-11T16:06:38.647834
License: Public Domain

WOODROUGH, Circuit Judge
(dissenting) .
The controversy here grows out of a well known kind of transaction between the insurance company and a so-called “proposed insured” that is soundly helpful to the business of selling life insurance, but has been unhappily considered in such a way as to bring discredit on the companies and grief and suffering on certain unfortunate widows and orphaned children.
In the life insurance business it takes a little time for the companies to check on insurability of prospects and sometimes to adjust clerical or other incidental details and that little delay hampers the selling of life insurance on which the existence of the companies is dependent. To meet that condition, the insurance agents are supplied with the printed form such as was used in this case, headed in bold type “Conditional Receipt”, the terms of which enable the agents to assure a prospective purchaser of life insurance that he will not be affected by that unavoidable little delay, but that if he is in good health, he will have (in this case) $10,500.00 insurance on his life in full force and effect from the day he delivers the amount of the first premium to the agent. The conditional receipt bears conspicuously the name of the company (in this case, New England Mutual Life Insurance Company) and the signature and counter signature of company officers; to-wit: General Agent and Secretary, and distinguishing between the time after the necessary delay when a proper policy is conditionally to be issued, and the time of the transaction, the General Agent inserts the date of the transaction conspicuously in writing in the blank for that purpose so that the instrument reads, “Insurance applied for shall be in full force and effect from this date provided the proposed insured is now in good health” — (in this case the date of payment, February 25, 1955, was written in with a pen,) “2/25/1955” and the printing included “this day” (twice repeated) “this date” and “now”; all being used in the instrument to stress that the transaction relates to the undertaking of a present obligation by the company and not to the policy of life insurance that is to be issued later, only on certain conditions.
Laymen who are solicited in this transaction understand perfectly that when *888they pay the money and get the receipt, they have the company’s obligation to pay if they die before the final closing of their insurance deal. In this case when the “proposed insured” left his home to go to his death the next day, after he made his payment to the agent, he left the “Conditional Receipt” the company gave him where his wife would find it and know he thought of her and believed he had provided for her.
The transaction with the company’s agent that caused that belief was an entirely fair one and involved no discrimination in favor of the receipt holder and no unfair burden on the company.
In the first place if the proposed insured lied when he said he was in good health, there was no liability on the company. The first and only condition precedent to the obligation the company declared in its receipt, namely, that the insurance was immediately effective, was as above stated, that the “proposed insured is now in good health.”
The other condition in the receipt was a condition subsequent to the company’s obligation declared in the receipt to the effect that if, after its date, satisfactory evidence of the proposed insured’s insurability was not received at the company’s home office in Boston or if the company determined he was not insurable, it would decline his application for a policy.
This condition of the receipt is not incompatible or in conflict with the company’s obligation for “insurance in full force from this date.” The two accord fully with each other. The words of the receipt make it perfectly plain that the company would not ultimately issue an insurance policy unless the company became satisfied of insurability. But that had nothing to do with the willingness of the company to make and fulfill the obligation concerning “insurance in effect from this date” declared in the receipt.
When Mr. Hinkle died, the day after the receipt had been delivered to him and his money had been accepted, all of the conditions upon the company’s obligation to pay the amount of $10,500.00 specified in the receipt had become satisfied and the company should pay. The situation then was simply that the company had agreed that if Mr. Hinkle died the money would be paid and if he survived, the matter would go forward to the issuance of a policy or denial of it. After his death there was no point or sense in going on with any inquiry about his eligibility for a life insurance policy of any particular kind or about any other detail that might have come up if he had not died and if the transaction had been proceeded with.
There is no element of harshness or unfairness to the company or discrimination towards its patrons in the transaction with the receipt. The terms of the receipt protect the company and forestall such a consequence. The receipt specifies that on determining non-liability, the company will refund the payment made to it by the proposed insured, but it does not state in express words what is to be done with the money paid on the happening of death while the “insurance is in full force from this date” before such company determination. Neither does it state what is to be done with the money if the policy issues. Manifestly the death obviated making the determination as to insurability so that the payment in the hands of the company has to be applied in accord with the necessary implication of the transaction in which it was paid and received.
The recital of the receipt is that the payment was “in connection with the application for insurance of $10,500.00 on the life of W. Max Hinkle” so that the company’s right to apply it on the temporary coverage is complete and exactly as clear as its right to apply it on the first premium of a policy would have been if' such policy had issued. So far as applying the payment is concerned, the same words cover both situations.
The payment manifestly was amply sufficient to fully compensate the company for the risk it took under its obligation for insurance in full force and effect from “this date”. That is practically demonstrated by the fact that insurance for short term is daily and hourly sold throughout the country through vending machines that deliver a policy for $10,-*889000.00 to anybody and everybody who deposits a fifty-cent coin in the slot. The record shows that the insurance herein was to cost $20.70 a quarter or $82.80 per year of 365 days or 22<¡¡ a day.
In the transaction herein involved it is true the company stood to absolutely lose that 22p a day if Mr. Hinkle lived and his application was declined. In that event it was obligated to refund the entire $20.-70. But the part of that refund the company would lose if the company had to make it probably would not equal the cost of the time of the agent soliciting or of an advertising calendar or gadget also risked to obtain a new policy holder who might well be expected to bring in hundreds or even thousands of dollars of premiums.
It might be only “petty stuff” to give a short year’s insurance for a full years premium, but it is such a serious wrong for a company to make a man believe it has insured him and to take his money therefore, if it does not so intend and I see no reason to ascribe such a thing to the company in this case.
I am not convinced that the few Iowa cases cited prohibit sustaining the judgment for the widow in this case. I would affirm the judgment.