Court Opinion

ID: 7025375
Source: CourtListenerOpinion
Date Created: 2022-07-24 05:03:49.879392+00
Date Added: 2024-06-11T16:10:42.879203
License: Public Domain

JUSTICE COOK, specially concurring: I concur. In my view the evidence favoring plaintiff, although very strong, is not so overwhelming that a contrary verdict could never stand. See Pedrick v. Peoria & Eastern R.R. Co. (1967), 37 Ill. 2d 494, 510, 229 N.E.2d 504, 513-14; Fooden, 48 Ill. 2d at 586, 272 N.E.2d at 500. Kenneth Niesmann terminated his employment August 5, 1989. Payroll deductions during his employment had paid his life insurance through August 15, 1989. A few days after August 15, Niesmann’s former employer sent defendant insurer a final payroll deduction check, in the amount of $46.66, which was not enough for a full month’s premium. Instead of returning the check, defendant cashed it and held the proceeds almost seven months, until Niesmann’s death February 24, 1990. On March 8, 1990, defendant attempted to return the proceeds to Niesmann’s estate. There is no evidence that defendant, or Niesmann, desired to terminate the policy before Niesmann’s death. Defendant wanted Niesmann to pay the balance of the premium through September 15, $40.01, after which defendant would begin to bill him directly or through a new employer. Niesmann wanted to continue the policy, but was experiencing financial difficulties. At issue in this case is whether defendant manifested its intention to afford coverage for a portion of a month by accepting the $46.66 check. Statements of intention made after the risk for which insurance was sought has transpired or after the risk period has ended, whether made by the insured or by the insurer, are inherently self-serving and suspect. The most convincing evidence consists of the actions taken by the parties before the outcome was apparent. It is not particularly significant that the proceeds here were held in a “special billing account,” in a “special billing suspense account,” or in some other account. The inaccurate statements by the independent insurance agent, Lorch, as he attempted to persuade Niesmann to continue the policy in force, provide little indication of defendant company’s intent as to the application of the partial payment. The strongest evidence in this case is that defendant received the check for the partial premium, cashed it, and made no attempt to return the proceeds for almost seven months. The cashing of an insured’s check and retention of the proceeds has been held an acceptance of premium in cases where the facts were much more favorable to the insurer than here. In Van Hulle v. State Farm Mutual Automobile Insurance Co. (1969), 44 Ill. 2d 227, 254 N.E.2d 457, a premium check to reinstate an automobile insurance policy was sent to the insurer after an accident in which one of the insureds was killed. The insurer was separately notified of the accident, but nevertheless held the check for 22 days, eventually cashed the check, then attempted to make a refund three days later. The supreme court affirmed a declaratory judgment for the insured, noting that the cashing of a check is significant and indicates acceptance. In Krumwiede v. Bankers Life & Casualty Co. (1981), 95 Ill. App. 3d 861, 420 N.E.2d 745, the insured sent a reinstatement form and a check on July 8, which the insurer received July 18. The insured had emergency surgery, which would have been covered by the policy, on July 22. On August 15 the company advised it could not reinstate the policy, but on August 17 the insurer cashed the check, then attempted to make a refund on September 26. The appellate court overturned a jury verdict for the insurer, holding that under Van Hulle, as a matter of law, the insurer had accepted the check. The fact that neither one of these cases involved a partial premium is not significant. What is important is that these cases involved disputed premium payments, and in both cases the cashing of the check and retention of the proceeds was held to constitute an acceptance of the premium. Based on these two cases, the United States District Court in Evaluation Systems (555 E Supp. at 121) held that an insurer accepted a $563.25 premium check (rather than the $613.50 called for by the policy) by cashing it immediately and retaining the proceeds for some three months before attempting to refund the payment. Evaluation Systems did involve the retention of a partial premium. The policy in this case provided that “[a]t the option of the company, premiums may be paid monthly in advance, or in any other manner made available by the company.” I view that language as so similar to the policy language in Evaluation Systems that the reasoning of that case, which I find persuasive, should be followed here. Even if the policy were silent as to the power of defendant to accept partial premiums, the parties could, by their conduct if nothing else, agree that such payments could be accepted. An insurance contract is not a contract for the sale of goods, but the language of section 2— 208(1) of the Uniform Commercial Code — Sales is informative: “any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement.” (Ill. Rev. Stat. 1989, ch. 26, par. 2—208(1).) A contract can be modified by mutual agreement, or by estoppel, and the two are sometimes difficult to distinguish. See Nagle v. General Merchandising Corp. (1978), 58 Ill. App. 3d 344, 348, 374 N.E.2d 1137, 1141. In response to the insurer’s argument that the Van Hulle decision outlined a formula for defrauding insurance companies, the supreme court in that case observed the problem could be easily overcome by an adjustment in the insurer’s procedure for handling lapsed policies. The same is true in this case. Defendant can easily avoid undesired extension of coverage by not holding, cashing, or retaining the proceeds of premium checks which are in incorrect amounts. Insurance companies, of course, are in the business of covering risks, not returning premium checks, and it is not to be expected that they would refuse a check where there is a possibility of coverage being continued.