Court Opinion

ID: 9791091
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:05:14.081071+00
Date Added: 2024-06-11T07:37:33.942747
License: Public Domain

GOODWIN, J.
This is an action at law to recover benefits under an alleged contract of insurance on the life of plaintiff’s deceased husband. Defendant appeals from a judgment on a verdict for plaintiff.
Plaintiff bases her claim on the terms of an instrument entitled “CONDITIONAL BINDING RECEIPT.” The face of this instrument reads as follows:
“RECEIVED PROM Rudy Lee Morgan
(Amount of cash
settlement received) $ 37.65 in connection with the initial premium on the proposed insurance for *115which an application is this day made to the State Farm Life Insurance Company ON THE LIFE OF
(Name of Proposed Insured) Rudy Lee Morgan and wife and named children, if a Family Life Policy is being applied for.
“Life Insurance and any additional benefits in the amount applied for (but not exceeding a maximum liability of $50,000, including all additional benefits, on all pending applications to the company combined) shall be deemed to take effect as of the date of this receipt, subject to the terms and conditions printed on the reverse side hereof.
“The amount of settlement received shall be refunded if the application is declined or if a policy is issued other than as applied for and is not accepted. Any cheek, draft or money order is received subject to collection.
“ 11/21/61 [Signed] Leonard H. Kress
Date of Receipt Signature of Agent”
The reverse side of the instrument contains the following provisions:
“Subject to the limitations of this receipt and the terms and conditions of the policy that may be issued by the company on the basis of the application, the Life Insurance and any additional benefits applied for shall not be deemed to take effect unless: (1) the company, after investigation and such medical examination, if any, as it may require, shall be satisfied that on the date of this receipt each person proposed for insurance was insurable for the amount of Life Insurance and any additional benefits applied for according to the company’s rules and practice of selection; and (2) the application is accepted and approved by the company at its Home Office or at one of its Regional Offices; EXCEPT THAT, if the application is not for a Family Life Policy, the approval by the com*116pany of the insurability of the Proposed Insured for a plan of insurance other than that applied for, or the denial of any particular additional benefit applied for, shall not invalidate the terms and conditions of this receipt relating to Life Insurance and any other additional benefit applied for
The trial court held that the receipt created a contract of temporary insurance as a matter of law. The court found an inconsistency between the conditions on the reverse side of the receipt (the conditions of ■insurability and company approval) and the language on the face of the receipt providing that “Life Insurance * * * shall be deemed to take effect as of the date of this receipt * * It was the trial judge’s theory that the applicant was insured until the application was rejected and notice of such rejection was given to the applicant during his lifetime. He submitted to the jury only the question of whether defendant had rejected the application and had notified the applicant of the rejection prior to his death.
Shortly after the receipt was issued, the company questioned the insurability of the applicant and requested that he be examined by a physician. The applicant failed to keep an appointment which had been made for him by the agent, and died without having complied with the company’s request for a physical examination.
Although the language in the conditional binding receipt may be confusing, and may even have been intended to be confusing, there is no ambiguity in the receipt, as ambiguity is usually understood in the law. Consequently, there is nothing for this court to construe.
Admittedly there have been cases in which a theory of constructive ambiguity has been employed in *117the absence of any ambiguity. See Ransom v. Penn Mutual Life Ins. Co., 43 Cal2d 420, 274 P2d 633 (1954); Binding Receipts in California, 7 Stan L Rev 292 (1955). Nevertheless, we are unable to decide the case at bar on the basis of a fiction which we deem inapplicable. The literal meaning of the receipt in this case is that the insurer engaged to insure the insured, if he turned out to be insurable, and, in that event, the insurance would be in effect from the date of the application. Such contracts have not yet been declared to be illegal in this state. Accordingly, this is the contract the parties made, and we are not at liberty to create a new contract for the parties. Headley v. United Fid. Hosp. Assur., 235 Or 302, 384 P2d 1007 (1963).
The ease should be returned to the trial court for a factual determination upon the issue of insurability. If the decedent was, in fact, insurable on the date the receipt was signed, then the company would have been under a duty to issue the policy upon the meeting of certain reasonable requirements by the insured.
If, as may have happened in this case, death intervened before the insured could meet all the requirements of the insurer, then the company would be bound by the receipt upon proof that the deceased was insurable when he made his application. These factual matters, however, were not decided by the jury because the trial court ruled, as a matter of law, that there was a contract of insurance in force on the day of the application, subject to a condition subsequent in the event of after-discovered uninsurability.
The defendant’s eighth assignment of error (with reference to the instructions on insurability) was well taken, and the case should have been submitted to the *118jury on the theory that the contract was the one set forth in the receipt.
Reversed and remanded.