Court Opinion

ID: 9472460
Source: CourtListenerOpinion
Date Created: 2023-08-05 04:00:35.045348+00
Date Added: 2024-06-11T17:42:56.725257
License: Public Domain

GRANT, Senior District Judge,
dissenting.
I respectfully dissent from the majority opinion in this case because I believe that it inadequately addresses the real issue which confronts us.
It is clear — as the district court concluded — that there was no actionable fraud on behalf of defendant, Rockford Life Insurance Company. This is a simple issue which merits, at best, brief discussion. Rather, the real issue in this case is the legal effect of the erroneous temporary insurance receipt which defendant, Rockford Life Insurance Company, proffered to the plaintiff.
The terms of the temporary insurance receipt materially differed from the terms of the “guaranteed insurability” rider. Despite these differences, the majority opinion suggests that no one was misled by the insurance company’s use of the incorrect receipt:
... The agent’s use of the standard form as a receipt for the Burnses’ application under the rider, a use that misled no one, provides no reason for refusing to enforce a perfectly valid condition in the rider.
Majority Opinion at 545 (emphasis supplied). This statement conflicts, however, with Mrs. Burns’ affidavit which provides:
... Rather, because he [the insurance agent] wrote out the application and also because he accepted the initial premium, I believed the additional insurance was in effect as of August 3, 1979.
This statement indicates that Mrs. Burns believed — and reasonably so — that the additional insurance was to go into effect immediately.
The majority opinion continues:
... Not to enforce it [the provision of the rider] would be unfair to the defendant [insurance company] and the defendant’s other policy holders, whose rates are geared to its loss experience.
Majority Opinion at 545 (emphasis supplied). While unfairness will certainly result to the defendant, enforcing the terms of,the “guaranteed insurability” rider is even more unfair to the plaintiff. Presently before this Court are two culpable parties: one, an insurance company which issued an incorrect temporary insurance receipt and the other, an ordinary individual who failed to read or understand the fine print of the “guaranteed insurability” rider in the original policy.1 The majority would impose a duty upon the general public to read and understand the fine print of insurance contracts while, at the same time, not requiring insurance companies, despite their bevy of attorneys, to read the receipts they issue, or know the law which will be applied to such insurance receipts, i.e., Kaiser v. National Farmers Union Life Insurance Co., 167 Ind.App. 619, 339 N.E.2d 599 (1976).
I would hold that the issuance of the temporary insurance receipt with terms which materially differed from the provisions of the “guaranteed insurability” rider *547created an ambiguity which must be resolved against the insurance company. “... [I]n the case of ambiguity, that construction of the policy will be adopted which is most favorable to the insured.” Mutual Life Insurance Co. v. Hurni Packing Co., 263 U.S. 167, 174, 44 S.Ct. 90, 91, 68 L.Ed. 235 (1923). “The insurance company which writes the policy and accompanying documents has the power to articulate clearly the meaning of the terms and provisions used. Any confusion which results from the wording chosen by the company will be resolved in favor of the insured.” The Manufacturers Life Insurance Company v. Capitol Datsun, Inc., 566 F.2d 354, 358 (D.C.Cir.1977) (emphasis added). Indiana courts uniformly follow this principle. Nationwide Mutual Insurance Company v. Neville, Ind.App., 434 N.E.2d 585 (1982); Farmers Mutual Aid Association v. Williams, 179 Ind.App. 514, 386 N.E.2d 950 (1979); Great Horizons Development Corporation v. Massachusetts Mutual Life Insurance Co., 457 F.Supp. 1066 (N.D.Ind.1978), aff'd by unpublished opinion, 601 F.2d 596 (7th Cir. 1979); Jeffries v. Stewart, 159 Ind.App. 701, 309 N.E.2d 448 (1974); State Farm Fire & Casualty Co. v. Ackerman, 151 Ind.App. 464, 280 N.E.2d 332 (1972); United States Fidelity and Guaranty Co. v. Baugh, 146 Ind.App. 583, 257 N.E.2d 699, 717 (1970) (“Where there is such ambiguity in the policy that the policy is doubtful in meaning or ambiguous or susceptible of two constructions, ... it is the duty of the jury to place the construction upon the language most favorable to the plaintiff [insured] and to resolve any doubt or ambiguity against the insurance company.”)
The test under Indiana law whether ambiguity exists is “whether ... reasonably intelligent persons, on reading the contract, could honestly differ as to its meaning.” Great Horizons Development Corp., 457 F.Supp. at 1077. The test is not met merely because a controversy exists and one party asserts a certain interpretation while another denies it. O'Meara v. American States Insurance Company, 148 Ind.App. 563, 268 N.E.2d 109 (1971).
In this case, there is a clear conflict between the terms of the rider which allowed the insured to purchase additional life insurance, regardless of his health, and the conditional insurance receipt which Agent Westgate issued to the insured when he decided to exercise his rights under the rider. This conflict clearly creates an ambiguity with respect to which, as the present lawsuit indicates, reasonably intelligent people could differ.
In light of Kaiser v. National Farmers Union Life Insurance Company, 167 Ind. App. 619, 339 N.E.2d 599 (1976) and its progeny, I would hold that the issuance of this temporary insurance receipt created a valid and enforceable insurance contract between Mrs. Burns and the Rockford Life Insurance company. The principle of Kaiser is that “Where ... a receipt is issued by a life insurer and the receipt is supported by consideration, a contract is created. Any conditions contained in the receipt are to be treated as conditions subsequent thereby compelling an insurer to act affirmatively or negatively on the application.” Kaiser, 399 N.E.2d at 604. As Judge McNagny stated in Meding v. Prudential Insurance Company of America, 444 F.Supp. 634, 636 (N.D.Ind.1978):
Kaiser represents the strong public policy in Indiana which prohibits insurers from accepting premiums and then conditioning the receipts to prevent the insurer from incurring any risk during the period which it retains an applicant’s premium, and during which an applicant might have reason to believe he was insured.
Here, defendant, Rockford Life Insurance Company, issued a conditional insurance receipt for consideration which reasonably led Mrs. Burns to believe that her son was insured. Since the insured died prior to notification of acceptance or rejection of the insurance contract by defendant, Rockford Life Insurance Company, I conclude that Kaiser is applicable to the facts of this case and that the defendant, Rockford Life Insurance Company, is liable to Mrs. Burns *548for the policy amount. I would affirm the district court.

. The majority opinion suggests that "The 'Guaranteed Insurability' rider is short and refreshingly lucid, and even a cursory reading could not fail to reveal the 60-day waiting period." Majority Opinion at 544. This simply assumes too high of a legal expertise on behalf of ordinary individuals and is little more than an ivory tower approach to reality. Most individuals do not read their insurance policies because they do not understand them. I do not find the guaranteed insurability rider in this case particularly lucid or short. Indeed, it is one and a half pages out of the fifteen which constitute the insurance contract.