Court Opinion

ID: 9686822
Source: CourtListenerOpinion
Date Created: 2023-08-24 16:07:51.653785+00
Date Added: 2024-06-11T09:45:12.896617
License: Public Domain

*47Souris, J.
(concurring in part). Plaintiffs’ claim-is that their son applied for life insurance with de- ■ fendant, naming them as beneficiaries, and fully complied with all of defendant’s requirements for such insurance, including completion of the defendant’s application, payment of the initial premium and submission to a physical examination. Upon their son’s subsequent accidental death, plaintiffs claim as named beneficiaries the face amount of insurance for which he had applied, basing their claim on 2 alternative theories: (1) that an insurance contract between decedent and defendant became fully effective upon decedent’s satisfactory compliance with defendant^ requirements, defendant’s soliciting agent haying represented to decedent and plaintiffs that insurance coverage would attach immediately upon completion of decedent’s medical examination if the examiner found him to be in good health; or, (2) that defendant’s unreasonable delay in accepting or rejecting decedent’s application estops defendant from denying liability after his accidental death. Each theory, in my view, has more merit than Mr. Justice-O’Hara’s opinion would suggest.
In Bleam v. Sterling Insurance Co., 360 Mich 208, we held that an insurance agent could bind his company by oral representations regarding the effective date of insurance coverage for which application was made when ambiguity was found between-the, written provisions of the application and an advertising folder to which was attached a receipt used upon applicant’s payment of the advance premium. It was conceded in Bleam, as it is undisputed in this case of Snyder, that the agent did in fact represent that coverage would become effective earlier than-stated in the application. Our decision in Bleam was based upon our conclusion that either the applicant and the agent were mutually mistaken with respect thereto-or there was a unilateral mistake on appli*48cant’s part prompted by tbe agent’s fraudulent misrepresentation, — in either of which events the agent’s principal would be bound and the Court justified in reforming the resulting contract. We held that evidence of the agent’s representations was admissible because of the existence of the ambiguity in the provisions of the advertisement and the application, considered together, citing Wadsworth v. New York Life Insurance Co., 349 Mich 240.
There is at least equal ambiguity in the circumstances of the case at bar to require reference to the conversations between defendant’s agent and these plaintiffs and their decedent son.* In the first place, all concerned knew that the insurance coverage for which application was made required the applicant to pass a medical examination. Nevertheless, defendant’s agent used a printed form of application designed for nonmedical insurance policies. Defendant’s underwriter witness testified that agents were instructed to use such applications even when selling medical policies because, unlike the regular application for policies requiring medical examination, the nonmedical application required applicant to supply certain information about his medical history which the company’s underwriters found useful in expediting the issuance of policies to the advantage of both the company and its insureds. Whatever the reason for such instructions, the application was not designed for the use to which it was put.
Second, the application on its face disclosed it was for use only when nonmedical policies were being sold, but it also provided, on the contrary, that the company could require a medical examination. At *49the top of the application appear the words : “Non-medical Only — Use regular application for medically examined cases.” On the reverse side of the application, on the other hand, at the bottom of the page, appear the words: “the Company reserves the right to require medical examination of any applicant.”
Third, there appears on the application a schedule of nonmedical policy limits of $2,500, $5,000 and $10,000 depending upon applicant’s age, the maximum of which was substantially below the $25,000 insurance for which the decedent applied and paid in advance the first annual premium. The record discloses that the schedule had been substantially increased (to a maximum of $15,000) about a year before decedent’s application, defendant’s agents notified thereof and new applications printed but, inexplicably, this agent used the superseded form.
Fourth, defendant’s underwriter testified that when the regular application for policies requiring medical examination is used, insurance coverage attaches as of the date of the medical examination if a policy is subsequently issued. Apparently, in such cases coverage is related back to the applicant’s medical examination probably on the theory that the risk undertaken is determined as of that date and, therefore, that it is entirely appropriate to commence coverage and amortize the premium as of that earlier date rather than the date the policy is ultimately formally issued. Whether this defendant’s regular applications for such policies contained language expressly so providing (as, for example, the “binder clause” quoted from the policy involved in Wadsworth v. New York Life Insurance Co., supra, 249, 250) does not appear in this record. However) language which does appear in the nonmedical policy application, inappropriately used in this case for a policy requiring medical examination, expressly negates any liability upon the company “until a pol*50icy shall he issued, and delivered to and accepted by [applicant] while in good health and free from injury.” However appropriate to a policy not requiring a medical examination, and therefore lacking logical justification for relating back the effective date of insurance coverage, such language is inappropriate for use in selling defendant’s policy which does require a medical examination and the effective date of which normally is related back to the date of the medical examination. Defendant certainly would not be heard to say that it could issue such a policy effective as of the' date of the medical examination if applicant maintained good health during the interim until actual issuance, delivery and acceptance of the policy, in which event there would have been no risk run for the pro rata share of the premium earned, but that if applicant’s health became impaired by illness or injury during such .interim, it could refuse to issue the policy and thereby avoid the enhanced (or matured) risk for which the advance premium had been paid. See Starr v. Mutual Life Insurance Co. of New York (1905), 41 Wash 228 (83 P 116), and other cases cited in 2 ALR2d 943 at 967.
The point of all of this is that the application used was inappropriate for the purpose intended and it could not, and did not, reflect the understanding of the parties regarding the kind of insurance policy being purchased nor its effective date. In short, its language was patently' ambiguous requiring parol evidence to explain that a policy requiring medical examination was intended, contrary to the'application’s terms; 'that the policy limits stated on the application were not applicable to the policy sought to be purchased; and that, contrary to the application’s terms, the.company could not deny the risk on the ground that applicant’s health became impaired by illness or injury subsequent to his satis*51factory medical examination, "but before formal issuance, delivery and acceptance of the policy. With reference to the latter point, the. effective date of coverage, plaintiffs’ evidence was that all parties clearly understood that applicant would be fully insured as soon as he was found to be in good health by defendant’s medical examiner, in conformance with defendant’s usual practice when the correct application form for such policies is used. All parties understood this to be so, because defendant’s agent so stated. As in Prudential Insurance Company of America v. Cusick, 369 Mich 269, defendant did not even attempt to refute such testimony, by producing its agent whose lips had been unsealed by the plaintiffs’ own testimony relating to such matters equally within the knowledge of the deceased.  Absent his testimony, we must presume he would not deny having made the representations it is claimed by plaintiffs he made.
Had the case been submitted to the jury on the foregoing theory alone and had the jury returned a verdict for plaintiffs, defendant could not urge reversal. However, as Justice O’Hara has pointed out, the jury was also permitted to consider plaintiff’s alternative theory that defendant’s allegedly unreasonable delay in issuing the policy estops it from denying liability after the insured’s death. I agree with Justice O’Hara’s conclusion that the trial court’s charge to the jury did not ■ fairly present defendant’s theory on this branch of the case thereby requiring our reversal of the judgment on the jury’s verdict and remand of the case for new trial. However, I do not believe defendant was entitled to make the extreme claims it did with respect to the factors to be considered by the jury in determining whether its delay was unreasonable.
*52Defendant argues strenuously that it should be absolved of liability because its evidence proved that it never received in its home office the report of applicant’s medical examination and that the applicant’s urine specimen was not received until after applicant’s injury from which he subsequently died. The trouble with this argument, even if we assume to be true defendant’s proofs that the medical report was never received by it and that the urine specimen arrived late, is that defendant seeks to avoid liability by reliance upon the failures of its own agent,— the examining physician. The record shows that the examining physician, called as a witness by plaintiffs, was defendant’s agent. Arrangements for the examination were made by the company, payment therefor was to come from the company, and the report of the examination was to be made to the company. See Brasier v. Benefit Association of Railway Employees, 369 Mich 166 (94 ALR2d 1385), and cases cited therein.
Defendant’s examining physician testified he mailed the completed medical report to the company’s home office 2 days after the examination upon completion of his analysis of applicant’s urine specimen he had that day received. Failure of the company actually to receive the report at its home office, or its subsequent loss after receipt, cannot be attributed to applicant or plaintiffs on any basis which I can conceive. Nor can they be charged for the delay in the doctor’s mailing of the urine specimen to the company’s home office. He testified that immediately upon receiving the specimen he conducted a Benedict analysis upon it and found no trace of sugar in applicant’s urine. The finding was recorded upon his medical report and the report mailed that day to defendant’s home office. The doctor testified further that he did not also then mail the urine specimen, as he was - required by *53the company to do, because after transferring it to the mailing container he discovered that the mailing label was inside the container and it had to be “fished out” and dried before it could be used. He testified that it did dry in 2 days and that he did then mail it to the company in sufficient time to arrive there in the normal course of events about a week before applicant’s injury.
Under such circumstances, it would seem to me that plaintiffs are entitled to have their theory of unreasonable delay tested by the jury from and after delivery of the urine specimen to defendant’s examining physician. Whatever delays thereafter occurred are chargeable not to them but, rather, to the company.
One further matter should be mentioned. Defendant has argued throughout this case, in the trial court and on appeal, that the day of applicant’s injury, rather than the day of his death, should be considered the terminal date in the jury’s determination whether defendant delayed unreasonably in issuing its policy. However, as noted earlier in this opinion, defendant’s underwriter testified that insurance policies requiring medical examination are issued by defendant effective as of the prior date of medical examination, at least, as in this case, where the first premium payment has been made in advance upon execution of the application; and, as we have also noted, it would be unconscionable to permit defendant to deny liability for such coverage in the event illness or injury or death occurs subsequent to physical examination but before formal issuance of the policy, while permitting defendant to take a risk-free ride on the advance premium in the event applicant maintains good health during such interim. For the same reasons, I believe defendant’s obligation to issue a policy within a reasonable time after applicant’s compliance with its requirements and payment *54of an advance premium is not terminated by applicant’s interim illness or injury or death.
Subject to the foregoing, I concur in reversal and remand for new trial. I would not, however, award costs to either party.
Black, Kavanagh, and Smith, JJ., concurred with Souris, J.

 Although defendant’s counsel initially objected to plaintiffs’ testimony with reference thereto on the ground that such evidence was equally within the knowledge of the deceased, he waived any objection he might have had by thereafter pursuing the matter himself in cross-examination of the plaintiffs. Furthermore, decedent’s widow, not a party herein, testified regarding the same conversations.