Court Opinion

ID: 9533927
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:35:33.22122+00
Date Added: 2024-06-11T13:29:13.233894
License: Public Domain

White, J., dissenting.
I agree with the majority in finding that a contract for insurance was formed between the parties when Collins sent the letter to the Donaldsons notifying them that their application had been approved. I disagree, however, as to the determination that the condition of terminating prior policies of insurance was not waived in its entirety.
As outlined in the majority opinion, the application for insurance filed with Farm Bureau cautioned that coverage would be effective “only when the application is approved” and that a “contract will not be offered when there is other major medical or hospital surgical coverage in effect, which is not being replaced, or whenever there is a duplication of benefits *149which would result in excessive coverage.” The record is conclusive that the Donaldsons did not cancel their previous insurance policy. However, this finding alone is not determinative of the present action. Instead, we need to consider whether cancellation of the Donaldsons’ preexisting health insurance coverage was a condition precedent to formation of a contract between the Donaldsons and Farm Bureau.
As stated by the majority, a condition precedent is a fact which must come into existence or an event which must take place before a right to performance arises. In this action, Farm Bureau evidently established as a condition precedent to formation of a contract of insurance the requirement that any applicant first terminate existing insurance coverage before an application would be approved. However, any such condition was waived when Collins sent the letter to the Donaldsons stating that “the above application has been approved.”
The majority agrees that this condition precedent was waived by acceptance of the Donaldsons’ application for insurance. However, the majority concludes that Farm Bureau merely waived March 15, 1984, as the precise date the preexisting insurance had to be canceled, not the condition in its entirety, and that therefore a reasonable time for performance was to be implied. I disagree with this interpretation.
The issuance by the insurer of a policy with knowledge that the “other insurance” clause is violated by the existence of a prior policy constitutes a waiver of such a breach. 9 G. Couch, Cyclopedia of Insurance Law § 37B:43 (rev. ed. 1985). Here, Collins’ letter stated that the Donaldsons’ application for insurance was approved, and advised that the “effective date of this new policy is March 15, 1984. You may wish to make arrangements of previous policies around this date.” While language in the application required the prior policies to be terminated before a policy would be offered, this subsequent letter to the Donaldsons clearly waived this requirement. Collins knew that the Donaldsons still had existing insurance. He even refers to this fact in the February letter he sent to the Donaldsons. The language “You may wish to make arrangements of previous policies around this date” can be *150reasonably construed to intimate that an insured is free to cancel or not cancel existing insurance, thereby negating the mandatory cancellation language contained in the application. If the agent who takes the application is informed of another policy, the insurer, by thereafter accepting the application and issuing the policy, is estopped from setting up a condition prohibiting other insurance, since the knowledge of the agent is the knowledge of his principal. 4 G. Couch, Cyclopedia of Insurance Law § 26A:108 (rev. ed. 1984).
I would affirm the judgment of the district court.