Court Opinion

ID: 8027010
Source: CourtListenerOpinion
Date Created: 2022-09-09 02:42:24.764021+00
Date Added: 2024-06-11T16:36:48.814863
License: Public Domain

MR. JUSTICE SHEEHY
concurring:
I agree that the summary judgment against' Cameron must be vacated, and the matter remanded to the District Court for further proceedings,.but on different grounds than set forth in the majority opinion.
The District Court, in its memorandum attached to its order granting summary judgment, placed weight on the fact that in the application for credit to Premier Homes, Inc., there was contained the statement “THIS IS NOT A COMMITMENT TO PROVIDE CREDIT LIFE OR CREDIT LIFE AND DISABILITY INSURANCE.”
It should be understood that the quoted statement, contained in the application for credit, has no bearing whatever insofar as the insurer, Universal Underwriters Life Insurance Company is concerned. The application for credit is not designed to be an application for insurance. It is designed to go to Premier Homes, Inc., the creditor, and eventually to its assignee, First National Bank of Bozeman. The application for credit has no part in the decision of Universal Underwriters as to whether it will issue credit life or disability insurance on this particular risk.
The reason the language appears on the credit application form is an outgrowth of the federal Truth in Lending Act. Pub.L. 90-321, Title I, § 106(b), 82 Stat. 148; 15 U.S.C. 1695(b). Because that language appears in the application for credit, the creditor, Premier Homes, Inc., is not required to include the cost of insurance in computing the finance charge percentage which the Creditor must disclose to the borrower under the federal Truth in Lending Act. When this purpose of the language on the application for credit form is understood, one sees that it has no bearing on whether Cameron is entitled to insurance.
Because the credit application form itself is not an application for insurance, it was necessary, as the facts in this case show, for an *356agent of Premier Homes, Inc. to return to Cameron on September 14, 1976, to obtain a true application for insurance. It is this form which Cameron filled out, and truthfully indicated the fact that he was retired because of disability, and suffered from arthritis and other ailments.
There is a second element in the memorandum opinion of the District Court which must at this point be explained away. The District Court held that because Premier itself refused the credit life application, “no notice or instruments were ever given to Universal Underwriters Life Insurance Company about the application, and likewise no policy was issued therefore. Universal Life Insurance Company was unaware that Archie Cameron ever existed, and had no knowledge whatsoever of claimed credit life coverage for this person.”
That finding of the District Court disregards the fact that Premier Homes, Inc. was an agent of Universal Underwriters Life Insurance Company. Universal is bound by the acts of its agent, and by the agent’s knowledge. In fact, all knowledge of the agent relating to matters within the agent’s authority is imputed to the insurance company. Section 28-10-604, MCA.
In this case Universal’s agent collected the insurance premium, took the written insurance application, determined itself that the application did not fit the insurer’s underwriting rules, and the agent on its own turned down the insurance for Cameron. But at that point, under the statute then in existence, it was the duty of the insurance company, through its agent or otherwise, it “immediately give written notice to such debtor” and to “promptly make an appropriate credit to the account.” Section 33-21-206(3), MCA.
The reason that those strict provisions of insurance law apply to credit life and disability business is because of the nature of this business in our present commercial world. In the credit life business insurers do not compete with each other to get insureds, but rather they compete with each other to get agents such as Premier Homes, Inc. Because the creditor, the lender, is also the *357agent of the insurance company writing credit life, the insurance company has entree to business it would not otherwise have. For this reason, insurance companies allow to such creditors as agents a substantial portion of the credit life premium for writing the business. This is one of the factors that cause premiums for credit life and disability to be quite high in relation to the risk assumed. That the procedure is successful is attested to by the fact that there is a high “penetration” of credit life and disability insurance in installment credit risks; some report as high as 90 to 95 percent.
The National Association of Insurance Commissioners was aware of this when it proposed the model law that Montana has adopted as its credit life and disability insurance provisions. Section 33-21-101, et seq., MCA.
Because of the prospective peril for borrowers-insureds in credit transactions, the model code incorporates strict provisions with respect to denial of coverage, and provides for immediate notice to the borrower, as well as return of this premium through a reduction of his debt account.
If we ignore the plain mandates of these statutes relating to insurance, we negate the intention of the legislature in these matters, and substitute our own rules of insurance law instead of what the legislature established. The insurer, through its agent, did not follow the law in turning down the insurance coverage in this case. It kept for one and a half years the premium which it should have returned immediately. “Oversight” or “inadvertence” is not a legal excuse for this ignoring the lawful duty imposed upon the insurer. The only lawful way that we can give effect to the intention of the legislature in these matters is to hold here that the insurance company, having failed in its lawful duty to give prompt written notice that the borrower was not insured, and failing to give prompt return of the paid premium, is estopped to claim now, after the death of the insured, that he is not covered by the insurer.
We cannot condone the failures of the insurer when there are but three or four pages of statutes relating to credit life and disability insurance on our law books, by allowing it to shelter itself under *358the claims of oversight and inadvertence, when the duty of the insurer is to conduct its business in this state according to our laws. This is not too much to ask of such an insurer.
The only fact issue upon which this case depends is whether the creditor required the debtor to make the premium payment in connection with his application for credit life insurance, under section 33-21-206, MCA. On the record, it appears that this was the case. If Premier Homes, Inc., at the time of the application in this case, made it a practice to add the cost of insurance to the borrower’s debt in the usual case where Universal Life underwriters was to be the insurer, it might then be concluded that the debtor was in fact required to make the premium payment. That is the single fact issue which I think is involved in this case, because otherwise it appears estoppel prevents the company from raising the no-contract issue.
The claim of Premier Homes and Universal Underwriters that Cameron “waived” his right to written notice and immediate repayment of his premium cannot be sustained, because waiver is a “voluntary abandonment of a known right.” There is no way that I can see, after the death of Cameron, to prove his knowledge of these factors.