Court Opinion

ID: 9747098
Source: CourtListenerOpinion
Date Created: 2023-08-27 14:56:49.692038+00
Date Added: 2024-06-11T07:25:20.094465
License: Public Domain

HULL, J .
I concur except as to part V of the majority opinion, in which I concur in the result.
Insurance Code section 10115 (all unspecified statutory references are to the Insurance Code) provides where an applicant dies before a life insurance policy for which he has applied has been issued, the policy will be in effect as if the policy had been issued and delivered on the date of the application (all other conditions of the statute having been met) if “payment is made equal to the full first premium at the time [the] application for life insurance ... is signed by the applicant and either (1) the applicant received at that time a receipt for said payment on a form prepared by the insurer, or (2) in the absence of such a receipt the insurer receives the said payment at its home office. . . .” (Ibid., italics added.)
The parties agree Michael did not receive a receipt for payment on a form prepared by Banner at the time he signed his application, and that Banner received Michael’s personal check for the first month’s premium at its home office and returned it to him without it having been negotiated.
On these facts, the majority holds “the second requirement of section 10115 is literally met. Michael submitted an application with a premium check and the same was received at Banner’s home office. Though Banner later returned the check, it retained the ability to secure payment of the monthly premium from Michael’s bank account and continued to underwrite his application.” (Maj. opn., ante, at p. 1373.)
In commercial transactions, “[t]he mere giving of a check does not constitute payment [citations] nor does the mere acceptance thereof raise a presumption that such acceptance constitutes payment. [Citation.] And since a check of itself is not payment until cashed the party attempting to prove payment by mere delivery or acceptance must go further and in addition prove that such delivery and acceptance was in accordance with an agreement that it was to be accepted as payment.” (Mendiondo v. Greitman (1949) 93 Cal.App.2d 765, 767 [209 P.2d 817]; see Navrides v. Zurich Ins. Co. (1971) 5 Cal.3d 698, 706 [97 Cal.Rptr. 309, 488 P.2d 637]; Hale v. Bohannon (1952) 38 Cal.2d 458, 467 [241 P.2d 4].) These concepts apply in the context of *1375insurance contracts. (Kansas City Life Ins. Co. v. Davis (1938) 95 F.2d 952, 957 [law settled that check made in payment of insurance premiums is taken conditionally unless there is a special agreement that it is received in absolute payment]; see generally 5 Holmes’s Appleman on Insurance 2d (1998) Law of Insurance Premiums, § 27.11, pp. 308-312.)
Given the above, there is a question whether receipt of a check that was never negotiated is receipt of payment within the meaning of section 10115. It is a question that is, in my view, unresolved by the present appeal since the parties did not litigate it in the trial court and did not adequately address it here despite the fact we drew the parties’ particular attention to the applicability of the statute prior to oral argument. While, without reference to the record or to pertinent authorities, Banner stated in passing the statute did not apply because Banner had not “accepted” the check, it did not argue that receipt of the check did not constitute payment within the meaning of section 10115.
On this record, one may be tempted to say section 10115 does not apply because receipt of the check was not receipt of payment unless there was an agreement that receipt of the check alone would be sufficient and Hodgson did not prove there was such an agreement. But it would be improper for us to do so where Banner chose not to defend against the applicability of the statute on that basis. Perhaps the issue was not raised because there was an agreement or because there was at the time of receipt sufficient funds in Michael’s account to honor the check and Banner thought that would be enough to satisfy the statute. In any event, Banner approached the matter as though receipt of the check was sufficient and we must let the parties pursue the issues they want to litigate.
Further, in my view, the fact that Michael submitted an “Authorization to Draw Checks in Payment of Life Insurance” through which Banner had the ability to secure payment of future monthly premiums is of no consequence in determining the applicability of section 10115, at least absent an agreement between the parties to the contrary. To the extent the court’s decision in Logan v. John Hancock Mut. Life Ins. Co. (1974) 41 Cal.App.3d 988, 992 [116 Cal.Rptr. 528] can be read to say that providing such an authorization without the agreement of the insurer that the authorization constitutes payment within the meaning of section 10115, I must respectfully disagree with it. The statute simply makes no mention of an ability to secure payment of later premiums as having an effect on coverage under the circumstances *1376addressed by section 10115. The requirements of the statute are explicit; if they are met, the statutory provisions apply, if they are not met, there is no coverage.
I concur in the result as to part V.
A petition for a rehearing was denied January 12, 2005, and the opinion was modified to read as printed above. Respondents’ petition for review by the Supreme Court was denied April 13, 2005.