Court Opinion

ID: 9462916
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:53:20.04085+00
Date Added: 2024-06-11T17:37:50.796332
License: Public Domain

WIDENER, Circuit Judge
(dissenting):
I respectfully dissent.
I first note that the opinion, on page 1058, indicates that “[t]he insured Ralph N. Wood, Sr. applied for a policy of ordinary life insurance on April 9, 1971,” and it appears from the record that the application was made by the appellant, Progressive En*1061terprises, being signed by Clarence Wood on behalf of the plaintiff as applicant, and by Ralph Norris Wood, Sr., as the proposed insured.
I further note that the opinion, again on page 1058, recites that “[t]he agent for the insurance company issued a Conditional Receipt in the amount of $362.77 on April 16, 1971.” The opinion then goes on to set out the provisions contained in the receipt. I think it is significant, however, that neither Progressive nor Wood ever received the conditional receipt and were thus not made aware of the fact that the binder expired by the terms of the conditional receipt at the expiration of sixty days from April 16th. These facts are undisputed.
This then brings me to the testimony from which it must necessarily be inferred that not only was the conditional receipt withheld from Progressive, but also the fact that the coverage had lapsed after sixty days was concealed from Wood and Progressive by New England Life’s agent, Watson. I specifically refer to Watson’s testimony beginning on page a80 of the appendix.
“Q. All right. And would you have brought that to their attention?
A. I don’t know, sir.
In a case like this — maybe I’ll reveal more here about myself than I care to, in a way — in a case like this it is a rather delicate thing, you have a lot of premium dollars you’re talking about.
It is difficult for a lot of people to understand the rating. There are a lot of variables here.
If the time is expired, and if you know the applicant — I have already said that Mr. Wood was doing as much as he could to get his requirements fulfilled — I don’t see that there is much point served by telling the individual that he no longer has insurance under the conditional receipt.”
Moreover, it appears that Watson also withheld from Progressive the fact that an extension of the conditional coverage could have been routinely obtained, and that Watson himself made timely payment of the premium demanded by his own company well within 60 days after the date of the conditional receipt. No further demand for payment of any premium was made until after the negotiations concerning Wood’s health were completed, the reason obviously being that the insurance company was afraid it would lose the business if it disclosed the true facts to Wood and Progressive.
But this is not all. The foregoing irregularities were compounded by the company’s conscious and deliberate violation of another section of the Conditional Receipt not referred to in the opinion of the court. Section G thereof provides in part:
“G. Refund and Cancellation of Receipt. The Company will refund the amount of this Receipt
****** (upon certain conditions not mentioned here because the company admits and relies on the fact that the coverage and temporary receipt lapsed on June 16, 1971).
Despite the clear language of the receipt as to refund, and the asserted lapse of coverage on June 16, 1971 (indeed, this is the essence of the entire defense of this claim), the company, in writing, not through inadvertence but by design, has shown its intent to keep the true facts from the insured. This calculated act with its obvious intent to lull Wood into a false sense of security is exposed by an internal memo sent by the home office of the company to its Richmond office. The memo also makes clear that the company was with the agent in the plan, part and parcel, and is here copied:
“The Conditional Receipt period has expired, and there is no longer any insurance coverage under the Conditional Receipt. It is not necessary to make any refund at this time, unless the applicant requests it. We will continue underwriting, although on a nonprepaid basis. If we decline, or if the applicant refuses the *1062offered policy, the prepayment must be returned in full.” (Emphasis added).
Thus, it appears to me that New England Life, after having extended temporary coverage to Progressive on the life of Wood, failed to inform Progressive of the terms of that coverage, failed to notify it when the coverage lapsed, failed to indicate that if Progressive so desired, it could seek an extension of that temporary coverage which would be granted routinely, and in all events accepted the payment from its own agent which it did not refund in violation of the terms of .the receipt itself. I would further point out that in Virginia the agent of an insurance company is the insurance company. What he does, it does. What he knows, it knows. So all the acts both of Watson and his insurance company are attributable in law to the company. See Boykin & Tayloe v. Columbia Fire Ins. Co., 90 F.Supp. 647, 650 (E.D.Va.1950); Va.Code § 38.1-292.1
Thus, it would seem to me that New England Life, having failed to inform Progressive of the conditional nature of the insurance coverage extended under the conditional receipt, or, indeed, of any other fact it had a right to know, should not be allowed to assert successfully a lapse in that coverage at this time. Certainly, New England Life should have given Progressive a copy of the conditional receipt and informed it of the fact that coverage lapsed sixty days thereafter. Certainly it should, have refunded the premium obtained. Failing in this, should it now be permitted to rely upon that lapse in coverage to deny Progressive’s claim? I think not.
I, of course, recognize the problems presented by the Virginia Supreme Court’s decision in Hayes v. Insurance Co., 198 Va. 670, 96 S.E.2d 109 (1957). There, however, the question was whether any coverage had ever existed. Here, there is no question but that there was a conditional policy in force following the insurance application. The issue is whether New England Life may assert the lapse of that coverage in light of its agent’s actions which must be imputed to it, as well as its own actions, and I am convinced that we are not bound by the Hayes decision. In this conclusion, I am reinforced by the fact that the Virginia court, in Hayes, took pains to point out a pertinent fact, and the one that should require our case to be distinguished: “The defendant company [in Hayes], moreover, did not issue or authorize to be issued interim or ‘binding’ insurance, that is, insurance effective from the date of the application and payment of the premium for a policy.” 198 Va. at 672, 96 S.E.2d at 111. Such interim insurance was admittedly issued here. That is very nearly all this case is concerned with.
In Virginia, even oral binders or contracts for temporary insurance are enforced,. Bituminous Casualty Corp. v. Baldwin, 196 Va. 1020, 86 S.E.2d 836 (1955). No reason exists not to enforce a written agreement of like tenor when the company has deliberately misled the insured as to its effectiveness and retained the premium paid, and in the face of the finding by the district judge that “. . . the only notice that Progressive . . . had that there was a binder of insurance was oral notice from the special agent to Progressive . that the policy of insurance was bound.”

. Whether Watson was a special agent with limited authority, or a general agent, is of no moment here. The company does not deny Watson’s authority to issue the conditional receipt, and his failure to deliver it is, therefore, chargeable to the company. Having failed to provide the insured with such a receipt, the company should not be permitted to rely upon limitations contained in the receipt to defeat coverage. Its claim that Watson failed to notify Progressive of the termination of coverage at the expiration of the sixty day period is not material, I think is not even a colorable defense.