Court Opinion

ID: 9566787
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:43:04.939186+00
Date Added: 2024-06-11T09:39:56.955283
License: Public Domain

CARTER, J.
I dissent. The majority opinion is based primarily upon the proposition that the agent who solicited the insurance had no authority to fix the date at which the risk was assumed by the insured. Conceding that to be true, there still exists a logical basis upon which the liability of the insurer must be predicated. That basis is ignored by the majority opinion. The facts of the case are clear.
Plaintiff’s husband, now deceased, was on July 17, 1940, solicited by a Mr. Abraham, soliciting agent of the defendant insurance company, for two health and accident insurance policies paying death benefits. Application^ for the policies were signed by decedent at that time and he paid to Abraham $13 on account of the premium on each of the policies. Abraham dated the applications July 20, 1940, cashed the check, and on that date delivered the applications and the premium money, less his commission, to the Mutual Insurance Agency which was in charge of Mr. Hall, who was the general agent for defendant in Los Angeles, California, and authorized to accept premiums and applications. Defendant’s Home Office is in Omaha, Nebraska. The list of the applications received by Hall, including that of decedent was dated July 30, 1940, and was received at the defendant’s Home Office on August 2, 1940. The policies were issued on August 5, 1940, and delivered on August 6, 1940. Decedent was unconscious when the policies were delivered. The poli*222cies were issued solely upon the information set forth in the application.
On July 26, 1940, decedent suffered an injury as the result of a fall, and on July 30 was again injured from a fall. He died on August 6, 1940, from the latter injury. On July 30, 1940, decedent’s wife wrote to Hall, defendant’s general agent, advising of the injuries, and asked for claim blanks. The letter was received by Hall on August 2, 1940. Blanks were sent to her.
The applications on the face thereof contain among other things the following-: “I, the undersigned hereby make application to . . . (defendant), for policy . . ., I understand and agree that this application shall not be binding upon the Association until the policy is issued to me.” And also: “Do you hereby apply to . . . (defendant) for a policy issued solely and entirely in reliance upon the written answers to the foregoing questions, and do you agree that (defendant) is not bound by any statement made by or to any agent unless written herein? Yes.” On the back of the application was advertising matter which included the following: “No Medical Examination Necessary” and “Insurance Policy. This policy goes into immediate effect from date of issue on accident and on sickness as plainly stated in the policy.”
The policies stated that the benefits would be paid for loss of life resulting from an injury received during the term of the policy. The term of the policy was stated as commencing on August 5, 1940.
This action was commenced by plaintiff to reform the policies and recover the death benefits thereunder. Judgment was rendered for defendant and plaintiff appeals.
The established rules for the construction of insurance contracts must be kept in mind. Because contracts of insurance are not the result of negotiation, and are generally drawn by the insurer, any uncertainties or ambiguities therein are resolved most strongly in favor of the insured. (Blackburn v. Home Life Ins. Co., 19 Cal.2d 226 [120 P.2d 31]; Perkins v. Fireman’s Fund Indemnity Co., 44 Cal.App.2d 427 [112 P.2d 670].) Where two interpretations equally fair may be made, that which affords the greatest measure of protection to the insured will prevail. (Fageol T. & C. Co. v. Pacific Indemnity Co., 18 Cal.2d 731 [117 P.2d 661].)
From the foregoing facts it is clear that the contracts of insurance were consummated. The applications were sent to *223defendant at its Home Office in Omaha, Nebraska. The premium was paid. They were there approved. Policies were issued on August 5, 1940. That the contract was complete and binding upon the insurer under those circumstances cannot be doubted. (See 14 Cal.Jur. 425-6.) Hence, the main issue is, when under the insurance contract the risk was assumed by the insurer; that is, did it commence at the date of the policies or prior thereto.
Applications for insurance have been referred to as offers or proposals for insurance on the part of the one to be insured. (14 Cal.Jur. 422.) The application becomes a part of the contract of insurance when the policy expressly so provides. (Boyer v. United States F. & G. Co., 206 Cal. 273 [274 P. 57].) In the instant case the applications were by the policies expressly made a part thereof, and photostatic copies were affixed thereto.
Turning therefore to the applications, it appears that they do not expressly state when the insurance coverage was to commence. They do provide that decedent applies to defendant for certain designated policies, and at the end of each appears the notation “Total cost $39.50.” Under that figure are the words “First Year.” Thereafter it reads “Paid $13 Balance $26.50 (Payable 30-60 days) Date 7/20/1940—. The signature of the decedent applicant and the soliciting agent follow. The applications were signed on July 17, 1940; the date, July 20, 1940, was inserted therein by the soliciting agent, it being the time when he delivered the applications to Hall. A portion of the premium was paid on July 17, 1940, and according to the applications the balance could be paid on a time basis. It is a fair and reasonable inference from the foregoing that applications were being made for insurance for a year’s term to commence upon July 17, 1940, if the insurer chose to accept the application and issue the policies. That it did so choose is apparent from the issuance of the policies. That interpretation clearly follows from the rule that “Where two interpretations equally fair may be made, that which affords the greatest measure of protection to the assured will prevail.” (Fageol T. & C. Co. v. Pacific Indemnity Co., 18 Cal.2d 731, 747 [117 P.2d 661].) Of course, an insurer can accept or reject an application for insurance, the same as any other person to whom an offer is made. But as will presently appear, the real question involved is, what *224was actually done in the light of the proper construction of the documents in the case now before us.
It is urged that the foregoing construction is not permissible because of the above-quoted clause in the application that the application shall not be binding upon the insurer until the policy is issued. On the contrary that clause lends support to that construction. It is to be noted that the application is not to be binding until a policy is issued. The reasonable and fair interpretation of that clause is that the application shall not constitute a contract of insurance, or that there shall be no insurance in effect pending the application unless the policy is issued. As we have seen, the application is merely an offer or proposal, and it would not create a binding contract of insurance. But that does not mean that when the offer is accepted it would not cover risks as of the date that the application was made for insurance.
With respect to the notation on the back of the applications heretofore mentioned, suffice it to say that it was no part of the application and cannot be said to be binding upon decedent. The matter appearing upon the face of the application should control.
Bach policy of insurance provides that it is issued in consideration of the statements made in the application and the payment of the premium, and that its term begins on the date thereof. It bears date of August 5, 1940. While it is true that the naming of August 5, 1940, as the date of the commencement of the term in the policy would appear to be an insufficient acceptance of the offer to purchase on the application for insurance as presented, inasmuch as such offer should be interpreted as requesting that the insurance commence on July 17, 1940, and therefore that no contract existed, the policy being merely a counter offer or proposal, we do not believe the policy may be so construed. The application was made a part of the contract of insurance and properly interpreted, contemplates that the risk was assumed as of July 17, 1940. This reasoning is further fortified by the fact that the policy was given in consideration of the statements in the application and the premium. The premium was paid. There is therefore an ambiguity on the face of the policy with reference to the effective date of the insurance coverage. Such ambiguity must be construed against the insurer in the light of the foregoing rules of construction. The result is that the application controls, and the issuance of *225the policy was a sufficient acceptance of the application as correctly interpreted, and a contract was consummated giving protection from July 17, 1940. Assuming that the contract of insurance did not become a completed contract until it was issued and delivered on August 6, 1940, nevertheless the period during which the risk was assumed related back to July 17, 1940. It follows therefore that the injuries suffered by decedent which resulted in his death, having occurred after the effective date of the policies, the death benefits are payable thereunder.
The cases relied upon by defendant are not in point. The same factual situation was not involved in Burch v. Hartford Fire Ins. Co., 85 Cal.App. 542, 543 [259 P. 1108]. In Hansen v. Farmers Auto. Insurance Exchange, 139 Cal.App. 388 [34 P.2d 188], no policy was ever issued upon the application, and it is otherwise distinguishable in respect to the wording of the application. The same comment applies to Lucas v. Metropolitan Life Ins. Co., 14 Cal.App.2d 676 [58 P.2d 934], Stark v. Pioneer Casualty Co., 139 Cal.App. 577 [34 P.2d 731], and Toth v. Metropolitan Life Ins. Co., 123 Cal.App. 185 [11 P.2d 94],
It may be that a cursory reading of the application would lead one to the conclusion reached in the majority opinion that no ambiguity exists as to the effective date of the policy. However, the application states “I understand and agree that this application shall not be binding upon the association until the policy is issued to me.” The clear implication and inference to be drawn from this statement is that, if and when the policy is issued, the “application” is “binding.” The premium was paid and the policy was issued. It is conceded by the defendant that the policy could have been dated any day on or after the date the application was made. Since the application constitutes an offer and the issuance of a policy constitutes the acceptance, the obligation created by the offer and acceptance relates back to the date of the offer in the absence of an express agreement to the contrary. There was no express agreement in this case. Therefore, upon the issuance of the policy, the liability of the insurance company became effective as of July 17, 1940, the date the application was made.
Even if the application is susceptible of a different interpretation, under the rule announced in the Fageol case above *226cited, the interpretation which affords the greatest measure of protection to the assured should prevail. This rule is nullified by the majority decision in this case.
In my opinion the judgment should be reversed.
Curtis, J., and Peters, J. pro tern., concurred.
Appellant’s petition for a rehearing was denied June 14, 1943. Curtis, J., Carter, J., and Schauer, J., voted for a rehearing.