Court Opinion

ID: 9762669
Source: CourtListenerOpinion
Date Created: 2023-08-29 02:28:36.256398+00
Date Added: 2024-06-11T07:29:36.534196
License: Public Domain

Ed. F. McFaddin, Associate Justice, dissenting. I dissent because it is my firm conclusion that the Majority, in reversing the judgment of the Trial Court, is doing substantial violence to our long-established rule that any ambiguity in an insurance contract is to be construed most strongly against the company and most liberally in favor of the insured or beneficiary. Some cases so holding are: Life & Cas. Ins. Co. v. Kinney, 206 Ark. 804, 177 S. W. 2d 768; and Halley v. Mutual Benefit Assn., 215 Ark. 907, 223 S. W. 2d 759. I maintain that an application of this rule would result in an. affirmance of the judgment; and I will now undertake to point out the ambiguities that exist in the document issued by the Insurance Company. The material stipulated facts are: (a) That on July 13, 1960 the Insurance Company received from Lueva Carroll $1.96, which was sufficient “to pay, in advance, two (2) weekly premiums” on the policy applied for; (b) That the duly authorized agent of the Insurance Company issued to Lueva Carroll an instrument entitled “Conditional Receipt for Premium Deposit” (this instrument will be further discussed when I point out the ambiguities in it); (c) That Lueva Carroll’s application was forwarded to the Home Office of the Insurance Company, and “prior to July 27, 1960” the Company decided that she was not “insurable” and directed the agent to return the $1.96 to her; and (d) That Lueva Carroll died on July 30, 1960, before the agent ever returned the $1.96 to her. Now let us consider the ambiguities in the “Conditional Receipt for Premium Deposit.” It is copied in full in the Majority Opinion, and there are two ambiguities — the first of which is not as obvious as is the second. (1) The receipt was for two weekly premiums on the policy; it provided that if Lueva Carroll was " on the date of said deposit . . . insurable and acceptable in the opinion of the Company’s authorized officers in Nashville, Tennessee . . .,” then upon her death “prior to the date of issue of said policy and within 31 days of the date of said deposit” the Company would pay the amount of the policy. There is no testimony in this ease concerning whether the applicant was uninsurable ‘ ‘ on the date of said deposit ’ ’; and that is the first ambiguity. No physical examination was required of Lueva Carroll, and evidently the agent who wrote the application and issued the premium receipt must have thought that she was insurable on that date. The only stipulation directed to uninsurability relates to some decision in the Company Office “prior to July 27, 1960.” (2) But the more serious ambiguity is contained in the language on the back of the conditional receipt. It says: “If the Company declines to issue insurance . . . the amount of the deposit must be returned to the person who paid it.” That language means that the burden was on the Insurance Company to make the return of the deposit to Lueva Carroll in her lifetime, and not to tender a return of the deposit to the beneficiary after the death of Lueva Carroll. The Insurance Company absolutely failed to tender the return of the deposit to Lueva Carroll in person, and that is what the Insurance Company said it had to do. This language is clear and unequivocal; but, if — when construed with the other language of the receipt — there is any ambiguity, then that ambiguity must be resolved against the Insurance Company, just as the Trial Court did. I maintain that the case at bar falls clearly within the rule of Union Life Ins. Co. v. Rhinehart, 229 Ark. 388, 315 S. W. 2d 920, and does not come within any exception as in Cooksey v. Mutual Life Ins. Co., 73 Ark. 117, 83 S. W. 317. There is a splendid Annotation in 2 A. L. R. 2d 943, entitled, “Temporary life, accident, or health insurance pending approval of application or issuance of policy.” In the opening section of that Annotation there is pointed out the history of the “binding receipts”; and from that paragraph we see that a binding receipt (or a “Conditional Receipt for Premium Deposit” as it is designated in this case) is an attempt by the Insurance Company to “both have its cake and eat it.” The Insurance Company wants to bind the applicant to take the policy when issued; so it takes the premium in advance with the understanding that when the policy is issued it will date back to the date of the application. But, in order to try to avoid liability from date of receipt of the money, the insurance companies have resorted to all sorts of language. When the Insurance Company in this case chose its language and stated that it had to pay the money back to Lueva Carroll in person, the Insurance Company bound itself that if she died before the return of the money, then the Insurance Compnay would pay the policy benefits. I do not see how the Majority can evade such a clear application of the law; and I therefore respectfully dissent.