Court Opinion

ID: 9626262
Source: CourtListenerOpinion
Date Created: 2023-08-22 08:06:44.676588+00
Date Added: 2024-06-11T18:06:24.497727
License: Public Domain

HOLOHAN, Chief Justice,
dissenting.
It seems basic to me that people must pay for what they purchase whether it be goods, automobiles, or insurance. A check given in payment of goods is accepted with the expectation that the check will be honored by the bank. Our commercial code recognizes that payment by check is conditioned and does not act as payment unless honored by the bank. A.R.S. § 44-2359.
The court’s opinion adopts a line of authority which holds that payment for insurance is different from the usual transaction and different rules apply.
The majority opinion of the Court of Appeals in this case appears to me to present the more sensible legal position. I adopt the opinion of the majority in the Court of Appeals and dissent from the opinion of this court.
The opinion of this court has not advanced any sound policy reason against treating payment by check as a conditional payment which voids a binder or insurance policy if the check is dishonored by the bank.
The acceptance of a check as conditional payment does no violence to the concept of insurance protection. The honoring of the check is a condition subsequent to the creation of the insurance contract. The majority in this court recognizes the legality of conditions subsequent in an insurance binder when it cites with approval Rutherford v. John O’Lexey’s Boat & Yacht Ins., Ltd., 118 Ariz. 380, 576 P.2d 1380 (App.1978). The insurance binder in Rutherford was effective provided the insured submitted a completed application on July 9. The insured had an accident on July 8, and he failed to submit the completed application *560on the 9th. The denial of coverage by the insurance company was upheld.
It seems consistent to hold that the insurance policy in this case was subject to the condition subsequent that the insured's check in payment be honored by his bank.
The majority in this court rely mainly on two cases. Bartleman v. Humphrey, 441 S.W.2d 335 (Mo.1969), and Cullotta v. Kemper Corp., 78 Ill.2d 25, 34 Ill.Dec. 306, 397 N.E.2d 1372 (1979). Although a federal district court case is also cited, I doubt that the majority means, to place much reliance on a decision by a federal trial court. In any event, the cited cases support the proposition that the classification of the acceptance of a check as absolute or conditional payment is determined according to the facts and circumstances surrounding the transaction and is a question of fact to be determined by the trier of fact.
Unfortunately, the majority in this case ignores its cited cases and proceeds to decide the disputed issues in the case. The fact that the binder had an effective date was found to be conclusive proof that the check was not accepted conditionally.
In both Bartleman and Cullotta an insurance policy had been issued in each instance and checks processed as cash premiums, but those courts held that proof of the insurer’s intent at time of acceptance is an issue to be submitted to the trier of fact. The rule in Arizona has been that even if the facts of a case are not in dispute, the inferences to be drawn from those facts may be in dispute. If different inferences can be drawn from the facts, the issues may not be resolved by summary judgment, and the issues must be submitted to the trier of fact. Lundy v. Prescott Valley, Inc., 110 Ariz. 362, 519 P.2d 61 (1974).
The evidence presented by the insurance company was that the transaction involved an application for insurance for a two month period. The applicant was not a regular customer, and there was no intention to extend credit to him. Payment was required for the entire two month policy. The affidavit of the agent handling the transaction was to the effect that the applicant, not being a regular customer, was given a binder pending issuance of the policy “predicated upon his check in payment of the premium due being good upon presentation to his bank.” In light of these facts it appears to me that different conclusions could be reached from a consideration of all the facts, and this court, following its cited authority, should have remanded the case for trial.