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Moone v. Commercial Casualty Ins. Co.

OPINION FILED APRIL 22, 1953

RICHARD F. MOONE, APPELLANT,

v.

COMMERCIAL CASUALTY INSURANCE COMPANY, APPELLEE.



Appeal by plaintiff from the County Court of Cook county; the Hon. B.E. MORGAN, Judge, presiding. Heard in the third division of this court for the first district at the October term, 1952. Reversed with direction. Opinion filed April 22, 1953. Rehearing denied and opinion modified June 3, 1953. Released for publication July 3, 1953.

MR. JUSTICE KILEY DELIVERED THE OPINION OF THE COURT.

Rehearing denied and opinion modified June 3, 1953

This is the second appeal in an action to recover disability benefits of $725 under the Chicago Bar Association Group Disability Policy of Insurance. The first appeal was from a judgment for the defendant after dismissal of the complaint. This court decided the complaint stated a cause of action, and the judgment was reversed and the cause remanded for trial. Moone v. Commercial Casualty Ins. Co., 342 Ill. App. 596. The trial was by the court without a jury and finding and judgment were for the defendant. Plaintiff has appealed.

Plaintiff's application for enrollment in the Policy was dated August 3, 1949. The Certificate of Insurance was issued to plaintiff, a lawyer, effective August 15, 1949. A copy of the application is impressed on the Certificate. The following questions and answers appear above plaintiff's signature:

"7. Have you been disabled by either accident or illness or received medical attention during the past five years? Yes. When? July 1945. Duration? 3-4 weeks. For what? suspected ulcer

"8. Are you now to the best of your knowledge in sound condition physically and mentally? yes- no disability in last 4 years"

Plaintiff has practiced law since 1938. It was about that time he began to suffer from a stomach ulcer. Early in July 1949 he called Parker, Aleshire & Company, defendant's Chicago agent, about enrollment in the Chicago Bar Association Group Policy. About July 10 Merlin W. Hughes called upon him and after a conference, plaintiff signed in blank two application forms. One was for use in the event plaintiff was acceptable in regular course, and one in the event that he was acceptable during an "open period," when applicants otherwise unacceptable are accepted. Plaintiff heard nothing further until the Certificate of Insurance arrived August 22, 1949.

Between July 29 and August 14, 1949, plaintiff went on vacation, was badly sunburned and suffered stomach distress. August 16 he had a severe attack of stomach illness and a couple of days later was advised by a doctor that he had a duodenal ulcer with obstructions due "stenosis" and that his life was in danger unless he submitted to an operation. August 24 he had a worse attack and entered the hospital where a section of his stomach was removed. He resumed his practice of law in November.

After he received the Certificate on August 22, he called Parker, Aleshire & Company, referred to herein as Company, telling them that the application bearing his signature was mistaken in the answer "suspected ulcer." A representative of that Company called on him and after discussing plaintiff's health record with him asked for a return of the Certificate. Plaintiff refused to turn over the Certificate, and on September 1, 1949 formally claimed the benefits. September 22 the defendant, herein called insurer, wrote him that it was recalling the Certificate because of incorrect information; that the Certificate would not have been issued had the Company then had the correct information; and in the letter enclosed currency equal to amount paid for the premium. September 24 plaintiff responded rejecting the tender, claiming a valid insurance contract, and stating that he had given insurer's agent a complete medical history when signing the blank applications. October 4, the insurer wrote again reasserting that the Certificate was issued on admittedly incorrect information in an application signed by plaintiff and disagreed that the Certificate represented a valid contract.

The insurer's answer set up alternative defenses: (1) That Hughes was an independent broker, agent for plaintiff and not insurer, with no authority to bind insurer with conversations; that insurer had no knowledge of plaintiff's condition of health, except that which appeared on the application; that the Certificate was issued on that knowledge and would not have been had insurer known plaintiff's true condition; that the application contains false representations about plaintiff's health; that the application was filled out, accepted and ratified by plaintiff; and that insurer is not liable. (2) That the Certificate and endorsements contain the entire contract and that under the terms of the Certificate of Insurance no agent had the authority to change the terms or waive provisions, and no change should be effective unless approved by a company executive and the approval endorsed upon the Certificate. Plaintiff replied that Hughes was not his agent but was insurer's; denied making false representations; and denied lack of insurer's knowledge of his health.

The trial court found that plaintiff told Hughes the truth about his health record and condition; that the misrepresentation about plaintiff's condition was a material one; and that Hughes was not the agent of the insurer.

The finding that plaintiff told Hughes the truth about his health record and condition is not challenged by either party. It is uncontroverted that Hughes had plaintiff sign two blank applications and that the one upon which the Certificate issued was filled out by Hughes. Since the answer "suspected ulcer" is admittedly incorrect, it follows the error is attributable to Hughes. We infer that this conclusion applies as well to the answer "no disability in last 4 years," insofar as this answer is considered to be erroneous. We infer from the ultimate finding that plaintiff told the truth that the court believed that plaintiff told Hughes the last time he had been unable to work, because of the ulcer, was in 1945. This statement clarifies the meaning which Hughes and plaintiff gave to the term "disability" which Hughes used in answering the question with respect to plaintiff's condition.

A vital issue is whether Hughes was the agent of the insurer or the broker of plaintiff.

The competent evidence on this issue was: that plaintiff was referred by the Chicago Bar Association to the Company with respect to the Group Policy; that the Company is the insurer's general agent in Chicago; that the plaintiff telephoned the general agent for information and was told someone would call on him; that shortly thereafter Hughes called on him saying he was from the Company; that plaintiff had not previously known Hughes; that the application form signed by plaintiff carried only insurer's name; that about 6 weeks after his ...


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