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Goebel v. Benefit Trust Life Ins. Co.

NOVEMBER 9, 1967.

HERMAN GOEBEL, PLAINTIFF-APPELLEE,

v.

BENEFIT TRUST LIFE INSURANCE COMPANY, A CORPORATION, DEFENDANT-APPELLANT.



Appeal from the Municipal Court of Chicago, First Municipal District of the Circuit Court of Cook County; the Hon. JOSEPH B. HERMES, Judge, presiding. Order reversed and cause remanded with directions.

MR. PRESIDING JUSTICE SULLIVAN DELIVERED THE OPINION OF THE COURT.

Rehearing denied December 7, 1967.

This is an appeal from an order denying the section 72 petition of defendant, Benefit Trust Life Insurance Company, to vacate a default judgment in favor of plaintiff. The original complaint sought benefits allegedly due under certain hospital and medical expense policies issued by defendant to plaintiff. Defendant did not appear or answer prior to return day and, under the rule of the Circuit Court of Cook County relating to the Municipal Department, automatic default and judgment were entered.

The plaintiff, Herman Goebel, was insured through his employment under group hospital and group major medical expense insurance policies. Pursuant to conversion privileges provisions of the policies, plaintiff applied for individual policies. The group policies expired on January 27, 1965.

The conversion privilege provided that if one's employment is terminated he may, subject to the association's regular underwriting rules, convert to an individual coverage if written application is made within thirty-one days from the date of termination of employment.

Goebel applied for this conversion and filled out an application therefor. The form contained the following questions and answers:

"12. Have you or any of your family ever had any of the following: . . . Cancer, diabetes, epilepsy, venereal disease? No. . . .

"15. Have you or any of your family received any medical or surgical advice or treatment or had any local or conditional disease WITHIN THE LAST FIVE YEARS? No."

The application was signed by Goebel and was dated January 22, 1965.

Benefit Trust, in reliance on the truthfulness of the information in the application, issued individual policies of insurance to Goebel. The policies provided benefits for sickness or disease contracted after the policy had been in force for a period of thirty days. On January 28, 1965, Goebel entered a hospital for tests and later underwent surgery and allegedly incurred expenses in the amount of twenty-seven hundred dollars ($2,700).

In an investigation of plaintiff's claim defendant discovered material false representations in the application which was attached to and made a part of the policies. The falsity was in the answers to the questions set forth above. Upon that discovery, Benefit Trust rescinded the individual policies, tendered to Goebel a refund of the premium paid, and denied his monetary claim.

On October 14, 1965, Goebel filed suit against Benefit Trust for the amount of the claim. Count I sought recovery under the group policies, and Count II relied upon the individual policies.

The summons issued showed service on defendant on November 6, 1965. On or about the same date the parties' attorneys conferred by telephone and defendant's attorney told plaintiff's attorney that the case would be vigorously defended in court.

Defendant's copies of the summons and complaint were misfiled in defendant's attorney's office. The summons showed a return day of November 15, 1965, but, as a result of the misfiling, the appearance and answer were not filed until November ...


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