Hastings, Senior Circuit Judge, and Kiley and Fairchild, Circuit Judges.
FAIRCHILD, Circuit Judge.
Action against six insurers to recover on account of the accidental death of Robert C. Usher.*fn1 All defendants alleged his death was suicide, but that issue has not been determined. Five defendants sought summary judgments based on other defenses. The district court granted summary judgment on some grounds and denied it on others. Final judgments in favor of three insurers were entered under Rule 54(b) F.R.Civ.P. Plaintiff appealed from these judgments and two defendants appealed from the order denying them summary judgment.
Mr. Usher was struck and killed by a train January 23, 1967.
In 1956 and '57 he obtained life insurance from Republic National Life Insurance Company in the total sum of $100,000, which has been paid, but with a like amount of accidental death benefit, which is contested. Republic did not seek summary judgment, and is not involved on appeal.
On February 1, 1966, he obtained accident insurance from Old Republic Insurance Company in the sum of $200,000 for loss of life. Old Republic moved for summary judgment on its defense of material misrepresentation as to health. The motion was denied.
On February 1, 1966, Usher obtained life insurance from North American Life & Casualty Company in the sum of $200,000. Several applications for reinstatement were made during 1966. North American's motion based on its defense of material misrepresentation as to health was denied.
On December 8, 1966, Usher's agents applied to a group of insurers referred to herein as Lloyd's, seeking accident insurance in the sum of $500,000 for loss of life. Summary judgment was granted to Lloyd's, based on its defense of material misrepresentation with respect to other insurance and its defense that there was no written contract. The court refused to base summary judgment on the defense of material misrepresentation with respect to health.
On December 29, 1966, Usher's agents applied to an insurer referred to herein as Fireman's Fund for accident insurance in the sum of $100,000, for loss of life. A binder was issued. Summary judgment was granted, based on the defense of material misrepresentation with respect to other insurance and the defense that the binder was subject to underwriter's approval which was not given. The court refused to base summary judgment on the defense of misrepresentation with respect to health or the defense that the application was not signed by the insured.
On December 29, 1966, Usher's agents applied to American Home Insurance Company for accident insurance in the sum of $200,000 for loss of life. A binder was issued. Summary judgment was granted, based on the defense that the binder was subject to underwriter's approval which was not given. The court refused to base summary judgment on the defense of misrepresentation with respect to health or the defense that the application was not signed by the insured.
1. Dismissal of appeals from interlocutory order. Old Republic and North American joined in the motion for summary judgment, but only on the ground of misrepresentation with respect to health. As to them the order, denying the motion, was not final but interlocutory. They did not obtain leave to appeal pursuant to 28 U.S.C. § 1292 (b), and their appeals must be dismissed.
2. Defense of binders subject to approval and not approved. Summary judgment, in favor of Fireman's Fund and American Home, was granted on this ground.
On January 11, 1967 Fireman's Fund wrote a letter confirming that "as of December 29, 1966, we have bound $100,000 of Accidental Death indemnity subject to approval of the application by our underwriting committee." The application was never approved. A letter giving notice of rejection was dated February 8. It stated that the application was incomplete in certain particulars and that "normal subsequent investigation" revealed the applicant was grossly overinsured considering his income and net worth and that the application would have been declined for that reason even if valid.
Mr. Gygax, an underwriter for Fireman's Fund, made an affidavit that he was under orders not to write accidental death coverage in any amount where the existing coverage and the coverage applied for was over the lesser of ten times income or net worth, or one million dollars. As of the date of application Usher was carrying $800,000 of accidental death insurance, was applying to other companies for $300,000 and to Fireman's Fund for $100,000, a total of $1,200,000.
American Home issued a form, effective December 30, stating "This insurance is bound subject to underwriting approval by the Company of application form 905." The application was never approved, although the record shows no specific rejection. Usher's signature to the application was not personally affixed, and it was shown by affidavit of an underwriter the company's regular custom and practice would have required rejection of an application not personally signed by the applicant.
Conditional binders vary greatly in their terms and in interpretation in different jurisdictions.*fn2 The problem presented when a loss or serious change in insurability occurs in the interim between issuance of a binder subject to underwriter's approval and the time of the underwriter's decision has, broadly speaking, three principal possible solutions: (1) giving retroactive as well as prospective effect to rejection, thus treating the application, notwithstanding the "binder" as no more than an offer by the applicant; (2) giving no retroactive effect to a rejection, thus treating the binder as a contract of insurance during the interim; (3) giving effect to the rejection only where, on as objective a basis as possible, it is reasonable to say that the rejection is based on the circumstances which existed at the time of the application.
The decision which expressly adopted the mere offer theory is Gerrib v. Northwestern Mutual Life Insurance Company (1930), 256 Ill.App. 506. It involved a receipt for one year's premium, paid at the time of application, providing that if the insurer shall be satisfied that the applicant was an acceptable risk, the insurance shall be effective ...