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Fields v. Franklin Life Insurance Co.

OPINION FILED JUNE 21, 1983.

JOFFRE M. FIELDS, PLAINTIFF-APPELLANT,

v.

FRANKLIN LIFE INSURANCE COMPANY, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Jackson County; the Hon. James Williamson, Judge, presiding.

JUSTICE KARNS DELIVERED THE OPINION OF THE COURT:

Rehearing denied July 20, 1983.

Joffre M. Fields brought this action against Franklin Life Insurance Company as beneficiary of her deceased husband, Charles S. Fields. After a jury trial in the circuit court of Jackson County, judgment was entered on the verdict in favor of defendant.

The question before us on appeal is whether the issuance of a conditional premium receipt by the insurance company, upon payment of the initial premiums by the deceased, bound the company to pay the death benefit where death occurred prior to the issuance of the policy of insurance. We hold that under the terms of the conditional premium receipt, and the facts here presented, no policy of insurance was in effect.

The deceased made two applications for insurance, paid the initial premium and was issued two conditional premium receipts. The receipts provided:

"CAUTION: No interim or temporary insurance coverage is afforded under the provisions of this receipt and no insurance will become effective prior to policy delivery and acceptance unless each and every condition specified in paragraph `FIRST' on the reverse side is fulfilled exactly. No agent of the company and no broker is authorized to alter or waive any of these conditions."

The conditions stated in paragraph "FIRST" on the reverse side of the receipt were as follows:

"FIRST. Conditions Under Which Insurance May Become Effective Prior to Policy Delivery and Acceptance. If each and every one of the following conditions have been fulfilled EXACTLY — (a) full initial premium must be paid according to the method of premium payment selected in the application for the amount of insurance applied for; (b) all medical examinations, tests, X-rays and electrocardiograms required by the Company's underwriting rules and standards must be completed within 60 days from the date of the application Part 1; (c) the Proposed Insured, (and the Applicant if Payor Benefits are applied for) must be on the Effective Date, as defined below, a risk acceptable under the Company's underwriting rules, limits and standards for a policy EXACTLY as applied for without modification and at the rate of premium paid — then insurance as provided by the terms and conditions of the policy applied for and in use by the Company on the Effective Date but for an amount not exceeding that specified in paragraph `SECOND' will become effective as of the Effective Date. `Effective Date' as used herein means the latest of: (a) the date of application Part 1, or (b) the date of completion of all required medical examinations, tests, X-rays and electrocardiograms required by the Company's underwriting rules and standards, or (c) the date, if any, requested in the application."

On April 4, 1978, the day after the deceased submitted a second application for life insurance, Fields sought medical attention from Dr. Hugh D. McGowan, the doctor to whom Fields had brought his son for medical care. McGowan had noticed Fields' weight loss over an 18-month period prior to his death and had advised Fields on at least two occasions to get medical attention. Fields' history of weight loss and a goiter visible to the naked eye were significant factors in Dr. McGowan's diagnosis that Fields suffered from hyperthyroidism. Fields was referred to Dr. G. Ray Ridings who treated Fields with radioactive iodine on May 18, 1978. On May 20, 1978, Fields became very ill, was rushed to a hospital and died that same day. The company attempted to arrange a physical examination of Fields on three occasions; no examination was made prior to his death.

No policy of life insurance was ever issued by Franklin Life on the applications submitted by Charles Fields. By letter dated May 26, 1978, the company informed the plaintiff that the applications of her husband were incomplete. The company denied liability under the terms of the conditional premium receipts and tendered return of the premium payments in the amount of $71.05, which plaintiff rejected.

The company denied that insurance coverage was in effect because the applicant had failed to submit to a medical examination within 60 days from the date of application as required by the conditional premium receipt and by the company's underwriting rules and standards. The company further alleged that the applicant had made a material misrepresentation of fact on the application for life insurance and that the applicant was not an acceptable risk under the company's underwriting rules and standards at any time from the date of application.

On appeal, plaintiff argues that the undisputed facts establish that an interim, or temporary, contract of insurance was in effect at the time of death, and prior to the issuance of a policy of insurance or formal rejection of the application for insurance. The plaintiff also assigns as error the refusal of the court to give certain preemptory instructions containing abstract propositions of law. Plaintiff's tendered instruction No. 27, as an example, told the jury that a temporary contract of insurance was in existence on issuance of the conditional premium receipt if the applicant was not notified by the receipt that he must have a medical examination and if the company failed to establish that the deceased was not an insurable risk at the time of submission of the application. However, plaintiff's lengthy issues instructions put in issue the same matter for the jury's determination.

In short, should we determine that the terms of the conditional premium receipt were ambiguous so that a factual question was properly left for the jury's determination, all possible factual questions were resolved in the defendant's favor. Thus, under plaintiff's issues instruction, the jury determined that the deceased was not an insurable risk; that the deceased failed to submit to a medical examination which was required under the terms of the receipt; that the deceased made a material misrepresentation of fact in the application for insurance; and that the insurance agent did advise the deceased that a medical examination was required. We need not consider whether this issue was properly submitted to the jury where the language of the receipt was clear that the agent could not waive any of the conditions precedent to coverage. See Wallace v. Prudential Insurance Co. of America (1973), 12 Ill. App.3d 623, 299 N.E.2d 344.

The plaintiff submitted for the jury's determination all conceivable factual issues which she perceived to entitle her to recover. Whatever nuances may be gleaned from these subsidiary factual controversies, they have all been resolved in defendant's favor. The plaintiff does not argue on appeal that ...


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