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August 15, 1984


The opinion of the court was delivered by: Aspen, District Judge:


Plaintiff Massachusetts Mutual Life Insurance Company ("Mass. Mutual") has brought this action against Helen Leberis, wife and beneficiary of the decedent Constantine Leberis ("Leberis"), for breach of an insurance contract. Jurisdiction is asserted pursuant to 28 U.S.C. § 1332. Presently before the Court is Mass. Mutual's motion for summary judgment. For reasons set forth below, Mass. Mutual's motion is denied.


On approximately May 16, 1981, Leberis applied to Mass. Mutual for a $50,000 whole life insurance policy on his life in conjunction with Mass. Mutual's Policyholder Opportunity Program ("POP"), under which certain policyholders were allowed to apply for additional insurance without a medical examination. Leberis' application was made through Irwin G. Winer ("Winer"), who had acted as Leberis' insurance broker for approximately 12 years. Questions on the application which asked whether the applicant had been advised of or treated for any illnesses during the prior year, in this case between May 16, 1980 and May 16, 1981, were answered negatively,*fn1 and Leberis signed the application below a certification that all statements made in the application were true. Mass. Mutual subsequently issued a policy to Leberis which contained a provision allowing Mass. Mutual to contest the validity of the policy for material misrepresentations in the application for two years following its issuance.*fn2

Following Leberis' death in June 1982, which fell within the two-year contestability period, Mass. Mutual initiated a routine investigation of Leberis' medical history. As part of its investigation, Mass. Mutual obtained Leberis' medical records from two Chicago-area hospitals. The subpoenaed records showed that Leberis had been hospitalized three times for heart disease during the year prior to his application for insurance.*fn3

Mass. Mutual asserts that Leberis misrepresented his medical history of heart disease, thereby materially affecting the risk assumed by the company.*fn4 As a result, according to Mass. Mutual, the insurance policy is void, and Mass. Mutual is not liable to Helen Leberis for the proceeds of the policy.

In motions for summary judgment, the burden falls upon the moving party to clearly establish that there is no genuine issue of any material fact relevant to a judgment in its favor. Cedillo v. International Association of Bridge and Structural Iron Workers, Local Union No. 1, 603 F.2d 7, 10 (7th Cir. 1979). The non-moving party is entitled to have any doubts resolved in his or her favor, Moutoux v. Gulling Auto Electric, 295 F.2d 573, 576 (7th Cir. 1961), and should receive the benefit of reasonable inferences which can be made from underlying facts contained in the materials submitted. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962).

In the case before us, the defendant claims that there are a number of factual questions that must be resolved. While most of her allegations are conclusory, the questions of Winer's status, that is, whether he was acting as an insurance broker or as an agent for Mass. Mutual is an unresolved material factual issue.

Mass. Mutual claims that Winer, who merely recorded Leberis' answers to the questions on the application, did not possess any factual knowledge of Leberis' heart disease and hospitalization. Mass. Mutual further asserts that, even if he was aware of Leberis' medical history, Winer's knowledge could not be imputed to the company because Winer was acting as Leberis' insurance broker in procuring the application. The defendant, on the other hand, insists that Winer was a friend of Leberis and was aware of Leberis' illness and hospitalization. The defendant alleges that this knowledge must be imputed to Mass. Mutual because Winer was the agent of that company.

Both views are supported to some degree by Winer's own testimony. Winer testified that he was an insurance broker and, as such, was licensed to do business with any insurance company in Illinois.*fn5 Winer also testified, however, that he had a subagent's agreement with Mass. Mutual.*fn6

It is generally accepted in insurance law that an agent represents a particular insurer, while a broker represents the insured. See, e.g., Roby v. Decatur Steel Erectors, Inc., 59 Ill. App.3d 720, 725, 17 Ill.Dec. 71, 75, 375 N.E.2d 1355, 1359 (4th Dist. 1978). See also Ill.Ann.Stat. ch. 73, § 1065.37. The knowledge of an agent or subagent can be imputed to the insurer. Lauhoff v. Automobile Ins. Co. of Hartford, Conn., 56 F. Supp. 493, 499 (E.D.Ill. 1944) [citing Insurance Co. of North America v. Thornton, 130 Ala. 222, 30 So. 614 (1901); 1 Cooley on Insurance at 475 (2d ed.), Restatement of Agency §§ 79-80]. However, either a broker or an agent may act in the opposite capacity and represent the other party in a transaction. National Premium Budget Plan Corp. v. LaSalle Casualty Co., 81 Ill. App.2d 466, 225 N.E.2d 400 (1967). Whether a person is acting as an insurance agent or a broker in a particular situation is determined by his action and other factors such as who called him into action, who controls his movements and whose interest he represents. Browder v. Hanley Dawson Cadillac, 62 Ill. App.3d 623, 629, 20 Ill.Dec. 138, 142-143, 379 N.E.2d 1206, 1210-11 (1978) [citing Tri-City Transp. Co. of Bituminous Casualty Corp., 311 Ill. App. 610, 37 N.E.2d 441 (1941), and Moore v. Commercial Cas. Ins. Co., 350 Ill. App. 328, 112 N.E.2d 626 (1953)].

In the case before us, Winer had clearly acted as a broker for Leberis prior to the taking of the application in question. As noted above, however, he has also testified that he has a subagent's relationship with Mass. Mutual. For this reason, it is necessary to determine in which capacity Winer was acting at the time he procurred Leberis' application on May 16, 1981. If it is found that Winer was acting as a broker, the extent of Winer's knowledge need not be addressed. If, on the other hand, it is determined that Winer was acting as Mass. Mutual's subagent, the extent of Winer's knowledge also becomes a material question of fact.

Accordingly, because these questions of fact exist, Mass. Mutual's motion for summary judgment must be ...

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