United States District Court, Northern District of Illinois, E.D
August 15, 1984
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, A MASSACHUSETTS CORPORATION, PLAINTIFF,
HELEN LEBERIS, DEFENDANT.
The opinion of the court was delivered by: Aspen, District Judge:
MEMORANDUM OPINION AND ORDER
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
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
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
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 denied. It is so