Appeal from the Circuit Court of Sangamon County; the Hon.
Richard J. Cadagin, Judge, presiding.
PRESIDING JUSTICE MCCULLOUGH DELIVERED THE OPINION OF THE COURT:
This action was brought against Charter Security Life Insurance, based upon policies issued by its predecessor, Louisiana & Southern Life Insurance Company, and its agent, Oscar McNear, Sr. Defendant McNear's motion to dismiss count II of the complaint, directed against him personally, was granted; and the judgment upheld on appeal in Bellmer v. Charter Security Life Insurance Co. (1982), 105 Ill. App.3d 234, 433 N.E.2d 1362. Defendant Charter filed a motion for summary judgment (Ill. Rev. Stat. 1983, ch. 110, par. 2-1005), based upon its interpretation of section 234 of the Illinois Insurance Code (Ill. Rev. Stat. 1983, ch. 73, par. 846), arguing it had no duty to provide notice of default to Amy Bellmer, as owner of the insurance policy, but only to James Bellmer as the person whose life was insured. The trial court granted Charter's motion for summary judgment, and thereafter denied the motion for reconsideration. This appeal followed. We reverse.
• 1-5 In reviewing an order for summary judgment, this court must consider all of the facts revealed in the record and all of the grounds alleged by the parties in order to determine whether a genuine issue as to a material fact does still exist. On appeal, all of the facts must be viewed in a light most favorable to the nonmoving party. The reviewing court will reverse the order granting summary judgment if it determines that a genuine issue of material fact does exist. (Casteel v. Smith (1982), 109 Ill. App.3d 1094, 1098-99, 441 N.E.2d 860, 863, and cases cited therein.) Thus, on examination of the record, if it can be fairly said that a triable issue of fact exists, the motion for summary judgment should be denied (Ray v. City of Chicago (1960), 19 Ill.2d 593, 599, 169 N.E.2d 73, 76); however, since it is a drastic method of disposing of litigation, it should be granted only when the movant's right thereto is clear and free from doubt (Hillblom v. Ivancsits (1979), 76 Ill. App.3d 306, 310, 395 N.E.2d 119, 121-22). (See also Farmers Automobile Insurance Association v. Hamilton (1976), 64 Ill.2d 138, 141-42, 355 N.E.2d 1, 2.) The use of summary judgment is proper when it is clear that all material facts are before the court, the issues are defined, and the parties are agreed that only a question of law is involved. (Allen v. Meyer (1958), 14 Ill.2d 284, 292, 152 N.E.2d 576, 580.) Nevertheless, the order of summary judgment must be reversed if it is based upon an erroneous interpretation of the law.
• 6-8 Statutory provisions applicable to a contract of insurance, and in force at the time of its making, form a part of such contract and should be construed in connection with the policy. (Konrad v. Hartford Accident & Indemnity Co. (1956), 11 Ill. App.2d 503, 513, 137 N.E.2d 855, 860; 44 C.J.S. Insurance sec. 302, at 1214-16 (1945).) Until accepted by an insurer, the application has been regarded as merely an offer or proposal, but once accepted and a policy is issued making the application part of the policy, the application must be construed together with the policy as part of the entire contract. (New York Life Insurance Co. v. Rak (1962), 24 Ill.2d 128, 131, 180 N.E.2d 470, 471; 13A Appleman, Insurance Law & Practice sec. 7584, at 249 (1976).) Insurance forfeitures are disfavored as insurance serves important functions in contemporary society and, even in doubtful cases, courts should be quick to find facts which support coverage (Abbey v. Lumbermen's Mutual Casualty Co. (1980), 83 Ill. App.3d 995, 997, 404 N.E.2d 991, 992); and language of the policy should be liberally construed in favor of coverage, toward the end that the insured is not deprived of the benefit of insurance for which was paid, except where the terms of the policy clearly require a different result (DC Electronics, Inc. v. Employers Modern Life Co. (1980), 90 Ill. App.3d 342, 413 N.E.2d 23).
Section 234(1) of the Code provides in pertinent part:
"No life company doing business in this State shall declare any policy forfeited or lapsed within six months after default in payment of any premium installment or interest or any portion thereof, nor shall any such policy be forfeited or lapsed by reason of nonpayment when due * * * within six months from the default in payment of such premium, installment or interest, unless a written or printed notice stating the amount of such premium, installment, interest or portion thereof due on such policy, the place where it shall be paid and the person to whom the same is payable, shall have been duly addressed and mailed with the required postage affixed, to the person whose life is insured, or the assignee of the policy, (if notice of the assignment has been given to the company) at his last known post office address, at least fifteen days and not more than forty-five days prior to the day when the same is due and payable, before the beginning of the period of grace, except that in any case in which a parent insures the life of his minor child, the company may send notice of premium due to the parent." (Emphasis added.) (Ill. Rev. Stat. 1983, ch. 73, par. 846(1).)
The legislature has failed to expressly include the term "owner of the policy," when different from "the person whose life is insured" or his "assignee." (Compare N.C. Gen. Stat. sec. 58-207 (1982); Kan. Stat. Ann. sec. 40-410 (1981); N.Y. Ins. Law sec. 3211 (McKinney 1985).) We note, however, that section 245.1 of the Code, pertaining to assignability of life insurance, specifically states:
"No provision of the Illinois Insurance Code, or any other law prohibits an insured under any policy of life insurance, or any other person who may be the owner of any rights under such policy, from making an assignment of all or any part of his rights and privileges under the policy including but not limited to the right to designate a beneficiary thereunder and to have an individual policy issued * * *." (Emphasis added.) Ill. Rev. Stat. 1983, ch. 73, par. 857.1.
The applications for the policies which are the basis of this action were written on March 9, 1976. One application was for "split life" insurance in the amount of $100,000. The application requested the "[n]ame and address of proposed insured," which was completed with the information, "James M. Bellmer, 451 West Cook, Springfield, Ill., 62704." Question seven asked: "Where shall premium notices be mailed?" The response marked was, "[r]esidence." Question eight asked: "Owner: Who shall be the owner of any policy of life insurance issued Proposed Insured [box] If not, give full name and address." The response provided was: "Amy Bellmer 451 West Cook, Springfield, Ill., 62704." The beneficiary of the policy was also listed as "Amy Bellmer (wife of proposed insured)." Both James and Amy Bellmer signed the application, witnessed by Oscar McNear as agent for the insurer. This application resulted in issuance of policy No. 172412 on April 12, 1976; the policy specifications named James M. Bellmer as the "insured"; and specified the companion (annuity) policy number as 172411, and its annuitant as James M. Bellmer.
Also on March 9, 1976, an application was completed for a "split life annuity" policy. This form was likewise completed to show James M. Bellmer as the "proposed insured," giving his address, providing that premium notices should be mailed to "residence," and that the "owner" of the policy was Amy Bellmer at the address specified above, with Amy Bellmer also as the beneficiary. Annuity policy No. 172411 was issued on this application.
In March 1977 the Bellmers were divorced, and the above policies went unmodified. Shortly before August 1978, James Bellmer furnished defendant notice of his change of address. Notices had previously been directed to James Bellmer "c/o Amy Bellmer" at the West Cook address. James Bellmer failed to make the October 1978 premium payment on policy No. 172412, which had no automatic loan provision; as well as on annuity policy number 172411, which had an automatic loan provision which paid the premium on that policy only. He was notified of default in payment on the former policy, and of ways to utilize the annuity policy to provide himself with term life insurance; he was later notified of his reinstatement rights. Amy Bellmer, sole owner of the policy, was not so notified.
Defendant received James Bellmer's check for the October 1978 premium payment on policy No. 172412 on December 31, 1978, outside the grace period; and returned the check to him with a letter explaining his reinstatement rights, and providing a form (which portion completed by defendant showed Amy Bellmer as owner of the policy), and informing him of the overdue premium charge of $71.78. Amy Bellmer was not so notified.
On July 14, 1979, James Bellmer died as a result of an auto accident.
Various documents of the defendant insurer in the record show that the company recognized Amy Bellmer as owner of the policies; and that notices which were timely sent to James Bellmer were addressed to the named insured "c/o of Amy Bellmer" at "1327 North Fifth Street, Apt. 4, Springfield, Illinois, 62702" this street address apparently being that furnished the insurer by Mr. Bellmer shortly before August 1978. The record indicates that it was made clear to Amy Bellmer at the time ...