Ruth S. Miller v. Republic National Life Insurance Company
714 F.2d 958
9th Cir.
1983
Check Treatment

*1 MILLER, Plaintiff/Appellant, Ruth S. LIFE

REPUBLIC NATIONAL COMPANY,

INSURANCE

Defendant/Appellee.

No. 82-4549. of Appeals,

United States Court

Ninth Circuit.

Argued May and Submitted Sept.

Decided Silver, Silver, D.

Melvyn & Suden San Jose, Cal., plaintiff/appellant. Boos, Martin, John L. Pettit & Fran- San cisco, Cal., defendant/appellee. MERRILL, FLETCHER, Before PREGERSON, Judges. *2 PREGERSON, he was an risk on Judge: insurable that date. Fred receipt, Miller was a which provided: appeals from an Appellant Ruth S. The insurance under for in favor summary judgment order granting application which is made shall be effec- Life Insur- Republic National Appellee receipt tive on the date of this or the date Miller contends (Republic). ance Co. completion medical examination her deceased Republic improperly denied (if required by Company), and when life insurance application husband’s date, whichever is the later if in the known to based on a condition that was not of the authorized of the opinion Officers exist at the time the was sub- application ... Insured is Company Proposed Be- premium fully paid. mitted and the for insurance acceptable insurable and of material genuine cause certain issues practices plan under the rules and on determined, fact remain be If In- Proposed of insurance .... is reversed acceptable sured is not so insurable and for trial. and the case remanded Company liability has no under this FACTS receipt .... are On pertinent undisputed. The facts Company days shall have 60 from date 15, 1977, agent November Alan Republic application upon consider and act father, Miller, Miller solicited his Fred application .... $50,000 purchase policy. a life insurance December Fred Miller diag- On was Miller was examined Within a week Fred personal nosed his as a by physician having and on by Republic, doctor selected brain malignant Surgery per- tumor. 22 Miller signed application November Republic formed on December 14. When his wife Ruth naming beneficiary. of the on it surgery learned that, part application provided Miller’s and on promptly application denied if the full first ... on 5, 1978, January returned to Miller his un- re- application the date of this and the year’s premium. cashed check for the first number as ceipt bearing the same serial September Miller died Proposed is issued to the application this poli- When Ruth Miller’s claim under the Insured, Compa- of the liability then the she cy by Republic, brought was denied and ny shall be as stated in the Alan Republic impleaded instant action. part made a hereof. be Miller, against cross-complained who then Republic Republic. also reserved to application “60 from the date of of the summary judgment, moved for Republic the insurabili- application ... determine hearing and a was held on November the basis on Proposed of the Insured on ty hearing, Republic after the day 1981. The or on another which the is made application submitted an affidavit of one of its under- stated that Finally, application basis.” writers, Marrinan, stating Michael F. President, President, Vice Sec- [o]nly Repub- Miller was uninsurable under Fred “on whatever date Secretary practices or an Assistant lic’s rules and retary brain tumor.” The modify discharge malignant can or con- he had the Company sum- granting court issued an order district Company’s or waive any tracts Republic. mary judgment then rights requirements only or statement, writing. representation No ANALYSIS by any person made other shall promise may be af- ruling The district court’s Company. be binding upon record, appears if it from the firmed of this factual infer- purposes viewing concedes for all evidence and after Miller, year’s his first favorable to appeal light that Fred Miller ences in the most of material genuine in full on December 1977. On that there are no issues judg- is entitled to his fa- fact and that day, the same Alan Miller assured Dosier v. E.g., of law. of that date ment as a matter ther that he was covered as Otherwise, Broadcasting 656 F.2d that condition. will Valley Corp., Miami (9th Cir.1981). reject pro- “make a deathbed race” to application insured’s whenever it re- posed summary judgment for Re granting knowledge during ceives the risk-evaluation court ruled that public, any the district period that the insured was involved in a arising Repub “temporary” coverage upon serious accident or contracted a serious ill- *3 application pre lic’s of Miller’s and receipt ness. the rule v. payment mium under of Ransom Co., Life Insurance 43 The Penn Mutual is question There no that the district 420, (1954),1 timely 274 P.2d 633 was Cal.2d correctly court the applied rules of Ransom in accordance with the require canceled finding and in that Fred Miller took Smith Life ments of Westland Insurance Smith required all of the for cov steps temporary 433, Co., 111, 15 Cal.3d 539 P.2d 123 Cal. erage Republic every to arise and that did (1975).2 Supreme 649 The California Rptr. thing required coverage, to terminate such in that an Court Ransom held insurance that had a to ter assuming Republic right contract was in force at the time of the erred, however, minate. The court in con proposed by insured’s death virtue of the the Miller to struing given Fred al application premium payment, and allow to determine that Miller was though right the insurer retained the any as of time after December uninsurable 425, coverage. terminate the 43 Cal.2d at 4,1977. This error warrants reversal of the Smith, 274 P.2d at 635. In the court held court’s order that cover “temporary” termination for Republic. age until the re applicant did not occur view, rejection ceived both notice of and a refund In the district court’s 120, paid. deny application of 15 Cal.3d at was free to Fred Miller’s any premiums 439, at Cal.Rptr. applying 539 P.2d at 123 656. In within 60 of Miller became case, hold, the instant that the uninsurable for reason. We how argues any dis ever, ruling holdings trict court’s undercuts the that the to Miller on 4, 1977, of Ransom and contends that December must be construed in Smith. She where, here, as an uninsurable condition favor of the insured give Republic during 60-day insurability first manifests itself the risk- additional time to determine period, evaluation an insurer should not be of the effective date of the policy i.e.,— deny application allowed to based on December 4.3 Ransom, pro- disability. In as in the instant the the event of total Within several weeks, posed by insured was examined a doctor select- the insurer issued Smith a that by coverage by applied ed the insurer and submitted the first full modified the for eliminat- premium payment application premium ing with his written the accidental death benefits and by monthly receiving increasing premi- for insurance. After the doctor’s re- and waiver port, requested sign Smith Ransom under- um. When refused to an amended examination, go physical application pay premium, but he further was or the increased he company killed in an automobile accident before this was told that would not issue the issue, arranged. by policy applied premium as framed and that al- Califor- Court, Supreme ready paid nia was “whether a contract of would be refunded. Smith died in immediately upon receipt by day. insurance arose an automobile accident the next Cali- completed application Supreme temporary defendant of the with held that the fornia Court premium payment subject right coverage upon that arose of to the insurance premium agreement application payment and defendant to terminate the if it sub- sequently in not concluded that Ransom was not ac- under the rule established Ransom was 423, ceptable.” applicant 43 at 274 P.2d at 634- terminated until received both Cal.2d rejection any premi- notice of and a refund of 35. The court held that there was immediate “temporary” coverage upon receipt ap- paid. 539 P.2d at 439- ums 15 Cal.3d at Cal.Rptr. plication premium payment. 123 at 655-6. and law, Smith, proposed ambiguities in an insur- insured Smith submitted 3. Under California strong- application premium payment most ance contract are to be construed life and insurance, Smith, ly mortgage-security protection, in favor of the insured. 15 Cal.3d at acci- 656; benefits, premium Cal.Rptr. at 123 at dental death waiver in 539 P.2d with the interpretation premium upon This is consistent the first looks it as a receipt purpose issuing receipts such assigned to study and is not bound it to discover life applicants: insurance conditions and limitations circumscribing its 12A practice issuing Appleman, condi- effectiveness.” has arisen of Insurance [A] binders if the Law at

tional first & Practice 247-51. § time of There is a application.... at the example, Young For v. Metropolitan variety wording in such instruments Co., Life 272 Cal.App.2d Insurance What the seek companies generally .... (1969), Cal.Rptr. approvingly cited coverage is to make depend to do interim Smith, Supreme the California Court their upon approval of the application, Young applied for life insurance under finding that the applicant was insurable double plan provided indemnity in the the time is made. application at event of death. The receipt giv- accidental argue appli- that this They protects when he Young en to *4 cant his condition should deteriorate that unambiguously stated accidental death after that moment. be paid applicant benefits would not if the Appleman, 12A Insurance Law Practice & died company approved poli- before the the 7237, added). (1981) (emphasis at 188-89 § cy. died before his Young application was Moreover, each while the of life language the sought insurer to approved, and limit its some re- policy insurance is different the terms of the liability by receipt. The a spects, virtually every construing case that, held even appeal though court of com- similar to Fred given to the one a pany approval clearly condition speaks poli- as of insurability the insurer’s full precedent liability, See, date. v. Fi- cy’s e.g., effective Rivota was liable to the full extent company under 1225, Co., & 1227 Guaranty 497 F.2d delity policy applied proved unless it that Cir.1974); (7th v. Phoenix Mu- Scheinman provisions limiting liability its were 999, Co., Insurance 1000 tual Life 409 F.2d Young’s called to attention or read him. Cir.1969); Insur- (7th Damm v. National 461, Cal.Rptr. at 77 at 387. The Id. court America, ance 200 N.W.2d 620 Co. that, ordinary layman, reasoned “to the (N.D.1972). the insurance consti- payment of with interpretation also comports This for immediate payment protection.” tutes expectations” appli- the “reasonable Id. receives a the first receipt, pays cant who medi- premium, submits to the insurer’s case, instant In the Fred Miller Smith, cal examination. the California signed the full first application, Court of a Supreme development traced the aby and was examined year’s premium, doctrine aimed at the reason- “effectuating by Republic. No doctor selected further expectations ordinary appli- able requested. were medical examinations 441,123 15 at cant.” Cal.3d 539 P.2d at represented him agent insurance that he at 657. The arose out of Cal.Rptr. doctrine was covered as of December 4 if he was recognition that insurance are policies facts, that date. Under these insurable on adhesion,” i.e., “contracts standardized a expectation” Fred Miller had “reasonable prepared party to entirely by contracts one that he if he was insurable as was covered acceptance by the transaction for other. of December 4. 122 n. at n. 539 P.2d at 441 123 Id. we conclude that form, Because present at 657 n. 12. In its Cal.Rptr. doctrine to terminate Fred Miller’s expectations” right “reasonable had no unless coverage prove that “one insurance it could holds who is a issued, Ransom, at a be 43 Cal.2d at 635. An is but such condition must P.2d policy wording policy explicit is free on insurer to sell an insurance more than the may actually be cancelled condition and must come to the involved here subsequent on based medical facts learned attention of the insured. and the the date first uninsurable as of company very clearly that Miller was and explicitly re- served to ascertain the truth. must be reversed. case is remanded

for trial to determine Miller was whether 4, 1977. In connec-

insurable on December determination, we note that

tion with this hinge cannot on wheth-

“insurability” solely in fact

er an uninsurable condition exists on If policy. effective date quickly were the could re- AMERICAN MOTORCYCLIST ject who manifested an un- every applicant ASSOCIATION, etc., al., et during insurable condition the risk-evalua- Plaintiffs-Appellants, tion too period, placing heavy burden v. upon the applicant prove when the condi- tion WATT, etc., rendered him “uninsurable.”4 There- al., James G. et fore, an applicant should be considered “un- Defendants-Appellees. insurable” if the medical examinations INYO, political COUNTY OF subdivi requested by the insurer disclosed that an California, sion of the State of uninsurable condition existed as of the ef- Plaintiff-Appellant, policy. fective date of the *5 CONCLUSION WATT, etc., al., James G. et Based on the above analysis, Defendants-Appellees. 82-5099, Nos. 82-5100. reversed, and the case is remanded for trial. Appeals, United States Court MERRILL, Judge, dissenting: Ninth Circuit. I dissent and would affirm the District Argued May 1983. Submitted Court. I regard holding of the majority Sept. Decided 1983.

and its rationale contrary to the clear language receipt. agree

I that under the terms of that

receipt the facts establishing uninsurability

must have existed as of December I

disagree however, majority, with the on its question

contention that the is not whether existed,

those facts then but whether their

existence on that date had been disclosed

the medical examination requested by Re-

public. I find nothing or the

receipt to warrant such a conclusion. It is

the fact of uninsurability as of December 4 is crucial1 and not some subjective

assumption expectation that may then

have existed based on mistake of fact. The Marrinan, In this the affidavit of 1. No issue of fact exists as to that. Counsel underwriter, appellant argument states that Miller at oral conceded what was uninsurable “on whatever date he had the malignant me seems obvious: brain malignant brain tumor.” Under these circum- diagnosed which on December 8 tumor stances, very plaintiff it would be difficult for a existed four earlier. specificity. to counter such lack of