Knapp v. Independence Life & Acc. Ins. Co.

• Decision Date: 09 May 1961
• Docket Number: No. 12054,12054
• Citation: 118 S.E.2d 631,146 W.Va. 163
• Parties: Dennis R. KNAPP v. INDEPENDENCE LIFE AND ACCIDENT INSURANCE COMPANY.
• Court: West Virginia Supreme Court

Page 631

118 S.E.2d 631

146 W.Va. 163

Dennis R. KNAPP v. INDEPENDENCE LIFE AND ACCIDENT INSURANCE COMPANY.

No. 12054.

Supreme Court of Appeals of West Virginia.

Submitted Jan. 24, 1961.

Decided March 7, 1961.

Dissenting Opinion March 16, 1961.

Rehearing Denied May 9, 1961.

Syllabus by the Court

1. By virtue of Section 23, Article 12, Chapter 33, Code, 1931, as amended, any person who shall solicit within this State an application for insurance shall, in any controversy between the insured or his beneficiary and the insurer issuing any policy upon such application, be regarded as the agent of the insurer and not the agent of the insured.

2. A contract of insurance must be assented to by both parties either in person or by their agents. There must be a meeting of the minds of the parties as to the essential terms of the contract.

3. Ordinarily an advertisement issued for the purpose of soliciting insurance does not constitute a part of the contract when not attached to the policy or referred to in it.

4. In the law of insurance the elements of an estoppel against an insurer are conduct or acts on the part of the insurer which are sufficient to justify a reasonable belief on the part of the insured that the insurer will not insist on a compliance with the provisions of the policy and that the insured in reliance upon such conduct or acts has changed his position to his detriment.

Campbell, McNeer, Woods & Bagley, Selden S. McNeer, Jr., Huntington, for plaintiff in error.

Lane & Preiser, John J. Lane, Charleston, for defendant in error.

HAYMOND, President.

In this action of assumpsit, instituted in the Circuit Court of Kanawha County in July 1959, the plaintiff, Dennis R. Knapp, seeks a recovery from the defendant, Independence Life and Accident Insurance Company, a corporation, in the sum of $2,698.30 for necessary surgical, medical and hospital expenses incurred by the plaintiff in an effort to effect the cure of his wife who had contracted the disease of cancer. The plaintiff alleged in his declaration that the defendant owes him that amount under the terms and provisions of a policy of insurance which it issued to him on March 22, 1956 and on which the plaintiff bases his right to a recovery against the defendant in this action.

To the declaration of the plaintiff the defendant filed its plea of the general issue and its specifications of defense, and to those pleadings the plaintiff filed his replication. A pretrial order was entered on February 25, 1960, and at that time all facts pertinent to the issues in the case were stipulated by the parties except the facts relating to the question whether the plaintiff received either or both of two certain formal amendments or riders to the policy of insurance by which the coverage for cancer benefits was limited to $250.00 or $500.00 which amendments or riders the defendant alleged were mailed to the plaintiff; and that factual question was reserved for jury determination. Upon the trial of the case the jury found that the plaintiff did not receive any such amendments or riders. All other matters in controversy were submitted to the circuit court in lieu of the jury. The court found in favor of the plaintiff and on May 2, 1960, rendered judgment in his favor in the sum of $2,698.30, with interest and costs. To that judgment this Court granted this writ of error and supersedeas upon the application of the defendant.

On March 22, 1956, the defendant issued a policy of insurance to the plaintiff and the members of his family against loss by reason of surgical, medical and hospital expenses incurred in an effort to cure the members of his family of certain diseases, eight in number, and in particular the disease of poliomyelitis. The disease of cancer was not included in the original policy, the face amount of which was $5,000.00, with an annual increase of $1,000.00 per year until the maximum amount should be increased to $10,000.00 during the fifth policy year.

Sometime prior to the fall of 1957 the plaintiff received by mail from the home office of the defendant a letter informing him that his poliomyelitis and other dread diseases policy provided maximum benefits for poliomyelitis of $10,000.00 which increased in an amount of $1,000.00 each year until it shall be increased to the amount of $15,000.00 at no additional cost and requested the plaintiff to attach the rider to that effect to the policy. This rider, which accompanied the letter and was designated as a rider increasing basic sum for poliomyelitis provided that, without any increase in premium, the policy to which the rider should be attached 'is hereby amended as follows: Part One of such policy is hereby stricken therefrom and the following indented and quoted language is hereby substituted in place thereof: 'Part One--Basic Sums and Increases Therein 1. The Basic Sum for each of the diseases specified in Part Two, with the exception of Poliomyelitis, is $5,000.00. Such Basic Sum will be increased by $1,000.00 at the end of each consecutive policy year during which this policy has been continuously in force until it shall have been increased to $10,000.00. * * *. 2. The Basic Sum for Poliomyelitis is $10,000.00. Such Basic Sum will be increased by $1,000.00 at the end of each consecutive policy year during which this policy has been continuously in force until it shall have been increased to $15,000.00, * * *.'' The rider further provided that nothing contained in it should be held to waive, alter, vary or extend any of the terms or provisions of the policy, except as stated in the rider; and it was signed by the president and the secretary of the company.

In October 1957, after the plaintiff had received the foregoing rider which he attached to his policy, he received by mail from the home office of the defendant a form letter which contained, among others, these statements: 'Dear Policyholder: In Re: Policy No. FD You are a holder of an Independence family Polio and other Dread Diseases Policy. The Company has recently added Cancer Benefits to your policy, without any increase in premium. * * *.' The letter then informed the plaintiff of a new family life insurance policy obtainable from the defendant which would insure for one guaranteed low premium the father, the mother and all the children between the ages of fifteen days and twenty one years, and requested the plaintiff, if interested in such policy, to complete and mail to the company a card enclosed with the letter. The letter was signed by R. C. Day, Vice President of the defendant. Upon receipt of this letter the plaintiff attached it to his policy of insurance.

After receiving the foregoing letter the plaintiff renewed the policy for at least two additional periods of one year, paid a $10.00 premium for each renewal, and obtained receipts for each renewal which stated that cancer was included in the diseases covered by the policy. These renewal premiums were paid to, and the receipts were given by Ray W. Ellis, doing business as Ellis Insurance Agency, the broker who solicited and negotiated with the plaintiff in his purchase of the original policy of insurance.

Before the defendant mailed the plaintiff the second letter in October 1957, which was not accompanied by any rider, the defendant issued and sent to Coal River Insurance Agency, its local agent in the Charleston area which included Nitro where the plaintiff resided, a quantity of riders. Each of these riders specified that the amount of cancer coverage which had been added to the type of policy issued to the plaintiff was the sum of $250.00, and each of these riders contained the statement that it took effect July 1, 1957, or ninety days after the date of the policy, if the date of the policy was subsequent to June 30, 1957, directed the insured to attach the rider to his policy, and was signed by the president and the secretary of the insurer. In February or March, 1957, after the plaintiff had received the letter in October, 1957, the defendant issued and sent to its local agent a second quantity of riders. Each of those riders specified that the amount of cancer coverage had been increased from $250.00 to $500.00, contained the statement that it took effect May 1, 1958, or ninety days after the date of the policy, if the date of the policy was subsequent to April 30, 1958, directed the insured to attach the rider to his policy, and was signed by the president and the secretary of the insurer.

The evidence shows that the established practice of the local agent of the defendant was to send the riders to Ray W. Ellis, the broker who negotiated the original policy; but if that course was followed it appears, from the uncontradicted testimony of the plaintiff, and the jury so found, that the respective riders which provided cancer coverage of $250,00 and increased that amount to $500.00 were never received by the plaintiff; and it also appears that he was not informed about them until after he submitted his proof of claim to the defendant on or about May 27, 1959.

By letter dated June 11, 1959, the defendant denied liability for any amount in excess of $500.00 and informed the plaintiff of the rider which limited its liability to the plaintiff for cancer benefits to that amount. On June 15, 1959, the defendant sent its draft to the plaintiff in the amount of $500.00. The plaintiff instituted this action on July 6, 1959, which was before the expiration of sixty days from the date the plaintiff filed his proof of loss, and on July 24, 1959, he returned the draft to the defendant and notified it that he refused to accept the amount of the draft in settlement of his claim.

The stipulation contains numerous contentions in behalf of each of the respective parties. Among the contentions of the plaintiff are the contentions that as the letter received by him from the defendant in October 1957 contained no restrictions or limitations, the amount of coverage for...