Koorstad v. Washington Nat. Ins. Co.

• Decision Date: 26 December 1967
• Citation: 257 Cal.App.2d 399,64 Cal.Rptr. 882
• Court: California Court of Appeals Court of Appeals
• Parties: Eldon J. KOORSTAD, Plaintiff and Respondent, v. WASHINGTON NATIONAL INSURANCE COMPANY, a corporation, Defendant and Appellant. Civ. 32065.

Page 882

64 Cal.Rptr. 882

257 Cal.App.2d 399

Eldon J. KOORSTAD, Plaintiff and Respondent, v. WASHINGTON NATIONAL INSURANCE COMPANY, a corporation, Defendant and Appellant.

Civ. 32065.

Court of Appeal, Second District, Division 1, California.

Dec. 26, 1967.

John C. Morrow, Los Angeles, for appellant.

Eldon J. Koorstad, Downey, in pro. per.

FOURT, Associate Justice.

Washington National Insurance Company (hereinafter sometimes referred to as Washington) appeals from a judgment entered in favor of Eldon J. Koorstad by the trial court, sitting without a jury, in this action to enforce a contract for insurance coverage and obtain sickness and disability payments thereunder.

Koorstad is an attorney who has been engaged in active practice for a number of years with offices in Downey, California. On February 13, 1963, Robert G. Lindgren, a Washington insurance salesman, called on Koorstad to service certain insurance policies already in force on his life. At that time Koorstad decided, upon Lindgren's recommendation, to make application to Washington for three new policies: a medical expense policy, a business expense policy, and an income disability policy (hereinafter sometimes referred to collectively as disability protection policies). Koorstad already had a policy with another company which provided similar coverage, and the renewal premium on that policy was to become due March 1, 1963. Koorstad wished to take out the new policies in lieu of the existing policy and accordingly he directed Lindgren to the effect that he did not wish to duplicate coverage but wanted the new policies to become effective March 1, 1963. Lindgren agreed that this should be accomplished. ¹ The parties, however, stipulated during trial that Lindgren lacked authority to set the effective date of the insurance or to bind Washington to March 1, 1963, or to any other date upon which specific insurance coverage could commence.

Koorstad on February 13, 1963, signed application forms for the three new disability protection policies, but these forms were given to Lindgren undated. Koorstad at the same time applied for an additional life insurance policy from Washington. Lindgren told Koorstad that a physical examination would be required for the life insurance policy, but neither party mentioned a physical examination requirement in connection with the disability protection policies, or any of them. On the same day, Koorstad gave Lindgren two checks payable to Washington: one check dated February 13, 1963, for $13.00 as a premium deposit on the life policy, and the other check for $54.00 post-dated March 1, 1963, as one month's total premium on the disability protection policies. Lindgren accepted the checks, but did not give Koorstad the receipts which were attached to the disability protection policy applications. Koorstad was unaware of the attached receipt forms, which Lindgren did not point out to him, so he never requested them. Lindgren testified that he withheld the receipts because the three policies were not to become effective until March 1.

Lindgren immediately sent the life insurance premium to H. E. Nevonen Inc., the Los Angeles general insurance agency for Washington. Later he became concerned because he felt that the time required to process and issue the disability protection policies was so long that the work might not be completed within the grace period of Koorstad's expiring policy. With this in mind, on February 24, 1963, he dated and mailed the three disability protection policy applications also to H. E. Nevonen Inc. He did not in any manner advise the general agency that the policies requested were to be issued as of March 1, 1963. He enclosed with the applications his personal check of the same date made out to Washington to cover the first month's premiums, because he customarily covered post-dated checks in this manner. H. E. Nevonen Inc., received these applications, together with Lindgren's check, on or about February 25, 1963, and on February 26, 1963, it deposited these funds in its trust account and forwarded the applications to Washington's home office. Howard E. Nevonen as president of the Washington general agency testified that under these circumstances the next premium payment would normally become due March 24, 1963. Funds received in this manner were customarily held in the trust account pending Washington's action. Upon notice of Washington's approval the premium would be forwarded to the home office; if the applications were disapproved, the premium payment would be returned to the applicant.

Lindgren gave no prior notice to Koorstad of his decision to send in the premium, but by an undated letter which Koorstad received on or about March 2, 1963, he returned Koorstad's post-dated check (which was made out to Washington) and requested that Koorstad send instead a check payable to Lindgren. Koorstad in response sent Lindgren a substitute check.

On February 27, 1963, the three disability protection policy applications were received at Washington's home office in Evanston, Illinois. On February 28, 1963, Koorstad was examined by his doctor who found a vascular insufficiency in his left leg. On March 2 a tentative diagnosis of arteriosclerosis was rendered and this was confirmed a few days later. Accordingly, Koorstad in early March telephoned Lindgren and advised him that he might have arteriosclerosis. Lindgren then for the first time called Washington's home office to advise them that the policies were not to become effective until March 1. About March 12, 1963, Koorstad again called to let Lindgren know that the diagnosis of arteriosclerosis had been confirmed. Lindgren by letter dated March 19 gave Washington written notice that he and Koorstad had originally proposed a March 1st effective date for the policies.

Washington never issued to Koorstad any policy or policies evidencing the requested disability protection coverage. Each of the three applications which Koorstad submitted to Washington for disability protection was declined on April 7, 1963, as he was advised by letter dated April 18, 1963, for the stated reason that Koorstad was uninsurable. Subsequently, Lindgren tendered to Koorstad checks drawn on the Nevonen agency trust account, which was carried under the name 'Washington National Insurance Company,' refunding the premium deposits paid on the three applications.

Koorstad brought the instant action to recover business expenses, loss of income, and medical expenses, from Washington. The trial court found that Washington insured Koorstad for these three types of loss, pursuant to his applications and the payment of one month's premiums, commencing February 23, 1963, and for a period of one month. It further found that Koorstad's sickness, which gave rise to the subject action, became manifest on February 28, 1963, while the coverages were in effect, and that he gave prompt notice to the insurance company which was then obligated to pay benefits.

Appellant contends that (1) the evidence does not support the trial court's finding that Koorstad was insured by Washington for a period of one month commencing February 23, 1963; (2) as a matter of law there was no contract for insurance coverage between Koorstad and Washington; and (3) the trial court committed prejudicial error in rejecting an offer of certain evidence, limiting appellant's argument, permitting amendment of the complaint to conform to proof, and exercising bias which deprived appellant of a fair trial. These contentions are without merit.

The first two contentions will be considered together because of the close intermingling of the factual with the legal issues involved. Koorstad's complaint originally alleged an oral contract for insurance coverage to begin March 1, 1963. At the trial it was stipulated that Lindgren had no authority to bind the company to any specific date for the commencement of insurance coverage. The evidence, as hereinabove set forth, disclosed...