Lloyd v. Franklin Life Insurance Company

• Decision Date: 25 April 1957
• Docket Number: No. 15142.,15142.
• Citation: 245 F.2d 896
• Parties: Leeta A. LLOYD, Appellant, v. The FRANKLIN LIFE INSURANCE COMPANY, a Corporation, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

245 F.2d 896 (1957)

Leeta A. LLOYD, Appellant, v. The FRANKLIN LIFE INSURANCE COMPANY, a Corporation, Appellee.

No. 15142.

United States Court of Appeals Ninth Circuit.

April 25, 1957.

Neil Cunningham, San Francisco, Cal., C. W. Ricketts, Los Gatos, Cal., for appellant.

McCutchen, Thomas, Matthew, Griffiths & Greene, and Morris M. Doyle, Arthur R. Albrecht, San Francisco, Cal., for appellee.

Before HEALY, LEMMON and FEE, Circuit Judges.

JAMES ALGER FEE, Circuit Judge.

The beneficiary of a life insurance policy on the life of Warren William Lloyd, which contains in two different places the declaration, "First Policy Year Begins: January 1, 1953," brought action against The Franklin Insurance Company for the proceeds, after the death of Lloyd by suicide on December 21, 1954. The defense was that the effective date of issue of the policy was fixed, in accordance with a special request of Lloyd, at January 1, 1953, and that the policy issued contained a clause that, if "within two years from date of issue the Insured * * * shall die by self-destruction, the liability of the Company shall be restricted to the amount of premiums paid hereon." Cross-motions for summary judgment were filed. Based upon the pleadings, admissions, depositions and affidavits and all other documents on file, the trial court entered summary judgment for the Company.

The beneficiary did not object to the submission of the matter to the court on the cross-motions for summary judgment. After judgment was rendered for the Company, however, she made a motion to vacate judgment on the ground that there were material questions of fact unresolved. If this Court on appeal had found that proposition true, the cause must have been reversed, irrespective of the fact that each of the contesting parties respectively filed a motion for summary judgment. The able judge of the trial court, however, found expressly that there remained on the record no "issue as to any material fact." The record so shows. We affirm this holding.

It is true, the Company attempted to condition the admission that "a receipt on a form prepared by defendant Company was given to the insured" by the statement that this concession was for the purposes of its own motion for summary judgment only. We hold such a condition invalid. A concession of fact on motion for summary judgment establishes the fact for all time between the parties. The party cannot gamble on such a conditional admission and take advantage thereof when judgment has gone against him. This Court will not emasculate thus the efficient devices of summary judgment. Nor will we follow the weary road of common law pleading through tortuous sinuosities whereby facts admitted by a demurrer to any pleading must be established by proof in order to have judgment. This is not to say that there could be no relief by the court from an erroneous admission of a party. But there cannot be a tentative or conditional admission on motion for summary judgment, which by definition posits that there are not in truth any unresolved issues of material fact which must be tried if the wheel turns wrong. Of this all practitioners should take notice. The facts should be established first, and the law can only be laid down in light thereof.

The position of the beneficiary is based upon the fact that a receipt was thus given by the Company to the insured on December 6, 1952, when the latter, at the solicitation of the agent of the Company, signed an application for a policy of life insurance on printed form prepared by the Company. This application acknowledged receipt of the promissory note of insured for $12.57, the premium for a full month. The application provided that the policy issued thereon should not take effect unless the policy were delivered and the first premium paid during the lifetime and good health of insured, "in which event such policy shall be deemed effective as of the beginning of the first policy year as shown on such policy."

The receipt provided that, "if a policy is issued differing in plan or amount or premium or benefits from that applied for," no insurance should be considered in effect "until the first premium is paid and the policy manually delivered to and accepted by the applicant." Here there was a change in that the premiums provided for in the policy as issued were to be paid quarterly beginning on January 1, 1953, instead of monthly as contemplated in the receipt. Lloyd did accept this policy, which was manually delivered to him after January 1, 1953. He then paid the premium for the first three months.

The policy so issued contains elaborate clauses relating to premiums. One of these provides:

"Each semi-annual, quarterly or monthly premium shall be in accordance with the rates in use by the Company at date of issue hereof."

In the application, also, under the printed instruction, "Use this space for special requests," there appears the handwritten notation, "Date policy Jan. 1, 1953." In open court, when asked by the trial judge "whether you concede that Lloyd requested the policy be dated January 1, 1953, regardless of who wrote it on the application," counsel for the beneficiary answered, "Yes, Your Honor; we can't avoid that."

The receipt so delivered, which is relied upon by the beneficiary, was in part in the form set out below:

"First. It is agreed that (1) if the entire first premium stipulated in the policy issued hereon is paid to an authorized agent of the Company at the time of making this application and (2) if the Company shall be satisfied after investigation and medical examination, if a medical examination is required, that the proposed insured was, under the Company\'s rules and standards, an acceptable risk for the amount of insurance (not in excess of the Company\'s limit of retention) and upon the plan and at the rate of premium applied for on the date hereof or on the date of the medical examination, if a medical examination was required, which ever is the later, the insurance shall be effective in accordance with the provisions of the policy applied for from the date of this application or the date of the medical examination, if a medical examination was required, which ever is the later.

"Second. If the entire first premium is not paid or if a policy is issued differing in plan or amount or premium or benefits from that applied for, no insurance shall be considered in effect under this application unless and until the first premium is paid and the policy manually delivered to and accepted by the applicant during the continued lifetime and good health of the proposed insured." (Emphasis supplied.)

Insured took his medical examination on December 11, 1952.

The policy was delivered January 5, 1953. It provided: "First Policy Year Begins: January 1, 1953," as above noted, and established an annual premium of $136.63. One stipulation of the policy, as we have seen, established limited liability if insured committed suicide "within two years from date of issue." Death by suicide occurred December 21, 1954. Upon delivery of the policy, the insured and the agent of the Company agreed the premiums be paid quarterly and insured paid the first quarterly payment by check. There is no evidence that the Home Office of the Company ever received the promissory note given December 6, 1952. There was no payment of premium for the month commencing December 6, 1952, or December 11, 1953, or any other premiums except the quarterly premiums dating from January 1, 1953, provided for by the agreement received by the Home Office or the agent, unless the promissory note constituted one.

The sole question in the case is what was the "date of issue." We hold January 1, 1953, was the "date of issue" of this policy. In the application which was made a part of the policy, insured requested that it be so dated. Although the policy actually was written January 5, 1953, the Company dated it January 1, 1953, in accordance with the request of insured. All of the provisions of the policy relate to the date of January 1, 1953. The date of issue is thus fixed.

The insured, in accordance with these provisions of the policy as to premiums, had paid eight quarterly premiums. According to the agreed date of issue, the policy was effective without lapse until January 1, 1955. But insured killed himself December 21, 1954. Two years from the agreed date of issue had not elapsed, and the Company was only liable for the return of premium paid. It has been held that a policy would not become incontestible until two years from the date of issue established by the request of insured and compliance therewith by an insurance company.¹ There fore, this policy would not have been incontestible until two years after January 1, 1953. Similarly, the suicide clause would be effective for that time. The beneficiary contends that the policy was rendered ambiguous by the inclusion of the application as a part of the policy and the delivery of the promissory note as payment of the premium for the first month. It is claimed that the coupon receipt attached to the application made coverage commence on the date of the medical examination, December 11, 1952. Then it is urged that dating the policy January 1, 1953, would have the effect of giving the Company premium payment without any consideration or insurance contract obligation on the part of the Company for almost a month. The premium payment by promissory note of December 6, 1952, it is said, applied to short-term coverage for the period December 11, 1952, to the date of delivery of the policy. Finally, beneficiary urges the interim coverage given by the cover note commencing December 11, 1952, and the coverage which the policy says begins January 1, 1953, constituted a single contract and the application and the policy are to be construed together as parts of the same contract.

It is the law that doubts, inconsistencies or ambiguities in the construction of an insurance...