Mofrad v. New York Life Ins. Co.

• Decision Date: 01 September 1953
• Docket Number: No. 4605.,4605.
• Citation: 206 F.2d 491
• Parties: MOFRAD et al. v. NEW YORK LIFE INS. CO.
• Court: U.S. Court of Appeals — Tenth Circuit

206 F.2d 491 (1953)

MOFRAD et al. v. NEW YORK LIFE INS. CO.

No. 4605.

United States Court of Appeals Tenth Circuit.

September 1, 1953.

Jackson B. Howard, Provo, Utah, and K. Jay Holdsworth, Salt Lake City, Utah, for appellants.

George A. Critchlow, Salt Lake City, Utah, for appellee.

Before PHILLIPS, Chief Judge, and BRATTON and MURRAH, Circuit Judges.

MURRAH, Circuit Judge.

Appellants appeal from a judgment for the appellee insurance company on a directed verdict. The facts are practically undisputed and the sole question is whether appellee entered into a contract to insure the life of appellants' son.

At the solicitation of appellee's agent, Abolfazl Mohassel Mofrad, a native of Iran attending Brigham Young University in Provo, Utah, made application for a life insurance policy in the amount of $9,000.00 with double indemnity for accidental death. This application dated November 18, 1948, contained the following pertinent provisions of agreement between the parties:

"It is mutually agreed as follows: 1. That the insurance hereby applied for shall not go into force unless and until the policy is delivered to and received by the Applicant and the first premium thereon paid in full during his lifetime, and then only if the Applicant has not consulted or been treated by any physician or practitioner since his medical examination, or since the time of making this application if no medical examination is made, and thereupon the policy shall be deemed to have taken effect as of the date specified under 3 above; provided, however, that if the Applicant, at the time of making this application, pays the soliciting agent in cash the full amount of the first premium for the insurance hereby applied for, and so declares in this application and receives from the soliciting agent a receipt therefor on the form attached as a coupon to this application and corresponding in date and number hereto, and if the Company, after investigation and such medical examination, if any, as it may require, shall be satisfied that the Applicant, at the time of making this application, was insurable and entitled under the Company\'s rules and standards to the insurance, on the plan and for the amount hereby applied for, at the Company\'s published premium rate corresponding to the Applicant\'s age, then said insurance shall take effect and be in force under and subject to the provisions of the policy applied for from and after the time this application is made, whether the policy be delivered to and received by the Applicant or not."

Part 3 of the application referred to in the agreement provided that the policy should be written to take effect as of the date of the application. Upon signing the application, the applicant paid the agent an amount requested as the first monthly premium, and the agent delivered the coupon receipt to the applicant. This receipt also contained the quoted agreement between the parties and stated that the company was bound under the terms thereof.

The agent, who was new with the company and not sure of the procedure in taking applications, also filled in the non-medical portion, not remembering that, according to his rate book, such policies could be written only up to a maximum amount of $5,000.00 for an applicant of Mofrad's age. But the agent advised Mofrad he would have to take a physical and in fact made several appointments with authorized physicians for Mofrad. Mofrad never had a physical examination apparently due to the press of personal matters. After the company received the application with the premium, and noted the amount of insurance being requested, they reminded the agent that non-medical policies could be written for not to exceed $5,000.00 and advised the agent to have Mofrad take a physical. The agent replied that an appointment had been made.

Mofrad died December 4, 1948 as a result of injuries sustained in an automobile accident, and the appellants as beneficiaries named in the application seek to hold the company liable on the theory that the payment of the premium upon filing the application and the delivery of the receipt constituted an interim contract of insurance effective from the date of the application. Appellants contend that under the terms of the agreement considered in relation to Part 3 of the application, the only reasonable construction is that the company assumed the risk of insuring Mofrad from the date of the application under a so-called "binder receipt"; that otherwise the agreement is ambiguous; that the purpose...