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Show FACE FOUR THE DAILY RECORD . THURSDAY. MARCH 22, 1973 A In The Supreme Court Of The State Of Utah ' V r" ' , whether the contract related back to the date of the application (or medical) or not. If he lived until the application wae approved and a policy iesued, it would leern to be a matter of indifference to him whether he had been insured and the during the interim between the date of the application date of the issuance of the policy. On the other hand, if he died before the application was approved and the policy issued, his beneficiary would derive no benefit from the insurance. The chief object of the provision would, therefore, seem to be to enable the insurance company to collect premiums for a period during which there was in fact no insurance, and consequently no risk. Citation Under authorities which hold temporary insurance to be in effect, the conditions imposed by the receipt would be treated as conditions subsequent. The company was bound to act either affirmatively or negatively on the application. The insured, if an acceptable risk, was entitled to a policy. If he was not acceptable, the insurance company was reqiired to so notify him, and returnthe premium paid, or if rated up, On notify him by tendering an application at the higher rate. notified the facts in the instant case the insured was never ' during his life that his application was accepted, rejected, or that it would be considered at a higher premium. Here the money for the first premium was retained by his insurance company until after the insured's death, when tender was made to his beneficiary for a return of the premium which she rejected. Citations Where the provisions in a binding receipt are construed as providing temporary Insurance protection until such time as the insurer has considered the application and announced its determination to accept or reject the risk, the insurer cannot terminate the risk so assured unless the insured Insurance, Sec. 38, p. 1021: this situation can be remedied fairly and satisto factorily both parties is a question not yet answered. According to one text writer a satisfactory solution can be reached only by the open recognition that the sensible intentions and expectations of the negotiators themselve and not the unilaterally drawn wording of the binder and policy, should be controlling. The applicant who pays his premium expects to be protected immediately, and is customarily led to believe so by the agent. Since the effective date is said to be the date of the application once home office approval is given, but the applicant is not covered until the application is approved, the applicant is actually paying for a period during which he may not be covered. A recognition of the inequity of this result will, according to this view, enable courts more easily to conclude that, regardless of the wording of the binding receipt, the agreement between the insurer and the applicant contemplated temporary coverage, pending final action by the insurance company How .... In the instant action, the receipt, which the jury found was in fact issued to the applicant, Mr. Long, created temporary insurance coverage until such time as the insurers had considered the application and determined to issue a policy or reject the risk. Thereafter, the insurer cannot terminate the risk so assumed unless the insured is notified during his lifetime that his application was rejected. The fcts are undisputed that Mr. Long did not receive notice of the company's rejection; and, therefore, the company is liable to the beneficiary, Mrs. Long. The judgment of the trial court is reversed, and this cause is remanded with an order to enter judgment for the plaintiff. Costs are awarded to plaintiff. I CONCUR: 4. At pp. 959-96- 0. the scope of his authority, express or implied. After this, it seems that the main opinion employs and emphasizes an apologia that need not be indulged. R. L. Tuckett, Justice The following cases hold that a receipt such as appears in the instant case provides temporary or interim insurance subject to a condition subsequent: Steelnack v. Knights Life Insurance Co. , 423 Pa. 205, 223 A. 2d 734 (1966); Toevs v. Western Farm Bureau Life Insurance Co. , 94 Idaho 151, 483 P. 2d 682 (1971); Gaunt v. John Hancock Mutual Life Insurance Co. (2nd Cir. 1947), 160 F. 2d 599; Farmers New World Life Insurance Co. v. Crites, 29 Colo. App. 394, 487 P. 2d 608 (1971); Allen V. Metropolitan Life Insur. Co. , 44 N. J. 294, 208 A. 2d 638 (1965); Slobojan v. Western Travelers Life Insur. Co. , 74 Cal. Rptr. 895, 450 P. 2d 271 (1969); Prudential Insurance Company of America v. Lamme, 83 Nev. 146, 425 P. 2d 346 (1967). 5. CROCKETT, Justice: (Concurring specially) concur in holding that under the facts of this case the contract of insurance should be deemed to be in force. This is so because the stated position of the defendant company; that it could and did reject the insurance without cause or reason therefor, is unsound. I However, I think the statement in the third to last sentence in the main opinion that the insurer cannot terminate the risk so assumed unless the insured is notified during his lifetime that his application was rejected . , . a rule which could be applied under other circumstances is too to work injustice, and that such a policy could produce undesirable results in the insurance business. It may well have the effect of dissuading insurance companies from committing coverage at the time of receiving an application and the premium, depriving themselves of this favorable aspect of business, and the public of the advantages of such immediate coverage, which should be available in normal circumstances. Consequently, I think it should be. utated in connection with this decision that there are reasons why it is desirable and beneficial, both to the insurance company and its customers that under ordinary circumstances it should be able to commit insurance as being in effect upon receiving the application and the premium, but with the understanding that the insurance is not effective if circumstances exist which justify its avoidance. all-inclus- ive In order to accomplish the above-state- d salutary objective, the innurance company dioiid be able to reject insurance if in its investigation, or in the medical examination, it is found that there exists some soumd reason, known to the applicant but not to the insurance company, why he was not insurable, and notice of rejection is promptly given, whether that happens to be in the lifetime of the insured or not. E. g. , if the insured had a fatal disease, or some affliction which would make him uninsurable, and which fact was concealed from the insurance company, or where there has been any kind of fraud or deception practiced which would make the insurance contract void or voidable. On this subject generally see discussion and authorities cited in Prince v. Western Empire Life Ins. Co. , footnote 1, main opinion; and also Green v. Equitable Life Assurance Society, 3 Utah 2d 375, 284 P. 2d 695; Winger v. Gem State Mutual, etc. , 22 Utah 2d 132, 449 P. 2d 982; Burnham v. Bankers Life k Cas. Co. , 24 Utah 2d 277, 470 P. 2d 26l. HENRIOD, Justice: (Concurring in the result) I concur only in the result. I am of the opinion that the evidence justifies the result on the grounds that the carrier in sending out agents with ostensible authority to bind it to the terms of a policy representing recoverable benefits, and accepted, and cashed a check for the first premium, is bound by the agent's representations, - obviously made within City Business Licenses Aspen 2517 975 Corporation Utah Rent -A- -V olka James Scherer, 277 West 900 South Car Rental Utterbach 975 South 700 East Individual and Family C to 2118 028 Donald L. Hunt etux to Deseret' Thrift $2219.30. Counseling Wasatch American, Ltd. 218 Kearns Bldg Motion Picture Ownership 535 Wood'n Hands Water Service Agreements Thomas H. 212-2- Richard Young Young Fine Art Casting 779 West South Temple Wallace Saunders Tulip 1503-0- 1561 South 300 East Grocery Stoes M.Oottfredsen, Hearing Probate Court - Whitehead, Elvira Letters of gag Admr. Morgan, June Letters of wra Admr. kk Lamar Duncan. Hearing 59889 - Shepherd, LaSu Tannet D. Probate of Will Salisbury. Hearing kk 59092 - Green, LaPreal Rigby Letters of Admr, kk - - Hasaard, Cheater Probate of Will Erwin C. R. Henrlhsen, Hearing kk 59900 - Harris, Stephen E.' Probate of Will James BeleBa. Hearing 8 Ramona Avenue James E. Northern 1892 North State Drive Dan 59886 Carn West North Tenqsle 12 Major Enterprises 1118 East Sandpiper Way Fine Art Casting Vam etal to etal $1000 Jenny D. McKenna Mary Ann Quest William Littig 215 Edison Street ELLETT , Justice concurs in the concurring opinion of Mr. Justice Crockett. The cases cited in this opinion appear to be the judicial response to the following editorial comment in 2 A. L. R. 2d 943, Anno: Temporary etux Dev. $3000. PRO Carl H. Nowell 0 Dev. $3000. E Robert H. Nowell etux to 977 59890 Citations5. Robert P This problem was dealt with and an important distinction pointed out in our recent case of Moore v. Prudential Ins. Co. , 26 Utah 2d 430, 491 P. 2d 227, The insured died of a heart attack. The company sought to avoid liability on the ground that he had "catalepsy," which he had failed to disclose in answers on the application. We plainly indicated that if the concealment had been of something causally related to his death, he would not have been covered, but inasmuch as the catalepsy was not related to the cause of death, the company had no sound reason for rejecting the insurance. In the instant case the insurance company did not state a basis for rejecting the insurance, material or otherwise, but took the position that it could disclaim coverage without giving any reason at all. As stated at the outset, I cannot agree with that position, and I therefore concur in the decision directing judgment for plaintiff. is notified in his lifetime that his application was rejected. Second Mortgages kk F H A James Johnson 1115 North Miami Road MATFirst Security State Bank 200 East Braodway Duane G. Sanders 230 North 900 West SALT LAKE CITY ANTIQUE SHOW AND SALE Salt Palace 100 So. W. Temple 60 Antique Exhibitors March 22,23, 24 and 25 Thurs, Frl and Sat. ItOOtolO&OPM lantay 11 tat PM Gaaaral ttnlalw 11JO CfclMraw awtar 11 Fraa nntww arcawmwilaS l Adult |