FILED. imi. No. 17,561. United States Court of Appeals. For the Ninth Circuit. Henry Duque, Burton L. Walsh, APPELLANT'S PETITION FOR A REHEARING

Transcription

1 No. 17,561 IN THE United States Court of Appeals For the Ninth Circuit Metropolitan Life Insurance Company, a corporation, vs. Constance C. Wood, Appellant, Appellee. APPELLANT'S PETITION FOR A REHEARING Knight, Boland & Riordan, Burton L. Walsh, Richard J. Kilmartin, 444 California Street, San Francisco 4, California, Adams, Duque & Hazeltine, Henry Duque, James C. Powers, 523 West Sixth Street, Los Angeles 14, California, Attorneys for Appellant. FILED imi fjiank H. SCHMID, Clerk PCRNAU-WALSH PRINTING CO., EAN rrancisco

2

3 No. 17,561 IN THE United States Court of Appeals For the Ninth Circuit ^ Metropolitan Life Insurance Company, a corporation, I vs. Constance C. Wood, Appellant, Appellee. w APPELLANT'S PETITION FOR A REHEARING To the Honorable William E. Orr, Frederick G. Hamleij and James R. Browning, Circuit Judges of the United States Court of Appeals for the Ninth Circuit:

4 i

5 : i Appellant respectfully petitions this Honorable Court for a rehearing of the within matter upon the following grounds 1. The announcement of the incredible rule that the insurability of an applicant for life insurance at the tim-e of application is irrelevant will have far reaching consequences beyond the plight of appellant before this Court. The rule in this case forces a life insurance company in all cases involving a conditional receipt and the payment of an amount equal to the first premium to accept for insurance people who would never be insured because of existing physical ailments and disease. Insurability is the keystone of life insurance, and to say that it is irrelevant under any rule of law is incomprehensible. During a year approximately some 16 million (16,000,000) applications are made with life insurance companies throughout the United States which involve conditional receipts and the payment of an amount equal to the first premium in advance. If, as a result of this Court's decision, life insurance companies are forced to discontinue the giving of any protection in advance of delivery of a policy, millions of insurable members of the public who are honestly entitled to protection will be adversely affected, contrary to the public policy of California as evidenced by the Legislature's enactment of Section of the California Insurance Code. To make a pronouncement that in all of these cases insurability is irrelevant is to open the door to the perpetration of fraud. Persons who are dying from heart disease, cancer, brain tumor or other various critical ailments and who want insurance coverage can repeatedly apply for policies to successive insurance companies and obtain coverage until the company has had time to reject. In other words, a man who knows he has only days or weeks to live, under the decision of this Honorable Court, can fraudulently go on applying to different insurance com-

6 panies, getting his money back each time he lives until rejection, and getting coverage for the full amount when he dies between application and rejection. It is shocking to think, for example, that a man who is scheduled for a critical surgical operation on Monday can, on the previous Friday, apply for insurance and obtain full coverage, with his money being returned if surgery is successful, or full payment made to the beneficiary if he fails to survive the operation. This obviously absurd situation is sanctioned by the opinion of this Court. 2. This Honorable Court erred in stating that under the California rule as reflected in Ransom v. Perm Mutual Life Insurance Company, 43 Cal. 2d 420, 274 P. 2d 633, the insurability of the applicant at the time of application is irrelevant. Ransom did not so hold. In Ransom the opinion reflects that the doctor's examination "showed that his heart and chest (the organs about which the insurer raised a question) were normal and that there was nothing seriously wrong with his physical condition" (43 Cal. 2d at page 427). "An autopsy was performed which disclosed no evidence of disease and showed that Ransom's death resulted from external violence" (43 Cal. 2d at page 422). In Ransom the applicant was a healthy insurable man, and the California Supreme Court specifically so held in denying the company's misrepresentation defense. In the present case, the applicant, by the underwriting standards of appellant and by any underwriting standards of any company in the life insurance business, was uninsurable, and the fact of uninsurahility was conceded and admitted hy appellee's counsel in open court. "We submit that this is a far different cry from the facts in the Ransom case, and that the rule in Ransom must be limited to situations in which the applicant is insurable when the application is submitted. As above stated, to hold other-

7 wise will open the door to the perpetration of fraud and the obtaining of policies of life insurance to which uninsurable people are not entitled under any circumstances. 3. The Court erred in failing to distinguish between the language of appellant's receipt and the language used in the application in Ransom. The effect of the Court's decision here is to read all conditions in life insurance receipts as conditions subsequent. According to the rule set forth in the decision in the instant case, any mention of coverage as of the time of application makes a receipt "ambiguous" and it makes no difference at all what conditions are stated in such a receipt or how they are worded, they must all be treated as conditions subsequent. If this decision is allowed to stand, life insurance companies will either have to provide no protection at all prior to delivery of a policy or mil be required to insure every completely uninsurable applicant who may wish to apply, which is against the public policy of the State of California. 4. The Court erred in refusing to consider or to construe the applicability of Section of the California Insurance Code on the stated grounds that appellant in its application assumed a greater liability by contract than is imposed by the terms of Section The opinion in this Court states that upon a reading of the Ransom case this Court must hold that a greater liability was assumed by contract, without giving any reasons whatsoever. The application in Ransom is entirely different from the receipt in the case before this Honorable Court, and all that one must do is take the time to read the applicable provisions of Section and compare them with appellant's receipt to determine that it is crystal clear that the two are identical. The opinion completely fails to quote from either Section or from appellant's receipt or to demonstrate in what manner, or how, or by what language,

8 appellant assumed a greater liability by contract than the liability which is imposed by Section It is difficult to understand the Court's reasoning that the ''rule" in the Ransom case applied to the case before this Honorable Court when the Ransom case involved completely different language. 5. The Court erred in holding that coverage came into effect prior to the receiving of the completed application by appellant. In Ransom, the California Supreme Court stated the rule of that case four times in its decision (43 Cal. 2d at 423, 424, and 425). In every one of these passages, the Court stated that a contract of insurance arose upon the Company's receiving the completed application. The Court made it very clear that it meant a receiving by the Company, not a receiving by a soliciting agent or an examining doctor, stating that ''a contract for the insurance coverage described in the application came into existence upon receipt of the application and the premium payment after Ransom had been examined by defendant's doctor" (43 Cal. 2d at 424, emphasis added). The word "receipt" is not used by accident; it states the rule of the case. Even if appellant's receipt had the same effect as the application in Ransom and even if Section did not apply, appellee could not recover here because appellant had not received the application. Under the rule of Ransom v. Penn Mutual, no coverage comes into effect until an application is received by the Company and the insurer has an opportunity to reject it, none of which facts are true in the case at bar. 6. Appellant's Closing Brief was filed with the Clerk of this Honorable Court on April 26, The Appeal was argued on May 1, The opinion was filed on May 4, As above stated, this case involves a question of tremendous importance to the life insurance industry namely whether an insurer is bound to insure

9 k uninsurable applicants if they are to provide the public with insurance coverage prior to delivery of a policy. We respectfully submit that it is more than apparent from the opinion filed that this question, which obviously involves the public interest, was not given the consideration it deserves in the short time the Court had the case under submission. Appellant respectfully suggests that before a question of this importance is decided it should be given serious consideration by the whole Court, and that this matter be reheard en banc. Dated, San Francisco, California, June 1, Respectfully submitted. Knight, Boland & Riordan, Burton L. Walsh, Richard J. Kilmartin, Adams, Duqtje & Hazeltine, Henry Duque, James C. Powers, Attorneys for Appellant. Certificate of Counsel I, Burton L. Walsh, one of the attorneys for Petitioner, hereby certify that in my judgment the foregoing Appellant's Petition for Rehearing is well founded and that it is not interposed for delay. jk * Dated at San Francisco, California, May 31, Burton L. Walsh.

10