Mahon v. State Farm Mutual Automobile Insurance

BURKE, J.,

dissenting:

The fourth amended complaint, on which the validity of plaintiffs’ action rests, attaches the alleged agreement as Exhibit “A” and concludes that it “constituted a full and complete contract for the purchase of the insurance by the plaintiff . . . appearing . . . upon the face of said agreement.” Plaintiffs endeavored to sustain the judgment by asserting that there was on August 8,1953, in effect a “valid offer and the acceptance for temporary coverage.” There was no allegation in the fourth amended complaint that any offer or proposal of any kind made to Mahon was accepted by the defendants on August 8,1953, or at any other time. Without this allegation the complaint stated no cause of action either at law or in equity. See Morris v. Goldthorp, 390 Ill 186, 60 NE2d 857. The binder which had been attached and was a part of the application was not detached and delivered to Mahon until August 10, 1953. Plaintiffs now seek the benefit of the terms of a written binder, the contents of which, according to their testimony, were known to them and which they failed to produce and introduce into evidence. At the hearing the Mahons denied the delivery to them of any such binder, but now seek the benefit thereof. The temporary insurance provided beginning August 10, 1953, came into being by virtue of the binder and not by virtue of the application, Exhibit “A.” If the application provided insurance to Mahon on August 8, 1953, there was no application left for State Farm to review. There is a fatal variance in the allegations of the fourth amended complaint. It is obvious that had plaintiffs proceeded on the theory now expressed, the proofs could have been immeasurably curtailed.

Plaintiffs’ theory presented here is that the temporary insurance became effective August 8, 1953. Such an action could only be brought in a court of law for a breach of contract, oral or written. The only written document signed by Mahon and Soffel, the agent, was an application for insurance. The binder, which was a part of the application, was not detached and delivered to Mahon until August 10,1953. Consequently, no valid insurance, temporary or otherwise, became effective until the delivery of the binder. An application for insurance is not itself a contract, but a proposal requiring acceptance by the insurer through someone actually or apparently authorized to accept the same to give it effect as a contract. See Palmer v. Bull Dog Auto Ins. Ass’n, 294 Ill 287, 292, 128 NE 499; 7 Appleman Insurance Law and Practice, Sec 4265, p 31. The authorities say that in the absence of a binder, oral or written, for present temporary insurance the applicant is not covered by insurance and will not be covered until the application is accepted.

The policy of insurance was issued and delivered to the named insured August 20,1953, in accordance with the written application dated and signed by him on August 8,1953, after the application had in the regular course of business been submitted and accepted by the insurer. Between August 10 and August 20, 1953, Mahon was covered by temporary insurance by virtue of a written binder accepted and delivered by the agent to him on August 10, 1953, after the consideration designated therein was paid by Mahon. This binder became ineffective under its terms after it was superseded by the policy. The arguments of plaintiffs are premised on the assumption that Exhibit “A” was a contract, agreement, insurance policy or instrument binding on the insurer to the same effect and force as the policy of insurance itself which was dated August 10,1953. Plaintiffs thus seek to convert the application for insurance into a valid contract of insurance. If this argument be accepted, then the application, Exhibit “A,” should be reformed and not the policy of insurance. The proof is positive and uncontradicted that on August 10,1953, Soffel, the agent, deliberately changed the date of the application from August 8 to August 10, 1953. Plaintiffs apparently realize that they cannot reform the application itself.

It is interesting to note that plaintiffs switched their form of action from law to chancery, back to law, then chancery again and finally to a fourth amended complaint which is ambiguous and states no cause of action either at law or in equity. The pleadings and the proofs show clearly that plaintiffs have no case. The decree should be reversed and the cause remanded with directions to dismiss the cause for want of equity.