Etheridge v. Woodmen of the World Life Insurance Society

152 S.E.2d 773, 114 Ga. App. 807, 1966 Ga. App. LEXIS 923

• Court: Court of Appeals of Georgia
• Decided: November 3, 1966
• Docket: 42037
• Status: Published

Opinions

Bell, Presiding Judge.

We hold that the application and receipt in this case constituted a contract which provided temporary life insurance in accordance with the terms of the policy applied for unless the applicant was not an insurable risk on the date of application and that the conditional coverage was effective until the company acted on the application or until the contract became ineffective by expiration of time. The condition stated in the receipt is construed to be a condition subsequent rather than a condition precedent. Since the condition is a condition subsequent, the insurance company has the burden of showing by proper pleading and proof that the applicant was not an insurable risk. To carry its burden and escape liability, the company must show that at the time the conditional coverage commenced the applicant was in fact not an insurable risk by any reasonable standard in relation to the coverage applied for. This necessarily would be a question of fact for the jury to decide.

Insofar as they may conflict with the ruling here made, the following cases are expressly overruled: Hill v. Life & Cas. Ins. Co., 51 Ga. App. 578 (181 SE 104); Smith v. Metropolitan Life Ins. Co., 76 Ga. App. 229 (45 SE2d 471); Maddox v. Life & Cas. Ins. Co., 79 Ga. App. 164, 170 (53 SE2d 235); National Life &c. Ins. Co. v. Moore, 83 Ga. App. 289 (63 SE2d 447); Paulk v. State Mut. Life Ins. Co., 85 Ga. App. 413 (69 SE2d 777) and Kammerer v. Metropolitan Life Ins. Co., 95 Ga. App. 609, 611 (98 SE2d 391). These cases are in our opinion based on a misconception of contract law in that they proceed on the basis that the conditional • binding receipt coupled with the application for life insurance constitutes a mere offer to the company. It is this premise in those cases that we renounce. In paying his money in advance and accepting the binder in return, the applicant is not thereby offering to be insured, because his application does this for him regardless of whether he pays a premium in advance. Thus, the binder is issued for a separate consideration, not as a necessary part of the application. In cases of this kind there are two severable offers: (1) an offer by the applicant to purchase a policy of life insurance and (2) an offer by the company to provide interim insurance pending the company’s consideration of the applicant’s prior offer. The latter offer is accepted by the applicant by advance payment of the initial premium on the policy applied for. The application and receipt together constitute a contract as soon as the application is submitted, the premium paid and the conditional binding receipt issued. We do not determine whether the condition or conditions expressed in the contract in each of the cases above overruled were precedent or subsequent.

Coastal States Life Ins. Co. v. Vickers, 97 Ga. App. 646 (104 SE2d 140) involved an application for life insurance and a receipt with provisions substantially the same as those involved in the case sub judice. Division 1 of the Vickers case, supra, p. 650, is expressly overruled insofar as it is based on the premise that the condition expressed in the receipt was precedent rather than subsequent.

Judgment reversed.

Nichols, P. J., Frankum, Jordan, Hall, Eberhardt, and Deen, JJ., concur. Felton, C. J., and Pannell, J., concur specially.