Opinion
No. 1-805 / 01-242.
Filed August 14, 2002.
Appeal from the Iowa District Court for Scott County, DAVID E. SCHOENTHALER, Judge.
Early appeals from an order granting summary judgment in favor of an insurance company in her action as the beneficiary on a life insurance policy. AFFIRMED.
Michael J. McCarthy of McCarthy, Lammers, Hines, Davenport, for appellant.
J. Michael Weston and Brenda K. Wallrichs of Moyer Bergman, P.L.C., Cedar Rapids, for appellee.
Heard by VOGEL, P.J., and MILLER and VAITHESWARAN, JJ.
The beneficiary of a life insurance policy contends that the insurer cannot rely on claimed misrepresentations in the insured's application because a "true copy" of the application was not attached to the policy. The district court rejected this argument and so do we.
I. Background Facts and Proceedings
The facts are essentially undisputed. Timothy McCaughey purchased a life insurance policy from State Farm Life Insurance Company naming his ex-wife, Christine Early, as the sole beneficiary. When McCaughey died, Early filed a claim for the insurance proceeds. State Farm denied her claim on the ground that McCaughey had misrepresented his health condition on the policy application by failing to disclose a history of treatment for alcohol abuse and depression.
Early sued. State Farm answered that the policy was void in light of the claimed misrepresentations. Early moved to strike this affirmative defense on the ground the copy attached to her former husband's policy was not a "true copy" of original insurance application. The district court denied her motion. State Farm moved for summary judgment, contending its affirmative defense of material misrepresentation was dispositive. Early again raised her "true copy" argument in her resistance. The district court, for a second time, rejected the argument and granted summary judgment to State Farm on the merits of its misrepresentation defense. Early appealed.
We review a summary judgment ruling to determine whether there is a genuine issue of material fact and whether the moving party is entitled to judgment as a matter of law. Walls v. Jacob North Printing Co., Inc., 618 N.W.2d 282, 284 (Iowa 2000).
II. True Copy Defense
Our legislature has mandated that life insurance companies attach to a policy a "true copy" of an insured's application or representation that is made a part of the insurance policy or referred to in the policy or that may affect the validity of the policy. Iowa Code § 511.33. Failure to attach a "true copy" precludes an insurer from pleading, alleging or proving the falsity of the contents of the application or policy. Iowa Code § 511.34. The question here is whether the copy State Farm attached to Timothy McCaughey's policy comports with section 511.33.
511.33. Application for insurance — duty to attach to policy
All life insurance companies or associations organized or doing business in this state under the provisions of the preceding chapters shall, upon the issue of any policy, attach to such policy, or endorse thereon, a true copy of any application or representation of the assured which by the terms of such policy are made a part thereof, or of the contract of insurance, or referred to therein, or which may in any manner affect the validity of such policy, or, upon reinstatement of a lapsed policy, shall attach to the renewal receipt a true copy of all representations made by the assured upon which the renewal or reinstatement is made.
511.34. Failure to attach — defenses — estoppel
The omission so to do shall not render the policy invalid, but if any company or association neglects to comply with the requirements of section 511.33, it shall forever be precluded from pleading, alleging, or proving such application or representations, or any part thereof, or the falsity thereof, or any part thereof, in any action upon such policy, and the plaintiff in any such action shall not be required, in order to recover against such company or association, either to plead or prove such application or representation, but may do so at the plaintiff's option.
In Crandall v. Bankers Life Co., 245 Iowa 540, 547, 62 N.W.2d 169, 173 (Iowa 1954), our highest court stated:
Any memorandum placed on the original of an application by the insurer which in no way affects or changes the representations made by the applicant does not constitute a noncompliance with the statute if this memorandum is not on the copy attached.
This is what we have here. McCaughey's original application includes a section below a perforated line titled "Agent's Statement," containing fourteen printed questions as well as boxes or lines on which to denote the answers. McCaughey's carbon copy of the application only omits the questions printed in this section. The agent's handwritten answers and checkmarks, including a telephone number and income figure are legible. Early concedes that had the agent torn off the entire statement before copying it, she would have no basis for raising a "true copy" argument. We believe, under these circumstances, the statement was technically not even a part of the application. See Crandall, 245 Iowa at 545, 62 N.W.2d at 171.
The questions are:
1. Do you know the Proposed Insureds?
2. Proposed Insured 1's annual income.
3. Who is to pay premiums? (Full name and relationship if other than Proposed Insureds)
4. The mode of premium payment will be
[12 boxes appear here, 3 of which require additional information if marked]
5. Amount of premium submitted:
6. Amount of premium quoted:
7. If Preliminary Term Insurance desired, show the policy date. (Not available for Universal Life)
8. Was a Binding Receipt Issued? Y/N
9a. Indicate Other State Farm Insurance in family.
9b. Is State Farm Health insurance applied for? Y/N
10. Is this policy a replacement or change of existing insurance or annuities? (If yes, explain) Y/N
11. Did you give Proposed Insureds the Notices and the Acknowledgment and Authorization? Y/N
12. Did you use the premium offset concept to sell this policy? Y/N
13. Personal History Interview Telephone Information
DAYTIME PHONE NUMBER _____________________________
14. If applicable, has an oral specimen test been completed or an exam scheduled? (If exam, show date and physician or paramedical facility.) Y/N
Assuming the agent's statement was a part of the application, we note the information on the statement was completed by the agent, not the insured. If we further assume some of the information, such as McCaughey's listed income of $35,000 was a representation of the insured, as Early contends, that information did not affect or change any other representation of the insured, as the balance of the application did not contain any information concerning McCaughey's income. Indeed, the insurance agent stated under oath that the income figure was only obtained "to ascertain whether the insured has the resources to continue the policy in force, to pay the premiums." The premium amount was clearly disclosed in the application for insurance and in the policy. As McCaughey was already apprised of that amount and indicated his consent to it by signing the document, the insurer's inclusion of McCaughey's income without the accompanying stem question "Proposed insured 1's annual earned income." did not affect the issuance of the policy.
In reaching this conclusion, we have considered the host of contrary opinions cited by Early. Unlike the omitted question here, the information omitted from the copies in these cases relates to key terms of the insurance policy. See Lyons v. Farm Property Mut. Ins. Ass'n of Iowa, 188 Iowa 506, 507, 176 N.W. 291, 292 (1920) (amounts of indemnity omitted from copy); Rauen v. Prudential Ins. Co. of America, 129 Iowa 725, 728, 106 N.W. 198, 199 (1906) (copy of application not attached); Corson v. Iowa Mut. Fire Ins. Ass'n, 115 Iowa 485, 491, 88 N.W. 1086, 1088 (1902) (copy omitted cash value and sum to be insured); Corson v. Anchor Mut. Fire Ins. Co., 113 Iowa 641, 643, 85 N.W. 806, 806 (1901) (copy contained only two out of approximately ten of the items written into the original application); Johnson v. Des Moines Life Ass'n, 105 Iowa 273, 277, 75 N.W. 101, 103 (1898) (discrepancies related to how the beneficiaries would share the proceeds and the health of the insured); Seiler v. Economic Life Ass'n of Clinton, 105 Iowa 87, 91, 74 N.W. 941, 942 (1898) (copy omitted insured's signature, which the court characterized as an "essential part of the application"); Goodwin v. Provident Sav. Life Assur. Soc., 97 Iowa 226, 236, 66 N.W. 157, 158-59 (1896) (copy of the application omitted reference to certain afflictions suffered by the insured).
In Goodwin, the court also noted the copy failed to include an examiner's report, and incorrectly stated a mailing address. The court has since clarified that an examiner's report need not be attached to a copy and a mailing address is not pertinent information. See Kayser v. Occidental Life Ins. Co., 231 Iowa 620, 625, 1 N.W.2d 715, 718-19 (1942) (holding business address not material); Johnson v. Des Moines Life Ass'n, 105 Iowa at 277, 75 N.W. at 103 (holding examiner's report not a necessary part of a true copy).
Where the discrepancies are unrelated to key aspects of an insurance policy or are not representations of the insured, our highest court has not hesitated to find compliance with section 511.33 or predecessor statutes. See Crandall, 245 Iowa at 544, 62 N.W.2d at 173 (omission of check marks and circles appearing on the original not fatal); Kayser v. Occidental Life Ins. Co., 231 Iowa 620, 625, 1 N.W.2d 715, 718-19 (1942) (alteration of date of policy and agent's insertion of business address not material); Cline v. Iowa State Live Stock Ins. Co., 195 Iowa 918, 920, 192 N.W. 309, 310 (1923) (insertion of notes of agent had no effect); Knapp v. Brotherhood of Am. Yeoman, 139 Iowa 136, 138, 117 N.W. 298, 300 (1908) (omission of reference to the words "question" and "answer" not relevant).
We have also considered the purpose behind section 533.11, which is to give an insured the chance to review the application and correct any errors, before it is too late. See Kayser, 231 Iowa at 626, 1 N.W.2d at 719. This purpose is served by the copy of the application attached to McCaughey's policy. McCaughey had the key representations concerning his health before him, as well as the material terms of the policy, including the premium amount.
For these reasons, we conclude the copy of the application was a "true copy" within the meaning of section 511.33 and State Farm was entitled to judgment as a matter of law on this issue.
AFFIRMED.