Summary
In Watkins v. Coastal States Life Ins. Co., 118 Ga. App. 145 (2) (162 S.E.2d 788), the application was retained from July 8 to July 28 when the applicant died, and the court held that an action against an insurer or its agent for unreasonable delay in passing on an application for life insurance is not permitted in this state.
Summary of this case from Pearlman v. United Insurance Co.Opinion
43549.
ARGUED APRIL 2, 1968.
DECIDED JULY 8, 1968.
Action for damages. Whitfield Superior Court. Before Judge Pope.
Adams Adams, Robert B. Adams, Isaac C. Adams, for appellants.
Pittman Kinney, H. E. Kinney, for appellees.
1. Where an application for life insurance is made the basis of a suit, and the petition identifies the application as having been signed by the applicant and submitted to the defendant insurer, its provisions may be considered by the judge in passing upon the legal sufficiency of the petition.
2. An action against an insurer or its agent based upon the premise that the insurer delayed for an unreasonable time in passing upon the application for life insurance is not permitted in this state.
ARGUED APRIL 2, 1968 — DECIDED JULY 8, 1968.
Frances L. Watkins, individually and as administratrix of the estate of Raymond C. Watkins, instituted an action against Griffin Crumbley and Coastal States Life Insurance Company. The petition, drawn in two counts, alleged in part: On July 2, 1965, the defendant Griffin Crumbley, acting as soliciting agent for Coastal States Life Insurance Company, solicited from Raymond C. Watkins an application for a life insurance policy on his own life for a face amount of $10,000 and an additional accidental death benefit of $10,000, for which he was to pay a monthly premium of $16.30, the first premium being paid at that time in cash; the appellant was the beneficiary in the application for the policy; on July 2, 1965, Watkins made application with the defendant insurer through the defendant soliciting agent for life insurance upon himself; that the application was submitted and remains in the possession of the defendant insurance company.
The petition alleges further that Coastal States Life Insurance Company did not issue policies of the type applied for and that the defendant soliciting agent knew or should have known of this fact. Count 1 alleges that the defendant soliciting agent took the application for the purpose of sending it to the Atlanta office of the defendant insurer but that he retained the application in his possession until July 8, 1965, meanwhile altering it to be for a policy having a face amount of $13,000 with no accidental death benefit and for a monthly premium of $16.10. It is further alleged that the defendant soliciting agent did not notify the applicant that he had altered the application, nor did he return any portion of the premium, but instead appropriated the difference in premium to his own use without notifying the applicant. It is alleged that the defendant insurer failed to reject the application or notify the applicant that it would not be accepted prior to his death on July 28, 1965, which resulted from an accident which would have been covered under the accidental death provision of the policy applied for. Paragraph 26 of Count 1 of the petition alleges that as a result of the aforesaid acts which were unknown to the applicant, he refrained from purchasing other life insurance with other life insurance companies which he could have purchased for the same or less premium and with the same or additional coverage "had he known of said acts."
The petitioner prayed "that she have and recover judgment against the defendants in the sum of $20,000 and also the additional sum of $50,000 as exemplary damages." The application referred to in the petition as having been submitted to the insurer contained the provisions: "2. No liability shall exist unless and until the policy applied for has been delivered to and accepted by me and the first premium paid while I am in good health and free from injury. 3. Any statement made by or to anyone shall not be binding on the company unless entered herein or submitted to the company with this application."
The petition was filed on May 18, 1967, and on June 16, 1967, the defendants interposed general demurrers to the petition. On January 2, 1968, the judge passed orders sustaining the general demurrers. The plaintiff appealed, and the case is here for review.
1. The petition in the present case was designed to allege a cause based upon the defendant insurance company's negligence in failing to pass upon an application for life insurance within a reasonable time. Under procedure prior to the Civil Practice Act of 1966, in order to plead such action, the basic facts that had to be alleged were the existence of a valid application and that the application was submitted to the insurance company. Maddox v. Life Cas. Ins. Co., 79 Ga. App. 164, 169 ( 53 S.E.2d 235). The petition undertook to specify these facts with allegations that the application submitted by the applicant was in the possession of the defendant insurer. These averments disclosed, at least prima facie, that the applicant knew, assented to, and was bound by the terms of the application, as is the plaintiff in this case.
According to the cases of Brown v. Mack Trucks, 111 Ga. App. 164 ( 141 S.E.2d 208), and Hart v. Waldo, 117 Ga. 590 ( 43 S.E. 998), which deal with similar situations, the provisions of the application were properly for the judge's consideration in passing upon the legal sufficiency of the petition.
2. In the annotations of 32 ALR2d 487, 492, is the statement: "There is an almost even division of authority on the question whether an insurer may be liable in tort for damage resulting from delay in passing upon an application for insurance, with the question still open in several jurisdictions." Georgia may be classified as a jurisdiction coming within the latter category, because our courts appear never to have reviewed a case of that precise nature. However, the courts of this state furnish ample precedent to guide in the decision of this case.
In this jurisdiction a tort action based upon the negligence of the insurer in failing to pass upon an application for life insurance is not permissible. Our courts uniformly hold an application for life insurance is a mere offer or proposal that may be accepted or rejected by the insurer. Fort Valley Coca-Cola Bottling Co. v. Lumbermen's Mut. c. Co., 69 Ga. App. 120 ( 24 S.E.2d 846); Sasser v. Coastal States Life Ins. Co., 113 Ga. App. 17, 19 ( 147 S.E.2d 5). Where the applicant dies before the company passes upon the application, there is no liability, even when the premium paid by the applicant in anticipation that the policy will be issued is not returned until after his death. Starkes v. Metropolitan Life Ins. Co., 58 Ga. App. 37 ( 197 S.E. 520); Smith v. Metropolitan Life Ins. Co., 76 Ga. App. 229 231 ( 45 S.E.2d 471) and Sasser v. Coastal States Life Ins. Co., 113 Ga. App. 17, 19, supra. According to Smith v. Metropolitan Life Ins. Co., 76 Ga. App. 229, 231, supra, delay in passing upon the application makes no difference especially where, as in the present case, the application stipulates there is no liability unless the application is accepted. It was held in Maddox v. Life Cas. Ins. Co., 79 Ga. App. 164, 170, supra: "A contract of life insurance is consummated upon the unconditional written acceptance of the application for insurance by the company to which such application is made. . . So long as the application is not acted upon by the insurance company, of course no contract has been consummated; and if the applicant should die before the acceptance of his application, the company has incurred no liability. New York Life Ins. Co. v. Babcock, 104 Ga. 67 (1), 70 ( 30 S.E. 273)."
While not a Georgia case in the sense that it is a precedent binding upon the courts of this state, the case of Burks v. Colonial Life c. Ins. Co., 98 F. Supp. 140, 146, disposes of the question involved here in a definitive manner and clearly pronounces the law of this state as interpreted by the appellate courts. The case reads in part: "Plaintiff contends that defendant should have promptly accepted or rejected the application and notified the plaintiff of its action. Plaintiff contends that the delay of the defendant was unreasonable and prevented the applicant from securing other insurance, which he would have done, had he known he was not covered.
"Insofar as this count is concerned, this would seem to be a case of first impression in Georgia. It is elementary that there can be no tort without a breach of a legal duty or invasion of a private right. Munger v. Equitable Life Assur. Soc. of the U.S., (D.C.) 2 F. Supp. 914 (1, 2). In the absence of statute (and we find no such Georgia statute), before the court could say that the forwarding of an application to the defendant placed on the defendant a duty to act promptly or even to act at all, it would be necessary at least to find that insurance companies were affected with such a public interest as to give rise to such legal duty. No Georgia court decision to this effect has come to the court's attention, and this court is unwilling to so hold.
"This court is of the opinion that the mere filing of an application for insurance with defendant company did not place on the defendant any duty to act reasonably or promptly, or even to act. This being true, the defendant's conduct did not amount to a breach of duty so as to constitute a tort."
The appellant contends that the trial judge erred in passing upon and sustaining the demurrers interposed to the petition filed before the Civil Practice Act became effective. If we treat the petition as being tested by general demurrer or by a motion to dismiss under the Civil Practice Act (see Hill v. Willis, 224 Ga. 263, 264 ( 161 S.E.2d 281)), the result is the same since the trial judge did not err in dismissing the petition. "A (complaint) may be dismissed on motion if clearly without any merit; and this want of merit may consist in an absence of law to support a claim of the sort made." Poole v. City of Atlanta, 117 Ga. App. 432, 434 ( 160 S.E.2d 874).
Judgment affirmed. Bell, P. J., and Hall, J., concur.