Thompson v. Occidental Life Insurance Company Of California

513 P.2d 353 (1973)

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Nature of the Case

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Facts

Donald was insured by D under a $15,000 life insurance policy which provided for double indemnity for accidental death. Donald contacted John Kelly, the Oakland manager of D, for the purpose of increasing his insurance coverage. Kelly then met with Donald's accountant to determine what type of policy Donald should purchase and decided upon a five-year convertible term policy for $100,000 with double indemnity for accidental death. On August 5, 1964, Donald signed an application for the recommended policy and on August 11 submitted to a medical examination. D next contends that Donald misrepresented his medical history. The alleged misrepresentations occurred during the insurance medical examination on August 11, 1964. Donald did not fill out the application himself; instead, his oral responses were recorded by the examining physician, Dr. Epstein, a private practitioner on D's 'approved' list of physicians, who, by prior arrangement performed medical examinations of insurance applicants. Dr. Epstein read the questions on the application to Donald during a Friday afternoon session which included both a physical examination and completion of the questionnaire. Epstein indicated that Donald suffered from varicose veins and had had a vein ligation. No other medical conditions or treatments had been indicated. D claims that Donald failed to report to Epstein approximately 10 medical consultations he had at Kaiser Hospital with five different doctors which commenced on June 3, 1964, two months before the insurance medical examination and ended only the day before the examination took place. Donald (1) had complained of chest pain, (2) had an electrocardiogram performed, (3) was treated for 'phlebitis' (vein inflammation), (4) was advised to keep off his feet to avoid the possibility that a clot in a leg vein might break off and travel to his lungs, (5) had his legs X-rayed for 'intermittent claudication' (leg pain), and (6) was advised to undergo a 'chemical sympathectomy' (injection of a local anesthetic) to relieve the foregoing leg pain. Two days after the medical examination, Kelly went to Donald's office and requested payment of the first premium on the policy. Kelly recalled explaining to Donald that if he failed to pay the first premium, he would not be covered in the meantime even if he were ultimately found insurable. Donald paid the requested premium to Kelly the next day. The application was received by D's underwriters on August 17. The underwriters decided to require an additional medical examination. On August 24, before he was informed of this decision, Donald sustained an accident (falling into his bathtub and nearly suffocating) which resulted in his death four days later. D determined that the death was accidental and paid P, as beneficiary, $30,000 as double indemnity under the $ 15,000 life insurance policy. D notified P on September 4 that it would neither issue nor make payment under the $100,000 life insurance policy because the additional medical examination had not been completed. D returned the first premium by a check drawn on its own account. P retained the check and sued to recover $200,000 as double indemnity under the $ 100,000 policy. OP got the judgment and D appealed. D contends that no insurance contract ever came into existence, since no policy was ever delivered and that Donald had not completed the second medical examination required by D, and because Donald was ultimately found to be uninsurable