{ "id": 2936608, "name": "Western Fire Insurance Co., Plaintiff-Appellant, v. Joseph Moss et al., Defendants-Appellees", "name_abbreviation": "Western Fire Insurance v. Moss", "decision_date": "1973-05-07", "docket_number": "No. 55718", "first_page": "802", "last_page": "816", "citations": [ { "type": "official", "cite": "11 Ill. App. 3d 802" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "73 NYS 1", "category": "reporters:state", "reporter": "N.Y.S.", "case_ids": [ 7677845 ], "opinion_index": 0, "case_paths": [ "/nys/73/0001-01" ] }, { "cite": "36 Misc 405", "category": "reporters:state", "reporter": "Misc.", "case_ids": [ 1805067 ], "opinion_index": 0, "case_paths": [ "/misc/36/0405-01" ] }, { "cite": "181 A 170", "category": "reporters:state_regional", "reporter": "A.", "year": 1901, "opinion_index": 0 }, { "cite": "119 NJ Eq 166", "category": "reporters:state", "reporter": "N.J. Eq.", "case_ids": [ 944930 ], "year": 1901, "opinion_index": 0, "case_paths": [ "/nj-eq/119/0166-01" ] }, { "cite": "59 NW 191", "category": "reporters:state_regional", "reporter": "N.W.", "year": 1935, "opinion_index": 0 }, { "cite": "57 Minn 275", "category": "reporters:state", "reporter": "Minn.", "case_ids": [ 556128 ], "year": 1935, "opinion_index": 0, "case_paths": [ "/minn/57/0275-01" ] }, { "cite": "33 NW 322", "category": "reporters:state_regional", "reporter": "N.W.", "opinion_index": 0 }, { "cite": "37 Minn 106", "category": "reporters:state", "reporter": "Minn.", "case_ids": [ 8876759 ], "opinion_index": 0, "case_paths": [ "/minn/37/0106-01" ] }, { "cite": "60 Ill 448", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 8501849 ], "opinion_index": 0, "case_paths": [ "/ill/60/0448-01" ] }, { "cite": "129 Fla 332", "category": "reporters:state", "reporter": "Fla.", "case_ids": [ 1924562 ], "weight": 2, "year": 1871, "opinion_index": 0, "case_paths": [ "/fla/129/0332-01" ] }, { "cite": "472 S.W.2d 203", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10118072 ], "opinion_index": 0, "case_paths": [ "/sw2d/472/0203-01" ] }, { "cite": "303 U.S. 341", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6140586 ], "weight": 3, "opinion_index": 0, "case_paths": [ "/us/303/0341-01" ] }, { "cite": "132 A.L.R. 1325", "category": "reporters:specialty", "reporter": "A.L.R.", "weight": 2, "opinion_index": 0 }, { "cite": "450 S.W.2d 838", "category": "reporters:state_regional", "reporter": "S.W.2d", "case_ids": [ 10150023 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/sw2d/450/0838-01" ] }, { "cite": "79 Ill. 402", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2685656 ], "opinion_index": 0, "case_paths": [ "/ill/79/0402-01" ] }, { "cite": "79 N.E.2d 28", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "400 Ill. 55", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 5306597 ], "pin_cites": [ { "page": "58" } ], "opinion_index": 0, "case_paths": [ "/ill/400/0055-01" ] }, { "cite": "589 F.2d 236", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 827103 ], "opinion_index": 0, "case_paths": [ "/f2d/589/0236-01" ] }, { "cite": "91 Ill.App. 278", "category": "reporters:state", "reporter": "Ill. App.", "case_ids": [ 5281587 ], "opinion_index": 0, "case_paths": [ "/ill-app/91/0278-01" ] }, { "cite": "66 F.2d 330", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 895175 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/f2d/66/0330-01" ] }, { "cite": "287 P. 894", "category": "reporters:state_regional", "reporter": "P.", "weight": 2, "year": 1933, "opinion_index": 0 }, { "cite": "156 Wash. 691", "category": "reporters:state", "reporter": "Wash.", "case_ids": [ 828281 ], "weight": 2, "year": 1933, "opinion_index": 0, "case_paths": [ "/wash/156/0689-01" ] }, { "cite": "193 N.E. 451", "category": "reporters:state_regional", "reporter": "N.E.", "year": 1933, "opinion_index": 0 }, { "cite": "128 N.E. 499", "category": "reporters:state_regional", "reporter": "N.E.", "year": 1933, "opinion_index": 0 }, { "cite": "294 Ill. 287", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 5076843 ], "weight": 2, "year": 1933, "opinion_index": 0, "case_paths": [ "/ill/294/0287-01" ] }, { "cite": "92 U.S. 377", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 8782 ], "opinion_index": 0, "case_paths": [ "/us/92/0377-01" ] }, { "cite": "83 Fed. 631", "category": "reporters:federal", "reporter": "F.", "case_ids": [ 7853197 ], "pin_cites": [ { "page": "636, 637" } ], "opinion_index": 0, "case_paths": [ "/f/83/0631-01" ] }, { "cite": "26 Ga. App. 225", "category": "reporters:state", "reporter": "Ga. App.", "case_ids": [ 1404135 ], "opinion_index": 0, "case_paths": [ "/ga-app/26/0225-01" ] }, { "cite": "277 U.S. 311", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 3902801 ], "weight": 4, "opinion_index": 0, "case_paths": [ "/us/277/0311-01" ] }, { "cite": "358 Ill. 496", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 5280546 ], "weight": 2, "pin_cites": [ { "page": "503" } ], "opinion_index": 0, "case_paths": [ "/ill/358/0496-01" ] }, { "cite": "215 N.E.2d 801", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "opinion_index": 0 }, { "cite": "34 Ill.2d 310", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2881289 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ill-2d/34/0310-01" ] } ], "analysis": { "cardinality": 1200, "char_count": 32656, "ocr_confidence": 0.756, "pagerank": { "raw": 1.2165984267577318e-07, "percentile": 0.5972197606887506 }, "sha256": "3352bf83c2f2b23b08fd1020adcddb631993146d31bc80f4ae3aa6a65c1c7ba5", "simhash": "1:b2c3646fd4b182be", "word_count": 5554 }, "last_updated": "2023-07-14T15:22:35.785791+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "Western Fire Insurance Co., Plaintiff-Appellant, v. Joseph Moss et al., Defendants-Appellees." ], "opinions": [ { "text": "Mr. JUSTICE HALLETT\ndelivered the opinion of the court:\nThe Nature of the Action\nThis was a declaratory judgment action brought by the plaintiff insurance company against the defendant seeking to have a predated insurance policy issued to defendant Moss declared void ab initio. A third party action filed by said defendant against Louis Kamberos was severed at the time of trial and is not involved on this appeal. After a bench trial, the court held the policy to be valid and entered judgment in favor of the defendants and against the Plaintiff, and this appeal followed. No questions are raised on the pleadings.\nThe Facts\nOn Friday, August 16, 1968, defendant Moss telephoned his broker, the Kamberos Insurance Agency, and asked to speak to Louis Kamberos, who had previously obtained auto insurance for him. Kamberos was not in but the call was transferred to a William Dante, an independent insurance broker, who shared offices with Kamberos but was not associated with him. Moss told Dante that he intended to buy a boat, motor and trailer and wanted physical damage and public liability on it and gave him its value.\nAt about noon the next day, Saturday, August 17, 1968, Moss bought the boat, motor and trailer and telephoned Kamberos, who was out. Again he talked to Dante, who told him that the serial numbers of the boat, motor and trailer would be needed. Moss told him that he was going over to pick up the boat and asked if he could put him under a binder. Dante said that he could but that he would have to be there by 2:00 that afternoon. At about that time Moss went to Kamberos\u2019 office but neither Kamberos nor Dante was there. Moss left a piece of paper with the serial numbers on it with someone else in the office and both of them marked on the envelope the time. Moss thought that he was then insured.\nOn Saturday and Sunday Moss used the boat. On Monday morning Kamberos found the serial numbers with Dante\u2019s note on his desk and assumed that Moss had bought the boat on August 17, 1968, and wanted the effective date of insurance to begin on that date. In the afternoon, in response to a message to call Kamberos, Moss contacted him. Kamberos told Moss that he needed the exact cost breakdown on the boat, motor and trailer and Moss told him to call Milo-Craft, the vendor, for those details. Moss also told Kamberos that he had used the boat twice and thought that he was insured and that he intended to use it again that night. Kamberos told him that he was insured. Kamberos tried twice unsuccessfully on Monday to reach Pencil, of Milo-Craft, to get the breakdown figures, and left word for Pencil to call him.\nOn Monday evening August 19, 1968, the boat collided with a barge on the Calumet River. Moss suffered serious injuries, was in intensive care for 14 days and was hospitalized for 31 days. The other occupants of the boat, defendants O\u2019Malley, Regan and Steglisch, also suffered injuries. George O\u2019Donnell, Jr. was killed and his administrator is a defendant in this action.\nOn Tuesday morning, August 20, 1968, Kamberos finally reached Pencil and got the cost breakdown on the boat, motor and trailer and, unaware of the accident the night before, completed the application for insurance effective on August 17, 1968, and mailed it to the Buschbach Agency, an agent for the plaintiff, Western Fire Insurance Company.\nThat afternoon, Tuesday, August 20, 1968, Moss\u2019 sister notified Kamberos\u2019 secretary that \u201cthere was an occurrence\u201d and she passed this on to him. Kamberos did not contact either the Buschbach Agency or Western Fire because he did not know \u201cwhere it happened; or who or what was involved\u201d, although he did testify that had he known of the accident before he mailed in the application, he would not have mailed it.\nOn the 21st or 22nd of August, the Buschbach Agency received the application. There had been no prior conversations with Kamberos or Moss and no request for a binder had been made. The Buschbachs put their sticker on the application and forwarded it on to Western Fire. It was not unusual for the Buschbach Agency to receive boat applications in the mail and they did not contact the Kamberos Agency. Had the Buschbach Agency known of the August 19th accident when it received the application on August 21, it would not have accepted the risk.\nThe application, which read \u201cno losses\u201d, was received at Western Fire on August 23, 1968. Also unaware of the loss, Western Fire proceeded to issue its insurance policy effective August 17, 1968, the date Kamberos had put on the application. Had Western Fire been aware that a loss had occurred on August 19, 1968, or that the application had not been received at the Buschbach Agency until August 21, 1968, it would have declined the application. It does not follow a practice of predating policies and assumed that the agency had issued a binder as of August 17, 1968.\nOn August 27, 1968, Kamberos received the policy and a bill and mailed them to Moss.\nAfter his release from the hospital, Moss received the policy and bill from Kamberos and paid the premium. Thereafter, on September 27, 1968, Moss reported the accident to Kamberos, who then telephoned the Buschbach Agency and gave them their first notice of the August 19th loss. Buschbach immediately telephoned Western Fire and also forwarded to it a written notice of the loss.\nAfter such notice, Western Fire, under a non-waiver agreement, investigated the facts and in January of 1969, wrote Moss declaring the policy void and returning the full amount of the premium. The present declaratory judgment followed.\nThe Judgment Below\nAfter a bench trial developing the facts as above stated, the trial court found that Kamberos was the agent of Moss and not of Western Fire; that Western Fire was not aware of the accident when it issued the policy; that, since Moss was unconscious from the time of his accident until after the policy had been issued and could not have informed the insurance company of the accident, he was not guilty of any fraud in not reporting it before the policy was issued; that Moss did pay the premium; and, \u201cas to whether or not the failure of Mr. Kamberos, who was the agent of Moss * * * to inform them could be imputed to Moss\u201d, that\n\u201cI conclude that it cannot. He is a limited agent. His agency is that, simply, of getting them insurance and the fact that might have been negligence, whether it was knowingly or otherwise, that he failed to inform them cannot be imputed to the insured. He was an agent for that purpose, so that is absent.\u201d\nThe trial court therefore found the issues in favor of the defendants and against the plaintiff and entered judgment accordingly, thus sustaining the validity of the policy. This appeal followed.\nThe general principles of law in this field are well established and are not seriously disputed. The trouble, as often, comes when refinements of the rules are applied to a specific set of facts.\nIn 9 Couch on Insurance, 2d in section 38:21, it is said:\n\u201c2. KNOWLEDGE OF SUBSEQUENT FACTS\n\u201cSec. 38:21. Knowledge after application but before issuance of policy.\nKnown changes in conditions material to the risk which occur between the opening of negotiations for insurance and the issuance of the policy must be divulged. That is, there is a continuing duty on the part of an applicant to disclose newly discovered matters arising between the application for, and the confirmation of, the contract where they come to the applicant\u2019s knowledge and render his former answers no longer true.\u201d (Footnotes omitted.)\nIn 7 Couch on Insurance, 2d in section 35:98, it is said:\n\u201cSec. 35:98. Duty of subsequent disclosure.\nIn consequence of the continuing character of the representation from the moment of its making to the time when the contract is binding, a duty rests upon the insured to reveal conflicting knowledge acquired by him between those two dates. So it is held that matters material to the risk, occurring and becoming known to insured between the time of making the application and the final completion of the contract and concerning which inquiries had been made, must be disclosed; and if, while the insurer is deliberating upon the application for insurance, the applicant discovers facts which make portions of his statements in the original application no longer true, the most elementary spirit of fair dealing calls for a full disclosure.\u201d (Footnote omitted.)\nIn 12 Appleman, Insurance Law and Practice, it is said, in section 7275:\n\u201cSec. 7275. Changes in Risk of Hazard.\nUnder a good faith doctrine, the insured is under a duty to disclose to the insurer all facts affecting the risk which arise after application and before the contract has been consummated. # # * \u201d\nIn Carroll v. Preferred Risk Ins. Co. (1966), 34 Ill.2d 310, 215 N.E.2d 801, cited by plaintiff, our Supreme Court, at page 312, said:\n\u201cThe relationship between an applicant and an insurer requires good faith on the part of the applicant because of the peculiar character of the insurance contract. The applicant has an obligation imposed by law to notify the insurer of any changed condition materially affecting the risk during the pendency of the application for insurance. Western and Southern Life Insurance Co. v. Tomasun, 358 Ill. 496; Stipcich v. Metropolitan Life Insurance Co., 277 U.S. 311, 72 L.Ed. 895.\"\nIn Stipcich v. Metropolitan Life Insurance Co. (1928), 277 U.S. 311, 72 L.Ed. 895, above cited by our Supreme Court, the United States Supreme Court had said, at pages 316-317, that:\n# * [E]ven the most unsophisticated person must know that in answering the questionnaire and submitting it to the insurer he is furnishing the data on the basis of which the company will decide whether, by issuing a policy, it wishes to insure him. If, while the company deliberates, he discovers facts which make portions of his application no longer true, the most elementary spirit of fair dealing would seem to require him to make a full disclosure. If he fails to do so the company may, despite its acceptance of the application, decline to issue a policy, Canning v. Farquhar, 16 Q.B.D. 727; McKenzie v. Northwestern Mutual Life Insurance Co., 26 Ga. App. 225, or if a policy has been issued, it has a valid defense to a suit upon it. Equitable Life Assurance Society v. McElroy, 83 Fed. 631, 636, 637. Compare Traill v. Baring, 4 DeG. J. & S. 318; Allis-Chalmers Co. v. Fidelity & Deposit Co. of Maryland, 114 L.T. 433; compare Piedmont and Arlington Life Insurance Co. v. Ewing, 92 U.S. 377.\u201d\nSee, also: Palmer v. Bull Dog Auto Ins. Ass\u2019n, 294 Ill. 287, 128 N.E. 499; Western & Southern Life Ins. Co. v. Tomasun, 358 Ill. 496 at 503, 193 N.E. 451; Hansen v. Continental Casualty Co., 156 Wash. 691, 287 P. 894; Strangio v. Consolidated Indemnity Co., (9th Cir. 1933), 66 F.2d 330.\nThe defendants contend, however, that the above general rule requiring the disclosure of material changes during the pendency of the application does not apply in the case at bar for several reasons.\nI\nTheir first main contention, which has three subdivisions, is that there was no \u201cfraud\u201d or \u201cconcealment\u201d of the disastrous collision of August 19, 1968, in the case at bar\u2014\n(a) Because Moss, being unconscious and in intensive care throughout the pendency of the application, could not himself have notified anyone, let alone the plaintiff or its agent, Buschbach, of the accident. (This is doubtless sound and is conceded but does not in itself eliminate fraud or concealment through Kamberos as his agent.)\n(b) Because, although Moss\u2019 sister had reported the collision the next afternoon to Kamberos\u2019 secretary, who advised him, shortly after he had mailed the application to Buschbach, that there had been an \u201coccurrence\u201d, he did not notify either Buschbach or Western Fire \u201cbecause he did not have all the pertinent facts at his disposal\u201d.\n(c) Because, \u201ceven if Kamberos did know of the loss and willfully failed to communicate it to the plaintiff, this \u2018concealment\u2019 cannot be imputed to Moss\u201d because Kamberos\u2019 \u201cauthority was exhausted once he had mailed the application for the insurance.\u201d\nDealing first with (b) above, the contention that Kamberos did not have to advise Buschbach or Western Fire of the collision because all that his secretary had told him was that Moss\u2019 sister had advised her that there had been an \u201coccurrence\u201d falls of its own weight. He certainly should have inquired further or, at least passed what he knew on to Buschbach or Western Fire, which would have prevented the issuance of the policy. Even Kamberos admitted that had he heard of the \u201coccurrence\u201d before he mailed in the application, he would not have mailed it.\nIn Orient Insurance Co. v. Peiser (1900), 91 Ill.App. 278, Peiser requested his broker, Magill and Chamberlain, to secure fire insurance on certain personal property and Webster, the broker\u2019s chief clerk, personally filed an application for such insurance with Loeb & Sons, agents of the Orient Insurance Company, which accepted it. Between 4:00 P.M. and 4:20 P.M. that day a fire was discovered by which the property was destroyed. Webster testified that the application was accepted by Loeb at three o\u2019clock but Loeb testified that it was not until five o\u2019clock. Webster admitted that he knew at 4:45 P.M. that there was a fire in the neighborhood where the property was situated, but testified that he did not then know that the building in which the property was then stored was on fire.\nThe defendant tendered the following instruction which was refused:\n\u201cIV. The court instructs the jury that in applying to the agents of the defendant, for insurance upon the property of the plaintiff, the plaintiff, or his agent, was bound to the utmost good faith in said application and to disclose the true condition of the property at the time of the consummation of the contract; if the jury believe from the evidence that any contract of insurance ever was consummated between said plaintiff and said defendant, and if the jury further believe from the evidence that the plaintiff, or his agent, concealed from the defendant, or its agents, any fact material to the risk, or which if disclosed to the agents of the defendant would have caused them to refuse to issue said policy, then said plaintiff was not acting in the utmost good faith with the agents of said defendant, and said policy is void, and the jury must find the issues for the defendant.\u201d\nIn reversing a judgment for the applicant and remanding the case for another trial with directions to give said instruction, the court, at pages 279, 281, said:\n\u201cIf there was a fire raging in the neighborhood of the building where said property was at the time said application was made, that was a very material fact which, if known to said Loeb & Son at the time, would no doubt have caused them to decline to accept said application. If said property had been destroyed at the time said application was accepted, then such contract of insurance would not become effective. If said Webster knew of said fire at the time he made such application and suppressed the fact, the contract for insurance then made can not be enforced because of fraud. * * *\n* 4 4 If the application was not made until 5:00 P.M., and if said Webster knew of the fire at 4:45 P.M., then the rule stated in said instruction should have been before the jury, and should have guided them in arriving at their verdict. * *\nThe trial court did not adopt defendants\u2019 said contention, that Kamberos was somehow excused from notifying Buschbach or Western Fire of the \u201coccurrence\u201d reported to him \u201cbecause he did not have all the pertinent facts at his disposal\u201d, and neither do we.\nPassing then to contention (c) above, the defendants contend, in substance, that Kamberos\u2019 concealment of the fatal collision from Buschbach and Western Fire cannot be imputed to Moss because Kamberos\u2019 authority was exhausted once he had mailed the application. The trial court accepted this view, but we do not.\nThe only case cited in support of this contention is Holbrook v. Institutional Insurance Co. of America (7th Cir. 1966), 589 F.2d 236, which holds merely that where a broker has applied for and actually received delivery of an insurance policy ordered by his customer, he has no authority thereafter to cancel and surrender the policy because the insured was, for a time, behind in his payments to his broker.\nIn Illinois, by statute, an insurance broker, such as Kamberos, is the agent of the applicant, not of the insurer, in the procurement of a policy of insurance (Ill. Rev. Stat. 1971, ch. 73, par. 1065.37). This has always been the Illinois rule. As our Supreme Court said in France v. Citizens Casualty Co., 400 Ill. 55, 58, 79 N.E.2d 28,\n\u201cThe rule is that an insurance broker, like any other broker, is the agent of the person who employs him. If an insurance broker is engaged to purchase insurance covering property of the one employing him, he becomes the agent of the insured and not the insurer. (Lycoming Fire Ins. Co. v. Rubin, 79 Ill. 402.)\u201d\nIn 12 Appleman, Insurance Law and Practice, sec. 7272, he says:\n\u201cAn ordinary broker, employed to procure insurance, is the agent of the person employing him, and his concealment from the insurer of any material fact, whether wilful or not, is the concealment of his principal. An insurer, issuing a ship repairer\u2019s liability policy for a period antedating the issuance of the policies, has been held entitled to rely on the repairer and its broker, acting as the repairer\u2019s agent in applying for the issurance, to make known the facts of any accident preceding the issuance of, but covered by the policies and all other facts material to the risk. * #\nIn vol. 16, sec. 8722, he says:\n\u201cAn agent soliciting policies of automobile insurance not directed to place the policy with any particular company is the agent of the insured, not the insurer, * * (Footnote omitted.)\nand sec. 8728, that:\n# * An insured, is bound by his broker\u2019s acts, even though fraudulent, and is charged with such broker\u2019s knowledge, and cannot challenge the validity of the contract which the broker makes for him. Consequently, a misrepresentation or breach of warranty by such broker is, in law, the act of the insured, and he is chargeable with the consequences thereof.\u201d (Footnotes omitted.)\nIn 7 Couch on Insurance, 2d, section 35:161, it is said:\n\u201cSec. 35:161. Broker as insured\u2019s agent.\nWhere the broker is regarded as the agent of tire insured, the latter is not excused from the effect of false statements made by the broker. * * *\u201d\nand, in 9 Couch on Insurance 2d, sec. 38:10, that:\n\u201cSec. 38:10. Concealment by broker.\nWhere the broker is the agent of the insured to procure the policy, concealment by him of material facts voids the policy.\n* * *\u201d (Footnote omitted.)\nWe therefore hold that Kamberos\u2019 agency for Moss was for the ultimate procurement of an insurance policy and was not exhausted or terminated by the mere mailing of the application on the morning of August 20, 1968.\nWe therefore conclude that the defendants\u2019 first main contention \u2014 that there was no fraud or concealment of the disastrous collision of August 19, 1968 \u2014 is without merit and that the policy issued by the company, without any hint of said prior loss is void \u2014 -unless the defendants\u2019 final main contention, hereinafter stated, changes all of this.\nII.\nThis brings us to the defendants\u2019 final contention \u2014 that the rules above enunciated do not apply to this case because here the application was for a predated policy and that this shifts the risk of material changes during the pendency of the application to the insurance company, which \u201cneed not issue the policy until it determines the facts on its own.\u201d\nVarious texts and cases are cited and quoted, but the law in Illinois, is otherwise and follows the general rules previously enunciated.\nIt is, as defendants contend, well established that parties to an insurance contract may validly agree on an effective date which is prior to the actual execution of the policy so as to cover a loss which may already have occurred, but there are somewhat varying statements as to the circumstances under which this may be accomplished.\nDefendants quote the following from 9 Couch on Insurance, 2d, sec. 39:87, p. 493:\n\u201cAlthough insurance policies ordinarily are prospective in operation only, they may be made retroactive as to the time of attachment so as to provide for indemnity for a loss which occurred prior to the date of the policies, for there is no principle of law which denies the parties the right to assume obligations antedating the date of the contract if the parties, for a valuable consideration, so elect, provided, of course, there is no fraud or concealment or material misrepresentation.\u201d (Emphasis added.)\nbut this does not really change the general rules previously discussed.\nThey also cite and quote at length from Burch v. Commonwealth County Mutual Insurance (Tex. Sup., 1970), 450 S.W.2d 838, but there the Supreme Court of Texas (at p. 841) said:\n\u201cMost courts that have considered the question hold that recovery may be had on a police antedated to include the time at which a loss occurred provided neither the applicant nor the insurer knew of the loss when the contract was made. Appleman, supra, \u00a7 2291; 43 Am. Jur. 2d Insurance \u00a7 328; Annotation, 132 A.L.R. 1325. See also United States v. Patryas, 303 U.S. 341, 58 S.Ct. 551, 82 L.Ed. 883. We approve and adopt this as a general rule, because in our opinion it is entirely sound as applied to the facts of this case. Aside from any question of protecting insurance companies against possible fraud on the part of their customers or agents, we can think of no reason for holding that the parties may not effectively contract for the insurer to assume the risk of a loss that may or may not have occurred when the contract is made. If that is then- intention, they are not mistaken in any material respect even though the insured property has, in fact, been damaged or destroyed. When neither of them knows of the loss, there is no basis for charging the insured with fraud and the company is not in the position of promising unconditionally to pay a substantial amount of money in exchange for a much smaller sum.\u201d (Emphasis added.)\nThis is reflected in the more recent case of Robbins v. Maryland American General Ins. Co. (Tex. Civ. App.), 472 S.W.2d 203, where the same court, at page 208, says:\n\u201cIt is now settled law in this State that a recovery may be had on a policy of insurance against a loss occurring prior to the issuance of the policy provided that neither the insured nor the insurer knew of the loss when the contract was made. Burch v. Commonwealth County Mutual Inc. Co., 450 S.W.2d 838 (Tex. Sup. 1970). * * *\u201d\nThese cases do not change the general rules discussed above.\nIn their argument the defendants finally contend that:\n\u201cThe mere fact that the company receives an antedated application is sufficient to place it on notice that it may be issuing a policy to insure a loss that has already occurred. If it fails to make an appropriate investigation, then it should be chargeable with the facts it could- have obtained. This is consistent with the principle that one who has failed to exercise ordinary care to discover the truth cannot claim fraud. * *\nand that:\n\u201cIn summary, and as so eloquently stated by Justice Schaefer, plaintiff\u2019s contention \u2018overlooks the crucial difference between the duty to notify of changed conditions under an ordinary application and the duty that exists when predated insurance is involved\u2019.\u201d\nDefendants\u2019 above quotation from Justice Schaefer\u2019s comments in Carroll v. Preferred Risk (1966), 34 Ill.2d 310, 215 N.E.2d 801, ignores the fact that said language is taken from his dissent and therefore demonstrates precisely what is not the law in Illinois.\nIn said case, the applicant, at 5:00 P.M. on June 22, 1962, mailed to the insurance company an application for an automobile liability insurance policy to be effective at 12:01 A.M. that same day. At 10:00 P.M. that night, June 22, 1962, he was involved in an automobile accident resulting in the death of plaintiffs intestate. The application was received on June 25, 1962, and the policy was issued, effective at 12:01 A.M. on June 22, 1962, as requested. No disclosure was made of the accident until after the issuance of the policy.\nIn holding that the policy was not effective and that the applicant was therefore uninsured, the Supreme Court through Mr. Justice Solfisburg, at pages 312-315, said:\n\u201cPalmer v. Bull Dog Auto Insurance Ass\u2019n, 294 Ill. 287, involved a similar problem. In Bull Dog the plaintiff applied for an automobile theft policy and sent the application and premium to the insurer. The loss occurred, as in the case at bar, after the application was mailed, but prior to acceptance by the insurer. The court held that the loss was not covered by the policy, stating at pages 291-292:\n\u2018Where a loss occurring before the risk attaches is known only to the applicant and he obtains a policy without disclosing the fact of loss the policy is void, even though the contract be given a date prior to the loss.\u201d (I Joyce on Insurance, 2d ed., sec. 107.) a # #\nWhile Mimms executed the application for insurance on June 22, the day of the fatal accident, the application was not received by Adams until June 25. Pursuant to ordinary contract principles, the application did not become an offer until it was communicated to the offeree, Adams, more than two days after the undisclosed fatal accident. It is essential to the existence of an offer that the proposal by the offerer be made known to the offeree. (Restatement of Contracts, \u00a7 23; 17 C.J.S. Contracts, sec. 38.) On the application Mimms answered in the negative to the question, \u2018Has the applicant or any other person been involved in an automobile accident while operating any private passenger type automobile resulting in any damage to any property, including his own, or in bodily injury or death, during the preceding 36 months?\u2019 We feel that the answer to this particular question must be considered a continuing representation that there has been no intervening material change in the risk from the date of the application to the time the policy is issued. Strangio v. Consolidated Indemnity & Ins. Co. (9th cir.) 66 F.2d 330.\n# # e\nIn the present case Iberra was the agent of Mimms and had neither apparent nor actual authority to bind the risk. The material increase in the risk due to the fatal collision was known to Mimms but unknown to the insurer prior to the issuance of the policy. We, therefore, conclude that the issuance of the policy without disclosure of the increased risk was not effective and Mimms was an uninsured motorist at the time of the collision with plaintiff\u2019s intestate.\u201d\nThis is in line with the law generally.\nIn 9 Couch on Insurance, 2d, it is said, in section 38:23:\n\u201cSec. 38:23. Occurrence of accident.\nWhere the applicant for an automobile liability policy, to his knowledge, had been involved in an accident prior to the issue of the policy but subsequent to his application, it was his duty to disclose such accident to the insurer even though the policy according to its terms was to take effect as of a day prior to the accident. * * *.\nA workmen\u2019s compensation policy will be avoided ab initio where the insured concealed the fact that an accident had occurred shortly before the application, despite the fact that the policy .was antedated and covered the period of the accident. (Footnotes omitted.)\nIn 12 Appleman, Insurance Law and Practice, in section 7272, this author says:\n\u201c* * * An insurer, issuing a ship repairer\u2019s liability policy for a period antedating the issuance of the policies, has been held entitled to rely on the repairer and its broker, acting as the repairer\u2019s agent in applying for the insurance, to make known the facts of any accident preceding the issuance of, but covered by the policies and all other facts material to the risk. * \u00b0 *\u201d\nIn 132 A.L.R. 1325 in an annotation entitled \u201cAntedating policy of insurance as affecting liability for loss that had already occurred\u201d, it is said:\n\u201cIt is generally held that where at the time of an application for insurance there has been a loss but neither the applicant nor the insurer knew of this fact a recovery may be had on a policy subsequently issued, which was antedated so as to include the time at which the loss occurred * * *.\nBut where one applies for a policy of insurance knowing that a loss has already occurred and conceals this fact and procures a policy to be antedated so as to cover the period when the loss occurred, the policy is void because of such fraud or concealment and no recovery can be had thereon. Massachusetts Bonding & Ins. Co. v. Hoxie (1937) 129 Fla 332, 176 So 480; Merchants\u2019 Ins. Co. v. Paige (1871) 60 Ill 448 (by implication); MATLOCK v. HOLLIS (Kan) (reported herewith) ante, 1316; Wales v. New York Bowery R. Ins. Co. (1887 ) 37 Minn 106, 33 NW 322; Nippolt v. Firemen\u2019s Ins. Co. (1894 ) 57 Minn 275, 59 NW 191; Continental Casualty Co. v. Lanzisero (1935) 119 NJ Eq 166, 181 A 170; Henshaw v. Insurance Co. of N.Y. (1901) 36 Misc 405, 73 NYS 1.\u201d\nIn Hansen v. Continental Casualty Co., 156 Wash. 691, 287 P. 894, in reversing a judgment on an accident policy, the Supreme Court of Washington, at pages 895, 896, said:\n\u201cAppellant\u2019s contention, which we think must be sustained, is that respondent\u2019s agent McNally, in procuring the predating of this policy so that on its face it covered a date on which an accident had already occurred, known to respondent\u2019s agent, but entirely unknown to the appellant and its agent, was guilty of conduct that voided the policy as to any liability for such in- l juries.\n# # #\nThe rule that there is no liability on a policy upon an application of the kind in the present case, for an injury occurring between the date of the application to which the policy was predated and the date on which the policy was actually issued, where such injuries were unknown to the insurer at the time of issuing and delivering the policy, goes hand in hand with another well-settled rule that changes in condition material to the risk which occur between the opening of negotiations for insurance and the issuance of the policy must be disclosed, as an elementary spirit of fair dealing * *\nWe therefore hold that the defendant\u2019s final contention \u2014 that the general rules heretofore enunciated do not apply to this case because here the application was for a predated policy and that this shifts the risk of material changes during the pendency of the application to the insurance company \u2014 is not the law, certainly in Illinois and probably generally.\nIII.\nWe therefore conclude that Moss\u2019 insurance broker, Kamberos, was his agent, not only for the mailing of the application, but also for the ultimate procurement of a liability policy on his boat and motor; that shortly after mailing said application and days before it was received or processed Kamberos learned from his secretary that there had been an \u201coccurrence\u201d, which he did not investigate or report to Western Fire or its agent Buschbach; that during the pendency of that application Kamberos, as Moss\u2019 agent for the procurement of the policy, was under a continuing duty to advise Western Fire or its agent Buschbach that there had been an \u201coccurrence\u201d (actually a fatal accident), which certainly was a change materially affecting the risk, and that his lack of knowledge of the details of said \"occurrence\u201d does not excuse the failure which constitutes, in law, a concealment or a fraud upon the insurance company, which had no hint of the fatal collision when it issued the policy; that this concealment or fraud vitiates the policy and bar's any recovery as against the insurance company; and that, certainly, under Illinois law and probably generally, this is true, even though the policy was predated to be effective before the policy was actually issued.\nAs a result, the judgment is reversed, and the case is remanded for further proceedings not inconsistent with this opinion.\nReversed and remanded with directions.\nBURKE, P. J., and GOLDBERG, J., concur.", "type": "majority", "author": "Mr. JUSTICE HALLETT" } ], "attorneys": [ "Hinshaw, Culbertson, Moelmann, Hoban & Fuller, of Chicago, for appellant.", "Philip H. Corboy, of Corboy and Kotin and Associates, and Samuel L. Evins, of Richman & Evins, both of Chicago, (Sidney Z. Karasik, of counsel,) for appellees." ], "corrections": "", "head_matter": "Western Fire Insurance Co., Plaintiff-Appellant, v. Joseph Moss et al., Defendants-Appellees.\n(No. 55718;\nFirst District (1st Division)\nMay 7, 1973.\nRehearing denied June 7, 1973.\nHinshaw, Culbertson, Moelmann, Hoban & Fuller, of Chicago, for appellant.\nPhilip H. Corboy, of Corboy and Kotin and Associates, and Samuel L. Evins, of Richman & Evins, both of Chicago, (Sidney Z. Karasik, of counsel,) for appellees." }, "file_name": "0802-01", "first_page_order": 824, "last_page_order": 838 }