The opinion of the court was delivered by: BECHTLE
This matter is before us on the parties' cross-motions for summary judgment in an action in which recovery is sought for the face amount of a life insurance policy never issued by defendant.
Leonard Recupito, Jr. ("Recupito"), then 43 years of age, seeking to establish a ready cash estate to protect his family, consisting of his wife, two daughters and his parents, in the event of his untimely death, sought the assistance of Richard C. Bannon, C.L.U. ("Bannon"). Bannon was a licensed insurance broker and a licensed life insurance agent, employed by Mutual Benefit Life Insurance Company as an authorized agent to sell group life insurance on its behalf. He was also a special employee of Alden-Levine Associates, 1845 Walnut Street, Philadelphia, Pennsylvania. Bannon recommended that Recupito obtain $200,000 of life insurance instead of the $100,000 coverage sought by him. Since another company had declined to insure Recupito, Bannon recommended, among others, the defendant, an insurance company which specializes in insuring the lives of people who do not meet the qualifications of standard underwriting. In response to Bannon's inquiry through Alden-Levine Associates, an authorized agency for defendant, defendant sent a document dated January 8, 1971, through the mail known as a "Tentative Quote" indicating that it was interested in issuing a five-year renewable convertible policy in the maximum face amount of $200,000 on the life of Recupito, the premium to be determined from standard Table 2 rates. The quote was made dependent upon receipt by defendant of a formal application, medical examination report, an electrocardiogram ("EKG") recording, an X-ray, home office specimen, and an "inspection report" (i.e., a credit rating report).
On Wednesday, January 13, 1971, Recupito, as the proposed insured, signed Part I of two applications, each for $100,000 of five-year renewable convertible term life insurance. Each was addressed to defendant and showed that a premium of $57.28 was to be charged on a monthly basis. The amount was at the standard rate and was selected by Bannon on the assumption that Recupito would qualify for that rate instead of a higher one. Part I of each application was dated at Philadelphia, Pennsylvania, on January 13, 1971, by Bannon and signed by him as a witness for Alden-Levine Associates. The first application was for a policy to be obtained by Recupito naming his parents as beneficiaries; the other for a policy to be obtained by his wife on which she was named beneficiary. On the same day, a medical doctor selected by defendant, after interrogating and examining Recupito, filled out Part II ("Answers made to the medical examiner" by the proposed insured) and Part III ("Medical examiner's report") of each application. In Part III, the doctor reported that his overall estimate of Recupito's health was "First Class," in contrast to "Good," "Fair," or "Poor."
Part I of each application, in pertinent part, provided: "It is Hereby Agreed that the insurance applied for shall not be in effect until the issuance and delivery of the policy and the payment of the first premium thereon while the Proposed Insured . . . in sound health, except as may be provided in the Conditional First Premium Receipt detached herefrom and issued if the premium be paid in advance. . ." (Italics supplied.)
The conditional receipt, the insurability determination type, referred to in each application is in the following form:
CONDITIONAL FIRST PREMIUM RECEIPT
"Received from the sum of which is the amount shown in item 23 of Part I of the application to Inter-Ocean Insurance Company bearing the same date as this receipt. This payment is received subject to the agreements contained in Part I of the Application, and the terms and conditions printed on the reverse side hereof. Any remittance not in cash is received subject to actual cash payment.
Dated at . . . (City), . . . (State), this . . . day of . . . , 19 . . .
Soliciting Agent" (Italics supplied.)
The reverse side set forth, inter alia, that the insurance applied for shall be in force as of the date of death of the proposed insured provided he is insurable on the date of the application as a standard risk in accordance with the practice of the company governing the acceptance of risks for the plan and amount of insurance applied for at the company's published premium rate for his classification of risk.