Appeal from the Judgment entered October 16, 1986 in the Court of Common Pleas of Lycoming County, Civil Division, at No. 85-01123.
Robert A. Gallagher, Williamsport, for appellant.
Norman Lubin, Williamsport, for Grimm and North Cent., appellees.
Cirillo, President Judge, and Wieand and Del Sole, JJ. Wieand, J., files a concurring and dissenting opinion.
[ 378 Pa. Super. Page 607]
The courts of this Commonwealth have, once again, been asked to consider the question of whether a material misrepresentation contained in an application for automobile insurance will permit the insurance company to rescind the policy it issued to the applicant when the misrepresentation is later discovered. In three previous decisions the answer has been in the negative and insurers have not been allowed to rescind the policy. Following the lead of these cases, we too find that an insurer who later learns of an applicant's failure to disclose information material to the risk is not permitted to rescind the policy as a contract which is void ab initio.
In the instant action, Appellant, Keystone Insurance Company, issued a binder to Appellees on the same day they applied for automobile insurance. The next day, Appellee, Sylvia Klopp, was involved in an automobile accident. Within a month Appellees received from Keystone both an automobile policy with a insurance identification card, and notification that Keystone was rescinding the binder and policy accompanied by the return of Appellee's premium deposit. Keystone's refusal to provide insurance and the basis for its attempt to rescind the policy were based upon certain material misinformation supplied on the Appellees' insurance application. When presented with cross-motions for summary judgment, the trial court ruled that rescission, as opposed to cancellation, is not a remedy available to an insurer such as Appellant. The trial court's ruling obligating Keystone to insure Appellees for the accident is contested by Keystone because it maintains that there exists a common law right to rescind a policy which is based upon a misrepresentation and is void ab initio.
The identical claim, when presented to two separate panels of the Commonwealth Court, was rejected. In a consolidated appeal before the Pennsylvania Supreme
[ 378 Pa. Super. Page 608]
Court, the Commonwealth Court's decisions were affirmed. Metro. Prop. & Liab. v. Insurance Com'r, 517 Pa. 218, 535 A.2d 588 (1987). In an Opinion Announcing the Judgment of the Court, Justice McDermott provides sound rationale for the conclusion that Act 78, 40 P.S. §§ 1008.1-1008.11, was intended to supersede all common law rights and remedies and that the insurer was able to terminate an automobile insurance policy solely by the means provided under the statute. See also Metro. Prop. & Liability v. Ins. Dept., 113 Pa. Commw.Ct. 150, 537 A.2d 53, 55 (1988). The case before the Supreme Court was heard by 6 justices and the opinion of Justice McDermott was joined by one justice. One justice concurred in the result and two justices joined in a concurring opinion authored by Chief Justice Nix. In the Concurring Opinion, Chief Justice Nix declined to agree that insurers are to be foreclosed from rescinding policies and, instead, reasoned that the Commonwealth Court's rulings should be affirmed since the misrepresentations in the two cases before the court were not material to the claimed loss. Because the Opinion of Justice McDermott was not adopted by a majority of the Court, it is not binding precedent, nevertheless its persuasive value is to be considered. Commonwealth v. Covil, 474 Pa. 375, 380-381, 378 A.2d 841, 844 (1977).
The rationale provided in the Opinion Announcing the Judgment of the Court details convincing reasons why an insurer cannot elect to rescind a policy and instead must comply with Act 78 in order to terminate a policy. The Supreme Court Opinion deals with this situation as follows: it looks to the policy and rationale behind the Act; it makes reference to limiting access to the courts; it provides expert and expeditious forums for resolving claims; it prevents unscrupulous insurers from bargaining down claims by threats of rescission; and it encourages insurers to perform better and more efficient investigations prior entering into a contract. As stated, we find this reasoning persuasive and will not seek to repeat it herein. The ground in this area
[ 378 Pa. Super. Page 609]
has been thoroughly plowed, we see no need to ...