THOMPSON v. OCCIDENTAL LIFE INS. CO

WRIGHT, C.J.

I dissent.

I disagree with the majority on two grounds: (1) Thompson's concealment and misrepresentation of material facts relating to his health in making application for insurance constitute grounds for rescission of any agreement which might have been entered into, and (2) no insurance contract became operative as Thompson was ultimately found to be uninsurable and no policy was issued or delivered to him.

In resolving the issue of misstatement and concealment it is necessary that we examine in depth Thompson's complete medical history as known to him at the time of the examination conducted by Dr. Epstein in behalf of the defendant insurance company.

Dr. Fieler, Thompson's family physician until 1961, testified that Thompson relied heavily on tranquilizers, sedatives and sleeping pills during the time he was under the doctor's care. Dr. Fieler had examined and diagnosed a varicose vein problem in 1961, recommending that Thompson undergo a surgical procedure known as a vein ligation to partially alleviate the symptoms. In 1962, the vein ligation was performed by Dr. Green. Dr. Green also performed a hydrocoyle and a hernia operation on Thompson in that year.

In 1963 Thompson was examined by Dr. Conklin. Dr. Conklin testified that Thompson was a heavy drinker. The doctor found it necessary to prescribe moderately strong sleeping pills and advised Thompson to decrease his alcohol intake. Dr. Conklin last saw Thompson for laryngitis in January 1964.

Dr. Pellegrin first examined Thompson in June 1964. Thompson complained of pain in his chest, back, "in his right hip, down into his right heel, and had some swelling of his right foot." Dr. Pellegrin testified that Thompson looked "acutely ill, was very pale and was moving very gingerly; that is, no rapid movements and sort of hunched over as if in considerable discomfort." The doctor treated Thompson for pneumonia and his overall condition improved.

Thompson again visited Dr. Pellegrin in July 1964. At this time Thompson complained of pain following any exercise, including walking. The doctor concluded that Thompson was experiencing intermittent claudication. Thompson told the doctor that "this pain has been present and becoming progressively worse since [he] had the vein ligation two years ago." Dr. Pellegrin took a pulse reading from which he concluded that there was diminished circulation in the arteries in both legs. In fact, the pulse in the arteries at the back of the knees and in the feet was barely palpable. The doctor also performed an electrocardiogram, finding some borderline indications which he did not consider especially significant.

Dr. James Thompson testified for the defendant that Thompson suffered from two basic conditions: varicose veins (thrombophlebitis) and hardening of the arteries (arteriosclerosis). The doctor explained that varicose veins is a common ailment which results from thickening of the veins and has a tendency to make the legs swell. Such can have serious effects if a blood clot, which may form in the vein, breaks off and flows through the veins into the heart or lungs. The other condition from which Thompson suffered, arteriosclerosis, was much more serious. This occurs when cholesterol is laid down on the interior of the walls of the arteries. As the walls get thicker with continuing deposits, the passageways through the arteries become narrower, thereby reducing the blood flow. The doctor indicated that, according to the medical records, the situation in Thompson's case had progressed to such an extent that the arteries were not carrying enough blood to the legs to allow Thompson to walk more than about half a block without experiencing intermittent claudication. The condition existed not only in arteries supplying the legs, where it is commonly reported, but also in arteries supplying the vital organs of the body, such as the heart, and may precipitate heart attacks or coronary occlusions. The doctor concluded that when arteriosclerosis has advanced to the degree present in Thompson, judging from his symptoms, his life expectancy would be less than one-half and probably more in the neighborhood of one-third of that of a person of Thompson's age.

Thompson again visited Dr. Pellegrin in the middle of July 1964. At this time Thompson complained of increased pain in the knee and some swelling and redness about that area. He was also experiencing a recurrence of the vein problems and the doctor noted evidence of phlebitis. Dr. Pellegrin testified that he was considering two procedures for relieving the intermittent claudication: (1) order Thompson to stop smoking and (2) perform a chemical sympathectomy. He explained that smoking causes blood vessels to contract. As the pain which Thompson experienced in his legs was due to decreased circulation smoking may have been a contributing factor. Dr. Pellegrin also described the procedure for treatment by a chemical sympathectomy. He testified that the arteries are controlled by the sympathetic nervous system and that certain of the nerves are associated with the artery walls. He explained further that certain impulses cause the walls of a vessel to contract, thereby decreasing circulation. However, if such impulses are cut off the vessels are allowed to relax. The purpose of the chemical sympathectomy is to render ineffective those portions of the nervous system which cause the contractions. Dr. Pellegrin at the July visit advised Thompson to cut down on his smoking and referred him to another doctor to investigate the desirability of a chemical sympathectomy.

During the course of his testimony Dr. Pellegrin stated that the intermittent claudication had nothing to do with Thompson's vein problems. In response to a question as to whether Dr. Pellegrin had told Thompson that claudication was a symptom of a different problem from the vein problems experienced earlier, Dr. Pellegrin replied that although he could not remember exactly what he told Thompson, "I am sure I must have described it — possibly, as something to do with circulation, and this is why we were going to do all these various diagnostic studies, to find out what was going on."

On referral from Dr. Pellegrin, Thompson met with Doctors Olpin and Hodge who concluded after examination that a chemical sympathectomy should be performed as soon as necessary laboratory tests could be completed. On August 10, the day prior to the insurance examination by Dr. Epstein, Thompson met again with Dr. Olpin, a vascular surgeon. Dr. Olpin's records reflected the following notation: "Detailed discussion of proposed lumbar sympathetic block held with patient. He will call in for an appointment when he completes his lab work." Dr. Olpin testified that, to the best of his recollection, this discussion consisted of an explanation of the purpose of the operation, the technical procedure involved and the possible complications which could arise from such a procedure. Dr. Hodge, who also saw Thompson on August 10, testified that he assumed he also had conversations with Thompson with respect to claudication and varicose veins.

It must be recognized from the foregoing that Thompson suffered from and was made aware of two serious ailments at the time of his examination by Dr. Epstein: varicose veins and arteriosclerosis. Neither of such ailments could be characterized as a minor matter likely to have been of no concern to Thompson nor of interest to the defendant insurer. In fact, the evidence presented at trial established that the arteriosclerosis condition, the presence of which Thompson failed to report to Dr. Epstein, was by far the most serious of all the maladies from which Thompson suffered. The evidence also points unerringly to the fact that Thompson was aware that he was committed to serious medical procedures to alleviate the condition. It is manifest, as a matter of law, that Thompson understood and appreciated his total medical problem at the time of his examination by Dr. Epstein.

The insurance examination conducted by Dr. Epstein was admittedly abbreviated. The doctor testified without dispute, however, that it was his practice to ask all of the questions listed on the application form and to record the answers as given by the applicant. Among other questions he asked Thompson whether he had been examined by a physician in the past five years, whether he had had an electrocardiogram, and whether he had had or been advised to have any surgical operation. Dr. Epstein entered an affirmative answer to each of these inquiries but, when asked to give details of all yes answers, including all dates and the names and addresses of all attending physicians, only the 1962 vein ligation and the hernia operation were mentioned and the name and address of Dr. Green were noted. Dr. Epstein's report of his examination of Thompson makes no mention of Thompson's consultations, examinations or treatments by (1) Dr. Fieler terminating in 1961 (conditions treated with tranquilizers, sedatives and sleeping pills), (2) Dr. Conklin in 1963 (drinking) and 1964 (laryngitis), (3) Dr. Pellegrin in June 1964 (pain in chest, back and right leg, pneumonia), in July 1964 (intermittent claudication, diminished circulation in both legs, electrocardiogram), again in mid-July 1964 (varicose veins, phlebitis, intermittent claudication treated by terminating use of tobacco with recommendation relative to chemical sympathectomy), and on August 10, 1964, the day immediately prior to the insurance examination by Dr. Epstein, and by (4) Drs. Olpin and Hodge (varicose veins, intermittent claudication to be treated by chemical sympathectomy upon completion of laboratory tests).

Most significantly, perhaps, Dr. Epstein's report does not indicate that Thompson had been instructed by Dr. Olpin the day before the examination that the chemical sympathectomy was necessary. Dr. Epstein testified that had Thompson told him that he had been so instructed Dr. Epstein would have noted it on the application. He further testified that he would have noted Thompson's visits with Drs. Pellegrin, Olpin and Hodge, the recent attacks of phlebitis, and complaints of chest pain had Thompson informed him of such matters.

At the completion of the examination Thompson signed the application, which includes in a conspicious place above his signature, the declaration: "I represent that the statements and answers shown above are complete and true to the best of my knowledge and belief."

In spite of the apparent inconsistencies, the jury, rendering an advisory finding, concluded that Thompson did not misrepresent or conceal material facts. An insurance company is entitled to demand complete and truthful answers to its inquiries respecting an applicant's medical history and condition ( Burns v. Prudential Ins. Co. (1962) 201 Cal.App.2d 868, 869 [ 20 Cal.Rptr. 535]), and failure to disclose that which a party knows, and ought to communicate, is concealment (Ins. Code, § 330) which entitles the injured party to rescind the contract of insurance. (Ins. Code, § 331.) Likewise, misrepresentation of material facts may also furnish grounds for rescission. ( Cohen v. Penn Mut. Life Ins. Co. (1957) 48 Cal.2d 720, 725 [ 312 P.2d 241].) The materiality of a nondisclosure or misrepresentation is determined by the effect that truthful answers would have had on the party to whom the communication is due, in forming his estimate of the relative advantages and disadvantages of the proposed contract. (Ins. Code, § 334.)

The evidence here shows that Thompson concealed or misrepresented that he had suffered within recent months attacks of pleurisy, phlebitis, chest pain and arteriosclerosis which would not allow him to walk more than half a block without intermittent claudication. Further, he did not disclose that he had received advice the day prior to the examination that a chemical sympathectomy was necessary to relieve symptoms of the arteriosclerosis. The materiality of such misrepresentation and concealment is obvious.

The majority would reconcile the insufficiency of Dr. Epstein's medical examination and report with an implied finding that he intentionally or inadvertently failed to record the information as reported by Thompson. Dr. Epstein testified that, although the examination was cursory, it was his invariable practice to follow the format of the application form and to record all information related by the applicant. Dr. Epstein also testified that had he been told about Thompson's recent visits to the other doctors, recurrence of phlebitis, pleurisy and chest pain, the existence of intermittent claudication due to arteriosclerosis, or that Thompson had been advised to undergo a chemical sympathectomy, he would certainly have noted the information on the application.

Although a trier of fact is free to accept or reject a witness' testimony such disbelief cannot supply the existence of a fact nor may it supply substantial evidence in support of a verdict. ( Casetta v. United States Rubber Co. (1968) 260 Cal.App.2d 792, 808 [ 67 Cal.Rptr. 645].) "A legal inference cannot flow from the nonexistence of a fact; it can be drawn only from a fact actually established. (Code Civ. Proc., §§ 1958, 1960.) It is axiomatic that `an inference may not be based on suspicion alone, or on imagination, speculation, supposition, surmise, conjecture, or guesswork.'" ( Eramdjian v. Interstate Bakery Corp. (1957) 153 Cal.App.2d 590, 602 [ 315 P.2d 19].) In this vein we said in Hick v. Reis (1943) 21 Cal.2d 654, 660 [ 134 P.2d 788], that such a rule is necessary to preclude arbitrary action by the trier of fact. We noted there that the trier of fact may not indulge in inferences which are unsupported or which are rebutted by such clear, positive and uncontradicted evidence that it is not subject to doubt in the minds of reasonable men. (See also Isenberg v. California Emp. Stab. Com. (1947) 30 Cal.2d 34, 40 [ 180 P.2d 11]; State of California v. Superior Court (1962) 208 Cal.App.2d 659 [ 25 Cal.Rptr. 363].)

Dr. Epstein's testimony went entirely unrebutted by plaintiff. Even if the jury disbelieved Dr. Epstein, it does not follow that the jury could infer that the questions were not asked at all or that Dr. Epstein intentionally or inadvertently failed to record the answers as such inferences would necessarily be based on impermissible conjecture or surmise which cannot furnish evidence in support of the verdict. (See Hicks v. Reis, supra, 21 Cal.2d 654, 660; Eramdjian v. Interstate Bakery Corp., supra, 153 Cal.App.2d 590, 602.)

There is a further reason why failure to make a full disclosure cannot be charged against Occidental's agent, Dr. Epstein. The record shows that Thompson signed the certification declaring that the information contained in the application was complete and true. We said in Telford v. New York Life Ins. Co. (1937) 9 Cal.2d 103, 107 [ 69 P.2d 835], that there is a requirement of fair dealing by both parties to an insurance contract. This requirement includes a duty on the part of the applicant to read the application and to report to the insurer errors or omissions. By neglecting to inform the company of material omissions, the applicant assumes the responsibility therefor. (See also Layton v. New York Life Ins. Co. (1921) 55 Cal.App. 202 [ 202 P. 958]; Goldstone v. Columbia Life etc. Co. (1917) 33 Cal.App. 119 [164 P. 416].)

The majority, while conceding that Telford correctly states the law in the area, rely on decisions which indicate that a failure to notify the insurer of errors or omissions may be excused if it can be inferred that the examining doctor created an impression that additional written responses were unnecessary. The applicant must have been so misled by the examining doctor that on a reading of the application including the errors and omissions the applicant would not have cause to believe that they were material. ( Rutherford v. Prudential Ins. Co. (1965) 234 Cal.App.2d 719, 727 [ 44 Cal.Rptr. 697].) In Boggio v. Cal.-Western States Life Ins. Co. (1952) 108 Cal.App.2d 597, 598 [ 239 P.2d 144], for instance, there was evidence that the soliciting agent told the insured: "`Well as long as you do not have a medical discharge they don't care about all this. As long as you have an honorable discharge and not a medical discharge you can sign this application.'" In the case at bar, on the other hand, there was absolutely no evidence which would even suggest that Thompson was misled or had reason to believe that it was unnecessary to give truthful or complete answers to the questions asked by Dr. Epstein. The only evidence received bearing on the subject of the examination indicated that the form was faithfully prepared and Thompson read the application before affixing his signature.

As previously noted the trier of fact was not bound to believe Dr. Epstein but, absent evidence to the contrary, it could not make findings to the contrary. ( Hicks v. Reis, supra, 21 Cal.2d 654, 660; Eramdjian v. Interstate Bakery Corp., supra, 153 Cal.App.2d 590, 602.) Inasmuch as Thompson signed the application he is conclusively presumed to have known, in the absence of contrary evidence, the contents of the application and the falsity of the materials appearing therein. The application must therefore be considered an instrument in the perpetration of a fraud, and no recovery can be allowed on the policy. ( Layton v. New York Life Ins. Co., supra, 55 Cal.App. 202, 206-207.)

The majority next theorize the court may have believed that Thompson, as an ordinary layman, failed to recollect or appreciate the significance of the consultations with Drs. Pellegrin, Olpin and Hodge. The majority speculate that the medical terms used by these doctors might have been meaningless jargon to Thompson and he was unable to understand the seriousness of the conditions from which he suffered or the nature of the proposed medical procedures.

Several of the doctors who had examined Thompson prior to the interview with Dr. Epstein testified that Thompson was informed and appreciated the seriousness of the diseases from which he suffered and the nature of the proposed corrective procedures. Thompson's recognition of the differences between his varicose vein problems and the arteriosclerosis condition which was causing intermittent claudication is evident from statements he made to Dr. Pellegrin. Dr. Pellegrin testified that, in describing the evolution of the intermittent claudication, Thompson had stated that the pain had been present and became progressively worse since he had the vein ligation in 1962. During the course of each examination by Dr. Pellegrin the topic of intermittent claudication was discussed. Dr. Pellegrin testified that he makes it a practice to explain to his patients the meaning and implications of the technical terms which he uses.

The nature and advisability of a chemical sympathectomy was discussed with Thompson on several occasions in consultations with three different doctors. Dr. Pellegrin first considered the operation as a possible treatment to alleviate the intermittent claudication. Dr. Olpin's records indicate that a detailed description of the proposed operation was had with Thompson in which the purpose of the operation and the procedures involved were discussed. Thompson also had occasion to inquire about the nature of the operation in consultations with Dr. Hodge. Each of these doctors also testified that in discussing a medical problem with a patient as a matter of course they explain technical terms in attempting to insure that the patient understands his condition and proposed treatments.

There is absolutely no support in the record for the contention that Thompson did not understand or appreciate the communications of the doctors. Nor does the conclusion that Thompson did not distinguish the varicose vein problem from the disease causing intermittent claudication find support. The only reasonable conclusion which might be drawn from the testimony of the doctors who examined Thompson is that even a layman would have understood and appreciated the significance of the chemical sympathectomy. The majority's assertion that Thompson failed to appreciate the significance of the consultations is at best speculative and without support. The further assertion that Thompson may have failed to recollect extended medical consultations which ended in a recommendation of surgery only a day before the interview with Dr. Epstein is contrary to reason and to the record.

The majority next assert that the trier of fact may have concluded that Thompson's undisclosed problems related to "minor indispositions" rather than serious ailments. Such a conclusion could only result from a misreading of the evidence introduced at trial. The evidence showed without contradiction that the most serious of the conditions from which Thompson suffered was arteriosclerosis and that this was certain to shorten his life substantially. The uncontradicted testimony of a witness cannot be arbitrarily disregarded. ( Gomez v. Cecena (1940) 15 Cal.2d 363, 366 [ 101 P.2d 477]; Camp v. Ortega (1962) 209 Cal.App.2d 275, 281 [ 25 Cal.Rptr. 873]; see also Evid. Code, §§ 410, 411.) Although there are exceptions to this rule when the testimony is inherently improbable ( La Jolla Casa deManana v. Hopkins (1950) 98 Cal.App.2d 339, 345-346 [ 219 P.2d 871]), the witness is impeached (Evid. Code, § 785), or has an interest in the subject matter of the litigation (Witkin, Cal. Evidence (2d ed. 1966) § 1113), there were no such infirmities in the statements of Drs. Pellegrin, Hodge and Olpin who each testified that Thompson had been advised as to the seriousness of his ailment. Again, the trier of fact was not free to indulge in suppositions entirely contrary to the evidence.

Finally, the majority submit that the trier of fact may have concluded that the subject matter of the consultations with Drs. Pellegrin, Olpin and Hodge would not have affected defendant's decision to issue Thompson a policy. In support of this contention the majority note that the court was not required to accept contrary evidence on the issue presented by an officer of defendant. (See McAuliffe v. John Hancock Mut. Life Ins. Co. (1966) 245 Cal.App.2d 855 [ 54 Cal.Rptr. 288]; Witkin, Cal. Evidence (2d ed. 1966) § 1113.) However, even if the court refused to give credence to this testimony it would have no more effect than if it had not been given. ( Market Street Ry. Co. v. George (1931) 116 Cal.App. 572, 576 [ 3 P.2d 41].) It is inconceivable that an insurer would not have been affected by the disclosure that an applicant suffered from an advanced condition of arteriosclerosis, a malady which would shorten his life span by one-half to two-thirds.

The majority correctly state that the party alleging fraud has the burden of proof on that issue. ( Farmers Auto. etc. Exch. v. Calkins (1940) 39 Cal.App.2d 390, 393 [ 103 P.2d 230]; Mayfield v. Fidelity Casualty Co. (1936) 16 Cal.App.2d 611, 616 [ 61 P.2d 83]; Evid. Code, § 520.) The burden of proof means that the party so charged has the obligation to produce a particular state of conviction in the mind of the trier of fact as to the existence or nonexistence of a fact. (Evid. Code, §§ 115, 190, 500.) The party with the burden of proof of a fact has the initial duty of producing evidence sufficient to avoid a ruling against him on the issue. (Evid. Code, §§ 110, 550.) When the requisite degree of proof is achieved as to the existence of a particular fact, the trier thereof must assume the fact exists. (Morgan, Basic Problems of Evidence (1961) p. 19; 9 Wigmore, Evidence (3d ed. 1940) § 2485.) Usually, the party with the burden of proof is required to convince the trier of fact that the existence of the fact is more probable than its nonexistence by a preponderance of the evidence. However, in some instances a party must produce in the mind of the trier a substantially greater proof concerning the existence of a particular fact, as proof by clear and convincing evidence. (Witkin, Cal. Evidence (2d ed. 1966) § 190.)

Whichever standard of proof is applicable here, it would appear that defendant satisfied its burden of proof of fraud upon the introduction of the application certified as true and complete by Thompson, and the introduction of extensive evidence of errors and omissions with Thompson's knowledge thereof. At the very least the introduction of the foregoing would have shifted to plaintiff the burden of producing evidence to rebut the inference that Thompson committed fraud in applying for the insurance. (Witkin, Cal. Evidence (2d ed. 1966) §§ 193-195; 9 Wigmore (3d ed. 1940) Evidence, § 2487; Comment, Law Revision Commission, Evid. Code, § 550.) Inasmuch as the plaintiff failed to produce any evidence whatsoever to rebut the inference of fraud the court should have found as a matter of law that there was fraud which entitled defendant to recind any contractual obligation for which it might otherwise have been liable.

I also disagree with the conclusion of the majority that a contract of insurance was in fact entered into. The majority place great reliance on our decision in Ransom v. Penn Mutual Life Ins. Co. (1954) 43 Cal.2d 420 [ 274 P.2d 633]. I believe, however, that a careful examination of that decision will demonstrate that it differs from the case at bar both on its facts and its theoretical justification.

The question in Ransom was whether a contract of insurance arose immediately upon receipt by the insurer of the completed application accompanied by the premium payment, subject to the insurer's right to terminate the agreement if it subsequently found the applicant to be unacceptable, or whether the acceptance of the applicant as an insured was a condition precedent to the existence of the contract. The form in Ransom contained the following clause: "`If the first premium is paid in full in exchange for the attached receipt signed by the Company's agent when this application is signed the insurance shall be in force, subject to the terms and conditions of the policy applied for, from the date of Part I or Part II of this application, whichever is the later, provided the Company shall be satisfied that the Proposed Insured was at that date acceptable under the Company's rules for insurance upon the plan at the rate of premium and for the amount applied for, but if such first premium is not so paid or if the Company is not satisfied as to such acceptability, no insurance shall be in force until both the first premium is paid in full and the policy is delivered while the health, habits, occupation and other facts relating to the Proposed Insured are the same as described in Part I and Part II of this application and in any amendments thereto.'" ( Id. at p. 423.)

We held the operative factor in Ransom to be reliance. Initially we observed that "[t]he clause quoted above [was] subject to the interpretation that the applicant is offered a choice of either paying his first premium when he signs the application, in which event `the insurance shall be in force . . . from the date . . . of the application,' or of paying upon receipt of the policy, in which event `no insurance shall be in force until . . . the policy is delivered.'" ( Id. at p. 425.) Citing Gaunt v. John Hancock Mut. Life Ins. Co. (2d Cir. 1947) 160 F.2d 599, 601, we stressed that an application must be construed as it would be understood by a lay person. We concluded that such a person would have assumed from reading the contract that he would receive immediate coverage in exchange for the early payment of his money and that he would not understand that he was left uninsured until the company, at its leisure approved the policy. "[I]t would be unconscionable to permit the company, after using language to induce payment of the premium at that time, to escape the obligation which an ordinary applicant would reasonably believe had been undertaken by the insurer." ( Id. at p. 425; italics added.)

The application in the case at bench is not reasonably susceptible to alternative constructions when read by an ordinary person. It adequately informs the reader that he would not receive immediate coverage when he paid his premium unless certain, well defined conditions were met. Comparison of the provisions of the contract in Ransom with those in the instant case reveal that the elements of inducement and reliance which were present in Ransom, and the basis of our decision there, are absent here.

The application in the instant case first notifies the applicant that the policy was not to take effect unless the first premium and the policy were delivered during the lifetime of the proposed insured, except as otherwise provided in the receipt. Although at first blush the language in this and the Ransom contract may seem similar, the primary effect of the language in Ransom was to induce reliance that coverage would commence upon the payment of the premium, while Thompson was put on notice that payment would not result in coverage unless other conditions were met.

In Ransom the terms and conditions upon which immediate coverage would not be afforded were explained in a manner which was at best ambiguous, the court stating, "While some of the language tends to support the company's position, it does no more than produce an ambiguity, and the ambiguity must be resolved against defendant. [Citations.]" We concluded that the language was reasonably susceptible to the construction that immediate payment would result in immediate coverage.

On the other hand the receipt in the instant case reveals no such ambiguity and explains that if the company is satisfied with the applicant's insurability at the time of the completion of both parts of the application, "but only after such conditions are met," the insurance will be effective from the date payment of the premium is made. Otherwise, the proposed insured is informed that coverage will not begin until the policy is delivered.

The contract here, unlike that in Ransom, does not induce the applicant to believe that payment would result in coverage without regard to physical condition. A fair reading of the contract by an ordinary person would yield the conclusion that immediate coverage is available only if the applicant is found to be fit. Consequently, the underlying theoretical justification of the Ransom case is lacking and no contract came into being because Thompson neither received the policy nor was found to be acceptable by defendant.

For either one or both of the foregoing reasons, I would reverse the judgment.

Sullivan, J., and Draper, J., concurred.

Appellant's petition for a rehearing was denied October 10, 1973. Wright, C.J., and Sullivan, J., were of the opinion that the petition should be granted.