                    IN THE COURT OF APPEALS OF TENNESSEE
                                 AT JACKSON
                ______________________________________________

                                      FILED
                                      October 19, 1999

                                     Cecil Crowson, Jr.
                                    Appellate Court Clerk

ROBERT C. LEE TRUST by and
through M. STEPHEN BRANDON,
TRUSTEE,

and

MISSTENN RADIOLOGY, P.A.,

      Plaintiffs-Appellants,
                                                   Shelby Chancery No. 98-0014-1
Vs.                                                C.A. No. 02A01-9901-CH-00021

THE PAUL REVERE VARIABLE
ANNUITY INSURANCE COMPANY,
a wholly owned subsidiary of Textron,
Inc.,

     Defendant-Appellee.
______________________________________________________________________
______

                 FROM THE SHELBY COUNTY CHANCERY COURT
                THE HONORABLE WALTER L. EVANS, CHANCELLOR


                               Larry E. Parrish, P.C., of Memphis
                                         For Appellants

                                  George T. Lewis, III and
                           Lori Hackleman Patterson of Memphis
                                       For Appellee




                               AFFIRMED AND REMANDED

                                         Opinion filed:




                                                                                   Page 1
                                                              W. FRANK CRAWFORD,
                                                              PRESIDING JUDGE, W.S.


CONCUR:

ALAN E. HIGHERS, JUDGE

HOLLY KIRBY LILLARD, JUDGE
     This appeal involves a declaratory judgment suit against an insurance company

seeking a declaration that a policy of insurance was never in effect and for judgment for the

amount of premiums paid. From the order of the trial court granting defendant, The Paul

Revere      Variable   Annuity    Insurance    Company,        (Revere)   summary   judgment,

plaintiff-appellant, Robert C. Lee Trust (Trust) appeals. 1

         The complaint alleges that the Trust was established in 1982, and the trustee is M.

Stephen Brandon. The address of both of the Trust and the trustee is 6075 Poplar Avenue,

Suite 420, Memphis, Tennessee, 38119.             The complaint avers that MissTenn is a

Mississippi professional association duly chartered by the State of Mississippi with its

principal place of business in Corinth, Mississippi. Plaintiffs allege that Revere’s agent

solicited the purchase of a life insurance policy on the life of Robert C. Lee, M.D. and

obtained the execution of an application for the policy dated June 16, 1994. The application

states that the proposed insured is Robert C. Lee, M.D., and the owner and beneficiary of

the policy is the Trust. The application further states as pertinent to the issue before the

Court:

               (5) The insurance applied for will not take effect unless the
               issuance and delivery of the policy and payment of the first
               premium occur while the health of the Proposed Insured . . .
               remains as stated in the Application. . . .

The complaint alleges that there never was a delivery of the policy and further avers that by

means of bank drafts drawn directly from the account of MissTenn, Revere obtained from

MissTenn approximately $5,000.00 per month for thirteen months as premiums on the



                                                                                                Page 2
policy. Plaintiffs aver that there was no policy in effect, and that Revere must refund the

amounts paid as premiums.

       Revere’s answer admits that the application was made and that the premiums were

paid but denies that there was no delivery of the policy. It avers that the policy was in full

force and effect, and it is entitled to the premiums paid.

       The material facts are not in dispute. The Robert C. Lee Trust was established by

Dr. Robert C. Lee as settlor in 1982 for the purpose of estate planning. MissTenn, at all

material times, was a professional association wholly owned by Dr. Lee. For the purposes

of funding the Trust, Dr. Lee arranged to procure insurance on his life, and in June, 1994, Dr.

Lee completed and signed an application with Revere for a two million dollar life insurance

policy on his life to be owned by the Trust. As stated in the complaint, the application stated

that the policy would not take effect unless the policy was delivered while the “health of the

Proposed Insured . . . remains as stated in the Application.” The application was handled

by Revere’s agents, Bruce Sartain and Rick Jiminez.          The first premium check in the

approximate amount of $5,000.00 was paid by MissTenn’s check signed by Dr. Lee. By

written instrument Dr. Lee authorized Revere to draw monthly premium installments from the

MissTenn bank account. On June 20, 1994, the policy of insurance applied for was mailed

from Revere’s home office in Worcester, Massachusetts, to the agents in Jackson,

Mississippi. Upon receipt of the policy from Revere, the agents placed the policy in the

United States mail for delivery to Stephen Brandon, trustee for the Robert C. Lee Trust at his

address. Brandon denies receiving the policy. Both Brandon and Dr. Lee received notices

from Revere concerning the premium payments made from the MissTenn bank account.

In September, 1994, Dr. Lee’s father, a Farm Bureau agent, asked Dr. Lee to replace his

existing life insurance policy with a policy obtained from his brother, Glenn Lee of

Tennessee Farmers Mutual Insurance Company. Dr. Lee agreed and instructed his brother

to perform a 1035 Exchange of policies so that there would be no gaps on Dr. Lee’s

insurance coverage and no tax consequences for the exchange. 2 The existence of the



                                                                                                  Page 3
Revere policy was required to complete an exchange of insurance policies. To initiate this

procedure, Dr. Lee signed a Tennessee Farmer’s Insurance Form entitled, “Notice

Regarding Replacement: Replacing Your Life Insurance Policy,” on September 11, 1994,

which represented that he currently held a life insurance policy from Revere. On December

25, 1994, Dr. Lee signed a Tennessee Farmer’s Life Insurance Company form entitled “

Absolute Assignment to Effect Section 1035 Exchange and Cash Surrender,” which stated

that the Revere policy was in effect on that date.

       Revere filed a motion for summary judgment asserting that the undisputed facts show

constructive delivery of the policy. Alternatively, Revere asserts that even if no delivery was

accomplished, the insured waived the delivery requirement by recognizing, in writing, that

the policy was in full force and effect. Plaintiffs also moved for summary judgment, agreeing

that no issues of material fact exist.

       After a hearing on December 2, 1998, the trial court granted Revere’s motion for

summary judgment by order entered December 8, 1998.             The trust has appealed and

presents the sole issue for review as whether the trial court erred in granting Appellee’s

motion for summary judgment and denying Appellants’ motion for summary judgment,

finding as a matter of law that the mailing of an insurance policy to a proposed insured

constitutes a constructive delivery of said policy and thereby creates a binding policy of

insurance, negating the need for an actual delivery of the policy?

       A motion for summary judgment should be granted when the movant demonstrates

that there are no genuine issues of material fact and that the moving party is entitled to a

judgment as a matter of law. Tenn. R. Civ. P. 56.03.          The party moving for summary

judgment bears the burden of demonstrating that no genuine issue of material fact exists.

Bain v. Wells, 936 S.W.2d 618, 622 (Tenn. 1997). On a motion for summary judgment, the

court must take the strongest legitimate view of the evidence in favor of the nonmoving party,

allow all reasonable inferences in favor of that party, and discard all countervailing evidence.

 Id.   The parties concede that there are no genuine issues of material fact and that



                                                                                                   Page 4
summary judgment is appropriate.

       Although Revere asserts that Mississippi law is controlling on the issue presented, it

concedes that the law is the same in both Mississippi and Tennessee. Appellant contends

that Tennessee law applies. The applicable law is such that we need not extend this

Opinion in this regard.

       Appellant contends that the application provision requires actual delivery of the policy

to the Trust as the owner of the policy. Revere, on the other hand, contends that its mailing

of the policy to its agent for delivery satisfied the application’s provision.

       1 Couch on Insurance 3d, § 14.10 (1996) states:

               Whether delivery has occurred depends upon the intention of
               the parties as manifested by their acts and words. Similarly, in
               determining whether there has been a delivery to the insured by
               a delivery to the agent of the insurer, the intention of the parties
               as to the purpose and conditions of the delivery to the agent
               must be considered and given effect.

               The condition of delivery of the policy does not necessarily
               require an actual or manual delivery. A constructive delivery
               suffices in lieu of a delivery of the instrument into literal
               possession of the applicant in the absence of an explicit
               contractual or statutory provision which makes the effectiveness
               of the contract dependent upon actual delivery; or a contractual
               condition which must be fulfilled before delivery can be effective.
                 Ordinarily, the sufficiency of the delivery of a policy is
               determined not by who has the actual possession of the policy,
               but who has the right of possession.

                              *              *              *

       1 Appleman’s Insurance Law & Practice §. 132 (1981) provides:

               132. Necessity of delivery - Intention of the Parties.

               The mere fact that no contract was delivered to the insured is
               not, of itself, conclusive upon the question as to whether or not
               the contract is in force and effect. The question as to whether or
               not a valid delivery has been effected depends chiefly upon the
               intention of the parties. Thus, where the insurer mails the policy
               to its agent, the intent with which this action is performed
               governs in determining the sufficiency of delivery.

               Since delivery is largely a matter of intention, constructive
               delivery of the contract is sufficient in the absence of policy
               provisions to the contrary. Thus, where the policy is in the



                                                                                                  Page 5
              possession of the insurer’s agent, the question may have to be
              resolved upon the old doctrine of “meeting of the minds” to
              determine the question of constructive delivery. The very fact
              that the policy is complete and ready for delivery is, of itself,
              some evidence that the terms were all agreed upon.

                            *              *              *

       As stated in 19 ALR3d 953:

              It is a broad principle of general recognition in numerous cases
              that, under a policy provision requiring delivery to the insured, in
              general terms at least, the unconditional transmission of an
              insurance policy by the company to its agent for delivery to the
              applicant, where his application has been accepted and the
              policy issued, with nothing other than delivery remaining to be
              done by either party, constitutes delivery of the policy to the
              applicant.

Id. at 959-960.

       Tennessee has recognized delivery to an agent as an effective delivery of the policy.

This Court in Bates v. Equitable Life Assurance Society of the United States, 177

S.W.2d 360 (Tenn. App. 1943) stated:

              The first premium had been paid, the insurer had accepted the
              insured’s offer, issued the policy, and mailed it to its agent for
              delivery to the insured. Under these circumstances the
              formation of the contract had been completed and a manual
              tradition of the policy was not essential.                (citations
              omitted)(emphasis added).

Id. at 363.

       In Yonge v. Equitable Life Assurance Society, 30 F. 902 (E.D. Tenn. 1887), suit

was filed to recover on a life insurance policy. The policy was never actually delivered to the

insured but was mailed by the insurance company to the local agent of the company. The

Court held that as between the applicant and the company, the policy became effective and

binding when placed in the mail to the agent, and “if not then, certainly when it reached the

hands of the agent.” Id. at 902.

       Appellant relies upon the holding of this Court in Blazer Ins. Agency v. Jim Cogdill

Dodge, 809 S.W.2d 745 (Tenn. App. 1991). In Blazer, the insurance agency sued insured

to recover unpaid premiums on a liability policy canceled by the insured prior to maturity.



                                                                                                  Page 6
The issues in the case were whether the insured had a right to cancel the policies since he

never received them, whether the insured would be liable for the premiums on the policies

until the time he gave notice of cancellation or until the policies were actually canceled, and

finally, whether the amount of the premiums could be calculated on a pro rata basis or on a “

short rate” cancellation penalty basis. Appellant states in its brief that in both the Blazer

case and the case before the Court, the question is whether or not the insurance company is

entitled to receive payments for a period during which the insurance company claims to

have been bound by an issued policy even though the insurance company had not delivered

the policy. Appellant’s reliance on Blazer is misplaced. The principle issue in the case is

not whether the insured was obligated to pay the premium, but rather whether the unpaid

premiums would be determined upon a “short rate” or pro rata basis. The Court considered

the policy as effectively delivered, and this Court modified the trial court’s judgment against

the insured to fix the insured’s liability for premiums on a pro rata basis. Blazer actually

stands for the proposition asserted by Revere in the instant case. We hold, therefore, that

the policy in the instant case was effectively delivered pursuant to the requirements of the

application.

       In the case at bar, Dr. Lee’s application required only that delivery must occur while

he was in the same state of health that he was in at the time of application. The issuance of

the policy by Revere, the possession of the policy by the insurance agent, and the witnessed

mailing of it to the Trustee by the agents constituted a constructive delivery of the policy.

Further, the parties’ actions clearly show that they intended to be bound by the policy. Dr.

Lee and Mr. Brandon allowed premiums to be paid, represented to other parties that the

policy was in force, and never took any action manifesting any objection to the policy being

in force. We agree with the trial court that the policy was in force and had Dr. Lee died, the

insurance company would have been obligated to pay the $2 million coverage. To allow the

appellants to now deny the policy’s existence would be unjust.

       Moreover, the record is undisputed that the premiums paid on the policy were paid



                                                                                                  Page 7
by MissTenn, and there is nothing in the record to indicate that any other entity has any right

to receive a refund of premiums paid by MissTenn. The summary judgment in favor of

Revere is final as to MissTenn and is not assailed in this appeal.

       Accordingly, the order of the trial court granting summary judgment is affirmed, and

the case is remanded to the trial court for such further proceedings as are necessary. Costs

of the appeal are assessed against the appellant.


_________________________________
                                                  W. FRANK CRAWFORD,
                                                  PRESIDING JUDGE, W.S.

CONCUR:


____________________________________
ALAN E. HIGHERS, JUDGE

____________________________________
HOLLY KIRBY LILLARD, JUDGE




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