Cobb v. Pac. Mut. Life Ins. Co.

4 Cal. 2d 565, 51 P.2d 84 (1935)

 

RULE:

In a unilateral contract for payment in installments after default of one or more no repudiation can amount to an anticipatory breach of the rest of the installments not yet due. It is also the law that a bilateral contract becomes unilateral when the promisee has fully performed.

FACTS:

By the policy's terms, the insurer obligated itself to pay a monthly indemnity on account of any disability of the insured resulting from sickness or accident. When the insured became disabled due to sickness, proper notice was given to the insurer and demand was made for the monthly indemnity. The insurer repudiated the contract on the ground of fraudulent representations and suppression of material information, denying the contract's validity and refusing to pay any amount. The insured filed a complaint including claims on the contract. The jury rendered a verdict in favor of the insured, and the trial court found that the policy and contract of insurance had been unlawfully repudiated by the insurer and awarded the insured monthly indemnity in accordance with the terms of the policy, and indemnified damages based on the present value of the insured’s monthly payments until the his life expectancy of fifteen years. On appeal, the lower appellate court reversed the judgment award, and the insured was remitted to the amount of the accrued installments.

ISSUE:

Is the doctrine of anticipatory breach is applicable to a policy of insurance which provides for payment of installments of indemnity for disabilities even though the insurer repudiates the contract on the ground of concealment of a material information as to the condition of his health?

ANSWER:

No.

CONCLUSION:

The court refused to apply the doctrine of anticipatory damages to cases involving fixed installment money payments and reversed the award of the trial court and remanded for a determination of the accrued installments due the insured; otherwise, it affirmed the trial court's judgment. The court stated that there can be no anticipatory breach of a unilateral contract. As to the law that a bilateral contract becomes unilateral when the promisee has fully performed, in the case at bar the promisee had fully performed. He was exempt from future performance so far as dues or assessments were concerned. The fact that he was required or requested to submit to reasonable future medical examinations or furnish an occasional health report cannot be regarded as an unperformed obligation on the part of the insured. Furthermore, the insured in one count of his complaint affirmed the contract and prayed for judgment in accordance therewith, which should be sufficient to hold him to an action on the contract.

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