Reference no: EM132176834

Benjamin Humphries took out a health insurance policy with the Pinnacle Health & Casualty Insurance Co. Eighteen months later he became ill, suffered medical expenses, and filed a claim for benefits. Pinnacle Insurance wrote Humphries this letter: Dear Mr. Humphries: While servicing your claim, we learned that the medical facts on the application for this policy were not complete. If we had known the complete health history, we couldn’t have issued this insurance. We must place you and ourselves back where we were when you applied for the policy and consider that the insurance was never in effect. (We are refunding the premiums you’ve paid us.) Humphries deposited the refund check, which was much less than his claim, and then sued for the full claim. Pinnacle Insurance argued that Humphries had entered into an accord and satisfaction. The trial court granted summary judgment for the insurer, and Humphries appealed. Did Humphries enter into an accord and satisfaction by cashing the insurance company check? Argument for Humphries: The insurance company has its contract law wrong. The company attempted to rescind the contract. Then the insurer termed its unilateral act an accord and satisfaction. The company’s attempts fail: a rescission requires the agreement of both parties; an accord and satisfaction needs a clear statement that the creditor is accepting the check as full payment. Neither one occurred. Argument for Pinnacle Health & Casualty Insurance Co.: This is classic accord and satisfaction. The company informed Mr. Humphries that it regarded his application as false and offered him a partial payment as full settlement. He deposited the check, creating an accord and satisfaction, and has no claim for any more money. Write a judicial opinion explaining the result and the legal reasons why.