dissenting:

I agree with the district court’s determination that policy coverage ended when the insurer so notified the putative insured and returned her premium. The case before us is thus distinguishable from Smith v. Westland Life Insurance Co., 15 Cal.3d 111 , 539 P.2d 433 , 123 Cal.Rptr. 649 (1975), and Ransom v. Penn Mutual Life Insurance Co., 43 Cal.2d 420 , 274 P.2d 633 (1954), where these objective tests of policy and coverage termination had not been met. Any reinstatement, therefore, was solely at the option of the insurer, and the insurer was misled by the request to waive further medical examinations when it was known to Stokes that the person to be insured had a terminal illness. That the company undoubtedly would have acted to grant coverage if the illness had not been present is irrelevant, as the company had the absolute right to decline coverage or further negotiations with this particular insured.

I agree as well with the district court that Stokes was an agent of the insurer, with a duty to advise of material changes in medical condition so the company could determine whether to waive further medical coverage with full knowledge of all the pertinent facts. Stokes argues that he was a broker and not an agent, but he has shown no issue of fact to be tried. The memorandum of agreement between Crown Associates and Stokes states that he is an agent for Crown Associates. There is nothing inconsistent, moreover, with his being both an agent and a broker; and if he *506 were a broker, he still would not be home free.

It is not clear to me what legal premises underlie the court’s disposition and its order of remand. If Stokes is found to be an agent, is he liable, or was the insured somehow under a duty to issue the policy in any event so that the nondisclosure was harmless? Alternatively, is it implied that, if Stokes is not an agent, he is exonerated from liability even when he has delivered a policy contrary to express instructions, instructions which require it to be returned to the company if there is a change in the insured’s medical condition? The district court and the parties are left to speculate on these and other matters, with little guidance for further trial proceedings.

I respectfully dissent.