Opinion
Opinion delivered November 19, 1928.
1. INSURANCE — KNOWLEDGE OF INSURER'S AGENT. — Information given to an insurer's agent, at the time insured was making application for insurance, as to diseases for which he had been treated prior thereto, held to be the knowledge of the insurer, notwithstanding the benefit certificate contained a provision to the contrary. 2. INSURANCE — WHEN DIRECTED VERDICT PROPER. — Where payment of a benefit certificate was contested on the ground that the application contained false representations that insured had never had bronchial pneumonia, a verdict for the plaintiff was properly directed where the evidence failed to show that such representations were false.
Appeal from Garland Circuit Court; Earl Witt, Judge; affirmed.
Calvin T. Cotham, George R. Allen and A. W. Fulton, for appellant.
Murphy Wood, for appellee.
STATEMENT OF FACTS.
This suit was brought by appellee, beneficiary in the certificate, mother of Luther Homer Allen, deceased, upon a benefit certificate issued to him by appellant, the Fraternal Aid Union. It was alleged that the defendant was a corporation of the State of Kansas, a fraternal benefit association operating as such in this State, and had issued on September 8, 1926, to Luther Homer Allen, a member of the association, a benefit certificate in the sum of $1,000, payable to plaintiff, his mother, upon his death. That insured died on the 2d day of February, 1927, proof of death was furnished, and the claim was rejected by the Union, and liability denied thereon. A copy of the certificate was attached to the complaint.
The answer admitted the issuance of the certificate, but denied that Luther Homer Allen ever became a member of the Union; alleged that his application had not been approved, or the applicant initiated, or the certificate delivered to and accepted in writing by him while in good sound health, as required by 48 of the constitution of the Union, and also false warranties, contrary to 55 of the constitution, and especially his false answer, "None," to question 14 of the application, which reads as follows: "14. What illness, disease or injuries have you had since childhood?" That the answer was false, applicant having been treated, about a year before the application, for bronchial pneumonia, and confined to his bed for 10 or 12 days on account of his illness; and, because of the falseness of his warranties, deceased had not become a member of the association. A copy of the application was attached to the answer as an exhibit. The certificate was introduced in evidence, the payment of all assessments and dues shown to have been made to the death of the assured. The benefit certificate contained the provision:
"This certificate shall not be in force and effect and no liability hereunder is assumed by said association, unless and until it is delivered to and accepted by said member while in good health;" and also the indorsement: "I hereby accept Certificate No. 294241, delivered to me this first day of November, 1926, subject to all the conditions and provisions thereof. I further declare and warrant that I am in sound bodily health. Luther Homer Allen."
Appellee testified the association had refused to pay the claim on the ground that the insured had had previous illness and disease, but stated that he had never had bronchial pneumonia, only just malaria, and was treated by Dr. Hamilton two or three days; that, in the summer before, she had called Dr. Sanders when the boy was sick for a few days, but he did not say for what he was treating him.
Dr. Hamilton, witness for the appellant, stated he had treated the deceased in the middle of the summer of 1926; was called only once, and found him suffering with a high fever and malarial complications. The patient responded to treatment, and went back to work in about five days; did not have pneumonia at that time; witness never treated him for pneumonia, except in his last illness of about 6 weeks, and the cause of his death was bronchial pneumonia, with complications of abscess formations as a sequel.
Dr. Freeman, examining physician for appellant, examined deceased at his home on Central Avenue, at the request of Smith, who was writing insurance for appellant. Nothing was said at the time about the applicant having had malaria or any previous illness, except childhood diseases. "The applicant's appearance indicated good health, * * * and he rated him as first-class, but would not have done so if he had known he had suffered an attack of malarial fever during the summer and been informed that he had had bronchial pneumonia — would have reported it, with name and address of the attending physician."
Dr. Sanders, for the defendant, testified he had made one visit to deceased the summer before his death, and found him with some kind of bronchial trouble and fever, but he did not have bronchial pneumonia or malarial fever. Thought he was up and back at work in a few days. He attended deceased in his last illness, and the cause of his death was bronchial pneumonia.
Dr. Townsend, national medical director for the association, stated the application of Luther Homer Allen was sent to him for approval; "that the local medical examiner had no authority to admit any one to membership, his authority being limited to making physical examination and to report his findings." That, if the answer to question 14, part 2 of the application, had disclosed that applicant had suffered from an attack of pneumonia within the preceding year, witness could not have approved the application, and would have refused to do so, and postponed action for at least another year.
Dr. Sanders, recalled, testified he had signed the death certificate filed with the city clerk, stating the cause of death, and in it "gave as a contributing cause an attack of bronchial pneumonia the year before," but that he exceeded the limitation when he said this, as he had no personal knowledge of that sickness, and made the statement from inference from the history of the case, and "believed he should not have put that in the certificate."
Appellee testified deceased had never had any serious illness, only diseases of childhood; that C. A. Smith wrote in his answers in the, application. Homer did not write in any of the answers, only signed his name. When Smith asked what illness, disease or injury applicant had had since childhood, they all talked. She told him that Dr. Hamilton had treated him for malaria, and he could call him up, but Mr. Smith said it would not make any difference. Smith was there when Dr. Freeman came to make the examination, and they were all four of them in the house when the doctor made it. She also told Dr. Freeman that Dr. Sanders had seen him in the summer, and Smith said it would be all right, and did not amount to anything.
The court stated he did not think there was any testimony sufficient to submit to the jury on the issues made by the defense, and directed a verdict for plaintiff, and from the judgment this appeal comes.
(after stating the facts). It is urged that the court erred in directing a verdict against appellant. The defense was on two grounds, misrepresentation of insured's physical condition in answer to question 14 of the application in not stating that he had been treated for bronchial pneumonia about a year before his death, and because the insured was not in sound mental and bodily health when the policy was delivered.
Appellee, the mother of the insured and beneficiary in the policy, testified, and her testimony was not contradicted, that Smith, the soliciting agent, who did not testify, came out to her home and asked her consent to her minor son, Luther Homer Allen, becoming a member of the lodge and taking out a benefit certificate, which she agreed he might do if he thought he could pay the dues or premiums, and, the boy thinking he could, the agent filled out a blank application, which he had with him. She and the boy answered all questions fully and truthfully, telling the soliciting agent that Dr. Hamilton had treated Luther in the summer before for malaria — the doctor said he was treating him for that; that Dr. Sanders had made one visit, and prescribed for Luther, but did not say for what he was treating him; and told the agent that he could telephone to Drs. Hamilton and Sanders and ascertain what his trouble was, but that Smith said that made no difference; that they would have a physician to examine the boy and find out what his present condition was. That Luther signed the application as made out by Smith, without reading it, and did not go then to the medical examiner with Smith, because of not having the time. Dr. Freeman was not present when the application was made out, and no claim is made that any false statements or answers were made to him.
Both Drs. Hamilton and Sanders, witnesses for appellant, testified that Luther did not have and was not treated for bronchial pneumonia by either of them at any time before his last illness. It did appear in the death certificate, as made out by Dr. Sanders, that, "about a year before his death, the boy had had bronchial pneumonia," but the doctor stated that this was only an inference on his part, and should not have been put in the death certificate. Dr. Hamilton made only one visit to the boy, and gave him a prescription for malaria, and he was back at work in four or five days; and Dr. Sanders called once only, and thought he gave a prescription, but was not sure, and the boy was up and back at work in three or four days.
It is argued that there was collusion between the insured and the soliciting agent, but the evidence is undisputed that there was none. Neither the insured nor the beneficiary sought the insurance, which would not have been effected had not the soliciting agent come out to the home of appellee and procured the application. According to the undisputed testimony, the soliciting agent was fully and truthfully informed of the diseases that had been suffered by the insured in his answer to question 14 of the application, and the names of the physicians given, as well as the disease for which he had been treated, with the suggestion that he could call up the physicians and ascertain what the trouble was. This information would have become the knowledge of the company, by which it would have been bound, even in spite of a provision in the policy to the contrary, the agent who solicited the business being charged with the duty of asking the applicant questions concerning his physical condition. So. Ins. Co. v. Floyd, 174 Ark. 373, 295 S.W. 715; Mass. Bonding Ins. Co. v. Chapman, 176 Ark. 349, 3 S.W.2d 18; Springfield Mutual Assn. v. Atnip, 169 Ark. 968, 279 S.W. 15; United Assurance Assn. v. Frederick, 130 Ark. 12, 195 S.W. 691; American National Ins. Co. v. Hale, 172 Ark. 958, 291 S.W. 82; and Old Colony Life Ins. Co. v. Julian, 175 Ark. 359, 299 S.W. 266.
Then, too, according to the undisputed testimony from witnesses introduced by appellant, the physicians who had treated the insured during the summer before his application for membership in the Union was made, he did not have and was not treated for bronchial pneumonia, and there could have been no falsity of such a warranty, if one had been made. There is no intimation in the whole record that deceased had suffered from bronchial pneumonia before making his application for membership, except Dr. Sanders' statement in the death certificate, giving bronchial pneumonia, suffered the year before, as a contributing cause. This physician had treated him during the illness, and testified he did not have bronchial pneumonia then, that he only inferred it from the history of the case, in making out the death certificate, and that he should not have put that statement in the certificate.
We find no error in the record, and the judgment is affirmed.