American Nat. Ins. Co. v. Hale

• Citation: 291 S.W. 82
• Decision Date: 21 February 1927
• Docket Number: (No. 198.)
• Parties: AMERICAN NAT. INS. CO. v. HALE.
• Court: Supreme Court of Arkansas

Page 82

291 S.W. 82

AMERICAN NAT. INS. CO. v. HALE.

(No. 198.)

Supreme Court of Arkansas.

February 21, 1927.

Appeal from Circuit Court, Pulaski County; Richard M. Mann, Judge.

Action by Laura S. Hale against the American National Insurance Company. Judgment for plaintiff, and defendant appeals. Affirmed.

J. C. Marshall, of Little Rock, for appellant.

Downie & Schoggen, of Little Rock, for appellee.

WOOD, J.

This is an action by Laura S. Hale against the American National Insurance Company on two policies, one dated March 24, 1924, for $240, and the other dated October 6, 1924, for $94. The insurance company defended the action on the ground that the assured was not in sound health at the time the policies were issued. It was in evidence, and not denied, that the policies had been issued and delivered by the agent who took the application for insurance, and the premiums had been paid. The appellee testified that, at the time the applications were made and the policies delivered, there was nothing the matter with the assured. Previously he had high blood pressure. It was discussed with the agent. The insured communicated this fact to the agent at the time of the application, and the agent replied that it did not matter—that he had had high blood pressure himself. The assured looked healthy. He was working every day, and his health was fine at the time the policies were delivered. The assured had been treated for high blood pressure between the time of the issuance of the first policy and the last. This fact was communicated to the agent when he took the application for the second policy and the agent stated that that did not amount to anything.

The medical examiner for the insurance company testified that he made a careful examination of the physical condition of the insured in November, 1923. At that time the assured was suffering from an incurable disease —chronic nephritis or Bright's disease. He reported that fact to the company, and recommended that the policy be not issued. The policies sued on were issued without a medical examination. The company did not require it. The life insurance under these policies was for a small amount and is paid weekly Other testimony on behalf of the company tended to prove that the insured, at the time the policy was issued, was not in sound health.

The application for the policies contained a provision to the effect that the insured warranted that the answers to the questions in the application were complete, correct, and true to the best of his knowledge and belief, and made these answers a part of the contract of insurance. The application further contained a provision that none of the officers or agents of the company were authorized to make, order, or discharge the insurance contracts or to waive forfeitures.

The court, over the objection of the insurance company, on its own motion instructed the jury that, if they found that the deceased was not in sound health and that the agents of the defendant had knowledge of such fact, which knowledge they had obtained in the scope of their employment, then the defense of unsound health would not be available, and their verdict should be for the plaintiff; but if they found that the insured was not in sound health, and the agents of the company, acting within the scope of their employment, had no knowledge of such fact, then the verdict should be in favor of the defendant. The insurance company asked the court to instruct the jury that, if the insured was not in sound health on the day the policies were issued, their verdict should be in favor of the defendant, even though the jury should find that the agents of the company knew that he was not in sound health when the policy was issued. The company duly excepted to the ruling of the court in refusing its prayer for instruction and in giving instruction as above set forth on its own motion. The jury returned a verdict in favor of the plaintiff, and from a judgment rendered in her favor is this appeal.

In the case of National Life Insurance Co. of U. S. A. v. Jackson, 161 Ark. 597, 256 S. W. 378, there was a provision in the policy to the effect that:

"No liability is assumed by the company for any accident, illness, or disease occurring or contracted prior to the date hereof, or any death arising therefrom."

The testimony in that case tended to show that the insured died from tuberculosis. He had been afflicted for several months prior to the date of the issuance of the policy, and there was testimony from which the jury might have found that the agent of the insurance company had knowledge of the fact that the insured was sick at the time he took the application. But there was no testimony tending to show that the agent of the insurance company knew that the insured was afflicted with tuberculosis at the time of the issuance of the policy. On the contrary, the agent who took the application testified that he did not know that the insured had tuberculosis at the time he applied for the policy, or at the time the policy was delivered to him. He further testified that, if he had known this fact, he would not have taken the application, and that there was nothing in the physical appearance of the insured to indicate that he had tuberculosis. Commenting upon the instruction given in that case, in view of the facts disclosed, we condemned the instruction, and in doing so stated:

"It is true that the general rule of law imputing to a principal notice of facts learned by his agent in the discharge of his duties applies to insurers; but this principle has no application under the terms of the policy sued on. As will be seen from our statement of facts, one of the...