Bahr v. Prudential Ins. Co. of America

• Decision Date: 21 February 1969
• Docket Number: No. CV,CV
• Citation: Bahr v. Prudential Ins. Co. of America, 260 A.2d 422, 5 Conn.Cir.Ct. 620 (Conn. Cir. App. Div. 1969)
• Parties: Aida BAHR v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA. 2-674-51439.
• Court: Circuit Court of Connecticut. Connecticut Circuit Court, Appellate Division

Page 422

260 A.2d 422

5 Conn.Cir.Ct. 620

Aida BAHR v.The PRUDENTIAL INSURANCE COMPANY OF AMERICA.

No. CV 2-674-51439.

Circuit Court of Connecticut, Appellate Division.

Argued Dec. 16, 1968.

Decided Feb. 21, 1969.

Donald C. Cousins, Bridgeport, for appellant(plaintiff).

Edward J. Holahan, Jr., Bridgeport, for appellee(defendant).

DEARINGTON, Judge.

The plaintiff alleged that on or about February 22, 1966, she applied to the defendant and was issued a policy insuring her for hospital, physician and surgical benefits.On October 14, 1966, she was admitted to a hospital, and on October 25she was operated upon for a cholecystectomy condition.The defendant has refused to make payments for benefits under the terms of the policy.The defendant, while admitting the existence of the policy claims in its special defense that among other questions in the application required to be answered by the plaintiff was one relating to prior medical examinations and that the plaintiff in response had stated she was examined by a doctor at the United States embassy in Spain and that the examination was negative.Such statements, the defendant claims, were false, for the plaintiff had been examined several times by a doctor in Connecticut during 1965 and 1966, and her failure to report such examinations or visits constituted fraud.It is further alleged that the defendant tendered the premiums paid on the policy.In her reply to the special defense, the plaintiff did not deny such visits to her doctor but claims not to read or speak English and states that at the interview with the defendant's agent, Carroll, her son and daughter were present and that her recent visits to a doctor and her preexisting diabetic condition were disclosed by them to the agent and he either omitted or disregarded such information and therefore the defendant is estopped to assert fraud for it is bound by the knowledge of its agent.These allegations were traversed by the rejoinder.

The case was tried to a jury and at the conclusion of the trial the defendant moved for a directed verdict, which motion was denied.A verdict was returned in favor of the plaintiff, whereupon the defendant moved to set the verdict aside, claiming it was against the evidence and furthermore that it was contrary to law.At the same time, the defendant orally moved for judgment notwithstanding the verdict.The court stated it would reserve its decision on the latter motion until such time as it acted on the motion to set aside the verdict.Thereafter, the court set the verdict aside but through oversight did not act on the motion for judgment notwithstanding the verdict.Subsequently, this situation was brought to the attention of the court, and it thereupon granted that motion also.The plaintiff has appealed, assigning error, as set forth in her brief, (1) in the granting of the motion to set the verdict aside, because it was supported both by the law and the evidence; (2) in the granting of the motion for judgment notwithstanding the verdict, because the verdict was supported both by the law and the evidence; and (3) in the granting of both motions, because such a result is inconsistent.The plaintiff seems to have departed to some extent from such assignments in her arguments and brief.We will, however, review her assignment of errors as briefed.

Among other provisions in the application, the following appeared: 'I hereby declare that the above statements are complete and true.* * * I agree (1) that this application * * * shall * * * become a part of the policy; (2) that no agent has the authority to waive the answer to any question * * * or to waive any of the Company's rights or requirements with respect to the application, or to bind the Company by making any representation or by giving or receiving any information.'

The rationale of the court in granting the motion to set aside is to be found in its memorandum of decision on the motion, wherein it stated that the issue presented for its determination was 'whether the agent had the right on behalf of the company to waive the answer involved,' that is, her alleged answer relating to her diabetic condition and visits to her doctor.The court reasoned that it must be shown that the defendant had knowledge of the information claimed to have been given to its agent before a waiver could become effective, for the policy contained a provision that 'no agent has authority to waive the answer to any question in the application.'In short, the court concluded that the plaintiff was not entitled to judgment because there was no evidence that the defendant had waived any requirements in the application.The court cited, among other cases, Ward v. Metropolitan Life Ins. Co., 66 Conn. 227, 240, 33 A. 902, in support of its position.In its subsequent memorandum of decision granting the motion for judgment notwithstanding the verdict, the court reiterated the position it had taken in its prior memorandum and added that it was apparent that a new trial would not produce evidence which would permit a verdict in favor of the plaintiff.

The plaintiff claims that there was sufficient evidence of waiver or estoppel which had its origin in conduct antecedent to the contract to afford the jury the right properly to return a verdict in her favor and that error was committed in setting the verdict aside.The defendant concedes that, viewing the evidence in the most favorable light for the plaintiff as we must;Grills v. Pepsi-Cola Bottling Co., 151 Conn. 627, 628, 201 A.2d 185; the jury could reasonably have found that the plaintiff, through her son, disclosed information to the defendant's agent relating to her diabetic condition and medical history.It is evident that such information was not entered on the application.It is also evident that the plaintiff could not read English, and the agent admitted that the plaintiff's answers as they appear in the application were not read back to her.

We first consider the question of waiver or estoppel raised by the plaintiff.While the words waiver and estoppel are often used interchangeably by the courts, there is, however, a real distinction.For a review of that distinction, see such cases as MacKay v. Aetna Life Ins. Co., 118 Conn. 538 547, 173 A. 783;andBernhard v. Rochester German Ins. Co., 79 Conn. 388, 392, 65 A. 134.The plaintiff relies heavily on MacKay, in which the court held (p. 548, 173 A. p. 787): 'When the insurer, at the time of the issuance of the policy, has knowledge of existing facts which, if insisted on, would invalidate the contract from the time of its inception, it may be held, by delivering the policy and accepting the premium, to waive the cause of avoidance or to be estopped from insisting upon or taking advantage of it.* * * The possession by the insurer of knowledge of invalidating facts is universally recognized as an essential prerequisite, but the effect of knowledge of the agent of the insurer is a subject upon which there is a confusing diversity of authority.A majority of courts held that, subject to exceptions in case of fraud * * *, information communicated to or knowledge otherwise obtained by an agent within the scope of his authority-while he is acting in a matter in which he is required or authorized to act and the information is necessarily incident to that matter and affecting the liability of the company-is knowledge of the principal, the insurer.'SeeWard v. Metropolitan Life Ins. Co., 66 Conn. 227, 240, 33 A. 902;29A Am.Jur., Insurance, § 1060; note, 148 A.L.R. 507 508.

The question arises whether the insurer may, through limitation or restriction upon the authority of its agent, be permitted to disclaim its responsibility for the errors of its agent in recording the answers of the insured in the application.On this subject there is a diversity of opinion.29 A Am.Jur., Insurance, § 1034.In this jurisdiction, however, it seems clear that our rule permits an insurer to restrict the authority of its agent by so providing in the application and policy.In Ward v. Metropolitan Life Ins. Co., supra, it was not disputed, except in the pleadings, that certain statements in the application of a material character were untrue, the plaintiff claiming that truthful statements had been made to the defendant's soliciting agent and that he had not entered such material in the application.The policy contained a provision not unlike that in the instant case, that is, that the insurer would not be bound by any waiver not authorized by a principal officer.The court held (p. 241, 33 A. p. 905) that such provisions 'were designed to exclude the operation of the rule that notice to the agent who negotiates a contract is notice to the...