Burns v. Prudential Ins. Co. of America

• Decision Date: 29 March 1962
• Citation: 201 Cal.App.2d 868,20 Cal.Rptr. 535
• Court: California Court of Appeals Court of Appeals
• Parties: Patricia K. BURNS, Plaintiff and Appellant, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant and Respondent. Civ. 25418.

Page 535

20 Cal.Rptr. 535

201 Cal.App.2d 868

Patricia K. BURNS, Plaintiff and Appellant, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant and Respondent.

Civ. 25418.

District Court of Appeal, Second District, Division 3, California.

March 29, 1962.

Hearing Denied May 23, 1962.

Jack Dunaway, Hollywood, for appellant.

Adams, Duque & Hazeltine, James S. Cline and John H. Brinsley, Los Angeles, for respondent.

FILES, Justice.

This is an action upon a $10,000 life insurance policy issued by the defendant on the life of plaintiff's husband, Sidney D. Burns. The policy was taken out on May 15, 1957, and Mr. Burns died on September 1, 1958. An autopsy established that death was the result of a coronary thrombosis. Defendant then acted to rescind the policy on the ground of misrepresentations and concealments of fact. An agreed pretrial statement limited the controverted issues at the trial to whether the application for the policy contained false representations or concealments of fact; and if so, whether such misrepresentations or concealements of fact were material to the risk undertaken by defendant. At the close of the evidence the court directed a verdict for defendant. Plaintiff appeals from the judgment.

The underlying legal principles are established by statute and by case law. A life insurance company is entitled to select and classify its risks, and for this purpose is entitled to demand a truthful statement of the applicant's medical history. Material misrepresentations or concealments in this respect are grounds for rescission of the policy. (Ins.Code, §§ 331, 359; Cohen v. Penn Mutual Life Ins. Co., 48 Cal.2d 720, 727, 312 P.2d 241; Robinson v. Occidental Life Ins. Co., 131 Cal.App.2d 581, 586, 281 P.2d 39; National Life & Accident Insurance Co. v. Gorey (9th Cir.), 249 F.2d 388.)

In this case the contract of insurance was issued upon a written application signed by the deceased. This application included the following questions, with answers given by the applicant:

'7. Have you ever: (Give below full particulars with respect to each part of each question to which the answer is 'Yes'.) * * *

'c. had any X-rays or electrocardiograms, or blood or other medical tests? No. * * *

'9. Have you ever been treated for or had any known indication of: (Give below full particulars with respect to each part of each question to which the answer is 'Yes'.)

'a. heart trouble or murmur, chest pain, high blood pressure, or abnormal pulse? No. * * *

'10. Other than stated in answer to Question 9 have you ever been treated for or had any known indication of any disease or disorder of the: (Give below full particulars with respect to each part of each question to which the answer is 'Yes'.)

'a. Heart, blood, or blood vessels? No.'

The record shows without conflict that these negative answers were unture. Dr. Rossman, called as a witness for plaintiff testified to the medical history given by Mr. Burns when he came in for a checkup on August 13, 1956. Mr. Burns said that in 1949 he had an attack of shortness of breath and had been examined by Dr. Carl Williams. After that he saw Dr. Fred Kirby about pains in the chest and a rapid pulse. Mr. Burns was told by Dr. Kirby that his heart was fibrillating. In 1951 Mr. Burns was told that he had a heart valve hardening. He took empirin and codeine for chest pain and had been told to take quinidine if he ever felt that his heart was going rapidly. Quinidine is a depressant for the heart which calms irregular beatings and is used for certain types of fibrillation. Dr. Rossman produced the tracings of electrocardiograms which had been taken on eight different occasions between 1952 and 1956 and which Mr. Burns had delivered to him at the time of the 1956 checkup.

The office record of Dr. Williams, now deceased, is in evidence. The record includes the following entries: '4-20-49 Pain under sternum.' '12-19-50 Paroxysmal auricular fibrillation. pt on quinidine.'

Plaintiff herself had testified that her husband had called Dr. Williams in 1948 because 'he said that he was positive that he was going to have a heart attack.' Plaintiff testified she knew that Mr. Burns had had several electrocardiograms, that he had complained of pains in the chest and that he had an examination because his heart beat faster than usual.

In view of this uncontradicted evidence, there was no issue of fact as to the concealment and misrepresentation. Furthermore, there is no question as to the decedent's knowledge that his answers were false. Plaintiff relies upon her contention that the jury should have been allowed to pass upon the question of whether the facts misrepresented or concealed were material to the risk.

Insurance Code, section 334, provides:

'Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries.'

Prior to the adoption of the Insurance Code in 1935 this identical language appeared as Civil Code, section 2565, enacted in 1872.

The test of materiality here is a subjective test: the effect which truthful answers would have had upon the insurer. In a number of cases courts have held that where the insurer demands written answers to specific questions, the answers given are deemed material as a matter of law. These include Cohen v. Penn Mutual Life Ins. Co., 48 Cal.2d 720, 726, 312 P.2d 241; Pierre v. Metropolitan Life Ins. Co., 22 Cal.App.2d 346, 348, 70 P.2d 985; Maggini v. West Coast Life Ins. Co., 136 Cal.App. 472, 476, 29 P.2d 263; Westphall v. Metropolitan Life Ins. Co., 27 Cal.App. 734, 737, 151 P. 159; McEwen v. New York Life Ins. Co., 23 Cal.App. 694, 697, 139 P. 242; see San Francisco Lathing Co. v. Penn Mutual Life Ins. Co., 144 Cal.App.2d 181, 185, 300 P.2d 715.

In other cases the materiality of the false answers has been treated as a question of fact, even though the matters to be answered in writing were 'deemed material.' (California-Western States, etc., Co. v. Feinsten, 15 Cal.2d 413, 423, 101 P.2d 696, 131 A.L.R. 608; Torbensen v. Family Life Ins. Co., 163 Cal.App.2d 401, 329 P.2d 596; cf. Martin v. Mutual Benefit, etc., Ass'n, 71 Cal.App.2d 557, 162 P.2d 980.) Where the insurance company concedes or the evidence shows that the company would not have been influenced by full and truthful answers, the falsity of the application has been held not to justify rescission. (Ransom v. Penn Mutual Life Ins. Co., 43 Cal.2d 420, 427, 274 P.2d 633; Scroggs v. Northwestern Mutual Life Ins. Corp., 176 Cal.App.2d 300, 302, 1 Cal.Rptr. 189; Byers v. Pacific Mutual Life Ins. Co., 133 Cal.App. 632, 638, 24 P.2d 829; cf. Metts v Central Standard Life Ins. Co., 142 Cal.App.2d 445, 452, 298 P.2d 621.)

The distinction between the various groups of cases appears to rest upon the nature of the information withheld and what the evidence shows as to the practice of the insurance company when confronted with an application containing a truthful disclosure of the fact which was involved. Such a distinction seems to be required by the clear mandate of the statute.

In the present case the underwriter who reviewed the Burns application testified that he approved it without referring it to the medical department. Had he known about the electrocardiograms, he would not have approved the application until the tracings had been submitted to the medical department. Had the history of chest pains been disclosed, a special heart report and a new electrocardiogram would have been required, and the entire file would have been referred to the medical department for interpretation and recommendation.

Defendant's medical director, Dr. Domm, testified that had the application disclosed the chest pains for which codeine was taken, or the fibrillation for which Mr. Burns took quinidine, or the existence of the electrocardiograms, the company would have required further information, including a special heart report and a new electrocardiogram. Had the investigation indicated to the underwriter that the substernal pain was a significant heart pain, the application would have been rejected. Even for a pain of questionable origin, a standard policy would have been refused and a substandard policy might have been offered in the discretion of the underwriter. Because of a history of a single mild to moderate episode of auricular fibrillation, the company would not have made the contract it made with the deceased. Some of the electrocardiograms taken between 1952 and 1956 showed minor T-wave changes which, according to Dr. Domm, are significant from an underwriting standpoint,...