Cartwright v. Maccabees Mut. Life Ins. Co.
| Decision Date | 24 November 1975 |
| Docket Number | Docket No. 20575 |
| Parties | Margie CARTWRIGHT, Administratrix of the Estate of Clayton Cartwright, a/k/a Clayton J. Cartwright, Deceased, and Margie Cartwright, Individually, Plaintiff-Appellant, v. MACCABEES MUTUAL LIFE INSURANCE COMPANY, a Michigan Corporation, Defendant- Appellee. 65 Mich.App. 670, 238 N.W.2d 368 |
| Court | Court of Appeal of Michigan — District of US |
[65 MICHAPP 673] Kelman, Loria, Downing, Schneider & Simpson by George L. Downing, Detroit, for plaintiff-appellant.
James K. Robinson, Detroit, David A. Hersh, Birmingham, for defendant-appellee.
Before T. M. BURNS, P.J., and QUINN and KELLY, JJ.
This action was filed to recover the proceeds of an insurance policy that was never issued. The action was based on a conditional receipt given by the agent at the time the application for insurance was filed and an advance premium paid. The jury verdict was no cause of action. Judgment was entered thereon and plaintiff appeals.
On November 4, 1969, defendant's agent solicited a life insurance application from Clayton J. Cartwright and his wife, Margie L. Cartwright, at their home. The Cartwrights signed an application for insurance with defendant, seeking a $20,000 face amount joint life insurance policy on their lives, and a term insurance policy on the lives of [65 MICHAPP 674] their children. The application consisted of two parts and contained a number of questions directed to Mr. and Mrs. Cartwright. Mrs. Cartwright testified she was asked only two questions: (1) whether she was pregnant, and (2) when she had last seen a doctor. Mr. Cartwright answered the questions pertaining to him. Immediately above the signatures of Mr. and Mrs. Cartwright on Part I of the application appears the following language:
'IT IS UNDERSTOOD AND AGREED (1) that the above statements and answers and those in any Part II and III required are complete and true to the best of my knowledge and belief and shall, together with this agreement, form the basis and become a part of any policy issued hereunder; (2) that except as otherwise provided in the attached receipt, the insurance hereunder applied for shall not take effect until a policy therefor is accepted by the owner and the first premium paid while the undersigned have no knowledge that the health, habits and occupation of the proposed insured, family member or second insured have not remained as described in the application; (3) that, to the extent permitted by statute, the proposed insured, family member or second insured waive(s) all rights governing disclosure of medical examination or treatment * * *'
Immediately above the signatures of Mr. and Mrs. Cartwright on Part II of the application appears the following language:
'I hereby declare that all the statements and answers to the above questions are complete and true to the best of my knowledge and belief, and I agree that the foregoing together with this declaration shall form a part, designated as Part II, of the application for the insurance.'
Contemporaneously with the completion of the [65 MICHAPP 675] application, Mr. and Mrs. Cartwright both signed medical authorizations as follows:
At the time of the application, an advance premium of $170.49 was paid with respect to the insurance applied for, and a conditional receipt was delivered to the Cartwrights. The relevant part of that receipt reads as follows:
'(I)f the Company at its Home Office shall be satisfied that on the latest of the dates of the completed Part I, Part II (if required), and Part III (if required) of the application, any of the individuals to be insured are insurable under the Company's rules of that date, whether on a standard basis or not, then, * * *
'(a) life insurance, only on the lives of the individuals who are determined by the Company to be insurable on that date, is effective as of that date; * * *
'If the Company shall be satisfied that any individual intended to be insured is uninsurable, then no life insurance is effective as to that individual and if all are uninsurable then the Company's liability is limited to the return of the amount of advance payment.'
On November 10, 1969, defendant received the application of Mr. and Mrs. Cartwright at its home office. Thereafter, the following events occurred:
1. On November 11, 1969, defendant received a report from the Medical Information Bureau showing that a Clayton J. Cartwright had been reported as having collagen disease, abnormal heart and albuminuria.
[65 MICHAPP 676] 2. On November 13, 1969, defendant forwarded an attending physician's statement to Dr. Howard B. Appleman, the physician listed by Mr. Cartwright on the application, requesting medical information regarding Mr. Cartwright.
3. From November 14, 1969, to December 1, 1969, defendant had correspondence with Retail Credit Bureau regarding an erroneous entry in its November 14, 1969 report that Mr. Cartwright engaged in a 'hazardous sport'.
4. On December 5, 1969, defendant hand delivered another attending physician's statement to Dr. Appleman requesting medical information concerning Mr. Cartwright.
5. On December 18, 1969, Mr. Cartwright died.
6. On December 19, 1969, defendant wrote to its agent advising that defendant was still waiting for medical information from Dr. Appleman.
7. On December 23, 1969, prior to issuance or delivery of an insurance policy, defendant learned that Mr. Cartwright had died.
8. On January 6, 1970, defendant again wrote to Dr. Appleman advising him that his report was needed to permit Maccabees to determine whether Mr. Cartwright 'was insurable on any basis at time of application'.
9. On January 12, 1970, Dr. Appleman called defendant and gave his report. The report related a substantial medical history, including rheumatic fever, possible collagen disease and pneumonia. It further stated:
10. January 16, 1970, defendant, having decided that Mr. Cartwright was uninsurable at the time of the application, advised Mrs. Cartwright by letter that it was unable to offer any insurance and enclosed a check for the amount of the advance premium paid.
An autopsy performed on Mr. Cartwright revealed the cause of death to be severe pneumonia in both lungs and that he did have systemic lupus erythematosus.
At trial, plaintiff's claim was based on three theories: (1) that upon proof of the payment of the premium, issuance of the conditional receipt and death prior to notification by the defendant that the decedent was rejected for insurance, plaintiff should recover; (2) that upon the above proof, if the defendant unreasonably delayed in notifying of acceptance or rejection, that plaintiff should recover; and (3) that plaintiff should recover in any event unless the defendant established that it in good faith became satisfied that Clayton Cartwright was not on November 4, 1969 insurable on any basis whatsoever.
Under defendant's underwriting rules as of November 4, 1969, a person suffering from systemic lupus erythematosus was not insurable on a standard basis or otherwise.
At trial, plaintiff offered certain exhibits which were received, read into the record responses to plaintiff's requests for admissions, and rested her case on that proof and the pleadings. Defendant then moved for a directed verdict as to all issues except insurance coverage under the conditional receipt and whether the receipt was voided by fraud in the application. This motion was granted [65 MICHAPP 678] and the trial proceeded on that basis. Coverage under the conditional receipt was contingent on defendant proving by a preponderance of the evidence that it made a good faith effort to determine Mr. Cartwright's insurability as of the date of the application, November 4, 1969.
In support of its claim of good faith, defendant was allowed to introduce in evidence a transcript of an oral report made by Dr. Howard B. Appleman, the doctor who had treated Mr. Cartwright. This exhibit was apparently reduced to writing by defendant's vice-president, Mr. Vanderbeck, after having received a telephone call from Dr. Appleman on January 12th. The trial court admitted this exhibit over plaintiff's objection, and we believe, improperly so. Plaintiff asserted as grounds for objection the physician-patient privilege. The trial court allowed the transcript, not for the truth of the matter contained therein, but to show that it acted in good faith in denying the application for insurance of plaintiff's decedent. The privilege is set out in M.C.L.A. § 600.2157; M.S.A. § 27A.2157:
'No person duly authorized to practice medicine or surgery shall be allowed to disclose any information which he may have acquired in attending any patient in his professional character, and which information was necessary to enable him to prescribe for such patient as a physician, or to do any act for him as a surgeon: Provided, however, That in case such patient shall bring an action against any defendant to recover for any personal injuries, or for any malpractice, if such plaintiff shall produce any physician as a witness in his own behalf, who has treated him for such injury, or for any disease or condition, with reference to which such malpractice is...
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