Comer v. World Ins. Co.
| Decision Date | 27 November 1957 |
| Citation | 212 Or. 105,318 P.2d 916 |
| Parties | Earl COMER, Respondent, v. WORLD INSURANCE COMPANY, Appellant. |
| Court | Oregon Supreme Court |
Carson, Carson & Gunnar and Douglas L. Hay, Salem, for appellant.
Williams & Skopil, Salem, for respondent.
This is an appeal by the defendant, World Insurance Company, from a judgment which the circuit court entered in favor of the plaintiff upon a policy of health and disability insurance which the defendant-appellant issued to the plaintiff as the insured October 14, 1949. The challenged judgment was preceded by a verdict in the plaintiff's favor. The complaint alleged that the event insured against occurred and that the defendant, after paying the plaintiff $566.66, refused to make further payments, although more became due. The challenged judgment awarded the plaintiff $1,600, an attorney fee, and costs.
The answer charged that the plaintiff induced the defendant to issue the policy by making, through the medium of the application for insurance, fraudulent representations concerning his health and medical history. In Comer v. World Insurance Company, Or., 318 P.2d 913, we summarized the alleged false representations as set forth in the defendant's cross-complaint. In the defendant's 'second defense' to the complaint filed in this action, the defendant made the same charges. It repeated them in a counterclaim in which it sought judgment against the plaintiff for $566.66, sums which it had paid to the plaintiff as disability payments before it discovered, so it claims, that the statements which the plaintiff had made in the application concerning his health were false. Since the alleged false representations are reported in Comer v. World Insurance Company, supra, we will not repeat them in this opinion.
The reply denied all allegations which charged that the plaintiff made fraudulent representations to the defendant. It admitted 'defendant, World Insurance Company, attached said application to said insurance policy and that the same is a part of Exhibit 'A' hereto.' The exhibit just mentioned is a copy of the policy. The reply, referring further to the second defense, said: 'Admits Paragraph III.' The latter reads as follows:
'On or about 14 October 1949, defendant delivered a copy of said application to plaintiff, with, and as a part of, said policy.'
Thereby the plaintiff concedes that the defendant made the application a part of the policy and delivered a copy of the conjoined instrument to him. The policy became effective October 14, 1949, at noon. As we have just seen, the plaintiff acknowledges that he received on that day a copy of the application. The importance of the admissions just noted will later become apparent. The reply to the counterclaim denied its averments, but admitted that defendant had paid to the plaintiff upon the policy 'certain sums'; it did not disclose the amounts.
The application, which was short, read in part as follows:
'Do you hereby apply to the World Insurance Company of Omaha, Nebraska, for a Lifetime Disability Benefit Policy, to be issued solely and entirely in reliance upon the written answers to the following questions which you adopt as your own and represent to be true, full and complete, and do you agree and understand that this application shall not be binding upon the Company until accepted by the Company? . . . Yes.
* * *
* * *
'9. Are you sound physically and mentally to the best of your knowledge and information? . . . Yes.
'10. Have you ever had any of the following disease: * * * Heart Disease? . . . No. High or low blood pressure? . . . No. Disease of the brain or nervous system? . . . No. * * * Stomach or gall bladder trouble? . . . No. If so, give details.
The plaintiff concedes that about six months before the policy was issued he received medical treatment from two Salem physicians, that he was hospitalized for five days and that a physician, who specialized as a neurologist, gave him six electric shock treatments. While he was receiving the therapeutic treatments just mentioned he lost five months' employment.
To the extent that the answers which we quoted from the application are at variance with the facts just recounted, the plaintiff concedes their falsity. He contends, however, that he related the true facts to the defendant's agent before signing the application. He submits that the agent, and not himself, was responsible for the erroneous information which the application contains.
The defendant admits that on August 4, 1951, when all current premiums upon the policy had been fully paid, the plaintiff met with an accident whereby he became entitled to receive the monthly sums provided by the policy if its defense of fraud lacks merit. After it had paid him $546.66 in monthly installments [it had previously paid him $20 upon another claim] it contended that it discovered that the application included false answers and refused to make further payments.
The defendant-appellant presents sixteen assignments of error. We shall now consider those which are based upon the parol evidence rule and the defendant's motion for a directed verdict.
In March, 1949, about six months before the policy was issued, abdominal discomforts which the plaintiff experienced caused him to consult Dr. Merle Brown, in Salem, one of the two physicians whom we have mentioned. Dr. Brown diagnosed the plaintiff's maladies as an intestinal fecal impaction causing an obstruction, hemorrhoids and a marked anxiety tension state. Comer was hospitalized for five days, during which the intestinal obstruction was cleared. Although the patient's physicial state was thereby improved, his mental condition was not. After Comer's discharge from the hospital, Dr. Brown administered, during five office calls, treatment for anxiety, to which the patient did not satisfactorily respond. April 16, Dr. Brown referred Comer to Dr. Paul Wolfe, a neurologist. The latter is the other physician to whom we have referred. Dr. Wolfe confirmed the diagnosis of aggravated anxiety, a state of mind which, according to Dr. Wolfe, accounted for the physical ailments. The anxiety symptoms of giddiness, tiredness, muscular tension, neckache and tightness of scalp were 'classically present in his case.' Comer was, in Dr. Wolfe's opinion, a neurotic. In order to alleviate the neurosis, Dr. Wolfe subjected Comer to six electric shock treatments in June, 1949. His response to the treatment was favorable, but his condition did not improve sufficiently to satisfy the neurologist. After a series of home and office calls, Comer, on August 10, 1949, allowed the professional relationship with Dr. Wolfe to lapse.
A month or so after he had discontinued Dr. Wolfe's services, Comer communicated with the defendant, inquiring for information about its policies which afforded health and accident indemnity. His troubles in the preceding months had caused the loss of five months' employment, and the prospect that this might recur was alarming. He and his wife, therefore, decided to investigate insurance protection against income loss. In response to their inquiry, one George E. Dayton, an agent of the defendant, called upon the Comers October 6, 1949. What transpired there is the subject of conflicting testimony, but it is agreed that at that conference Comer signed an application for defendant's accident and health policy. As we have seen, the plaintiff's pleadings concede that when the policy was delivered to him there was attached to it a photostatic copy of the signed application. Further, it is agreed that the questions and answers quoted in a preceding paragraph formed a part of the application.
As a result of the application, the defendant, on October 14, 1949, issued to Comer a policy which provided that the defendant insured him
'against loss of life, limb, sight or time sustained or commencing while this policy is in force, resulting directly or independently of all other causes from accidental bodily injuries sustained during any term of this policy, hereinafter called such injury, and against loss of time beginning while this policy is in force and resulting from sickness contracted during any term of this policy, the cause of which originates more than thirty days after the effective date hereof, * * *.'
The policy contained these additional provisions:
'1. This policy includes the * * * attached papers * * * and contains the entire contract of insurance. * * *
'2. No statement made by the applicant for insurance not included herein shall avoid the policy or be used in any legal proceeding hereunder. No agent has authority to change this policy or to waive any of its provisions. No change in this policy shall be valid unless approved by an executive officer of the Company and such approval be indorsed hereon.
* * *
* * *
'(a) This policy is issued in consideration of the statements made by the Insured in the application herefor, a copy of which is indorsed hereon and made a part hereof, * * *.'
Upon the cover page of the policy was the following:
The conference, in the course of which the plaintiff signed the application, occurred in the plaintiff's home October 6, 1949. Upon that occasion, the plaintiff, his wife, Dayton [defendant's agent] and an individual by the name of Homer C. Walker were present. Walker had lived in the Comers' home over a considerable period. The application was signed at the close of the conference. The Comers and Dayton were seated beside a table while Dayton explained the policy and made the entries in the application form after the plaintiff...
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