Federal Life Ins. Co. v. Wright

• Decision Date: 22 January 1921
• Docket Number: (No. 8397.)
• Citation: 230 S.W. 795
• Parties: FEDERAL LIFE INS. CO. v. WRIGHT.
• Court: Texas Court of Appeals

Page 795

230 S.W. 795

FEDERAL LIFE INS. CO. v. WRIGHT.

(No. 8397.)

Court of Civil Appeals of Texas. Dallas.

January 22, 1921.

On Appellant's Motion for Rehearing, April 9, 1921.

Appellee's Motion for Rehearing Denied May 14, 1921.

Appeal from District Court, Dallas County; E. B. Muse, Judge.

Suit by Mrs. E. Leo Wright against the Federal Life Insurance Company. From judgment for plaintiff, defendant appeals. Judgment reversed, and judgment rendered in favor of plaintiff for a limited sum.

Cockrell, Gray, McBride & O'Donnell, and Henry P. Edwards, all of Dallas, for appellant.

Carden, Starling, Carden, Hemphill & Wallace, of Dallas, for appellee.

TALBOT, J.

The appellee, Mrs. E. Leo Wright, instituted this suit October 9, 1915, against the appellant, as beneficiary under a policy of insurance issued by the appellant on the life of her husband, Robert William Wright. The appellee's husband died on July 8, 1916, from consumption or tuberculosis of the lungs. The appellant, in answer to plaintiff's petition, denied any liability under said policy on the ground that such policy never became effective as a contract of insurance, for the reason that Robert Wright was afflicted with said disease at the time the policy was delivered to him and was not therefore in good health at that time; that the application signed by Wright for the policy of insurance, and which by its terms was a part of such policy, provided that the policy should not take effect until actually delivered to the assured, Wright, and the first premium actually paid during his life and while he was in good health. It was further alleged that the said assured, Wright, had made false statements and misrepresentations material to the risk in his application for insurance, he having stated therein that he did not have any ailment, disease, or disorder; that he had never had consumption; that he had never had any serious illness; that he had never sought or been advised to seek a change of climate or occupation for his health; that the physician whom he had consulted and by whom he had been prescribed for and treated within the five years preceding the making of the application was Dr. Gray, and that he had consulted him the preceding week for cold in the head, which answers were each and all untrue, in that at the time of making said application he was afflicted with consumption or tuberculosis of the lungs, which fact he knew; had been advised to seek a change of occupation for his health, within a few months prior to the making of said application; and had, within a few months prior to the making of said application, consulted and been treated by Dr. E. H. Gray, of San Antonio, Tex., on several occasions, and had been treated during said time by said physician for tuberculosis or consumption.

Appellant also pleaded that, within 90 days after it discovered the falsity of the representations so made, it notified in writing Mrs. E. Leo Wright, the beneficiary under said policy, that on account of said misrepresentations it refused to be bound by the contract or policy of insurance. Thereafter it tendered back the annual premium paid on the policy, together with interest from the date of payment, and, such tender being refused, a deposit covering same was placed in the registry of the court. The appellee, in her supplemental petition, admitted that the assured, Wright, had consumption at the time he signed the application for insurance, but denied that he had knowledge of such fact, and denied that the answers made by him were fraudulently made. At the conclusion of the evidence, the appellant requested the court to direct the jury to return a verdict for the plaintiff for the amount deposited by the defendant in the registry of the court, and in all other respects for the defendant. This was refused, and the court submitted issues calling for findings as to whether the assured knew he had consumption or tuberculosis of the lungs when he signed the application for insurance, and as to whether the answers to certain of the other questions contained in the application were made willfully with intent to deceive the insurance company. These questions were answered by the jury in the negative, and the court entered judgment for the plaintiff for the amount of the policy with interest, statutory penalty, and $500 attorney's fees. From this judgment the appellant duly perfected an appeal to this court.

The first and second assignments of error complain of the action of the court in refusing to give appellant's requested instructions directing the jury to return a verdict in favor of the appellee, Mrs. E. Leo Wright, for the sum of $50.42, being the amount deposited by the appellant in the registry of the court, and in all other respects for the appellant. There are two propositions advanced under these assignments, which are, in effect, that where it is provided in the application for a policy of life insurance that the policy shall not take effect until it shall have been actually delivered to the insured and the first premium paid during his life and while in good health, and the uncontradicted evidence introduced in a suit on the policy shows that the applicant had tuberculosis of the lungs or consumption at the time he signed such application and at the time the policy was delivered, and that he had been informed by his physician that he had such disease, and such fact is admitted by the plaintiff, and the uncontradicted evidence further shows that his death, which occurred nine months after the issuance of the policy, was caused by tuberculosis of the lungs, and that the insurance company, within 60 days after learning that the insured had tuberculosis of the lungs at the time the policy was issued, notified the beneficiary in writing that it refused to be bound by said policy of insurance, such insurance company is not liable on the policy so issued and the court should instruct a verdict for the defendants. In reply to the assignments and propositions of the appellant, the appellee contends that the issues of fact in the case, which the jury found in her favor are that her husband did not know that he had tuberculosis, and that his answers were not made willfully and with the intent to deceive the appellant, and that the appellant did not, within a reasonable time after discovering the falsity of the misrepresentations, give notice to the assured that it refused to be bound by the contract of insurance. The first proposition asserted is:

"The burden was upon the insurance company to prove that, within a reasonable time after learning that the assured had tuberculosis of the lungs at the time the policy was delivered, it gave the assured notice that it refused to be bound by the policy. It was a question of fact whether such proof was so made."

There is no question but that this proposition of the appellee contains a substantially correct statement of the law upon the subject to which it relates, and if the burden therein referred to has not been discharged, the judgment of the district court must be affirmed, regardless of the other questions presented in the appellant's brief. Article 4948 of Vernon's Sayles' Texas Civil Statutes, which was passed in 1903, declares that—

"In all suits brought upon insurance contracts or policies hereafter issued or contracted for in this state, no defense based upon misrepresentations made in the applications for, or in obtaining or securing the said contract, shall be valid, unless the defendant shall show on the trial that, within a reasonable time after discovering the falsity of the misrepresentations so made, it gave notice to the assured, if living, or, if dead, to the owners or beneficiaries of said contract, that it refused to be bound by the contract or policy; provided, that ninety days shall be a reasonable time."

The appellant seems to have fully appreciated the burden resting upon it to give notice within the time required by the statute quoted that it refused to be bound by the policy, and that proof of that fact was essential to defeat the appellee's right to recover, but contends that it clearly and indisputably appears from the evidence that such notice was given. In this view of the evidence we are not prepared to concur. The appellant, in support of its contention, introduced the depositions of Dr. Jenney, its medical examiner, Isaac Hamilton, its president, Chas. Rannels, its secretary, all of Chicago, Ill., and the deposition of its actuary and assistant secretary, then in the army, in which each of them testified that the first time he learned that the assured had been afflicted with tuberculosis was when the company received the proof of his death about August 10, 1916. The appellant's Texas manager, Mr. Ben Thorpe, also testified to the same effect. The application of the assured for the policy in question contained the following:

"I have paid Mr. J. Smith $10.02 cash, notes for $11.50 due on December 27, 1915, March 27, 1916, June 27, 1916, premium on the policy for ____, on the condition that if the risk is not assumed by the company the same is to be returned with the provisions of conditional receipt No. ___, which I have accepted subject to the provisions thereof."

"This risk is approved and recommended by J. Smith, agent, signature of person or persons actually soliciting and securing application."

Appellant's manager in Texas further testified:

"I had that connection (manager) with the company at the time the application of Robert William Wright was made to the company and at the time the policy sued on in this case was issued. The application for insurance policies in Texas goes through my office. This policy involved in this suit went through my office. * * * I knew Smith, who took the application of Mr. Wright. That is the only life insurance application he ever took; he was in the accident and health department of our company. I do not know where he is now. The...