Great American Reserve Ins. Co. v. San Antonio Plumbing Supply Co.

• Decision Date: 11 March 1964
• Docket Number: No. 14232,14232
• Citation: 378 S.W.2d 141
• Parties: GREAT AMERICAN RESERVE INSURANCE COMPANY, Appellant, v. SAN ANTONIO PLUMBING SUPPLY COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 141

378 S.W.2d 141

GREAT AMERICAN RESERVE INSURANCE COMPANY, Appellant, v. SAN ANTONIO PLUMBING SUPPLY COMPANY, Appellee.

No. 14232.

Court of Civil Appeals of Texas, San Antonio.

March 11, 1964.

Rehearing Denied April 8, 1964.

LeLaurin, Chamberlin, Guenther & Murry, Bettie J. Stock, San Antonio, for appellant.

Brundidge, Fountain, Elliott & Churchill, Dallas, for appellee.

MURRAY, Chief Justice.

This suit was instituted by appellee, San Antonio Plumbing Supply Company, against appellant, Great American Reserve Insurance Company, seeking to recover upon a policy of life insurance issued upon the life of Sul Ross in the principal sum of $10,000.00. Appellant contends that the policy was never in effect. Both parties moved for summary judgment. The trial court overruled the motion of appellant and granted that of appellee, and then proceeded to render judgment against appellant in favor of appellee in the sum of $10,000.00, together with penalty, attorney's fees and interest; from which judgment the Great American Reserve Insurance Company has prosecuted this appeal.

In November, 1961, Sul Ross, Andrew Carl Tomlin, William August Stoeltje, and

Martin F. Reinhard were officers of and stockholders in appellee company, and decided to take insurance on their lives for the benefit of the company. They contacted Darrell Barnes, who at the time was a soliciting agent for appellant, and each gave him his signed application for $10,000.00 of insurance. In each application it was stated as follows:

'(2) That the policy hereby applied for shall not take effect unless the insured is alive at the time of its delivery to the insured provided that if this application is approved by the company and policy issued as applied for, and provided the first premium has been paid, the insurance applied for herein shall be effective from the date of this application, or the date of the medical examination of (sic) such examination is required, and, provided further, that in no event, shall the insurance applied for herein take effect unless the insured is in sound health at the time of the making of this application.'

Appellant required that Sul Ross take a physical examination, and it was discovered that he had high blood pressure and an excess of sugar in his urine. Ross was required to take another physical examination and to furnish a written report as to his health from his personal physician, and from this information appellant 'rated up' the policy of life insurance being issued on the life of Sul Ross. There is no difficulty about the other three policies, this suit is based alone upon the Sul Ross policy. Appellant's principal office was in Dallas, with a branch office in San Antonio. The four policies were prepared in the Dallas office and sent to the San Antonio office, with instructions to have each insured sign a declaration of no change in health. The policies were received on January 19, 1962, but nothing was done about them that day. On January 20, 1962, Sul Ross was taken sick and sent to the hospital. This information reached the San Antonio office on the same day.

Joe Roger Davenport was the San Antonio Branch Manager, and Kenneth Stewart Wingfield was Unit Manager. Darrell Barnes was no longer a soliciting agent; he had become a broker. When Barnes heard of Sul Ross' hospitalization he called Wingfield and asked what should be done. Wingfield advised Barnes 'to get a check.' In this connection, Wingfield testified as follows:

'Q All right. Did you ever tell Darrlee Barnes to go out there and get a check?

'A Yes, I told him to.

'Q What were your words that you used in telling him this? Again, if you don't remember specifically, just tell us generally what you said to him.

'A Okay. Generally, my words were 'I wish to heck we could have done this yesterday when the policies came in, rather than today, then the situation wouldn't exist. Go out and get a check and if Mr. Ross is actually in the hospital, of course, you can't let him sign the affidavit because he is not in good health, if he is in the hospital. We have got to hold the policy for instructions after he does get well and then we can go through the underwriting over again. Definitely get a check on these other fellows if they will give it to you and get their declaration signed.' By declaration, I am using this word for--we call our declaration of no change in health and so forth.'

Barnes went to appellee's office and there received a check payable to appellant in the sum of $222.90, being the total amount required to cover the premiums on the four policies. The normal premium for Ross would have been $61.50 per month, but due to his high blood pressure and excessive...