Huey v. American Nat. Ins. Co., 7660.

• Citation: 45 S.W.2d 340
• Decision Date: 02 December 1931
• Docket Number: No. 7660.,7660.
• Parties: HUEY v. AMERICAN NAT. INS. CO.<SMALL><SUP>*</SUP></SMALL>
• Court: Court of Appeals of Texas

45 S.W.2d 340

HUEY v. AMERICAN NAT. INS. CO.^*

No. 7660.

Court of Civil Appeals of Texas. Austin.

December 2, 1931.

Rehearing Denied January 6, 1932.

Appeal from District Court, Bell County; Few Brewster, Judge.

Action by William Howard Huey against the American National Insurance Company. From a judgment for defendant, plaintiff appeals.

Reversed and remanded.

E. C. Zellner, of Belton, for appellant.

Tyler, Hubbard, Countess & White, of Belton, for appellee.

BAUGH, J.

Appellant sued appellee for damages alleging fraud of its agent in procuring his application for and delivery to him of a life insurance policy providing double indemnity for accidental death, when he had applied for, and the agent had represented to appellant that he was delivering to him, a life, health, and accident policy, providing monthly compensation of $86.10 for total disability from accident. The policy was delivered to appellant on March 12, 1929, and on April 12, 1929, he was totally disabled by accident. He alleged that he did not know that such misrepresentations were untrue until after his injury; that he relied upon the representations of said agent and was misled thereby. He asked for damages for such fraud, and in the alternative that the policy delivered to him be reformed so as to speak the true agreement, and that it be enforced accordingly. The case was tried to a jury upon special issues, and upon their findings judgment rendered that appellant take nothing; hence this appeal.

The jury found in response to the issues submitted: (1) That the agent of appellee represented to Huey that for a monthly premium of $4.46 said insurance company would deliver to him a policy providing $86.10 per month in case of total disability; (2) that such representations were made as a material inducement to Huey to apply for such insurance and to pay his monthly premiums; (3) that but for such representations Huey would not have applied to appellee company for insurance, and would not have paid such premiums; (4) that Huey did not know when he signed the application what kind of insurance policy it called for; (5) that he was guilty of negligence in not ascertaining the recitals contained in said application; (6) that when the policy was delivered to him he put it away for safe-keeping, and paid the premiums without knowledge of the kind of policy it was; (7) that in so doing he was guilty of negligence; (8) that he represented in his application that he had not consulted with, nor been treated by, a physician within seven years prior thereto; (9) that such representation was untrue; (10) that this representation was not a material inducement to the insurance company to issue said policy; (11) that the insurance company would not have issued said policy if said representation had not been made.

The insurance company, in addition to denying liability, asked for a cancellation of the policy issued by it, on the ground of said false representations of the applicant, and on the ground that he had failed to pay his premiums subsequent to July, 1930. The judgment denied appellant recovery and canceled the policy.

Two major issues are presented: First, whether the appellee could urge as a defense against the fraud of its agent the negligence of the insured in failing to discover that fraud; second, whether it was authorized to cancel its policy because of a misrepresentation in the insured's application which the jury found was not a material inducement to the issuance of the policy.

The policy was applied for on March 6, 1929. The agent filled in the blanks in the application from information given him on the streets of Belton by Huey, who then signed the application. Huey testified that the agent Melvin was a cousin by marriage, solicited the insurance, and that he reposed full confidence in him, and believed what he said. The policy was delivered to appellant by Melvin on the streets of Belton on March 12th, and the first premium then paid. Huey testified that he took the policy home and placed it in his trunk for safe-keeping, relying upon the statements of Melvin that it was a life, health, and accident policy, and did not know that it was not until after he was disabled by accident on April 12, 1929.

We have grave doubts as to the sufficiency of the evidence to sustain the findings of the jury on the issues of Huey's negligence. Huey was a common laborer, 20 years of age, who knew nothing of insurance policies. The policy is in the record. The indorsement thereon of the kind of policy is: "20 pay Endowment at Age 85. Premiums payable for 20 years or until prior death. Double Accidental Death Benefit Disability Premium Waiver. Non-Participating."

The body of the policy contained tables, conditions, and limitations of liability peculiar to special insurance policies which the lay mind could scarcely be expected to understand. The language of Judge Neill, in Insurance Co. v. Hargus (Tex. Civ. App.) 99 S. W. 580, 582, would appear to be peculiarly applicable here: "The ordinary layman should not be charged with knowing the meaning of technical terms, ofttimes employed as traps to catch the unwary, used by life insurance companies and their agents, especially when informed by an agent who solicited the policy that the application presented to be signed was for such as has been agreed upon by him and the applicant."

Regardless of that, however, under the facts of this case, assuming that the evidence was sufficient to support the jury findings, the insurance company cannot, we think, urge such negligence as a defense against the misrepresentations of its agent; nor that it was the duty of the insured to inquire into their truthfulness. In Labbe v. Corbett, 69 Tex. 509, 6 S. W. 808, 811, the court said: "`When once it is established that there has been any fraudulent misrepresentation, * * * by which a person has been induced to enter into a contract, it is no answer to his claim to be relieved from it to tell him that he might have known the truth by proper inquiry. He has a right to retort upon his objector: "You, at least, who have stated what is untrue, * * * for the purpose of driving me into a contract, cannot accuse me of want of caution because I relied implicitly upon your fairness and honesty."' Ry. Co. v. Kisch, L. R. 2 H. L. 120."

This rule has been frequently reiterated and followed. Buchanan v. Burnett, 102 Tex. 492, 119 S. W. 1141, 132 Am. St. Rep. 900; Graves v. Haynes (Tex. Com. App.) 231 S. W. 385; Sanders v. Hickman (Tex. Civ. App.) 235 S. W. 278; Com. Jewelry Co. v. Braczyk (Tex. Civ. App.) 277 S. W. 755; Johnson v. Sugg (Tex. Com. App.) 291 S. W. 859. And we think the rule should apply as well to insurance contracts as to any other. While the rule obtains that one who accepts a policy without dissent is presumed to know its contents, he can overcome such presumption by showing that he put same away without reading it, in reliance upon the representations of its agents and upon the knowledge and integrity of the insurer to correctly draw the policy applied for. Delaware Ins. Co. v. Hill (Tex. Civ. App.) 127 S. W. 283; M. & M. Inter-Ins. Alliance v. Hansen (Tex. Civ. App.) 258 S. W. 261; Liberty Life Ins. Co. v. Woodward (Tex. Civ. App.) 12 S.W.(2d) 246. This is what appellant was shown to have done in the instant case.

Appellee cites us particularly to the following cases upon which the trial court obviously relied in submitting the issues of negligence of appellant and in rendering his judgment: Equitable Life v. Maverick (Tex. Civ. App.) 78 S. W. 560, followed and relied upon in Mutual Life Ins. Co. v. Hargus (Tex. Civ. App.) 99 S. W. 582, and Federal Life Ins. Co. v. Hoskins (Tex. Civ. App.) 185 S. W. 609. All of these were decisions by Courts of Civil Appeals, and no writs applied for. Each of them was a suit by the insured to cancel a policy issued to him, and to recover or cancel notes given in payment of premiums, on the ground that the agent had fraudulently represented that one character of policy would be issued, but actually delivered a materially different policy. In passing upon the sufficiency of the pleadings or on the charge of the court, those cases do announce that ...