Jackson v. Prudential Ins. Co. of America, Civ. No. 82-5079.
| Decision Date | 12 May 1983 |
| Docket Number | Civ. No. 82-5079. |
| Citation | 564 F. Supp. 229 |
| Parties | Kay B. JACKSON, Plaintiff, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant. |
| Court | U.S. District Court — Western District of Arkansas |
John R. Elrod, Elrod & Lee, Siloam Springs, Ark., for plaintiff.
John R. Eldridge, III, Burke & Eldridge, Fayetteville, Ark., for defendant.
This is an insurance coverage case in which the facts necessary for a determination of the issues raised are not greatly in dispute.
Plaintiff, Kay B. Jackson, is the widow of Jerry A. Jackson, who died on September 24, 1981, following open heart surgery which had occurred a few days before. On September 11, 1981, defendant Prudential's agent, James R. Hartley, had taken an application of insurance from the deceased for a decreasing term policy of $42,000.00. The application and circumstances surrounding its completion will be discussed in more detail below. At the time that the application was completed, the agent accepted from the deceased an initial premium of $24.91 and issued and delivered to the applicant a "temporary insurance agreement" which purported to provide temporary insurance in the amount applied for for a period beginning on the date of the receipt and ending when a permanent contract of insurance was issued, when the application was rejected by the company, or at the end of sixty (60) days if no policy had been issued and no rejection had been made prior to that time. Mr. Jackson died thirteen (13) days after the date of the temporary insurance agreement, and no policy had been issued nor had the application been rejected by the company.
After the death, the plaintiff made the necessary proof of loss, but Prudential refused to pay the face amount of the policy applied for, claiming that, at the time that the application was completed, the deceased had failed to disclose material information about his state of health at that time.
Suit was filed and the matter was tried to a jury on March 24, 1983. Both at the close of plaintiff's case and at the close of all of the evidence, the insurance company moved for a directed verdict on grounds discussed below. The Court took the motions under advisement and submitted certain issues to the jury by way of special verdict. The jury was asked the following questions, with the result indicated:
Because the verdict, if accepted by the Court, would require that the Court enter judgment in favor of the plaintiff in the total amount sued for, the defendant insurance company filed what is denominated as a "motion for directed verdict and/or judgment notwithstanding the verdict." The Court requested simultaneous briefs, and received excellent briefs from both parties arguing their respective positions. The Court has now considered the issues raised and has reviewed relevant testimony in the case and is now prepared to rule.
As indicated above, the facts are not greatly in dispute. However, there is a great deal of dispute between the parties as to the effect of these "facts" when the applicable law is applied.
At the time of his death Mr. Jackson was 45 years of age. In approximately February of 1980, he saw Dr. Bob Weaver, a family practitioner, complaining of a burning below his rib cage. Dr. Weaver diagnosed his problem as a duodenal ulcer. It was Mr. Jackson's practice to take a daily walk with his wife, and some time in August, 1981, he noted a burning sensation in his chest. There is some dispute about whether that pain also radiated into his arm. In any event, the testimony is clear that his wife became concerned about him and insisted that he see a specialist. She called another member of their church, a Mr. Breese, who had had heart problems and had by-pass surgery, and he recommended that her husband see Dr. Robert Lynch, a Tulsa, Oklahoma, cardiologist.
He visited Dr. Lynch's office in Tulsa, Oklahoma, a distance of approximately 100 miles from his home, on August 31, 1981. During the physical examination which Dr. Lynch gave him, he had an electrocardiogram and stress test. The tests were abnormal, and Dr. Lynch advised Mr. and Mrs. Jackson that he suspected that Mr. Jackson had heart disease, and he made an appointment for him to enter a Tulsa hospital on September 11, 1981, to have other tests, including a heart catheterization.
The Jacksons had recently purchased some real property on which they owed an indebtedness of $42,000.00. When they returned from Tulsa, they contacted James R. Hartley, who had been an agent for Prudential in the community for 14 years. Hartley and Jackson had been high school classmates and had known each other intimately for a number of years. Hartley testified that a few weeks before the contact which resulted in the application, the Jacksons had discussed with him the need for additional insurance because of an indebtedness that they had incurred at the time that the real property was purchased. He said that it was agreed that they would contact him when they were ready to proceed.
When Hartley was called after the Jacksons returned from Tulsa, it was agreed that he would visit them in their home on the evening of September 8, 1981. At that time he completed the application which was introduced as Plaintiff's Exhibit 1 at the trial. He testified that he asked Mr. Jackson each of the questions contained on the application and received answers from him. Although Mrs. Jackson was present in the room at the time, she testified that she did not listen to the discussion between her husband and Hartley and could not dispute any of Hartley's testimony.
The application which was completed at the time consists of two parts. In Part 1, a number of questions are asked, but only one question pertains to the physical condition or health of the applicant. That question is:
19. Has any person named in 1a or 6, Yes No
within the last 12 months
a. been treated by a doctor for or had a
known heart attack, stroke or cancer
other than of the skin? ................ ___ ___
b. had an electrocardiogram for chest
pain or for any other physical complaint
or taken medication for high
blood pressure? ........................ ___ ___
Hartley testified that at the time that he read to Jackson question 19, Jackson answered: "As it is written there it would have to be No. I have had an electrocardiogram, but it was in a routine physical." The agent then checked question 19b. "No." Part 2 of the application contained a number of additional questions pertaining to the health and physical condition of the applicant. Question 6 of Part 2 asks, among other things, whether the applicant had, within the past five years, had electrocardiograms or other medical tests performed. When Agent Hartley reached this question, Jackson advised him that he had been to Tulsa a few days before and had seen Dr. Lynch. It was made known to Hartley that Lynch was a cardiologist and that he had given Jackson an electrocardiogram and stress test and that these tests had been abnormal. He was advised by Jackson that Jackson was to return to Tulsa within a few days for further tests. Hartley knew that Jackson had been referred to Dr. Lynch by Breese, who Hartley also knew, and that Breese had been treated by him for a heart condition which resulted in surgery.
When he was asked why he checked question 19b. "No" in the face of that knowledge, he said that it was because Jerry Jackson had told him "No" when the question was asked. On cross-examination Hartley testified that, while Jackson had told him that Lynch had done an EKG and stress test in Tulsa and that they were abnormal and that he was to go back for more tests, he did not advise him that the tests had been done for chest pains. He was asked:
In spite of this testimony, Agent Hartley unequivocally testified that he does not believe that the Jacksons in any way lied to him and that: "I don't believe Jerry would lie to anyone."
The application was completed as indicated and both parts were handed to the applicant to be signed. Hartley testified that he does not know whether Jackson read the application before signing it, but that it is not customary for most applicants to do so. After the application was signed by both Hartley and Jackson, Hartley then accepted the initial premium of $24.91 and completed and signed the temporary insurance agreement described above. It is uncontroverted that Hartley was authorized by the company to issue the temporary insurance agreement only if both questions 19a. and 19b. of Part 1 of the application were answered "No." Since both of these questions had been so answered, Hartley issued the agreement and accepted payment of the premium.
In the motion for directed verdict made both at the close of plaintiff's case and at the close of all the evidence, Prudential argued, among other things, that Hartley was a mere soliciting agent and that any knowledge that he had with respect to the health of the...
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