Knight v. Jefferson Standard Life Ins. Co.

• Decision Date: 19 December 1967
• Docket Number: No. 7188,7188
• Parties: Carol Sue Fincher KNIGHT, Individually, and as Administrator and Natural Tutrix of her minor children, Richard Bryant Knight and Tyrone Timothy Knight, Plaintiff-Appellee, v. JEFFERSON STANDARD LIFE INSURANCE COMPANY, Defendant-Appellant.
• Court: Court of Appeal of Louisiana — District of US

Page 485

205 So.2d 485

Carol Sue Fincher KNIGHT, Individually, and as Administrator and Natural Tutrix of her minor children, Richard Bryant Knight and Tyrone Timothy Knight Plaintiff-Appellee, v. JEFFERSON STANDARD LIFE INSURANCE COMPANY, Defendant-Appellant.

No. 7188.

Court of Appeal of Louisiana, First Circuit.

Dec. 19, 1967.

Don M. Arata, of Richardson & Arata, Bogalusa, for appellant.

Donald H. Lee, of Seal, Lee & Crain, Bogalusa, for appellee.

Before LOTTINGER, SARTAIN and ELLIS, JJ.

SARTAIN, Judge.

Plaintiff, Mrs. Carol Sue Fincher Knight, instituted this suit to recover the proceeds of a policy of insurance issued by the defendant, Jefferson Standard Life Insurance Company, insuring the life of her late husband, Richard Dale Knight. The defendant insurer specially defended on the ground that certain untrue statements, material to the risk, were knowingly made by the insured in his policy application, and had the true and complete facts been disclosed in the application, defendant would not have issued the policy. Judgment on the merits was rendered by the trial court in favor of the plaintiff, rejecting the above defense, and defendant has appealed.

A stipulated chronological order of occurrences reveals that on November 25, 1964, plaintiff was first seen by Dr. Foster, his family physician, for a sore throat. On February 8, 1965, plaintiff had chills and fever and consulted Dr. Foster who immediately confined plaintiff in Bogalusa Community Medical Center where he remained for three days (Feb. 8, 9, 10) and was treated for cervical adenitis, which Dr. Foster described as 'lymph glands that swell up secondary to an infection depending upon where the infection is. We get cervical adenitis from a sore throat.' The application for insurance with Jefferson Standard was dated May 4, 1965. On June 28, 1965, plaintiff was seen by Dr. Foster and referred to Dr. Hartman because the lymph nodes had become enlarged. Two nodes were removed and forwarded to New Orleans for biopsy on June 28, 1965. As a result of the biopsy, Hodgkins Disease was diagnosed on June 30, 1965. Mr. Knight died on June 12, 1966, well within the contestable period of two years.

Defendant-insurer contends that Knight, by failing to state that he had been hospitalized on February 8, 1965, and by answering 'No' to certain questions, made a fraudulent misrepresentation of material fact which induced the defendant insurance company to grant the policy.

The record in this case clearly establishes the facts upon which the legal issues presented are to be resolved. The policy in controversy was secured by Mr. Clayton L. Baggett, agent for the insurer. Mr. Baggett had on one previous occasion talked to Mr. Knight concerning the latter's purchase of the contested policy. Several days before May 4, 1965, the date of the application for the policy, Mr. Baggett returned to the Knight home. He was accompanied by his district manager, Mr. William R. Matheny. Mr. Matheny asked the questions as indicated on the application form and filled out the same. Among the questions asked and Knight's responses thereto as they appear on this application are the following:

Question 8, Item F.: 'Have you ever been a patient in a hospital, sanitarium or institution?'

Answer: 'Yes.' Knight explained that the hospitalization was due to a hernia in 1947.

Question 12: 'Are you aware of any physical defect or have you had any complaint not mentioned above?'

Answer: 'No.'

Question 13: 'Have you consulted a doctor for any cause not included in the above answer?'

Answer: 'No.'

The only writing of Mr. Knight on the form is that of his signature. It is undisputed that the question of Mr. Knight's previous hospital stay of February 8--10, 1965 was not mentioned or discussed. Mr. Matheny did agree that Mr. Knight stated that 'sometime in the past he had occasion to see the doctor about some acid' that got into his eyes, but this was not reflected in the application because Mr. Matheny considered it unimportant and a 'minor' occurrence.

Mr. Baggett was a close personal friend of Mr. Knight for some five years. He stated that on the occasion of May 4, 1965, he considered Mr. Knight to be in good health and observed nothing that would indicate any conclusion to the contrary. Mr. Knight was 26 years of age at the time of the application. The record is clear and supports no other conclusion but that at the time Mr. Knight applied for and obtained the insurance policy in question he was unaware of the possibility that he was in fact suffering from Hodgkins Disease. He saw Dr. Foster on November 25, 1964 for what he thought to be a sore throat. He returned to Dr. Foster on February 8, 1965 for a sore throat. On this occasion he also evidenced chills and fever and it is clear that he was hospitalized for this reason.

Dr. Foster testified that he treated Mr. Knight with antibiotics and discharged him on February 10, 1965 when his chills and fever had subsided. The doctor was very definite in that Mr. Knight was admitted to the hospital for sore throat and that he was treated accordingly.

Mrs. Knight testified that her husband considered that he had only a sore throat in November of 1964 and February of 1965 and that this was his opinion at the time application was made for insurance.

The evidence further shows that Mr. Knight's sore throat had persisted for a considerable period of time. In November of 1964, Dr. Foster observed enlarged lymph nodes on the right side of Mr. Knight's neck. He attached no particular significance to this condition because such is usually secondary to sore throat and the swelling may not subside for several months. The enlarged lymph nodes were also present on February 8, 1965. Again, Dr. Foster attached no particular significance to this condition for the same reason. It was not until June 28, 1965 when Mr. Knight returned to Dr. Foster because his throat was not better and the swollen lymph glands was still present that Dr. Foster referred him to another physician. A biopsy was performed on one of the lymph nodes and the diagnosis of Hodgkins Disease was made. Mr. Knight died on June 12, 1966 as a result of this disease.

Dr. Van W. Gunther, Vice President and Medical Director of the defendant, testified that the presence of swollen lymph nodes in November, 1964 and February of 1965 was a clear indication that Mr. Knight was a poor insurance risk and that had the matter been called to his attention the subject policy would not have been issued without a further medical examination. It was his testimony that Mr . Knight's failure to mention is hospitalization in February of 1965 was a nondisclosure of a material fact which denied defendant the opportunity to order further medical examination and refuse to issue the policy in the event of a diagnosis of Hodgkins Disease.

It is also clear that on the date of application for the policy although it was unknown to Mr. Knight and his family physician, Mr. Knight was in fact afflicted with a fatal disease.

The trial judge stated in his written reasons, 'The court must make a determination as to the knowledge of the patient at the time he applied for the policy and not based on other evidence that came to light subsequent to that day'. The judge a quo held that he placed more emphasis upon and gave greater weight to the testimony of Dr. Foster than that of the testimony of Dr. Gunther. Accordingly, he determined that no fraudulent misrepresentations were made by Mr. Knight and that the plaintiffs were entitled to recover under the policy.

For reasons hereinafter stated we are of the opinion that the trial judge is correct in both his findings of fact and conclusions of law.

Resolution of the case at bar necessitates a thorough consideration of LSA-R.S. 22:619.

'Warranties and misrepresentations in negotiation; applications

A. Except as provided in Sub-section B of this Section and R.S. 22:692, no oral or written misrepresentation or warranty made in the negotiation or an insurance contract, by the insured or in his behalf, shall be deemed material or defeat or avoid the contract or prevent it attaching, Unless the misrepresentation or warranty is made with the intent to deceive.

B. In any application for life or health and accident insurance made in writing by the insured, All statements therein made by the insured shall, in the absence of fraud, be deemed representations not warranties. The falsity of any such statement shall not bar the right to recovery under the contract unless such false statement was made with actual intent to deceive Or unless it materially affected either the acceptance of the risk or the hazard assumed by the insurer. Amended and reenacted Acts 1958, No. 125.' (Emphasis added)

The intent or meaning of the above statute is considered in the case of Gay v. United Benefit Life Ins. Co., 233 La. 226, 96 So.2d 497. In considering R.S. 22:619(B) the court stated the following:

'Undoubtedly the declaration relied on is inartistically drawn and, when read with the remaining part of the section, it tends to create ambiguity. Hence, it requires interpretation.

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The declaration relied on herein by appellant (22:619(B)) does not clearly evidence an intention to change the law as it existed prior to the drafting of the Louisiana Insurance Code. This is particularly true when we consider that the signification of the original statutory provision had been determined by judicial interpretation many years prior to the codification and the Legislature never saw fit during that lengthy period, by means of an ordinary statute, to alter that determination . And after a careful reading of the cases in which the pre-existing law was interpreted and applied we are convinced that the codifiers, with reference to the provisions in question (LRS 22:619B), were merely attempting to express the courts' holding to the effect that in order to vitiate a policy a misstatement Must...