Massachusetts Mut. Life Ins. Co. v. Allen

• Decision Date: 21 December 1965
• Docket Number: No. 40573,40573
• Citation: 416 P.2d 935,1965 OK 203
• Parties: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, a corporation, Plaintiff in Error, v. Lena May H. Evans ALLEN, Defendant in Error.
• Court: Oklahoma Supreme Court

Page 935

416 P.2d 935

1965 OK 203

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, a corporation Plaintiff in Error, v. Lena May H. Evans ALLEN, Defendant in Error.

No. 40573.

Supreme Court of Oklahoma.

Dec. 21, 1965.

Rehearing Denied June 7, 1966.

Second Petition for Rehearing Denied July 12, 1966.

Syllabus by the Court

1. A 'misrepresentation' in negotiations for a life insurance policy under 36 O.S.1961, § 3609, is a statement as a fact of something which is untrue, and which the insured knows or should know is untrue, or which he states positively as true without knowing it to be true, and which has a tendency to mislead, where such misrepresentation is material to the risk.

2. An 'omission' in negotiations for a life insurance policy under 36 O.S.1961, § 3609, is an intentional omission to disclose a fact or condition which is material to the acceptance of the risk or the hazard assumed, and which is known to the applicant, or should have been known.

3. A 'concealment of facts' in negotiations for a life insurance policy under 36 O.S.1961, § 3609, implies an intentional withholding of facts of which the insured has, or should have knowledge, and the insured cannot be held to have concealed a fact of which he had no knowledge, or which he had no duty or reason to know.

4. An 'incorrect statement' in negotiations for a life insurance policy under 36 O.S.1961, § 3609, is a statement of fact which is untrue and known to be untrue, or so carelessly made that an intent to deceive may be inferred.

5. Whether misrepresentations, omissions, concealment of facts, or incorrect statements, as above defined, are made in negotiations for a life insurance policy by or in behalf of the insured are questions of fact for the determination of the jury where the evidence in connection therewith is conflicting.

6. Misrepresentations, omissions, concealment of facts and incorrect statements, as defined in paragraphs 1, 2, 3, and 4 of the syllabus herein, will prevent recovery under the policy where (1) fraudulent, or (2) material to the acceptance of the risk or the hazard assumed by the insurer, or (3) life insurance companies generally, in good faith, would either not have issued the policy, or would not have issued a policy in as large an amount, or would not have provided the coverage if the true facts had been made known to the insurer in negotiations for the insurance policy.

7. Failure to disclose a latent disease in negotiations for a life insurance policy upon his own life of which applicant has no knowledge, or reason to know, does not constitute a misrepresentation, omission, or concealment of fact, under the provisions of 36 O.S.1961, § 3609.

8. Where the instructions given to the jury clearly set forth the material issues upon which a party relies for relief, and the jury is told that if they find such material issues to be true they will find in favor of such party, the cause will not be reversed for new trial unless it appears from the general context of the instructions that the instructions were misleading.

Appeal from the District Court of Beaver County; C. R. Board, Judge.

Action by plaintiff, Massachusetts Mutual Life Insurance Company, for the cancellation of a life insurance policy, in which the defendant beneficiary, Lena May H. Evans Allen, filed cross-petition seeking recovery upon the policy. From verdict and judgment for defendant upon her cross petition, plaintiff appeals. Affirmed.

Robert L. Miles, Miles & Miles, Beaver, Wm. J. Holloway, Jr., Paul R. McDaniel, Crowe, Boxley, Dunlevy, Thweatt, Swinford & Johnson, Oklahoma City, for plaintiff in error.

Keith Drum, Lansden, Drum & Goetzinger, Beaver, for defendant in error.

JACKSON, Vice Chief Justice.

This action was initiated by plaintiff, Massachusetts Mutual Life Insurance Company, against defendant-beneficiary, Lena May H. Evans Allen, for cancellation of a life insurance policy issued to defendant's deceased husband, Dearl W. Evans. The material allegations asserted for cancellation were that there were misrepresentations, omissions, concealment of facts, and incorrect statements in the application for the policy; that such representations were (1) fraudulent, were (2) material to the acceptance of the risk or to the hazard assumed by Company, and (3) that insurer in good faith would not have issued the policy if the true facts had been made known to Company.

Defendant, Lena May H. Evans Allen, in answer and cross petition alleged that she was present when her deceased husband made application for the policy; that she and her deceased husband gave Company's soliciting agent, Bob Fenimore, a comprehensive statement of Evans' medical history, and did not misrepresent the facts to agent Fenimore.

From verdict and judgment against plaintiff upon its petition for cancellation and in favor of defendant upon her cross petition, the plaintiff has appealed.

Plaintiff Company's contentions on appeal are that: (1) Under 36 O.S.1961, § 3609, and the uncontradicted evidence plaintiff Company was entitled to judgment as a matter of law; and (2) that in any event, Company is entitled to a new trial for refusal of the trial court to submit to the jury proper instructions on the fundamental and decisive issues under 36 O.S.1961, § 3609.

36 O.S.1961, § 3609, was enacted in 1957 and appears to have been taken from Arizona's Insurance Code (Arizona Revised Statutes § 20--1109), which was enacted by that state in 1954. We have found no case from the Arizona court or this court wherein this section has been construed, and none has been cited.

We have given careful consideration to Sec. 3609, supra, and the evidence, and have concluded that Company was not entitled to judgment as a matter of law. Our decision will be better understood after a rather detailed statement of the evidence and events culminating in the issuance of the life insurance policy in question.

Dearl W. Evans, and wife, Lena May H. Evans (now Allen) were students at Oklahoma State University in 1958 and 1959. They received inquiry by mail from Company as to whether they would be interested in life insurance and indicated their interest on February 14, 1959, by returning a postal card. On March 11, 1959, a Company agent, Bob Fenimore, came to their home and during a period of approximately one and one-quarter hours obtained Evans' application for the insurance policy in question. The policy was issued on March 20, 1959. Evans died on December 31, 1959.

Agent Fenimore testified that the defendant and Evans told him that Evans had a run down condition similar to what a lot of college students have who are enrolled in heavy college courses; that the condition was described as not serious, and Evans' doctor had prescribed vitamins and rest and that the condition had cleared up. Fenimore did not consider Evans' run down condition serious at the time and therefore did not mention it in the written application.

Defendant, Mrs. Evans (Allen), testified that Fenimore asked the questions of Evans that appear on the written application form and from the answers given by Evans filled out the application form. That Fenimore asked Evans if he had had a physical or health examination within three years, and Evans told him that he had been under a doctor's care in April, 1958; that in answer to Fenimore's questions Evans said he had been in the hospital for tests and rest; that Evans mentioned Dr. C of Beaver, Oklahoma, as their family doctor; that Dr. C had told him (Evans) he had infectious mononucleosis, a run down condition in students; that in the treatment he had received antibiotics and blood builder; that he was feeling fine; that Dr. C had taken X-rays and blood tests, and that Dr. C's diagnosis was infectious mononucleosis; that Fenimore thought it was irrelevant to put this information on the application form since the doctor had dismissed him. She further testified that Evans read the application and asked Fenimore if he thought the form was filled out right, and that he would take Fenimore's judgment on it; that Evans offered to have a physical examination if Fenimore thought he should.

Defendant further testified that Evans told Fenimore that X-rays had been taken periodically; that nothing was mentioned about surgery, although she knew a lymph node (located under the skin in Evans' neck--approximately 1/3rd of an inch long) had been removed for Dr. C to run tests; that Dr. C made an office check-up on Evans in September, 1958; that Evans appeared to feel alright between September, 1958, and August, 1959. That Evans graduated in August, 1959, and they moved to a farm near Dalhart, Texas.

Company introduced Evans' hospital record at Beaver, Oklahoma, for the period April 7 to April 18, 1958, and called Dr. C as plaintiff's witness. Dr. C testified as to the tests and treatment of Evans; that his 'provisional' diagnosis was Hodgkins disease, but that after receiving and studying a biopsy report he concluded that Evans' condition was infectious mononucleosis, and so advised Evans; that infectious mononucleosis is a run down condition characterized by severe glandular swelling, blood count frequently out of order, tired feeling, not fatal, patients recover from it almost universally, it is a disease 'we say you treat out of a grocery store instead of a drug store.'

Dr. C further testified that he never diagnosed Evans' condition as Hodgkins disease; did not classify the removal of the lymph node as a serious type of surgery; that it was removed for a test; that Evans never saw the biopsy report, that he never discussed it with Evans; and that the biopsy report was negative as to Hodgkins' disease.

Dr. C further testified that after Evans left the hospital he saw him from time to time and that he wasn't ailing; that the swelling of the lymph nodes subsided.

Evans was feeling bad on December 24, 1959, and visited Dr. C. Dr. C concluded he had 'the flu and recommended that he...