Messer v. Washington Nat. Ins. Co.

• Decision Date: 16 November 1943
• Docket Number: 46251.
• Parties: MESSER v. WASHINGTON NAT. INS. CO.
• Court: Iowa Supreme Court

11 N.W.2d 727

233 Iowa 1372

MESSER v. WASHINGTON NAT. INS. CO.

No. 46251.

Supreme Court of Iowa

November 16, 1943

Appeal from District Court, Johnson County; H. D. Evans Judge.

Dutcher Ries & Dutcher, of Iowa City, for defendant-appellant.

Messer Hamilton & Cahill, of Iowa City, for plaintiff-appellee.

MANTZ Justice.

This is an action in equity wherein Frank F. Messer, plaintiff, brought suit against the Washington National Insurance Company defendant, on a disability insurance policy held by him in said company, claiming indemnity thereunder, alleging in substance that on July 27, 1941, while said policy was in force, he suffered an injury while riding a horse. That said injury was to his abdomen and as a result thereof plaintiff was taken to a hospital where he submitted to an abdominal operation on August 6, 1941, resulting in his total disability until October 1, 1941, and in partial disability thereafter until October 15, 1941; that plaintiff notified the defendant of said accident and filed proofs; that about November 10, 1941, an authorized representative of the company called upon plaintiff, admitted its liability under the policy and represented, stated and showed plaintiff that the policy provided $100 per month for total disability, $50 per month for partial disability and $100 for an abdominal operation, and then and there stated, represented and showed plaintiff that under the terms of article VI of said policy plaintiff was entitled to $100 for total disability for one month and $100 for the abdominal operation, a total due under the policy of $200.

Plaintiff alleges that he was then unaware of the fact that because of his paying double premiums, all benefits under the policy were to be doubled and that under the admission and interpretation of defendant, plaintiff was entitled to receive $400 instead of $200. That relying on defendant's representations, statements and acts aforesaid, and due to mutual mistake and oversight on the part of plaintiff and defendant, or due to such mistake and oversight of plaintiff, and an intent to conceal, cheat and defraud on the part of defendant, plaintiff accepted a $200 check and signed a receipt and some kind of a release for the defendant; upon discovery by plaintiff of the true facts he made demand upon the defendant for the additional $200 in accordance with the terms of the policy but defendant refused, basing its action on the ground plaintiff had cashed the check and signed a release and receipt; later plaintiff discovered under the policy there was due and owing him $736.50.

Plaintiff further alleges that by the statements, acts and conduct as alleged and by other false and fraudulent statements, the defendant attempted to dispose of said claim by the payment of $200 instead of the amount actually due and to obtain a receipt and release thereof; that all was part of a plan and scheme to cheat and defraud plaintiff; that on account thereof the said plaintiff is entitled to a decree rescinding said transaction and setting aside any receipts or releases executed and to judgment for $736.50 with interest, allowing defendant a credit on such sum for the $200 already paid, and for such other relief as may be just and equitable in the premises.

Defendant answered that on July 27, 1941, plaintiff was the holder of a policy of accident insurance in its company and that during September of that year plaintiff made demand upon defendant for benefits under the policy on account of an accident on July 27, 1941; that subsequent thereto defendant caused an investigation to be made of said accident and claimed disability and operation resulting therefrom, and, pursuant to said investigation, determined that the claimed disability and operation performed upon plaintiff were not caused solely and directly by accidental means within the terms of the policy; that about November 10, a duly authorized representative of defendant company, acting in good faith upon information and belief that the claimed disability and operation upon plaintiff were not caused solely and directly by accidental means, but on the contrary were complicated by disease having no connection with the accident of July 27, 1941, denied any liability on the part of defendant for benefits as claimed by plaintiff.

Defendant further alleged that after first making demand upon the insurance company in September, 1941, and up to and including November 10, 1941, the plaintiff was claiming a sum in excess of $200 as being due him under said policy and at the time of the payment to plaintiff by defendant of the sum of $200 there was a dispute between plaintiff and defendant as to the amount due under the terms of said policy and that the sum of $200 paid to plaintiff on November 10, 1941, was paid as consideration for full and complete settlement of a claim, the amount of which defendant in good faith denied.

The defendant alleged that when the $200 was paid on November 10, 1941, as full consideration therefor, plaintiff executed and delivered to defendant a release in full of all claims, demands and causes of action under said policy, and alleged that said release and the payment of the $200 as consideration therefor released all claims and demands of the plaintiff on account of injuries claimed to have been suffered by him on July 27, 1941. A copy of said release was attached to defendant's answer and defendant prayed that the claim of plaintiff be dismissed and judgment for costs be rendered against him.

The lower court found in favor of plaintiff, ordering that the release given by plaintiff to defendant on November 10, 1941, should be rescinded, cancelled, set aside and held for naught, and plaintiff was given judgment against defendant for $716.66 less a credit of $200 with 5% interest from date of judgment. Defendant has appealed.

Some of the facts are not in dispute; in others, there is a sharp conflict. We think the record fully sustains the following:

On July 27, 1941, appellee was the holder of what is termed a "non-cancellable disability policy" issued by the Great Western Insurance Company (later assumed by defendant), which was then in full force and effect, and that by reason of the payment of double premiums appellee was entitled to double indemnities under the terms thereof; that the appellee, while in California consulted a physician concerning his condition; that upon advice of such physician he was taken to the Murphy Memorial Hospital at Whittier, California, on August 5th, and August 8th he was operated upon for an acute abscess, an abdominal incision being made; that he remained in the hospital until September 1st and remained at Whittier until September 14th or 15th, receiving regular medical attention, after which he returned to his home in Iowa City and was treated there until the wound had fully healed. He was unable to work until about October 1st, and then worked part time until October 15th, following which he worked full time. About September 17th, he wrote to appellant advising it of his injury and disability, and, upon request of appellant, on September 30th sent to appellant a personal report of his claim and on October 4th he sent a further statement in which he enclosed a statement of his attending physician and a report from the hospital. The appellant acknowledged receipt of said claim and the attached statements and advised appellee that an investigation of his claim was being made.

It further appears that on the personal report of appellee there was the following question: "What would you consider a fair settlement if made immediately and without further reports?" To this question, in his own handwriting, appellee made the following answer: "Offer of settlement on letter attached and subject to conditions stated-$275-$100 for operation fee as per policy and $175 for benefits."

The letter referred to in the above answer was dated September 30th and in it appellee refers to the offer of settlement of $275 and states that he considers it to be fair and would accept it if paid immediately and without further reports. On October 2nd, appellant acknowledged receipt of appellee's letter and the personal report relative to the appellee's claim and in such letter there is the following: "We note with interest your proposal of settlement in the amount of $275.00." In this letter appellee was advised that appellant was unable to render a decision concerning its liability under the policy without the benefit of fully completed proofs and asked for the report of the attending physician and also one from the other attending physician, and a report from the hospital. This letter concluded with the following: "If you will send in fully completed proofs on blank furnished for that purpose by the company, the matter of adjustment in accordance with your proposal will be given prompt attention in accordance with the facts and provisions of the policy." On October 4th, appellee wrote appellant enclosing a statement of the attending physician and that of the hospital, and advising that he was unable to secure the statement of the other attending physician on account of his absence. On October 9th, Schaffnit, assistant manager of appellant company, acknowledged receipt of the letter with the reports of the physician and the hospital and further stated that the company was endeavoring to complete the investigation with the least possible delay and hoped to be able to inform him concerning the acceptance of the proposal within a relatively short period of time.

It appears without dispute that on November 10, 1941 Assistant Manager Schaffnit, representative of appellant, called at the office of appellee in Iowa City, Iowa, for the purpose of talking to appellee about the...