Metropolitan Life Insurance Company v. Fugate

• Decision Date: 28 February 1963
• Docket Number: No. 19063.,19063.
• Citation: 313 F.2d 788
• Parties: METROPOLITAN LIFE INSURANCE COMPANY, Appellant, v. Lucille L. FUGATE, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

313 F.2d 788 (1963)

METROPOLITAN LIFE INSURANCE COMPANY, Appellant, v. Lucille L. FUGATE, Appellee.

No. 19063.

United States Court of Appeals Fifth Circuit.

January 23, 1963.

Rehearing Denied February 28, 1963.

John Bell, John Arthur Jones, Knight, Bell & Jones, Tampa, Fla., for appellant.

James A. Franklin, Jr., John W. Emerson, Jr., Henderson, Franklin, Starnes & Holt, Fort Myers, Fla., for appellee.

Before RIVES, CAMERON and GEWIN, Circuit Judges.

GEWIN, Circuit Judge.

Lucille L. Fugate sued Metropolitan Life Insurance Company, a New York corporation, in the Circuit Court of Lee County, Florida, because of the refusal of the company to pay her, as beneficiary and absolute owner, the proceeds of a policy issued by Metropolitan on August 25, 1959, in the amount of $100,000.00 upon the life of her husband, Fred J. Fugate, who died on May 24, 1960, while the policy was in force. She also claimed judgment for interest and attorneys' fees, recoverable under Florida law, in addition to the full face amount of the policy. The cause was removed to the U. S. District Court for the Southern District of Florida and was tried by a jury. From a verdict and judgment in favor of Mrs. Fugate, Metropolitan has appealed.

Metropolitan admitted issuing the policy, the death of the insured during its continuance and its refusal to pay to Mrs. Fugate, the beneficiary, the proceeds of the policy; but denied the allegations that she and the insured had done and performed all and singular the matters and things required of them to entitle Mrs. Fugate to recover. In its second defense, an affirmative one, Metropolitan denied liability under the policy upon the grounds that the insured, Fred J. Fugate, had falsely answered "No" to the following 3 questions in the application for the policy:

"8(b) Have you ever used them (alcoholic beverages) to excess? If so, when and for how long?"

"5(a) Have you ever been a patient in or visited a hospital, clinic, dispensary or sanatorium for observation, examination or treatment?"

"5(f) Have you consulted any physician, healer or other practitioner within the past 5 years for any reason not mentioned above?"

As a matter of fact, it was proved at the trial by uncontradicted and unquestioned testimony that Mr. Fugate had been a patient at Lee Memorial Hospital from February 24, 1958 to March 4, 1958, and in White Cross Hospital from September 22, 1958 to October 2, 1958. He was treated for alcoholism or complaints resulting from drinking intoxicants in both hospitals.

Mrs. Fugate had applied for the policy as prospective owner and her husband as the prospective insured on April 30, 1959. The questions were answered in Part B of the application. Answers of the decedent in Part B 1 of the application were made to Dr. Vinson on May 1, 1959. The same answers were given by the decedent to Dr. Perez in Part B 2, containing the same questions, on July 6, 1959. A policy of the size in question requires two examinations. The policy was issued on August 25, 1959, and the decedent died on May 24, 1960. The policy had been in existence for a period of 9 months before death. Metropolitan alleged that when it denied liability under the policy, it tendered to Mrs. Fugate, as owner and beneficiary, the amount of $4,496.00 as reimbursement for the four quarterly premiums paid.

Dr. House testified that he saw the decedent for the first time as a patient on February 24, 1958, when he came to the physician's office and complained of a cough, fever and sweats; and admittedly he had been drinking for several days and was intoxicated at the time. The decedent informed the physician that he was prone to drink daily for about 4 to 6 weeks at a time and then he would stop and return to normalcy until he started drinking again. The pretext used for drinking was a painful back. Mrs. Fugate accompanied her husband at the time of the visit to Dr. House, who informed them both that he could not treat the decedent unless he was admitted to a hospital so that he could be attended by nurses. Mr. Fugate resisted going to the hospital, but finally agreed to go that day and he was admitted.

Dr. House diagnosed the decedent's condition as delirium tremens resulting from the fact that he was deprived of alcohol in the hospital, which produced a disturbed brain physiology resulting in hallucinations. During his stay in the hospital, the decedent was unconscious at times and thrashed about the bed in an effort to get up. He was restrained with a wide leather wristband which was fastened with a belt to the bed frame. Dr. House explained that the decedent, Mr. Fugate, thought he saw bulldozers and draglines. He was a contractor. After the delirium tremens subsided, Dr. House lectured the decedent about drinking and released him on March 4, 1958. He was in the hospital approximately 8 days on this occasion.

Dr. McEwan testified that he was the former owner of White Cross Hospital and served as its Administrator for approximately 24 years until it was closed in 1959. This hospital was used chiefly for the treatment of alcoholism. Although the hospital had closed, the records had been preserved. These records were produced and identified. They showed that the deceased, Mr. Fugate, was admitted to the hospital on September 22, 1958. On this occasion, the admission form was completed by the head nurse on duty at the time. Charts with respect to Mr. Fugate were kept by the various nurses on duty. Nurse Cox was night supervisor when the decedent was admitted and she completed the admittance history, which bore the signatures of Mr. Fugate and Dr. Holecek. Nurse Cox testified that the information on the admittance history was obtained from the patient. She stated that when another accompanied the patient on admission, she made a notation to that effect and there was no such notation on the records relating to the decedent. There was a notation on the history admission sheet reading as follows:

"Years of drinking, 30 years. Periodical, 20 years, every 304 months, Steady 304 wks."

This notation was interpreted as meaning that the patient would engage in a period of drinking every 3 or 4 months and that certain of the periods of drinking would last 3 or 4 weeks. The history sheet further showed, "History of Delirium Tremens, 6 mos. ago", and "Nightmares frequently". Under "Remarks" on the first sheet of the nurses' chart is the notation, "Has been drinking one or two fifths of whiskey a day when drinking." The succeeding pages of the chart show that the decedent was given one and a half ounces of whiskey 45 times during the first 5 days of his 10 day stay in the hospital, exclusive of his first two drinks in the amount of one and a quarter ounces each. According to Dr. McEwan, this whiskey was given to the decedent to reduce the possibility of his having delirium tremens.

Neither of these episodes was mentioned in the application for insurance, although the last episode occurred only 7 months before the decedent gave his answers to Dr. Vinson stating that he had not been in a hospital, clinic, dispensary or sanatorium for observation, treatment or examination.¹ Approximately 9 months after the last hospital visit he made like statements to Dr. Perez in July 1959. Approximately 10 months elapsed between the last hospital visit and the issuance of the policy.

William Shafer, the chief underwriter for Metropolitan, testified that if the physicians who treated the decedent or the two hospitals which he had so recently attended had been mentioned in the application, even though the nature of the diagnosis or treatment had not been given, Metropolitan would have developed the details of the cause for hospital treatment and would have contacted the doctors in question to obtain full information as to the health of the decedent; all in accordance with the rules, policies and standards of the company. Witness Shafer further testified that if the company had been unable to obtain satisfactory details, it would have declined to issue the policy. He positively testified that it was the policy of the company not to issue insurance policies to people who had been under treatment for alcoholism or drinking unless 5 years had elapsed since a "cure" and there had been no relapse in the meantime. Mrs. Fugate presented a number of reputable witnesses who were friends and business associates of her deceased husband, who testified that they did not know of his drinking to excess.

After the testimony was in, Metropolitan moved for a directed verdict on the grounds that it had proved the substantial elements of its affirmative defense by a fair preponderance of the evidence; and that there was no evidence nor any inference which reasonably might be drawn from the evidence when viewed in the light most favorable to the plaintiff which could sustain a verdict in her favor. This motion was denied and the court charged the jury.

Metropolitan excepted to the court's refusal to give its requested Instruction No. 3² which was, of course, requested after the motion for a directed verdict and which in substance instructed the jury that if it found from the evidence that the decedent knowingly concealed from the insurance company the fact that he had twice been hospitalized, as above mentioned, when application was made for the policy, their verdict should be returned for the defendant. Metropolitan then objected to the court's instruction that if the jury found that the decedent did use intoxicating beverages, but not to such an extent as to constitute excessive use thereof as defined by the court,³ then the decedent's answer in that respect would have been true and should not defeat recovery by the beneficiary. The jury found for Mrs. Fugate. Metropolitan then moved for a judgment N.O. V.; or in the alternative, for a new trial. The motion was denied. Metropolitan specifies as error the overruling of the several motions, the refusal to give Instruction No. 3,...