MFA Mutual Insurance Company v. Dixon

• Decision Date: 20 July 1965
• Docket Number: No. 1866.,1866.
• Citation: MFA Mutual Insurance Company v. Dixon, 243 F. Supp. 806 (W.D. Ark. 1965)
• Parties: M.F.A. MUTUAL INSURANCE COMPANY, a Corporation, Plaintiff, v. Roy DIXON, Administrator of the Estate of William Kenneth Dixon, Deceased, Lula Snyder and Elva L. Hamilton, Defendants.
• Court: U.S. District Court — Western District of Arkansas

243 F. Supp. 806

M.F.A. MUTUAL INSURANCE COMPANY, a Corporation, Plaintiff, v.Roy DIXON, Administrator of the Estate of William Kenneth Dixon, Deceased, Lula Snyder and Elva L. Hamilton, Defendants.

No. 1866.

United States District Court W. D. Arkansas, Fort Smith Division.

July 20, 1965.

Crouch, Blair & Cypert, Springdale, Ark., for plaintiff.

Charles W. Atkinson, Murphy & Burch, Carlos Hill, Fayetteville, Ark., for defendants.

JOHN E. MILLER, Chief Judge.

In this action commenced December 17, 1964, the plaintiff, M.F.A. Mutual Insurance Company, seeks a declaratory judgment under 28 U.S.C.A. § 2201 as to its rights and liabilities under a contract of liability insurance issued by it to William K. Dixon, now deceased.The plaintiff is a corporation organized under the laws of the State of Missouri with its principal place of business at Columbia, Missouri.The defendantRoy Dixon, the Administrator of the Estate of William Kenneth Dixon, deceased, is a citizen and resident of Washington County, Arkansas.The defendantsLula Snyder and Elva L. Hamilton are citizens and residents of Washington County, Arkansas.

In its complaint the plaintiff alleged that it issued a policy of liability insurance, No. XXXXXXXXX, to William Kenneth Dixon, covering a 1960 Oldsmobile, upon the representation in the insured's application that he had never been arrested for any offense or convicted in any court; that the insured was involved in an automobile accident April 9, 1964, which resulted in his death.That the defendantsLula Snyder and Elva L. Hamilton, passengers in the car driven by the decedent, instituted suit against the defendantRoy Dixon, Administrator of the Estate of William Kenneth Dixon, deceased, in the Washington County Circuit Court on September 2, 1964.That the plaintiff would not have issued the policy to the decedent but for the representations in the application that he had not been arrested or convicted of any offense.That the answers in the application were false in that the deceased had been convicted of numerous offenses, including driving while under the influence of intoxicating liquors, and that this representation was material to the risk.The defendant prayed that it be relieved of any duty to defend the suit against the estate of the insured in the Washington County Circuit Court and that this court enter a declaratory judgment determining the rights and liabilities of the plaintiff and that the policy be declared void and unenforceable and of no effect because of the misrepresentations by the insured in his application for the policy.

The defendantRoy Dixon, Administrator of the Estate of William Kenneth Dixon, deceased, in his answer generally denied the allegations of the plaintiff in its complaint, but admitted that the deceased was in an accident on or about April 9, 1964, which resulted in his death and admitted that the defendants Snyder and Hamilton had filed suit against him, as Administrator, in the Circuit Court of Washington County, Arkansas.The Administrator further stated in his answer that the policy in question is based upon an application of December 30, 1963, and that the plaintiff had already undertaken and agreed to defend the action pending in the Washington County Circuit Court.The defendant Dixon, Administrator, by counterclaim prayed for judgment against the plaintiff for damages to the automobile in the sum of $1,545.00 and medical payments in the sum of $500.00; that demand had been made upon plaintiff for these benefits under the policy, which plaintiff has refused to pay, and therefore the defendant prays that he recover $2,045.00 plus his attorney's fee and 12 percent penalty; all other substantive allegations of the plaintiff not specifically admitted as heretofore set out are denied.

Plaintiff in its reply of January 27, 1965, to the answer of Dixon and counterclaim, generally denies the allegations contained in the answer and asked the same relief as recited above in its complaint.

On February 4, 1965, the individual defendants Snyder and Hamilton filed their separate answer in which they admitted filing suit against Roy Dixon as Administrator of the Estate of William Kenneth Dixon, but otherwise allege that they are without knowledge as to any allegations of either the plaintiff or the defendant Dixon and pray that the complaint be dismissed as to them.

On June 16, 1965, the case was tried to the court without the intervention of a jury, the parties appearing by their respective attorneys.Ore tenus and documentary evidence, including stipulations of facts, were introduced.At the conclusion of the trial the case was submitted to the court and taken under advisement with leave granted to the parties to submit briefs in support of their respective contentions, which have been received and considered by the court.The case is now ready for disposition upon the pleadings, exhibits, stipulations and evidence introduced at the trial.

The following facts are established by the evidence and of which there is no substantial dispute.The deceased, William Kenneth Dixon, applied to the plaintiff's agent, Troy Hightower, of Springdale, Arkansas, May 3, 1963, for liability insurance policy covering a 1959 Chevrolet, Bel Air, four-door automobile.The application which was signed by the deceased contained several questions.The plaintiff's agent, Hightower, elicited the answers to the questions from the applicant and inserted the answers himself in the blanks.The application contains the following questions and answers which are pertinent:

"6.Has applicant or any driver EVER a. Been insured under the Assigned Risk Plan?No b. Been refused, cancelled or declined auto insurance or given notice of intention to refuse, cancel or decline insurance?No If yes give month and year -- c. Had any auto accidents?No d. Been arrested for any offense or convicted in any court?No e. Had any license suspended or revoked?No f. Had high school driver training?No "7.Does applicant or any driver a. Have any physical impairment?No b. Use to any extent any alcoholic beverages or drugs?No" At the conclusion of the agent's questioning the applicant and inserting his answers in the proper blanks, the deceased signed the application and the agent also signed the application and forwarded it to the plaintiff.Subsequently, the plaintiff executed a policy upon the application.

On December 30, 1963, the deceased made application to the plaintiff through its agent, Troy Hightower, for a change and substitution of a 1960 Oldsmobile in place of the Chevrolet, at which time he reaffirmed the answers to the questions in the application for coverage of the Chevrolet as heretofore set forth.

On April 9, 1964, the deceased was involved in an automobile accident in Washington County, Arkansas, as heretofore referred to in connection with the action commenced against his Administrator by the individual defendants, Snyder and Hamilton.After demand was made upon the plaintiff to defend the suit, it declined and tendered the premiums to the deceased's estate on the grounds that the deceased insured in his application had fraudulently represented facts material to the risk.

The fundamental consideration in determining the plaintiff's rights, duties and liabilities under the policy is whether or not the plaintiff has proved that the insured made false representations in his application for the policy, and, if they were in fact false, whether or not the plaintiff's evidence tendered to establish this is competent.

The issues as the court views the record are: (a) whether or not the insured, William Kenneth Dixon, made fraudulent material representations in his application of May 3, 1963; and (b) the admissibility of the criminal convictions of the deceased in various municipal courts for the offenses of reckless driving and driving while under the influence of intoxicating liquors.The plaintiff in its brief contends that the representations by the deceased that he had not been arrested or convicted are material to the risk.The plaintiff further contends that it would not have issued the policy had the deceased truthfully answered question 6(d) in his May 3, 1963, application and questions A and B at the bottom of his application for substitution of automobiles on December 30, 1963.The defendantRoy Dixon, Administrator, contends (1) that the application, although containing statements that the deceased had not been arrested or convicted of any offense, was not material to the risk for the reason that the policy was not issued solely on the basis of this application because the insured had carried numerous policies in the past with the same insurer and it was not therefore a stranger to the insured; and (2) that the plaintiff has failed to establish by competent evidence that the representations in the application were fraudulent.

DEAD MAN STATUTE

The defendants objected to the proffer of the testimony of all witnesses with respect to transactions concerning the insured deceased.The defendants predicated this objection upon Schedule § 2 of the Arkansas Constitution, known as the Dead Man Statute, which provides that in actions by or against executors, administrators or guardians, neither party to the action shall be allowed to testify against the other as to any transactions with or statements of the deceased unless called by the opposing party.The statute, of course, is narrowly construed.In Mosley v. Mohawk Lumber Co.(1916), 122 Ark. 227, 183 S.W. 187, relied upon by the plaintiff, the administratrix of the estate sought recovery for the death of the intestate alleged to have been caused by the negligence of the lumber company.The administratrix objected to the proffer of the testimony of the manager of the corporate defendant relative to the directions given by him to the deceased regarding the operation of a train which injured the deceased.The Supreme...