Murphy v. Continental Cas. Co.

• Decision Date: 13 November 1972
• Docket Number: No. 9027,9027
• Citation: 269 So.2d 507
• Parties: J. C. MURPHY v. CONTINENTAL CASUALTY COMPANY.
• Court: Court of Appeal of Louisiana — District of US

Page 507

269 So.2d 507

J. C. MURPHY v. CONTINENTAL CASUALTY COMPANY.

No. 9027.

Court of Appeal of Louisiana, First Circuit.

Nov. 13, 1972.

D. Bert Garraway, and Lawrence D. Sledge, Sledge, Garraway & Sleeth, Baton Rouge, for appellant.

David W. Robinson, Watson, Blanche, Wilson, Posner & Thibaut, Baton Rouge, for appellee.

Before LANDRY, TUCKER and CUTRER, JJ.

LANDRY, Judge.

Plaintiff (Appellant) appeals a judgment rejecting his demand for $50,000.00 allegedly due him as beneficiary under a policy of health and accident insurance issued by defendant, Continental Casualty Company (Continental), covering Appellant's deceased wife, Helene M. Murphy. Pursuant to LSA-R.S. 22:657, Appellant seeks interest and attorney's fees due by virtue of defendant's failure to timely pay without just cause. Continental defended on the grounds (1) the policy was voided because of a willful misrepresentation of material fact in the application for insurance; (2) death was not 'accidental' within the meaning of the policy provisions, and (3) if death was accidental, it was caused or contributed by disease, and therefore excluded from coverage. The trial court rejected Appellee's defense of misrepresentation, but dismissed Appellant's action upon finding that Appellant failed to prove the occurrence of an accident. The trial court also held that, assuming the occurrence of an accident, plaintiff failed to meet policy provisions requiring that death result directly and independently of all other causes, and was not caused or contributed to by sickness or disease. We reverse and render judgment in favor of plaintiff.

On September 28, 1966, Mrs. Murphy, then approximately 67 years of age, applied for subject policy which provided for benefits for injury defined therein as follows:

'Injury' means bodily injury caused by an accident . . . and resulting directly and independently of all other causes in loss covered by this policy . . ..'

An exclusionary clause expressly excludes from coverage 'loss caused or contributed to by sickness or disease.'

Question 5 of the application asks: 'Have you been under observation or had medical or surgical advice or treatment during the past 5 years? (If 'yes' state type of condition, dates, duration, results, name of doctor and hospital.) The question was answered in the affirmative and the following explanation added: 'Regular Check-up: Good Health'.

Question 6 of the application inquires: 'To the best of your knowledge and belief, are you now in good health and free from physical impairment or deformity? If 'No' give full particulars?' It appears the 'No' block was first checked, the check marked out, and the 'Yes' block then checked. Defendant maintains the foregoing answers constituted misrepresentations of material facts inasmuch as decedent had considerable health problems in the preceding five years, which, had they been disclosed, would have resulted in rejection of the application for insurance.

The record discloses that as of the date of application and for many years previous, decedent was most active for a woman her age. She was daily engaged in the undertaking of hybridizing day lillies, in which endeavor she attained a degree of renown. With the aid of her maid of many years, decedent did all of the physical work necessary to raise and cultivate plants. She spent an average of 6 hours daily in her gardens, digging, planting and performing similar chores. She published a catalogue of lillies available for sale. She filled orders, packing and shipping lillies in response to mail orders from various parts of the country. She frequently attended flower shows, driving her own automobile to distant places, especially to attend day lilly conventions. In addition, she was active in church and music groups. It was because of her activities, especially her driving about the country that prompted decedent and appellant to apply for the insurance in question.

The record further discloses that decedent was suffering from mild to moderate hypertension or high blood pressure which condition antedated the application in question. For this condition, she sporadically took light medication prescribed by her son-in-law, Dr. J. S. Lucas. Although constantly reminded to take her medicine, the record discloses beyond doubt that decedent did so only when felt inclined. In 1962, decedent sustained a moderate whiplash as the result of an automobile accident. She was hospitalized for a period of about two days. The neck injury aggravated a pre-existing arthritic condition. It is conceded that in 1966, her arthritis had progressed to the point she had restricted neck motion. In addition, she had a single rather large gallstone of which condition she was aware. This condition, however, being a source of little discomfort, she rejected the suggestion that she have it surgically removed. Approximately 30 years ago, decedent underwent a spinal fusion to correct a vertebral problem. Despite this condition, her back caused her no particular problem.

On February 4, 1966, Dr. Lucas referred decedent to Dr. Charles S. Prosser, Intenist, for medical evaluation mainly because Dr. Lucas felt the opinion of a non-related doctor would have more influence upon decedent, and Dr. Lucas desired to have her advised by a disinterested doctor to take her medicine regularly and lose weight. He felt this would lead to better control of decedent's difficulties which he deemed relatively minor for a person decedent's age.

Dr. Prosser testified in essence that he hospitalized decedent for a few days at Dr. Lucas' request. Decedent related a history of early morning fatigue. Decedent related she wanted to do things, but after a few hours exertion, she was tired out. Dr. Prosser noted some evidence of mild depression. His examination and elicited history revealed hypertension for which decedent was then taking mild medication. He also noted evidence of some deafness in the patient's right ear, mild generalized muscle and joint aching, moderate backache and fusion of the 5th, 6th and 7th cervical vertabrae with elimination of the intervening spaces. Dr. Prosser also noted the rather large gallstone which appeared to be causing the patient no particular distress. Dr. Prosser advised decedent to continue taking her medicine, and consider the possibility of having her gallstone removed, otherwise for decedent to conduct herself in her normal manner which he felt she could do. At Dr. Prosser's request, decedent returned for a follow up visit on February 17, 1966, at which time the patient was advised to lose weight.

The testimony of Dr. Lucas, plaintiff, Mrs. Barbara Murphy Lucas (decedent's daughter), and decedent's maid, Pinkie Johnson, leaves not the slightest doubt but that decedent was a staunchly independent individual who complained very little, if at all, and who did not consider herself ill enough to take medicine.

After her hospitalization by Dr. Prosser, decedent returned home with the attitude that she was in good health, and that Dr. Lucas was an alarmist in referring her to Dr. Prosser. Upon her return home, decedent continued her usual activities until she suffered a stroke in 1968. Following the stroke, decedent's condition worsened . She began experiencing episodes of spontaneous projectile type vomiting, the materiality of which will appear in our subsequent discussion of the question of whether her death was accidental within the terms of the policy.

In essence, plaintiff testified that at the time the policy was applied for, both plaintiff and decedent considered decedent to be in good health. Plaintiff explained that he did so largely as the result of Dr. Prosser's diagnosis and advice that decedent continue her routine activities. He added that at that time decedent was as active as usual and made no complaints regarding her physical condition. Plaintiff stated that he and decedent explained decedent's past medical history to defendant's representative who filled out the application, and decedent then affixed her signature. Examination of the application reveals that the questions thereon were filled out in a handwriting different from decedent's signature . Defendant's representative, Mr. T. B. Beale, Jr., did not appear as a witness. It is stipulated, however, that if Mr. Beale were called to testify, he would state that he did not fill out the application.

It is clear from the testimony of defendant's underwriter, Skomra, that had plaintiff's true medical hisory been known, the application would have been rejected.

Based on the foregoing testimony, the trial court concluded the application contained misrepresentation of material facts, but that defendant failed to establish fraud or intent to deceive on the part of decedent, and declined to avoid the policy for fraud.

Subject policy provides that 'After two years from the date of issue . . . no misstatements except fraudulent misstatements . . . shall be used to void the policy or to deny a claim . . ..'

The law presently governing the effect of misrepresentation in instances of this nature is found in LSA-R.S. 22:619(B), which reads as follows:

'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 and 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.'

Defendant concedes that two lines of jurisprudence have evolved in the interpretation of the applicable statute, namely, one to the effect that materiality of a misstatement standing alone is sufficient to bar recovery; the other holding that both intent to deceive and materiality must be established for the insurer to avoid...