National Life & Acc. Ins. Co. v. Blagg

• Decision Date: 12 March 1969
• Docket Number: No. B--1174,B--1174
• Parties: The NATIONAL LIFE AND ACCIDENT INSURANCE COMPANY, Petitioner, v. Mrs. Alvin BLAGG, Respondent.
• Court: Texas Supreme Court

Page 905

438 S.W.2d 905

The NATIONAL LIFE AND ACCIDENT INSURANCE COMPANY, Petitioner, v. Mrs. Alvin BLAGG, Respondent.

No. B--1174.

Supreme Court of Texas.

March 12, 1969.

Rehearing Denied April 23, 1969.

Guittard, Henderson, Jones & Lewis, O. F. Jones, III, Victoria, for petitioner.

Cullen, Mallette, Maddin, Edwards & Williams, Donald A. Edwards, Victoria, for respondent.

GREENHILL, Justice.

This is a suit upon an alleged contract of life insurance. Alvin Lee Blagg applied to the National Life and Accident Insurance Company for a life insurance policy, and at the time of his application he was issued a 'conditional receipt' for his deposit of the first premium of $8.50 on the proposed insurance. Blagg died before any insurance policy was issued. His widow brought this suit against the company to recover $10,000, the amount of the policy applied for, basing her suit on the terms of the 'conditional receipt' issued to Blagg. Trial was to a jury, and judgment was entered on the jury's verdict favorable to Mrs. Blagg. The Court of Civil Appeals reversed and remanded the cause for a new trial. 431 S.W.2d 396. The insurance company is the petitioner here, and the only point before us concerns the Court of Civil Appeals' alleged error in remanding the cause for a new trial rather than rendering judgment for the company.

Crucial to Mrs. Blagg's recovery was the question whether temporary life insurance was in effect at the time of her husband's death. The receipt involved contains the following provision:

'* * * Said deposit is received by the Company subject to the following conditions: (1) * * * Insurance under terms of policy applied for shall take effect as of date of said deposit or date of medical examination (if required), whichever shall be the later, provided that on that date Proposed Insured, in the opinion of the Company's authorized officers in Nashville, Tennessee, was insurable and acceptable under the Company's rules and practices for the Amount, Premium and Rating Class applied for.'

Blagg was required to take a medical examination. It was given by Dr. Don L. Wendt in Victoria, Texas, on July 16, 1965. The Doctor's report reflected that Blagg's blood pressure and other indications of health were normal. In response to a question on the printed 'Medical Examiner's Report' supplied to Dr. Wendt by the company, Dr. Wendt rated Blagg as a first class risk. It should be noted, however, that in filling out his written application form, Blagg stated that in 1962 he had been confined in a hospital for a general check up as required by his employer, with 'results slightly low blood pressure.'

On July 19 the doctor's report and the application form were forwarded from the company's district office in Victoria, where Blagg lived, to the company's home office in Nashville, Tennessee, where on July 21 the records were first brought to the attention of Kenneth F. Haas, an underwriting manager for the company. Mr. Haas testified that Blagg's application form together with the company's own records, which were compiled independently of any information supplied by Blagg or Dr. Wendt, showed that for three consecutive years prior to his application for insurance, Blagg had been treated for a blood pressure abnormality. The evidence shows that normal blood pressure for a man Blagg's age and size would be 140 systolic over 90 diastolic. (140/90). According to the expert testimony in the record, any reading above that level would be abnormal. The company's records reflected that in May of 1960 Blagg's blood pressure readings on separate occasions had been 160/110, 152/100, and 132/90. In 1961 it was 160/100. And as noted above, Blagg's application form showed that in 1962, he had been confined in a hospital with 'results slightly low blood pressure.'

In addition, Blagg answered 'no' to a question on the application form inquiring if he had ever had any ailment or disease of the heart. Mr. Haas testified, in effect, that Blagg's negative response to the question, in conjunction with the company's own records and Blagg's admission that he had been confined in a hospital in 1962 with a blood pressure problem, raised a question in his mind concerning the reliability of Blagg's representation that he had never had an ailment or disease of the heart.

On the basis of the foregoing evidence, Haas testified that on July 21, the day Blagg's application and the company's records were first brought to his attention, he formed an opinion that Blagg was not insurable on the date of his medical examination, July 16, for the plan, classification, and rate applied for. For the purpose of determining whether Blagg would be insurable at a Higher rate, Haas testified that on that same date, July 21, and again on August 6, the company's medical director in Nashville wrote a letter at Haas's direction to Dr. Wendt in Victoria, requesting him to re-examine Blagg with specific instructions to inquire for any history or symptoms of abnormal blood pressure, and to record his blood pressure again on two different days with Blagg in a sitting position. A urine specimen was also requested to be forwarded to the home office for a laboratory analysis. Dr. Wendt was also requested to ascertain whether Blagg had ever been treated for hypertension, and if so, for how long and what medication or treatment he had received.

The July 21 letter to Dr. Wendt also contained the notation, 'Applicant has history of high blood pressure, 160/110, and treatment.' This circumstance corroborates the testimony of Haas to the effect that the company was aware before Blagg's death that he had a history of high blood pressure, and had determined him to be uninsurable at the standard rate for that reason. Dr. Wendt acknowledged having received the two letters requesting additional information, but due to a misunderstanding between Dr. Wendt and the Victoria office as to the procedure to be followed, Blagg was never re-examined by Dr. Wendt; and, as a consequence, neither the Nashville office nor Haas ever received the additional information requested. Blagg died suddenly of a heart attack on August 14, 1965. The company's home office was first notified of Blagg's death by a letter dated August 18, 1965, and his application for insurance was declined shortly thereafter. The company denied liability under the conditional receipt to Mrs. Blagg, the beneficiary, and this suit resulted.

As expressed by this Court in United Founders Life Ins. Co. v. Carey, 363 S.W.2d 236 (1962), conditional receipts such as the one presently before us provide for temporary life insurance; and the insurance is to be effective on the date of completion of the applicant's medical examination If in the opinion of the company's authorized officers he was on that date insurable and acceptable according to the terms of the receipt.

Thus, a beneficiary can prove that the temporary insurance provided by the receipt was in force when the applicant died by obtaining a fact finding that in the opinion of the officers of the insurance company the applicant was insurable and acceptable on the date of the completion of his medical examination. Even if the opposite finding is made by the jury, I.e., the opinion was formed that the...