National Sav. Life Ins. Co. v. Dutton
Decision Date | 17 September 1982 |
Citation | 419 So.2d 1357 |
Parties | NATIONAL SAVINGS LIFE INSURANCE COMPANY, a Corporation v. Eula DUTTON. 80-897. |
Court | Alabama Supreme Court |
Robert H. Harris of Caddell, Shanks, Harris, Moores & Murphree, Decatur, for appellant.
A. P. Reich, II of Speake, Speake & Reich, Moulton, for appellees.
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This is an action in which damages were claimed for breach of a contract of health and accident insurance issued to plaintiff Eula Dutton by defendant National Savings Life Insurance Company (National), and the bad faith refusal by National to pay a claim made under the policy.
National denied any liability and charged that Mrs. Dutton had, in her application, materially misrepresented matters relating to her previous health condition. For this reason, National denied the claim, rescinded the policy, and returned all premiums.
The case was tried to a jury, which returned a verdict in favor of the plaintiff for $14,000. National filed a motion for new trial or, in the alternative, a judgment notwithstanding the verdict, contending:
(1) That the court erred in denying National's motion for a directed verdict on the tort claim of bad faith refusal to pay Mrs. Dutton's claim; and
(2) That the court erred in its instruction to the jury that the policy was subject to cancellation or rescission only if Mrs. Dutton intentionally or deliberately furnished false information to National in her application for insurance.
The trial court denied National's motion, and National appealed. We reverse and remand.
The policy was solicited by Wendell Eddy, Mrs. Dutton's son-in-law, who was a soliciting agent for National and other companies. In completing the application for the policy, he asked Mrs. Dutton a series of questions which appeared on the printed application form. He testified that he recorded her response to each question, one of which inquired of her whether she had ever had: "High or low blood pressure, pain in chest, varicose veins, disease of heart or circulatory system." To this she responded "no." Dr. Paul P. McCain, Decatur, was shown on the application as her physician.
After completing the application, Eddy forwarded it to National to be processed. When the policy was returned to Eddy for delivery to Mrs. Dutton, he reviewed it with her and pointed out to her the "NOTICE" contained in the policy, advising that it could be voided if the application contained incorrect information.
The policy became effective on September 20, 1977. On November 6, 1978, Mrs. Dutton, for the first time, consulted Dr. Tony Williams, a medical practitioner in Moulton. A medical history was taken by his nurse, which, according to Dr. William's testimony, included a statement that Mrs. Dutton "was having pain in her right side of her back and under the right shoulder," and this pain had been experienced "at intermittent intervals for two or three years."
At trial, Dr. Williams described the pain as radiating "from the right side around into the right upper quadrant, the lower part of the chest right upper quadrant." He also testified that, because of the vagueness of the symptoms and his being not quite sure what the cause was, he sent her to the hospital for further examination that same day.
As part of the admitting process, a further medical history was taken by hospital personnel, who are not medically trained. This hospital record contains the following entry:
Dr. Williams testified that he admitted Mrs. Dutton to the hospital and ordered laboratory tests "to rule out the cause of chest pain." He also testified, and the hospital record reflects, that the patient had some high blood pressure readings in the days following her admission to the hospital, and Dr. Williams started her on high blood pressure medication "shortly thereafter." The patient's chart contains this entry on the night she was admitted:
The patient was dismissed after several days, and the hospital discharge summary, as reflected in the record, is as follows:
Following her discharge from the hospital, a claim for benefits was filed with National by the hospital and Dr. Williams. The claim indicated that Mrs. Dutton's hospitalization was for an ulcer disease. Upon receipt of the claim, National sought and received, with Mrs. Dutton's authorization, the medical records relating to her hospitalization. After reviewing these records, the company denied the claim with the following letter:
Mrs. Dutton asked Dr. Williams to respond to this letter, which he did, he said, to document that he "was not aware that Mrs. Dutton had previous outstanding hypertension." His letter follows:
The record also discloses that subsequent to the cancellation of the policy, Mrs. Dutton was again admitted to the hospital, complaining of chest pains. When the company declined Mrs. Dutton's request to reinstate the policy, she cashed the premium refund check and filed this lawsuit.
On appeal, National presents the same two issues on which its motion for new trial or JNOV was based. It argues that the trial court erred in its instruction to the jury that the policy was subject to cancellation or rescission only if Mrs. Dutton intentionally or deliberately furnished false information in her application for insurance.
The trial court addressed the issue of National's right to cancel the policy several times in its instruction to the jury, and the following is representative of the substance of the trial court's charge:
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