Nolden v. Mutual Ben. Life Ins. Co.

• Decision Date: 01 November 1977
• Docket Number: No. 75-636,75-636
• Parties: Glenna J. NOLDEN, Respondent, v. MUTUAL BENEFIT LIFE INSURANCE COMPANY, Appellant.
• Court: Wisconsin Supreme Court

Page 75

259 N.W.2d 75

80 Wis.2d 353

Glenna J. NOLDEN, Respondent, v. MUTUAL BENEFIT LIFE INSURANCE COMPANY, Appellant.

No. 75-636.

Supreme Court of Wisconsin.

Submitted on Briefs Oct. 5, 1977.

Decided Nov. 1, 1977.

Syllabus by the Court

Mutual Benefit Life Insurance Company, defendant-appellant, appeals from a judgment awarding Glenna J. Nolden, plaintiff-respondent, the sum of $11,989.60, pursuant to the provisions of a life and medical insurance contract issued by the defendant to Ronald A. Nolden, her deceased husband. Trial was to a jury.

The plaintiff has filed a notice of review with respect to that portion of the judgment limiting medical expense recovery to $1,989.60. This issue was presented to the trial court on stipulated facts and briefs.

Cross & Wagner, Baraboo, for appellant.

Hill, Quale, Hartmann, Bohl & Evenson, Baraboo, for respondent.

CONNOR T. HANSEN, Justice.

The defendant issued Nolden a group health and life insurance contract based upon an application executed by Nolden on August 15, 1971. The contract provided for payment of medical expenses and $10,000 in death benefits. The insured died February 11, 1972, at the age of twenty-six, following open-heart surgery. The defendant contends that the deceased insured made erroneous or inaccurate statements as to his health condition in his application for insurance which increased the risk or contributed to the loss as a matter of law; that the trial court erred in not directing a verdict; and that we should therefore reverse the judgment.

An issue is also raised as to whether Russell Greenwood was an agent of the defendant, and whether because of Greenwood's knowledge of the insured's medical history, the defendant has waived its right to avoid the policy, or is estopped from doing so because of such knowledge by Greenwood.

The plaintiff's motion of review requires consideration of the trial court's determination in regard to certain medical expenses. This issue involved additional medical expenses in the amount of $7,572. Medical claims of this amount were not timely filed against the decedent's estate. The trial court held that the estate was not "legally required" to pay the claims and hence they were not medical expenses payable under the items of the insurance contract.

I.

No one can contend that the insured did not have a serious heart problem. The fact that he died at the age of twenty-six years following open-heart surgery attests to this fact. This is also well supported by the medical records offered and received during trial.

The following three questions on the insured's application for group life and medical insurance were answered "No."

"3. Have you . . . consulted or been treated by a physician, surgeon or other practitioner in the past five years?

"4. Do you . . . contemplate having, or have you . . . had in the past five years, any surgery, treatment, observation or routine examination in any clinic, hospital, sanitarium or health resort?

"5. Do you . . . have any physical impairment or deformity or reason to believe you are not in sound physical condition?"

Defendant argues that Ronald Nolden made misrepresentations in applying for insurance which increased the defendant's risk, as a matter of law, and that this question should not have been submitted to the jury. The trial court disagreed, however, and gave the jury the following special verdict question:

"Did the insured, Ronald Nolden, give an inaccurate or erroneous answer, or answers, to questions 3, 4 or 5 in his application for insurance?"

The jury answered the question, "No."

In Zillmer v. Miglautsch, 35 Wis.2d 691, 699, 151 N.W.2d 741, 745 (1967), this court discussed the standards which determine whether a case should be taken from the jury and a verdict directed for a party. There the court said:

"In determining whether or not the trial court was in error in failing to direct the verdict, this court must take that view of the evidence which is most favorable to the party . . . against whom the verdict was sought to be directed . . . If there is any evidence to sustain a defense or a cause of action, the case must be submitted to the jury . . . The weight and sufficiency of the evidence is for the jury . . . as is the weight to be given to the witness' positive or negative testimony . . . Furthermore, it is basic that the credibility of the evidence and the inferences to be drawn therefrom are matters for the jury . . . If there is any evidence other than mere conjecture or incredible evidence to support a contrary verdict, the case must go to the jury . . . Incredible evidence is evidence in conflict with the uniform course of nature or with fully established or conceded facts. . . ." (Citations omitted.)

Furthermore, a verdict will be directed:

" . . . only when the evidence gives rise to no dispute as to the material issues or only when the evidence is so clear and convincing as reasonably to permit unbiased and impartial minds to come to but one conclusion." Smith v. Pabst, 233 Wis. 489, 491, 288 N.W. 780, 781 (1940), citing Rusch Sentinel-News Co., 212 Wis. 530, 533, 250 N.W. 405 (1933).

If a question is properly for the jury, the jury's verdict will not be disturbed if any credible evidence fairly admits of an inference supporting the verdict. Zweifel v. Milwaukee Automobile Mut. Ins. Co., 28 Wis.2d 249, 254, 137 N.W.2d 6 (1965); Ide v. Wamser, 22 Wis.2d 325, 331, 126 N.W.2d 59 (1964). This is particularly true when the verdict has the approval of the trial court, as is the case here. Metcalf v. Consolidated Badger Co-operative, 28 Wis.2d 552, 137 N.W.2d 457 (1965). The evidence will be viewed in the light most favorable to the verdict. Brunette v. Dade, 25 Wis.2d 617, 131 N.W.2d 340 (1964).

From these authorities it is apparent that the defendant must sustain a heavy burden of persuasion. The grounds for avoiding an insurance policy on the basis of misrepresentation are prescribed by sec. 209.06(1), Stats. 1973, ¹ which provides:

" . . . No oral or written statement, representation or warranty made by the insured or in his behalf in the negotiation of a contract of insurance shall be deemed material or defeat or avoid the policy, unless such statement, representation or warranty was false and made with intent to deceive, or unless the matter misrepresented or made a warranty increased the risk or contributed to the loss."

Under this provision, a policy may be avoided if an insured's statement (1) was false and made with intent to deceive; (2) increased the risk; or (3) contributed to the loss. Kreklow v. Miller, 37 Wis.2d 12, 19, 154 N.W.2d 243 (1967). Defendant does not argue that the alleged misstatements were made with an intent to deceive, but rather that they increased the company's risk. The defendant further argues that, under sec. 209.06(1), Stats., the applicant's motives and state of mind are irrelevant.

There can be no dispute that the answers given to the application questions do not accurately reflect the medical facts about Nolden. However, there is a substantial conflict in the testimony on critical facts, and the issue cannot be resolved as a matter of law.

In 1957, when he was twelve, Nolden had been diagnosed as having a heart murmur caused by a congenital heart lesion or defect. In 1965, x-rays had revealed some enlargement of the heart and liver, indicating a back flow of blood into one of the chambers of the heart or a strengthening of the heart muscle to counteract the defect.

In March, 1967, Nolden was hospitalized for an appendectomy. Before surgery, x-rays were taken and an electrocardiogram performed. These tests showed massive cardiac enlargement; a shunt, or "short-circuit" of the flow of blood; moderate myocardial disease; increased pulmonary vascularity; abnormal triggering of the heartbeat; and the previously diagnosed congenital heart disease. Nolden was not advised of these medical findings. He was told that the tests were to examine his heart and lungs to determine whether he could safely undergo appendectomy surgery. He was advised that his pre-existing heart condition remained, but that it was not expected to interfere with surgery. His attending physician, Dr. Melvin F. Huth, who first diagnosed the heart murmur when Nolden was twelve years of age and had been his physician during the intervening years, testified that from what Nolden was told, he may have understood his condition to be a heart murmur and may also have understood that a congenital heart defect was the same thing as a heart murmur.

Nolden had no subjective symptoms of his condition prior to December 16, 1971; was never placed on any restrictions and took no medication as a result of it. It did not interfere with his normal activities or physically manifest itself in any way. He led an active life; worked long hours at strenuous work as a self-employed carpet installer; was an avid sportsman and hunter; and regularly snowmobiled and water-skied. He had landscaped around his home, planting trees and digging a pond; was seldom sick and appeared to be in excellent physical condition.

In June, 1971, Russell Greenwood, an employee-trainee of the James O'Hearn insurance agency and a longtime friend of the Noldens, contacted them to sell them insurance. At Greenwood's suggestion, they applied for life and health insurance coverage from another insurance company. In taking the application, Greenwood inquired about Ronald Nolden's medical history. Nolden said that he had had a heart murmur as a child but that it had never bothered him and that he had never been treated for it. He also told Greenwood that he had had an appendectomy in 1967. The plaintiff testified, and Greenwood did not deny, that Greenwood then said that it was not necessary to report the appendectomy, because it had been performed nearly five years previously. This insurance company requested that Nolden have a physical examination, but he told Greenwood h...