Occidental Life Ins. Co. of Cal. v. Nichols

• Decision Date: 31 October 1957
• Docket Number: 6 Div. 772
• Citation: 266 Ala. 521,97 So.2d 879
• Parties: OCCIDENTAL LIFE INSURANCE COMPANY OF CALIFORNIA v. Fred W. NICHOLS.
• Court: Alabama Supreme Court

Page 879

97 So.2d 879

266 Ala. 521

OCCIDENTAL LIFE INSURANCE COMPANY OF CALIFORNIA v. Fred W. NICHOLS.

6 Div. 772.

Supreme Court of Alabama.

Oct. 31, 1957.

Count A of the complaint is as follows:

'Plaintiff claims of the defendant the sum of Nineteen Hundred Thirteen and 80/100 ($1,913.80) Dollars due on a policy whereby the defendant on, to-wit, the fourteenth day of November, 1951 insured the life of the plaintiff for the sum of Thirty Five Thousand ($35,000) Dollars, and in said policy agreed to pay to the plaintiff a monthly income equal to One (1%) Per Cent of the amount of said sum, if the plaintiff, after paying at least one full annual premium and before default of the payment of any subsequent premium and before attaining the age of Sixty (60) years, should become permanently and totally disabled as the result of injury or disease so as to be wholly unable to engage in any occupation or to perform any work for compensation or profit. Plaintiff further alleges that said policy further provided that such total disability shall be presumed to be permanent after the plaintiff has been continuously totally disabled for not less than four (4) months and was during all that period wholly prevented from engaging in any occupation or performing any work for compensation or profit by cause or causes other than death, and that said monthly payments were to be made beginning four (4) months after the date of the commencement of such disability and on the same day of each month thereafter during such disability. And plaintiff avers that after paying at least one full annual premium and before default in payment of any subsequent premium and before attaining the age of sixty (60) years, the plaintiff became so totally disabled on, to-wit, July 4, 1952 so as to be wholly unable to engage in any occupation and perform any work for compensation or profit and the plaintiff was continuously so totally disabled during the months of to-wit, July, August, September, October, November, December of 1952 and the first part of January, 1953, and plaintiff avers that although the plaintiff has furnished due proof thereof to the defendant, yet the defendant has failed to pay the monthly income that was due him during the period from to-wit, July 4, 1952 through January 4, 1953 amounting to the sum of Seven Hundred ($700.00) Dollars. Plaintiff further alleges that on, to-wit, November 14, 1952 and while the plaintiff was so totally disabled, as aforesaid, the plaintiff paid to the defendant the second annual premium on said policy amounting to the sum of One Thousand Two Hundred Thirteen and 80/100 ($1,213.80) Dollars and plaintiff alleges that by virtue of the terms and provisions of said policy the defendant waived all payments of premiums on said policy falling due during the continuance of the disability hereinabove described, which payment of said premium the defendant has failed or refused to waive and has failed to refund to the plaintiff upon demand. Hence this suit.'

Spain, Gillon & Young, Frank M. Young and S. R. Starnes, Birmingham, for appellant.

Sirote, Permutt, Friend & Friedman, Birmingham, for appellee.

GOODWYN, Justice.

Appellee, Fred W. Nichols, brought suit against appellant, Occidental Life Insurance Company of California, to recover disability benefits ($350 per month for two months) and return of a premium paid ($1,213.80) as provided for in a policy of insurance issued to him by the appellant. A jury verdict was rendered in favor of plaintiff and a judgment thereon was duly entered. The defendant's motion for a new trial being overruled, it brought this appeal.

The policy sued on provides for payment of $35,000 on death of the insured and disability benefits of $350 per month for permanent and total disability. There is a provision in the policy that a disability shall be considered permanent and total after it has continued for four months, with no benefits being allowed for the first four months. The claim in this suit is for two months' disability following the four months' waiting period.

The complaint, as last amended, consisted only of Count A, which will be set out in the report of the case. Defendant's demurrer to the amended complaint being overruled, it entered a plea in short by consent. The primary defenses relied on were the general issue and fraud and misrepresentation on the part of plaintiff in his application for the insurance.

The principal factual issue revolves around the answer to a question in the application. Plaintiff answered 'No' to the following question: 'Have you ever had any of the following diseases or symptoms? * * * Mental derangement or any nervous disease?' The evidence discloses that he had been confined to a hospital in Birmingham on two separate occasions in 1938. The original diagnosis by his doctor at that time showed that he was suffering from manic depressive psychosis, a mental disease. However, some time thereafter, the doctor changed his diagnosis to 'an anxiety reaction,' terming it a 'gastric neurosis.' There is a conflict in the evidence as to when this was done and as to whether it was properly made. Apparently, the jury believed the change was made other than for purposes of the trial.

There was conflicting medical testimony as to the symptoms of manic depressive psychosis, how closely these symptoms matched those of plaintiff during his 1938 illness, and as to the probability of recurrence of the disease.

There is no evidence that plaintiff knew, prior to the trial, that he had ever been diagnosed as suffering from manic depressive psychosis. He testified he had been told by his doctor that the 1938 illness was hyperinsulinism.

Subsequent to that illness, plaintiff applied for and received several policies of insurance from other companies, all of which were introduced in evidence in this case. In applications for the earlier of these other policies plaintiff answered questions to the effect that he had had a nervous disorder in 1938. In this connection, it was stipulated by defendant that prior to receipt of plaintiff's application, it was in possession of coded information furnished it by the Medical Information Bureau on August 18, 1943, that plaintiff had, within '3-4-5 years' prior to that time, suffered an attack of 'neurasthenia or nervous prostration'; and that 'this information was in the knowledge of the defendant company at the time the defendant's policy number 2505161 [the policy sued on] was issued.' It was also virtually uncontroverted that plaintiff's 1952 illness had no relation to that in 1938.

From the summer of 1952, and into the winter of the following year, plaintiff was in several hospitals and received treatment from several doctors. He suffered severe headaches, throat aches, some fever, stomach cramps, loss of appetite, loss of weight, diarrhea and muscle wasting. It appears to be undisputed that he was permanently and totally disabled during this period and that, unless the claimed misrepresentation by him is a bar to recovery, he is due the disability payments sought in this suit.

A doctor for defendant examined plaintiff prior to and in connection with issuance of the policy involved in this case. In filling out the part of the application dealing with plaintiff's medical history the doctor took information from prior examination records which he had made in connection with his examination of plaintiff for insurance with other companies. Those records did not disclose any prior nervous or mental disease. Plaintiff signed the application but did not read it.

Defendant demurred to the complaint taking the point, among others, that it does not show plaintiff was permanently totally disabled as the result of an accident or disease. The argument is that the policy provides for disability payments during 'permanent total disability of the insured' while the complaint alleges only 'that plaintiff became so totally disabled on, to-wit, July 4, 1952 so as to be wholly unable to engage in any occupation and perform any work for compensation or profit and the plaintiff was continuously so totally disabled during the months of to-wit, July, August, September, October, November, December of 1952 and the first part of January, 1953.'

It seems to us, from a consideration of all the allegations of Count A, that it sufficiently alleges the insured's permanent total disability. It first sets out that the insurer agreed to pay a monthly income to the plaintiff 'if the plaintiff * * * should become permanently and totally disabled as the result of injury or disease so as to be wholly unable to engage in any occupation or to perform any work for compensation or profit.' It then alleges that the policy provides 'that such total disability shall be presumed to be permanent after the plaintiff has been continuously totally disabled for not less than four (4) months and was during all that period wholly prevented from engaging in any occupation or performing any work for compensation or profit by cause or causes other than death.' It then alleges that 'plaintiff became so totally disabled on, to-wit, July 4, 1952 so as to be wholly unable to engage in any occupation and perform any work for compensation or profit and the plaintiff was continuously so totally disabled during the months of to-wit, July, August, September, October, November, December of 1952 and the first part of January 1953.'

There seems to be no question about the right to disability benefits under the policy being dependent upon the insured's permanent total disability nor that the complaint must show that insured is permanently totally disabled, within the meaning of those terms as used in the policy. It is our view that Count A sufficiently alleges the insured's permanent total disability. The policy expressly provides that a total disability shall be presumed to be permanent after a continuous total disability for not less than four months. The...