Omaha Nat. Bank v. Manufacturers Life Ins. Co.

• Court: Nebraska Supreme Court
• Writing for the Court: BOSLAUGH, McCOWN, and HASTINGS, JJ., and BRODKEY, J., Retired, and RIST; BOSLAUGH
• Citation: Omaha Nat. Bank v. Manufacturers Life Ins. Co., 213 Neb. 873, 332 N.W.2d 196 (Neb. 1983)
• Decision Date: 01 April 1983
• Docket Number: No. 82-130,82-130
• Parties: OMAHA NATIONAL BANK, Trustee for Raymond C. Cutchall, Appellant, v. The MANUFACTURERS LIFE INSURANCE COMPANY, Appellee.

Page 196

332 N.W.2d 196

213 Neb. 873

OMAHA NATIONAL BANK, Trustee for Raymond C. Cutchall, Appellant, v. The MANUFACTURERS LIFE INSURANCE COMPANY, Appellee.

No. 82-130.

Supreme Court of Nebraska.

April 1, 1983.

Syllabus by the Court

1. Jury Instructions. In instructing a jury, the trial court is not required to define language commonly used and generally understood.

2. Jury Instructions. The meaning of an instruction and not its phraseology is the important consideration. An inadvertent grammatical error in an instruction is harmless error if it is clear from the instruction itself and the other instructions given that the jury was not confused or misled by the error.

3. Jury Instructions. When the trial court does not give verbatim requested instructions but does adequately instruct regarding the issues upon which the requests are made, it is not error to refuse the proffered instructions.

4. Fraud. Where one party to a transaction induces the other party to enter into it by willful misrepresentation, he cannot escape liability for his fraud by showing that such party could have investigated the representations made and would then have found that they were untrue.

5. Fraud. Contributory negligence is generally not a defense to deliberate, active, or willful fraud.

6. Fraud. A person is justified in relying upon a representation in all cases if it is a positive statement of fact and if an investigation would be required to discover the truth.

7. Fraud. The fact that inquiries were made elsewhere which did not disclose the falsity of the representations is no defense.

8. Insurance: Fraud. An insurer may justifiably rely on the insured's representations unless to do so would be so utterly unreasonable, in the light of the information open to it and of its skill or experience, that its loss is its own responsibility.

9. Depositions. If only part of a deposition of a witness is offered in evidence by a party, an adverse party may require him to introduce all of it which is relevant to the part introduced, and any party may introduce any other parts relevant to the issues and not introduced.

10. Rebuttal Evidence. The admission of rebuttal testimony is largely within the discretion of the trial court.

John F. Thomas and William F. Hargens of McGrath, North, O'Malley & Kratz, P.C., Omaha, for appellant.

Raymond M. Crossman, Jr., of Crossman & Norris, Omaha, for appellee.

BOSLAUGH, McCOWN, and HASTINGS, JJ., and BRODKEY, J., Retired, and RIST, District Judge.

BOSLAUGH, Justice.

The plaintiff bank as trustee is the primary beneficiary of a life insurance policy issued to Raymond C. Cutchall, the insured, by the defendant insurer on March 23, 1976. Cutchall died on August 13, 1977, during the contestable period of the policy. This action was brought on December 10, 1979, to recover the proceeds of the policy.

It is undisputed that the premiums due under the policy were paid and the only issue is whether the defendant was entitled to rescission because of false representations made by the insured in the application for the policy. The premiums paid by the insured, together with interest, were paid into court by the defendant on January 15, 1980.

The record shows that on October 5, 1972, the insured consulted Dr. Thomas J. Gurnett concerning pain underneath his breastbone, which radiated into his shoulders and upper arms. Dr. Gurnett examined the insured and made a number of tests, including an electrocardiogram (EKG). The EKG showed evidence of a prior coronary thrombosis or myocardial infarction. Dr. Gurnett told the insured that he had experienced a heart attack, and prescribed nitroglycerin as a short-term vasodilator and also longer term and more persistent dilation medicine. Dr. Gurnett advised the insured that his heart disease would be an ongoing problem.

In October 1975 the insured submitted an application for additional life insurance to The Guardian Life Insurance Company. Guardian offered to issue a policy to the insured at an increased premium because of evidence that the insured had high blood pressure. The insured then submitted applications to Business Men's Assurance Company and the defendant.

While the application to Business Men's Assurance Company was pending, the application to the defendant was accepted and the policy was then issued to the insured by the defendant.

The jury returned a verdict for the defendant, and judgment was entered on the verdict. The plaintiff has appealed. The principal issue on the appeal involves justifiable reliance, that is, whether the defendant was entitled to rely upon the statements made by the insured in the application for the policy. The plaintiff contends the evidence does not support the verdict and that certain of the instructions to the jury were erroneous. The plaintiff also contends the trial court erred in permitting the defendant to offer portions of a deposition and in refusing to allow the plaintiff to offer portions of another deposition.

In determining whether the evidence is sufficient to support the verdict, the evidence must be viewed in the light most favorable to the defendant, all questions of fact must be resolved in its favor, and it is entitled to the benefit of every inference that may reasonably be deduced from the evidence.

It is undisputed that the application submitted to the defendant by the insured on February 4, 1976, contained the following questions and answers: "SO FAR AS YOU KNOW HAVE YOU EVER HAD ANY DISTURBANCE OF: ... 4. The HEART, BLOOD VESSELS such as--(c) Chest discomfort, angina or heart disease?" "No"; ... "(e) Have you had any electrocardiograms, when, why, result?" "Yes"; "4E)--4-16-75--Routine phys. WNL."; "4E)1-14-76--Ins. physical." ... "12. So far as you know have you had any illness or injury in the last 5 years not mentioned above?" "No." ... "14. (a) Have you had any operation, treatment, hospital care or medical examination during the last 5 years not mentioned above?" "No."

The statements made on the application which were material to the risk were clearly false. The insured concealed the fact that the EKG by Dr. Gurnett in 1972 disclosed a prior heart attack and coronary artery disease, for which he had received medication.

The evidence is that the defendant relied upon the false statements in the application. If the defendant had known the truth concerning the heart disease of the insured, it would have requested additional information and would not have issued the policy or would have offered a policy at a much higher premium.

The insured died on August 13, 1977, of cardiac arrest as a consequence of an acute myocardial infarction.

The plaintiff contends that the defendant's failure to properly investigate the information available to it precluded justifiable reliance upon the false statements made by the insured.

In addition to the application submitted by the insured, the defendant required that a "heart chart" be completed by a local physician, including an EKG which was made on January 14, 1976. The examination was made by Dr. David Jasper, the personal physician of insured, and the chart was completed by him. The insured did not consult Dr. Gurnett after February 23, 1973, and did not advise Dr. Jasper of Dr. Gurnett's diagnosis and treatment for his previous difficulty.

The insured reported a negative history of heart disease on the chart submitted to the defendant. In a letter to the defendant dated February 27, 1976, Dr. Jasper stated that the insured was in "excellent health" except for a brief occurrence of high blood pressure.

The application submitted by the insured, together with the other medical evidence submitted to the defendant, was reviewed by Dr. Paul Aggett, a cardiovascular and peripherovascular surgeon, who is the associate medical director for the defendant. Dr. Aggett testified that he relied on the answers to the health questions in the application, and the heart chart submitted by Dr. Jasper. He interpreted the January 14, 1976, EKG supplied by Dr. Jasper as being "within normal limits."

Much of the evidence concerns the interpretation of the January 14, 1976, EKG. Several cardiologists called as expert witnesses by the plaintiff testified that the EKG was "abnormal" and indicated a prior myocardial infarction. These witnesses varied in their testimony as to how positive or apparent the abnormality was shown, and all conceded that the interpretation of an EKG is a matter of opinion about which experts may differ. The evidence further shows that it is possible for a person to have a normal EKG although having suffered a prior heart attack. The evidence also shows that an EKG may be influenced by many factors extraneous to the condition of the patient's heart.

The most that can be said regarding the interpretation of the EKG of January 14, 1976, is that the evidence was conflicting and presented a question of fact for the jury. The jury resolved the conflict in favor of the defendant, and the evidence supports that finding.

The evidence shows that insurance companies can obtain information on applicants for insurance from two sources. The Medical Information Bureau (MIB) is a centralized information bank for medical information collected by member insurance companies. Equifax is a company which investigates applicants.

The defendant requested information on Cutchall from MIB on two occasions. The first time was after the application had been received. The second request was made after Cutchall had asked to increase the coverage. Neither response indicated that Cutchall had heart disease. The defendant did not subscribe to a service whereby MIB would provide followup information.

After Cutchall's death the defendant requested an Equifax investigation. The report revealed information concerning Cutchall's heart condition which was in Equifax's files at the time the policy was issued.

The plaintiff argues that the trial court improperly...