Physicians Mut. Ins. Co. v. Savage
Citation | 296 N.E.2d 165,156 Ind.App. 283 |
Decision Date | 21 May 1973 |
Docket Number | No. 1--1272A104,1--1272A104 |
Parties | PHYSICIANS MUTUAL INSURANCE COMPANY, Defendant-Appellant, v. James P. SAVAGE, Plaintiff-Appellee. |
Court | Court of Appeals of Indiana |
James E. Sullivan, Cox, Zwerner, Gambil & Sullivan, Terre Haute, C. Wendell Martin, Bredell, Martin & McTurnan, Indianapolis, for defendant-appellant.
Hansford C. Mann, Mann, Mann, Chaney, Johnson & Hicks, Terre Haute, for plaintiff-appellee.
This action was brought by plaintiff-appellee, James P. Savage, as the executor of the Estate of Ruby L. Brown, to recover on a hospital expenses and accidental death insurance policy. The policy was issued to Mrs. Brown by the defendant-appellant, Physicians Mutual, on July 28, 1968, and by way of a rider attached thereto, accidental death benefits of $10,000 were extended for an additional premium. On January 5, 1971, at which time the policy and rider were in effect, Mrs. Brown was fatally injured while operating an automobile. A blood-alcohol test, taken shortly thereafter, revealed that Mrs. Brown had a .21 per cent alcohol in her blood stream at the time of the accident.
The hospital expenses policy issued to the decedent contained the following provision: 'This policy does not cover any loss caused by or resulting from . . . (6) mental disorder, alcoholism or drug addiction.' The foregoing provision was not included in the accidental death benefit rider which did, however, provide that the rider was: '. . . subject to the provisions of the policy to which it is attached that are not in conflict with the rider provisions.'
Subsequent to Mrs. Brown's death attorney James Savage, as the executor of Mrs. Brown's estate, notified that insurance company of the death of its insured, and requested the necessary claim and proof of death forms. After various correspondence between the insurance company and Savage, John Hudson, an agent of Physicians Mutual, appeared at Savage's office on May 12, 1971. Hudson related to Savage that Mrs. Brown had a blood alcohol content of .21 per cent at the time of her death and that under the terms of a rider, which Hudson misrepresented was a part of Mrs. Brown's policy, coverage was excluded due to Mrs. Brown's intoxication. The rider which Hudson exhibited to Savage contained the following exclusion:
'Injury sustained in consequence of the Insured's being intoxicated or under the influence of any narcotic unless administered on the advice of a physician.'
Hudson offered to settle Savage's claim for $1,000 which was not accepted. The rider exhibited by Hudson was left in the possession of Savage and was subsequently introduced into evidence. At the time of his meeting with Hudson, Savage was unaware of any difference between the rider shown to him by Hudson and that which was actually attached to Mrs. Brown's policy.
Savage's complaint alleged, inter alia, that on behalf of the estate of Mrs. Brown he was entitled to recover the face value of the rider of $10,000 and that he was further entitled to exemplary damages for the insurance company's wrongful and willful denial of its contractual obligations. The case was tried to the court without a jury, which resulted in a judgment that Savage recover $10,108.17 from Physicians Mutual on the insurance contract and in addition thereto the further sum of $50,000 as exemplary damages. The trial court found, among other things, that:
'. . . defendant through its agents and employees knowingly perpetrated a fraud upon the plaintiff in substituting another contract of insurance for the contract of insurance entered into herein and claimed denial of insurance coverage for accidental death.'
From its overruled motion to correct errors, Physicians Mutual groups the various assigned errors into four major arguments:
1. The court erred in holding that there was coverage under the policy and rider;
2. the court should have granted a new trial because of unavoidable surprise to Physicians Mutual because of the absence in the complaint of allegation of fraud;
3. the decision of the trial court is contrary to law, and,
4. the court's award of punitive damages was excessive.
In addressing our decision Physicians Mutual's first argument, that of whether or not the 'alcoholism' rider prevented recovery on the policy, we are of the opinion that Physicians argument is without merit. The words in an insurance policy should be given their plain and ordinary meaning whenever possible. Sitzman v. National Life & Accident Ins. Co. (1962), 133 Ind.App. 578, 182 N.E.2d 448, O'Meara v. American States Insurance Company (1971), Ind.App., 268 N.E.2d 109. Alcoholism is defined as 'continued excessive use of alcoholic drinks': Webster's Seventh New Collegiate Dictionary. There is an absolute dearth of evidence in the record which would tend to show any pattern of alcoholism on the part of the decedent. Physicians Mutual's argument, that death obviously resulted from a state of intoxication, falls far short of a showing that the decedent continually and excessively used alcohol.
Physicians Mutual takes the position that it was denied a fair trial 'because of surprise when (Savage) offered evidence of alleged fraud on the part of (Hudson) in the absence of any allegation in the complaint of the alleged fraudulent conduct.' We do not agree that surprise existed.
The fifth rhetorical paragraph of Savage's complaint alleged:
'The plaintiff is entitled to exemplary damages as (sic) result of defendant's wrongful and wilful denial of its contractual obligations.'
The prayer for relief also asks for 'exemplary damages as the court deems proper . . ..' Physicians Mutual specifically denied the above quoted paragraph in its first paragraph of answer. Savage filed a trial brief at the commencement of the trial which discussed fraud and exemplary damages. In addition, the following colloquy took place prior to the calling of any witnesses in the case, namely:
We cannot say, as a matter of law, that Physicians Mutual was unaware of the impending quest for exemplary damages.
Physicians Mutual also argues that fraud was not plead in accordance with TR 9(B), IC 1971, 34--5--1--1, which states:
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