Physicians Mut. Ins. Co. v. Savage

Decision Date21 May 1973
Docket NumberNo. 1--1272A104,1--1272A104
Citation296 N.E.2d 165,156 Ind.App. 283
PartiesPHYSICIANS MUTUAL INSURANCE COMPANY, Defendant-Appellant, v. James P. SAVAGE, Plaintiff-Appellee.
CourtIndiana Appellate Court

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.

ROBERTSON, Presiding Judge.

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:

'MR. MANN: Plaintiff's offers into evidence plaintiff's Exhibit No. 2.

MR. SULLIVAN: I am going to object to the introduction of Plaintiff's Exhibit No. 2 for the reason that it is outside the issues of this case and, further, for the reason that it has not been properly identified as to what it is nor is it stated that purpose for which it is being introduced into evidence.

MR. MANN: If the Court please, this is a statement of the condition of the Physicians Mutual Insurance Company as filed with the Insurance Commissioner of the State of Indiana as required by the statutory law of the State of Indiana and is also the most recent one filed, filed December 31, 1971, certified by the Insurance Commissioner of the State of Indiana.

THE COURT: This would be then directed toward the exemplary damages request, I assume. Well, I've got to look at it, Jim, but I am inclined to agree with you, at the present time at least, tht this would not be admissible. (our emphasis)

MR. MANN: We will hook it up.

THE COURT: Hold it then until such time as it is tied together, how's that. Then you can make your offer at that time.' 1

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:

'In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be specifically averred. Malice, intent, knowledge, and other conditions of mind may be...

To continue reading

Request your trial
22 cases
  • Rousseff v. Dean Witter & Co., Inc.
    • United States
    • U.S. District Court — Northern District of Indiana
    • June 20, 1978
    ...negligence. See, e. g., Soft Water Utilities, Inc. v. LeFevre, 159 Ind.App. 529, 308 N.E.2d 395 (1974); Physicians Mutual Ins. Co. v. Savage, 156 Ind.App. 283, 296 N.E.2d 165 (1973). Therefore, judgment will be entered for the defendant and against the plaintiff on the federal securities la......
  • Schimizzi v. Illinois Farmers Ins. Co.
    • United States
    • U.S. District Court — Northern District of Indiana
    • May 23, 1996
    ...damages of $2,000. On appeal, the punitive damages award was upheld as warranted and not excessive. In Physicians Mut. Ins. Co. v. Savage, 156 Ind.App. 283, 296 N.E.2d 165 (1973), the insurer fraudulently denied hospital and accidental death benefits on the basis of a rider that was not par......
  • State Farm Mut. Auto. Ins. Co. v. Shuman
    • United States
    • Indiana Appellate Court
    • December 22, 1977
    ...her attorney. Such conduct appears to fall within the parameters of the common law tort of fraud. Cf., Physicians Mutual Insurance Co. v. Savage (1973), 156 Ind.App. 283, 296 N.E.2d 165. We need not consider whether in fact each element of actionable fraud has been proven, however, because ......
  • Asbury v. Indiana Union Mut. Ins. Co.
    • United States
    • Indiana Appellate Court
    • October 26, 1982
    ...Words in an insurance policy should be given their plain and ordinary meaning whenever possible. Physicians Mutual Insurance Company v. Savage, (1973) 156 Ind.App. 283, 296 N.E.2d 165. As Judge Staton recited in his concurring opinion in " 'An insurance contract is prepared and drafted sole......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT