Prudential Ins. Co. of America v. Perry

Citation174 S.E.2d 570,121 Ga.App. 618
Decision Date19 March 1970
Docket NumberNos. 1,3,No. 44809,2,44809,s. 1
CourtUnited States Court of Appeals (Georgia)

Syllabus by the Court

1. Absent fraud on the part of the agent taking an application for insurance, the applicant is bound by the answers which he makes to the questions and the information written in it, and this is true whether the answers and information be written by the applicant himself or by the agent.

2. (a) Where, in response to a question as to what doctors had treated the applicant during the preceding five years, information as to treatment for a serious eye condition by several specialists was not listed, and there was listed information as to treatment for childbirth, an appendectomy, routine physical, and an 'eye check-up,' there was a material misrepresentation that the listed instances were all the treatment which applicant had undergone.

(b) Ordinarily it is a jury question as to whether a misrepresentation is material, but where the evidence excludes every reasonable inference except that it was material, no issue is presented upon that point for the jury and it is a question of law for the court.

(c) Failure to list the names of specialists who have within the specified period treated the applicant for a serious condition is a concealment of material facts.

(d) The provisions of Code § 37-116 have no application to the subject of waiver as related to conditions imposing forfeitures in contracts of insurance. Consequently, the listing of a doctor who had treated the applicant for the serious eye condition with the assertion that he had been consulted on one occasion for an 'eye check-up' does not put the company on inquiry as to the facts which might have been obtained by inquiry from him.

(e) An agent can bind his principal only within the scope of his agency, and persons dealing with the agent with notice of limitation of his authority may not rely upon acts of the agent which are beyond his authority.

3. When an application for insurance is attached to and made a part of the policy it becomes a part of and a basis of the contract. If there are material misrepresentations in it the contract may be avoided upon a showing of falsity and materiality.

4. When the application is attached to and made a part of the contract a showing of reliance upon the information contained therein in the issuance of the policy is not required; since it becomes a basis for and a part of the contract reliance upon it is conclusively presumed.

5. The defendant is entitled to a judgment as a matter of law, and its motion for summary judgment should have been granted.

Bill Perry applied January 15, 1968 to Prudential for a hospitalization insurance policy to cover medical expenses that might be incurred by himself or his wife. The agent who took the application turned it in to the company's Augusta office, and it was sent to the home office. The company conducted an investigation by directing inquiry to a physician to whom she had gone for a routine check-up and received reply from him February 21, 1968 in which he stated that Mrs. Perry had been his patient since September 20, 1963 and had been in for routine examinations and had been found to be in good health, with all cancer smears negative, concluding with the assertion that 'I feel this patient is in very good health.' He gave no information about her eye trouble.

After that the policy was issued as of January 16, 1968, and released for delivery, but the actual delivery did not occur until after March 17, 1968.

When claim for Mrs. Perry's hospital expenses was made against the company it developed that she had entered the hospital March 17, 1968 for surgery to her eye and that it had been expected since early December, 1967, that she would be hospitalized for the surgery because of serious deterioration of the cornea resulting from a long history of recurring ulcers and that she had consulted and been treated by several eye specialists for it. The company denied the claim and Mr. Perry, the insured under the policy, brought suit, seeking recovery of the hospital expenses, besides penalty and attorney's fees.

The company answered, asserting that there had been a material misrepresentation and a material concealment in the application for the insurance, for that no mention of Mrs. Perry's serious eye condition was made, nor were the names of several of the specialists who had treated it listed in response to questions.

The application, attached to and made a part of the policy, carried above the applicant's signature to Part I the following: 'I hereby declare that all statements and all answers to the above questions are complete and true, and I agree that this Part I, and Part II if required by the company, and any amendment thereto, together with this declaration, shall constitute an application for insurance. I further agree that no agent has authority to waive the answer to any question in this application, to waive a condition applicable to any insurance coverage resulting from this application or any of the company's rights or requirements with respect to this application, to modify this application or to bind the company by making any promise or representation or by giving or receiving any information.'

Part II was simultaneously required, and above the applicant's signature to that appeared the following: 'I hereby declare that all the statements made and answers to the above questions are complete and true and include full particulars of each and every part of Question 2, Part II, to which the answer is 'Yes.' I agree that the foregoing, together with this declaration, shall form a part, designated as Part II, of the application for insurance.'

Depositions were taken, affidavits obtained and the company moved for summary judgment. Upon its denial a certificate of review was obtained and the company appeals.

Jones, Cork, Miller & Benton, Edward L. Benton, Macon, Fulcher, Fulcher, Hagler, Harper & Reed, J. Walker Harper, Augusta, for appellant.

Sanders, Hester, Holley, Ashmore & Boozer, Richard A. Slaby, Augusta, for appellee.


Plaintiff testified in a deposition that when the company's agent took the application he had related to the agent all of the facts and details concerning his wife's eye trouble, including the names of all doctors who had treated her for it and that the agent, who was writing in the answers as the questions were asked, simply failed to enter the information; that he had asserted the company would not require or need all of the information and that an entry that she had been seen by Dr. J. Fair in December, 1967 for an 'eye check-up' would be sufficient.

In his deposition the agent denied that Mr. Perry had given any information that was not fully reflected in the answers to the questions, and that the answers had been written as given him by the applicant. He denied having told Mr. Perry that anything less than the whole and full information would suffice.

1. It should be observed that the applicant is bound by the answers recorded on the application, whether written by him or by the agent, absent any fraud on the part of the agent in deceiving him as to what was in fact written down as answers, or in preventing him from reading and ascertaining what was written down. Boykin v. Franklin Life Ins. Co., 14 Ga.App. 666(2), 82 S.E. 60; National Accid. & Health Ins.Co. v. Davis, 50 Ga.App. 391(2), 178 S.E. 320; Curry v. Washington National Ins. Co., 54 Ga.App. 590(2), 188 S.E. 741; Id., 56 Ga.App. 809, 810, 194 S.E. 825; Rhodes v. Mutual Benefit Health & Accid. Assn., 62 Ga.App. 208, 210, 8 S.E.2d 685; Mutual Benefit Health & Accid. Assn. v. Marsh, 62 Ga.App. 425, 431, 8 S.E.2d 117; Life & Cas. Ins. Co. of Tennessee v. Davis, 62 Ga.App. 832, 834, 10 S.E.2d 129; State Farm Mutual Auto. Ins. Co. v. Anderson, 107 Ga.App. 348(1), 130 S.E.2d 144; Jessup v. Franklin Life Ins. Co., 117 Ga.App. 389(1), 160 S.E.2d 612; American Liberty Ins. Co. v. Sanders, 120 Ga.App. 1(2), 169 S.E.2d 342; Massey v. Cotton States Life Ins. Co., 70 Ga. 794; Shedden v. Heard, 110 Ga. 461(2), 35 S.E. 707; Heard v. Shedden, 113 Ga. 162(2), 38 S.E. 387; Johnson v. White, 120 Ga. 1010, 48 S.E. 426; Stillson v. Prudential Ins. Co. of America, 202 Ga. 79, 42 S.E.2d 121.

Insurance is a matter of contract, and the rules governing contracts and their making are applicable to insurance policies, including the application therefor. 'There is no greater sanctity and no more mystery about a contract of insurance than any other. The same rules of construction apply to it as to other contracts.' Clay v. Phoenix Ins. Co., 97 Ga. 44, 53, 25 S.E. 417. Thus, the rule requiring an applicant to read the application and know what is in it before signing has its roots in the rule exemplified in Hill v. Western Union Telegraph Co., 85 Ga. 425, 11 S.E. 874; Stoddard Mfg. Co. v. Adams, 122 Ga. 802, 50 S.E. 915; Truitt-Silvey Hat Co. v. Callaway & Truitt, 130 Ga. 637(2), 61 S.E. 481; Weaver v. Roberson, 134 Ga. 149, 67 S.E. 662; Lewis v. Foy, 189 Ga. 596, 6 S.E.2d 788; Thomas v. Eason, 208 Ga. 822(3), 69 S.E.2d 729; West v. Carolina Housing & Mortgage Corp., 211 Ga. 789, 89 S.E.2d 1288, and others of like tenor. Cf. Cotton States Mut. Ins. Co. v. Booth, 116 Ga.App. 410, 412, 157 S.E.2d 877. The reason for the rule is to afford opportunity to correct any error and make it truthful, for when the applicant signs the application he is bound by the answers which have been inserted to the questions, absent any trick, artifice or the like used to procure his signature to it, and especially so when the application is attached to and becomes a part of the contract. Mutual Benefit Health & Acc. Ass'n v. Marsh, 60 Ga.App. 431, 437, 4 S.E.2d 84.

Consequently, unless fraud against him appears the answers on the...

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