Prudential Insurance Company of America v. Gourley

• Decision Date: 22 May 1959
• Docket Number: No. 17431.,17431.
• Citation: 267 F.2d 156
• Parties: PRUDENTIAL INSURANCE COMPANY OF AMERICA, Appellant, v. Alma Mae Long GOURLEY, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

267 F.2d 156 (1959)

PRUDENTIAL INSURANCE COMPANY OF AMERICA, Appellant, v. Alma Mae Long GOURLEY, Appellee.

No. 17431.

United States Court of Appeals Fifth Circuit.

May 22, 1959.

Ralph B. Tate, R. Foster Etheredge, Birmingham, Ala., Spain, Gillon & Young, Birmingham, Ala., of counsel, for appellant.

Burgin Hawkins, Birmingham, Ala., for appellee.

Before HUTCHESON, Chief Judge, and CAMERON and BROWN, Circuit Judges.

JOHN R. BROWN, Circuit Judge.

William V. Long was murdered. He was found stabbed to death in his car at 5:00 a.m. June 8, 1957, in his home town of Birmingham, Alabama.

And yet, while this fact does take on some significance later, the sole questions before us arise out of the Alabama law of insurance. The possible criminal aspects have not been entrusted to us — especially as there is neither hint nor clue that the beneficiary was in any way involved.

Long had insured his life for $22,000 with the Prudential Insurance Company. He was divorced, living with his sister, Alma Mae Long Gourley, and had made her the beneficiary. Upon Long's death, Prudential denied liability except as to the $444.63 accumulated premiums and interest. She sued. She won. Prudential appeals.

Prudential has tenaciously clung to one theory throughout its unsuccessful course of initial refusal, defense, motion for new trial, motion for judgment n. o. v., and appeal. It is, quite simply, that Long did not tell the truth when he answered the questions on the application. This defense, it should be noted, is one which finds both statutory support and limitation in the Alabama Code. "No * * * misrepresentation * * * shall defeat or void the policy * * * unless such misrepresentation is made with actual intent to deceive, or unless the matter misrepresented increased the risk of loss." Ala.Code, Tit. 28, § 6 (1940).¹

Long's medical history is not really the primary source of dispute. There is no hint that his actual cause of death was in anyway related to his past medical history. And it is apparent that some items of that history were misrepresented — at least in the sense of factual inaccuracy. But it is Gourley's contention that they were minor items and misrepresented through inadvertence, forgetfulness or his own good faith belief as to their nonexistence or insignificance, and thus neither "with actual intent to deceive" nor of a nature, as to Long, that "increased the risk of loss."

Long supplied the information for the application to the Prudential examining doctor, Dr. James R. Hodges, on October 4, 1956. The items in issue are the typical ones relating to past history of indications and treatment for heart trouble, and a request to "give complete details" of all past hospital visits, and all consultations with doctors for the past five years.² He gave a negative answer to all such questions with the exception of indicating a "plastic operation on nose" in 1954 in answer to question 12. This was, therefore, a misrepresentation and omission of the fact that he had been under the care of Dr. J. L. Hillhouse when in the hospital for pneumonia February 6-9, 1956, and for what was diagnosed to be a coronary occlusion November 18-28, 1952, and at that time electrocardiograms were made. He was also examined by a Naval Reserve doctor, Dr. W. C. Parsons, on August 17, 1953. By all odds the most significant item was the failure to disclose the 1952 hospital admission for a coronary.

I. Intent to Deceive

The jury's verdict for Gourley required that they find that Long did not make this misrepresentation "with actual intent to deceive." Prudential contends that the District Court erred in its rulings, and in allowing this question to go to the jury, because such a misrepresentation demonstrates an intent to deceive as a matter of law. Of course, before this contention can be meaningfully evaluated it is helpful to examine the record to see the extent to which there was evidence on which the jury could base such a finding.

The jury may have concluded that Long's misrepresentations were due to a permanent forgetting, a temporary inadvertence, a misunderstanding, or if intentional it was without the requisite intent to deceive. Because of his apparent good health and vigor he might have thought that there had been no "indication of any heart * * * disorder." If he remembered the 1952 hospital stay it may have seemed more than five years ago. Such a conclusion, of course, would require that the 1952 occurrence be presumed to be of very little significance to Long. What basis is there for this belief? In brief, there is (1) the doctors' testimony that Long's occlusion may have been of a very minor degree, (2) Long's subsequent reference to it on one occasion, (3) his general good health, (4) his rather vigorous activity, suggesting both that (a) he must not have considered himself to have had a heart attack, and (b) a reaffirmation of his general condition of good health, and (5) his cause of death.

The medical testimony will be discussed in greater detail later in regard to the "risk of loss" point. It is sufficient to note here that the jury could have reasonably concluded from the testimony that damage from Long's coronary episode was not of a serious location or degree, that medical theory is presently unsettled as to the effect of an occlusion on life expectancy — especially in the case of a coronary of Long's type, and that anyone who carried on activities like Long must have either recovered or not suffered a very serious attack.

Although no one, apart from the medical testimony of his 1952 hospitalization, testified to ever having heard Long complain of the coronary, or shortness of breath or pain, he did report this item in giving a medical history for his nose operation in 1954: "Possible coronary occlusion 2-3 years ago." (Emphasis supplied.) Actually, of course, the occasion was but one year and eight months prior to his 1954 operation. If in July of 1954 he thought the "possible coronary" had occurred as long as three years ago, it is conceivable that two years and three months later (October 1956) he really considered it to have been over five years prior to his application, although in fact it was but four. And although the five-year period applied expressly only to Question 12, note 2, supra, the remoteness and uncertainty in Long's mind in point of time are equally relevant in regard to Question 14, note 2, supra, in determining the intent which the law requires he have in making this misrepresentation.

Three witnesses testified as to Long's physical activities after 1952. They were Earl Maglinson, the principal of Price Grammar School, Jimmy Tarrant, head football coach Phillips High School, and R. L. Long, Long's brother. Maglinson and Tarrant had been on the coaching staff at Phillips High School with Long from about 1948 to 1956. Long had been head baseball coach and a football coach at Phillips until accepting the principalship of Dupuy School in the fall of 1956, and had remained a Little League baseball coach until the time of his death. They described his general health and physical condition as "stout, strong and vigorous," and "tough." R. L. Long described him as "exceedingly strong physically." As a football and baseball coach he engaged in "rather strenuous and violent exercises." As a coach, according to Maglinson, "You have to block, you have to tackle, you have to run. You have to play football every afternoon." He slid bases for the Little Leaguers, did pick and shovel work on a baseball diamond for them, and had spent nearly all his summers outdoors painting.

Long died four years and seven months after his 1952 hospital admission. During this time there is no record of any further heart trouble. And in assaying this question of intent the jury could also properly consider that the cause of his death was "associated with a penetrating stab wound of the anterior abdominal wall, with perforation of the quadrate lobe of the liver and a massive hemoperitoneum," according to the autopsy post-mortem, and was in no way related to his prior coronary.

The jury presumably considered that this was not the case of a man with a severe and chronic heart condition misrepresenting this fact to an insurance company with the intent to deceive them into issuing him a policy they would otherwise refuse. If this was a factual issue for jury decision, we feel there was adequate basis in the record for this conclusion.

But Prudential asserts that this question of "intent to deceive" should never even have gone to the jury, and that it was wholly one of law. They have cited several cases to us for this proposition. However, none of them are really determinative of the case before us as can be seen from the following brief analysis.

(1) At the outset it may be noted that the cases urged recognize a distinction between insurance application questions calling for an expression of opinion (e. g., "have you ever had * * * any indication of any heart or blood vessel disorder?"), and one merely calling for a statement of fact (e. g., "have you consulted * * * a physician * * * during the past five years?"). Aetna Life Ins. Co. v. Bolding, 5 Cir., (Fla.), 1932, 57 F.2d 626, 627; New York Life Ins. Co. v. McCarthy, 5 Cir., (Ala.), 1927, 22 F.2d 241, 244; McSweeney v. Prudential Ins. Co., 4 Cir., 1942, 128 F.2d 660, 662.³

(2) Some of these cases dealt with diseases which the Alabama Courts have ruled "increase the risk of loss" as a matter of law. New York Life Ins. Co. v. Zivitz, 1942, 243 Ala. 379, 10 So.2d 276, 283, 143 A.L.R. 321 ("There are types of fatal maladies of which the courts take judicial knowledge, such as `tuberculosis, cancer and Hodgkin's disease,' as materially increasing the risk of loss"); New York Life Ins. Co. v. Horton, 1938, 235 Ala. 626, 180 So. 277 (Hodgkin's disease); Miller v. Metropolitan Life Ins. Co., 1925, 214 Ala. 4, 106 So. 335 (cancer); National Life & Accident Ins. Co. v....