Roberts v. National Liberty Group of Companies

• Decision Date: 13 August 1987
• Docket Number: No. 4-86-0784,4-86-0784
• Citation: 111 Ill.Dec. 403,159 Ill.App.3d 706,512 N.E.2d 792
• Parties: , 111 Ill.Dec. 403 Dolores A. ROBERTS, Individually and as Administrator of the Estate of Paul W. Roberts, Deceased, Petitioner-Appellee, v. NATIONAL LIBERTY GROUP OF COMPANIES, Administrator for Veterans Life Insurance Company, Respondent-Appellant.
• Court: United States Appellate Court of Illinois

Page 792

512 N.E.2d 792

159 Ill.App.3d 706, 111 Ill.Dec. 403

Dolores A. ROBERTS, Individually and as Administrator of the Estate of Paul W. Roberts, Deceased, Petitioner-Appellee, v. NATIONAL LIBERTY GROUP OF COMPANIES, Administrator for

Veterans Life Insurance Company, Respondent-Appellant.

No. 4-86-0784.

Appellate Court of Illinois,

Fourth District.

Aug. 13, 1987.

William L. Townsley, Sebat, Swanson, Banks, Garman & Townsley, Danville, for respondent-appellant.

M. Eugene Wright, Wright Law Offices, Danville, for petitioner-appellee.

Justice WOMBACHER delivered the opinion of the court:

In Spring of 1982, Plaintiff Paul Roberts called Defendant Veteran's Life Insurance Company (administered by National Liberty Group of Companies) in response to a television ad. Mr. Roberts applied for a $30,000.00 life insurance policy which was only available to individuals under the age of 60 years. Mr. Roberts' original application, submitted prior to his 60th birthday was either lost or misplaced by the defendant insurance company. A second application exists which is signed by Mr. Roberts and his wife Dolores under the date of April 7, 1982. A notation on the application indicates receipt by the defendant's mailing room of November 23, 1982. The parties stipulated that the application and the policy itself were backdated so that the 60 year limitation of insurance liability could be avoided. The issued policy was backdated to April 11, 1982. Mr. Roberts' sixtieth birthday occurred in April of 1982.

On the insurance application, Mr. Roberts had reported that he had been treated for an ulcer; however, he marked "no" on the question of treatment for high blood pressure. In fact, the record indicates that in 1979 and 1980 Mr. Roberts was tested for blood pressure at the office of his family physician, Dr. Hetherington. Various readings were slightly elevated, and eventually medication was prescribed in June 1979. No testing appears from December of 1980 through May of 1982. According to the defendant's corporate records, a call was made to the Roberts' residence on November 23, 1982, asking about the prior treatment for ulcers. There had been no surgery for the ulcers and no current medication.

Cancer was diagnosed in Mr. Roberts in October of 1982, and he died of cancer on June 5, 1983. A claim was duly processed by Mr. Roberts' wife, Dolores (listed beneficiary), at which time the defendant denied the claim and mailed Mrs. Roberts a premium refund check totaling $818.62.

Mrs. Roberts was appointed Administrator of her husband's estate by the circuit court of Vermilion County, IL. She filed suit against the defendant demanding the $30,000.00 together with interest thereon. The trial court found for the plaintiff.

Upon appeal the defendant contends that the false answer on the application regarding high blood pressure treatment constituted a misrepresentation which allows them to avoid the policy. Additionally, the defendant asserts that the failure to disclose the cancer prior to the policy being issued allows them to avoid the policy.

Under Illinois law, a false statement in an application for insurance is not in itself a ground for avoiding the insurance policy. The insurer must prove that the statements were made with intent to deceive or involved matters materially affecting the acceptance of the risk. (Ill.Rev.Stat.1985, ch. 73, par. 766.) The statute is to be read in the disjunctive and an insurer need not show both the materiality of the misrepresentation and an actual intent to deceive, but satisfies its burden if it establishes either a material misrepresentation or an intent to deceive. Campbell v. Prudential Ins. Co. of America (1958), 15 Ill.2d 308, 155 N.E.2d 9.

A "misrepresentation" is a false representation of a material fact by one party to an insurance contract to the other party, tending directly to induce the other party to enter into a contract of insurance. (Jung v. Siegal (1942), 314 Ill.App. 67, 40 N.E.2d 840.) The trial court, as the factfinder, found that the evidence of previous medical attentions, the method of completing the form and the disclosure of the ulcer condition, required a finding of lack of intent to deceive. The trial court's findings are presumed to be correct. (Gillespie v. Gillespie (1966), 70 Ill.App.2d 38, 216 N.E.2d 462.) We agree with the trial court. The omission in reporting the high blood pressure does not reflect a concerted effort to deceive the insurance company when viewed in light of the totality of the circumstances. Furthermore, Mr. Roberts' doctor believed the elevated pressure was slight and was technically stress-related hypertension rather than a physical condition constituting high blood pressure.

Still, a misrepresentation could void the policy if it materially affected the acceptance of the risk or the hazard assumed by the company. (Ill.Rev.Stat.1985, ch. 73, par. 766. Safeway Insurance Co. v. Duran (1979), 74 Ill.App.3d 846, 30 Ill.Dec. 652, 393 N.E.2d 688.) Again, we sustain the trial court's determination that the misrepresentation did not materially affect the acceptance of the risk or the hazard assumed by the defendant insurance company.

Incomplete answers, or failure to disclose material information in response to a question in an application may constitute a material misrepresentation. (Stone v. Those Certain Underwriters at Lloyds (1980...