Robinson v. Reliable Life Ins. Co., 19245

• Decision Date: 23 June 1977
• Docket Number: No. 19245,19245
• Citation: 554 S.W.2d 231
• Parties: James D. ROBINSON, Appellant, v. The RELIABLE LIFE INSURANCE COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 231

554 S.W.2d 231

James D. ROBINSON, Appellant, v. The RELIABLE LIFE INSURANCE COMPANY, Appellee.

No. 19245.

Court of Civil Appeals of Texas, Dallas.

June 23, 1977.

Rehearing Denied Aug. 11, 1977.

Roger Turner, Dallas, for appellant.

William A. Forteith, Elliott, Churchill, Hansen & Dyess, Dallas, for appellee.

GUITTARD, Chief Justice.

The question on this appeal is whether an insurer, in order to avoid liability on a policy of life insurance on the ground of false representations in the application for insurance, must establish both that the representation was material to the risk and that the condition concerning which the representation was made contributed to the death of the insured. We hold that under Texas Insurance Code Annotated article 21.16 (Vernon 1963), a finding that the misrepresentation was material to the risk is ground for avoiding the policy without proof that the condition misrepresented contributed to the event which caused the loss.

This suit was filed by the beneficiary for the amount payable on the death of the insured, his fourteen-year-old stepson. The insurer denied liability and counterclaimed for cancellation of the policy on the ground of false representations in the application. After trial without a jury, the trial court denied liability and filed findings of fact to the effect that the application contained negative answers to questions inquiring whether the insured had been treated by a doctor within the past five years, whether the insured had any injury, illness or operation in the past five years, and whether the insured had ever been confined to a hospital or sanitorium. The court found that each of these statements was false, that each was material to the risk assumed by the insurer, that each was relied on by the insurer in issuing the policy, that the policy would not have been issued but for such statements, and that the insurer did not discover the true facts until shortly after the death of the insured. There is no evidence in the record concerning the cause of death, and the court made no finding on that question.

On this appeal the beneficiary contends that the court erred in finding that the alleged misrepresentations were material to the risk because there was no evidence as to the cause of death. The question turns on the construction of a statute, originally enacted in 1903, and now appearing as Texas Insurance Code Annotated article 21.16, as follows:

Any provision in any contract or policy of insurance issued or contracted for in this State which provides that the answers or statements made in the application for such contract or in the contract of insurance, if untrue or false, shall render the contract or policy void or voidable, shall be of no effect, and shall not constitute any defense to any suit brought upon such contract, unless it be shown upon the trial thereof that the matter or thing misrepresented was material to the risk or actually contributed to the contingency or event on which said policy became due and payable, and whether it was material and so contributed in any case shall be a question of fact to be determined by the court or jury trying such case. (Emphasis added.)

The beneficiary contends that the word "or" above emphasized should be read as "and," so that the condition misrepresented in the application cannot be considered as grounds for avoidance of the policy unless such condition was actually a cause of the loss insured against. This intent, he argues, is shown by the further provision that "whether it was material and so contributed in any case shall be a question of fact."

The statute has not been expressly so construed in any of the cases cited by the beneficiary, although several seem to adopt this construction by implication. Thus, a number of opinions appear to be based on the view that a representation is not "material to the risk" unless the condition concealed by the misrepresentation was the cause of the loss. Southern Life & Health Ins. Co. v. Grafton, 414 S.W.2d 214, 218 (Tex.Civ.App. Tyler 1967, writ ref'd n.r.e.); Trinity Reserve Life Ins. Co. v. Hicks, 297 S.W.2d 345 (Tex.Civ.App. Dallas 1956, no writ); National Life & Acc. Ins. Co. v. Dickinson, 115 S.W.2d 1180, 1183 (Tex.Civ.App. El Paso 1938, writ dism'd); First Texas Prudential Ins. Co. v. Pipes, 56 S.W.2d 203, 204 (Tex.Civ.App. El Paso 1933, writ dism'd).

We do not consider that these decisions are sound insofar as they seem to hold that a condition existing at the time of the issuance of the policy is not material to the risk unless it actually contributes to the loss. The concept of a condition material to the risk assumed by the insurer is quite distinct from the cause of the loss, as the better reasoned cases in Texas and elsewhere have recognized. Thus, there is a well-defined line of cases supporting the insurer's contention that under article 21.16 the materiality of the risk must be viewed as of the time of the issuance of the policy, rather than at the time the loss occurred, and that the principal inquiry in determining materiality is whether the insurer would have accepted the risk if the true facts had been disclosed.

The only expression by the supreme court on the point is Fidelity Union Fire Insurance Company v. Pruitt, 23 S.W.2d 681, 683-84 (Tex.Comm'n App.1930, holding approved), which involved breach of a stipulation of continued occupancy in a fire insurance policy. The commission of appeals, in remanding for a new trial, observed that if the statute in question (now article 21.16) should be applicable, and if at the time the policy was issued a disclosure that the building would remain vacant would have influenced the company in taking the risk, the stipulation that it was insured "while occupied by the...