Roosth v. Lincoln National Life Insurance Company

• Decision Date: 04 September 1959
• Docket Number: No. 17426.,17426.
• Citation: 269 F.2d 171
• Parties: Rosa Lee ROOSTH, Appellant, v. LINCOLN NATIONAL LIFE INSURANCE COMPANY, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

269 F.2d 171 (1959)

Rosa Lee ROOSTH, Appellant, v. LINCOLN NATIONAL LIFE INSURANCE COMPANY, Appellee.

No. 17426.

United States Court of Appeals Fifth Circuit.

July 30, 1959.

Rehearing Denied September 4, 1959.

Charles F. Potter and Spruiell, Lowry, Potter, Lasater & Guinn, Tyler, Tex., for appellant.

Thomas B. Ramey, Jack W. Flock, Tyler, Tex., Gordon C. Reeves, J. T. Deitschel, Fort Wayne, Ind., Ramey, Brelsford, Hull & Flock, Tyler, Tex., of counsel, for appellee.

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

CAMERON, Circuit Judge.

December 24, 1956, Dr. Harold Roosth (insured), a practicing physician in Tyler, Texas, applied to The Lincoln National Life Insurance Company (insurer) for $50,000 life insurance with appellant Rosa Lee Roosth, his wife, as beneficiary. The policy was issued on the same date after the usual medical examination and was delivered to insured soon thereafter. After paying two monthly premiums the insured died February 7, 1957, the death certificate showing as the cause of death "Sub-arachnoid hemorrhage due to ruptured aneurism." The insurer declined the beneficiary's claim under the policy on the ground that insured had made false statements and misrepresentations in his written application for the policy knowing they were false and making them with intent to deceive the insurer, claiming that said false statements and misrepresentations were material to the risk assumed by insurer and were relied upon by it and it was induced thereby to issue the policy; and that the insured was not in good health when the policy was issued and delivered to him.

This civil action brought by the beneficiary was tried before court and jury and, after prolonged deliberation, the jury reported its inability to agree upon a verdict and was discharged. Thereupon the court, after hearing argument and considering briefs, entered judgment granting insurer's motion for directed verdict based upon the averment that each of the defenses relied upon by it had been established by "the uncontradicted and/or great preponderance of the evidence." The question presented by this appeal is whether the defenses relied upon were established by evidence of such character that the court below was justified in deciding that no jury issues were presented, and that the defenses should be sustained as a matter of law; and that the insurer had not waived, or was not estopped to prevail on, its motion for directed verdict by reason of notice of facts omitted from the application it acquired prior to the issuance of the policy. A careful reading of the record and briefs convinces us that, under Texas law, the evidence required that the issues be decided by the jury and that it was error to decide them as a matter of law.

The trial below was prolonged and the record is made up largely of the testimony of nine doctors who gave their opinions based, to a large degree, upon hypothetical questions. Without doubt, there is support in the record for a jury finding in favor of the insurance company, but that is not the question which is before us. Ours is the duty to search the record to see if it contains credible evidence from which the jury would have been warranted in finding for the appellant. The opinion, therefore, will be confined largely to pointing out the evidence favorable to the appellant and the law of Texas under which, in our opinion, a case for the jury was made out.

A few fundamental facts should be kept in mind as the details are considered. The first is that Lincoln made a specialty of substandard risks and its premium charges were based accordingly. The annual premium normally applying to the policy issued to insured was $1,094 per year, while the charge made for the policy issued to him was $1,922 per year, an uprating of 74.7 per cent. The insurer knew that the doctor had had a myocardial infarction, commonly known as a coronary thrombosis, in 1948, and that the American General Insurance Company had, five years thereafter issued him a rated-up policy.¹ Insured knew that he was a permanent cardiovascular cripple and, despite his comparative youth, had cut down on his activities to protect himself from future attacks. He was inevitably heart conscious and was probably never free from a measure of anxiety and foreboding. The insurer also knew this. That occurrence was the basic ingredient of the contract between the two and the congeries of considerations attending it, the causes, the concomitants and the consequences were logically taken into account in the execution of the contract, and every act by the parties in connection with it should be interpreted in the light of this fundamental fact.

The idea of insurance originated, not with the insured, but with the insurer. The insured felt sufficiently encouraged concerning his recovery and general physical condition to go in with his brother, also a doctor, and construct a clinic, which was occupied in the year 1956. Insured was exploring the covering of the mortgage on the clinic by what was referred to as "mortgage insurance." But Lincoln's agent learned of the situation and importuned insured to purchase life insurance instead, sending in to Lincoln on Nov. 1st an inquiry whether it would be interested in writing it. The amount desired by insured was $26,000, and the application first signed by him November 10, 1956 was for a policy in that amount. The agent inserted in that application the request that an additional policy in the amount of $24,000 be issued. The physical examination by the company examiner, Dr. C. B. Young, was based upon the November 10th application. Insurer's agent, however, testified that the policy was issued on the application dated December 24th, but upon the medical examination made November 11th.

Lincoln pled affirmatively that insured willfully made false answers to specific questions asked him by the medical examiner, as set out in the footnote.² It is first complained that insured misrepresented the cause of the death of his mother. Since insured was thirteen years of age at the time of her death, it is clear that he knew nothing of the cause and the answer on his application is bound to have been the repetition of what he had heard. His brother explained that family history revealed — as the brother expressed it, they were taught — "That she died from a kidney condition resulting from childbirth." That is essentially what the death certificate showed.

The Company introduced evidence that, in 1950, insured told someone making a physical examination of him that his "mother died at 39 of cerebral vascular accident." His recollection then was no better apparently than it was when he applied for this insurance. At the time of the application he gave his mother's age at death as 40. At the time of the asserted admission against interest in 1950 he gave her age as 39. The death certificate showed that she was 45. If the answer should be considered of any consequence, the jury had a right to believe that the insured gave the best information available to him. Especially is this true when, on the same application, he showed that his father died at the early age of 62 of coronary thrombosis, and the evidence is replete with the showing that his brother was the victim of extreme hypertension for which a serious operation was performed in 1950.

Skipping over to question No. 14(a) concerning seven listed afflictions, including dizziness and headaches, there is abundant evidence that insured had never suffered from dizziness or headaches of any consequence. The evidence to the contrary can serve only to make this a jury question.

The remaining questions with respect to which the insurer claims false and fraudulent misrepresentations may be grouped, because the same evidence relates to all of them. The insured answered, in response to question 13, Note 2, supra, that he had been in two hospitals, one in 1955 and one in 1950. He did not answer that he had never been in any other such institution. Moreover, the question related only to "observation, treatment or operation." The Company's chief point about this answer is that insured had, in November, 1950, undergone a complete physical examination by the doctors of the Smithwick Clinic at Massachusetts Memorial Hospital in Boston. In that connection, the evidence showed that insured was not admitted to said institution as a patient or for treatment. His check-up was a mere incident to his trip to Boston to take his brother who was seriously ill of hypertension, and the insured merely submitted to the general examination during the time he was detained there waiting for his brother to develop enough strength for the serious operation.

The most serious admission against interest relied upon by appellee was contained in the case history which was taken from insured on this occasion. The intern taking the case history made this note: "About four years ago after discharge from army with no reservation it was noted that he had a BP of 160/100-110. He was completely asymptomatic until the middle of September, 1948, when he had two weeks of `indigestion' followed by a full blown posterior myocardial infarction. He recovered and slowly has increased his activity to 5-6 hours of work (internist) a day. Since the coronary he has ceased smoking and has been taking 150-200 mg of dicumarol every other day, following it with a prothrombintime once a week."

The physical examination then conducted showed an average lying blood pressure of 186/129, but it fell markedly after rest and, under sedation, reduced to 110/70; the testimony disclosed also that the eyes were "clear," that the heart was not enlarged, and that the electrocardiogram was normal.

In connection with this evidence it should be considered that Lincoln, in its manual of instructions to medical examiners, advised that blood pressure history beyond five years should usually be disregarded; and, as to more...