Rossmann v. G. F. C. Corp. of Missouri, No. 40461

• Court: Court of Appeal of Missouri (US)
• Writing for the Court: GUNN
• Citation: 596 S.W.2d 469
• Parties: John ROSSMANN et al., Plaintiffs-Respondents, v. G. F. C. CORPORATION OF MISSOURI et al., Appellants-Defendants.
• Docket Number: No. 40461
• Decision Date: 04 March 1980

Page 469

596 S.W.2d 469 John ROSSMANN et al., Plaintiffs-Respondents,
v.
G. F. C. CORPORATION OF MISSOURI et al., Appellants-Defendants. No. 40461. Missouri Court of Appeals, Eastern District, Division Two. March 4, 1980.

Fortus & Anderson, Sidney Fortus, Clayton, for Old Republic Life Ins. co.

Thompson & Mitchell, James J. Raymond, Richard W. Hokamp, St. Louis, for G.F.C. Corp.

Norton Y. Beilenson, Dolgin, Beilenson & Klein, Clayton, for plaintiffs-respondents.

Page 470

GUNN, Presiding Judge.

This appeal arises out of a charge of negligence and bad faith in the processing and payment of a claim on a credit disability insurance policy. The jury verdict was in favor of both defendants, but the trial court granted plaintiff's motion for a new trial based upon, inter alia, alleged erroneous instructions. ¹ Defendant G.F.C. Corporation of Missouri (GFC) and Old Republic Life Insurance Company (Old Republic) appeal asserting, in part, that the trial court erred in not granting their motions for directed verdict. We find that defendants' motions for directed verdict should have been granted and reverse the judgment. ²

In ruling as we do, we view the evidence and reasonable inferences therefrom in the light most favorable to plaintiffs, disregarding defendants' evidence except as it aids plaintiffs' case. Hawkins v. Whittenberg, 587 S.W.2d 358 (Mo.App.1979). In so doing, we find that plaintiffs failed to present a submissible case against defendants.

On September 6, 1968, plaintiffs John and Bernice Rossmann applied for a loan at a St. Louis branch of GFC. According to Mrs. Rossmann they were advised that insurance needed to be purchased as a condition for securing the loan but they were not informed of the purpose nor nature of the insurance although Mr. Rossmann acknowledged that he executed a document: "I hereby apply to Old Republic Life Insurance Company . . . for insurance to provide monthly disability payments to the above named creditor (GFC). . . ." Of course, GFC's evidence differed mightily from the Rossmanns: they were explicitly advised that they were purchasing credit disability insurance which would not afford coverage for any pre-existing illness or condition prior to the policy date of September 6, 1968. The policy terms specifically excluded coverage for any pre-existing condition. The Rossmanns signed all documents necessary to obtain a loan from GFC for $1,104.

On September 9, 1968, three days after the loan and date of the credit disability policy, Mr. Rossmann entered a veterans' hospital on a complaint of unconsciousness, weakness and shortness of breath, and a medical impression of hysterical conversion reaction was noted. He was discharged from the hospital on October 9, 1968. Between September 9, 1967 and September 9, 1968, Mr. Rossmann was hospitalized five times with similar symptoms, and subsequent to September 9, 1968 he was hospitalized nine additional times with similar symptoms. His hospital discharge summary in October, 1968 related that the illness had commenced in September, 1967.

While her husband was in the hospital after his attack in September, 1968, Mrs. Rossmann sought to make arrangements with GFC for the repayment of the loan. At that time according to her a GFC employee suggested that a disability claim be filed under the Old Republic insurance policy. Upon Mr. Rossmann's release from the hospital in October, 1968, both Mr. and Mrs. Rossmann obtained the aid of a GFC employee in filing an application for benefits. The trial testimony was somewhat nubilous as to whether Mr. Rossmann directly acknowledged on the claim form whether he had been afflicted with his illness prior to

Page 471

taking out the disability insurance. His testimony was that he was "uncertain" whether he had personally marked the claim form indicating that he previously had the same disease for which he was seeking disability benefits. In any event the claim was submitted to Old Republic and benefit payments commenced. After five payments were made, Old Republic reviewed the claim form and concluded that the disability was as a result of an affliction possessed prior to the date of the insurance policy. Payments were stopped. GFC then urged the Rossmanns to make payments on the loan in a mordacious and bellicose manner according to the Rossmanns, including telephone calls to the Rossmanns and a letter to Mrs. Rossmann's employer. ³ GFC's efforts at collecting the outstanding balance culminated in a magistrate court action with default judgment against the Rossmanns on June 17, 1970. Writs of sequestration on Mrs. Rossmann's wages followed. ⁴ Subsequently, the Rossmanns, through an attorney, sent a second disability claim to Old Republic with a physician's statement and a statement of the insured that Mr. Rossmann had not had an affliction predating the effective date of the disability policy but that his disability first occurred on October 5, 1968. Old Reliable asserted that its initial decision to decline benefits was proper on the basis of the disclosures in the first claim application. But as a result of the second, amended claim, Old Republic allowed it and paid the balance of the loan to GFC. GFC also refunded the Rossmanns $154.00 which it collected on the loan.

This law suit followed with the Rossmanns seeking $600,000 in damages. The theory of Mr. Rossmann's action against Old Republic was predicated on the tort of bad faith in its disruption of payments based on its failure to make an independent investigation of the accuracy of the statements made in the claim form. His charge against GFC was based on the negligence of a GFC employee in inserting on the original claim form a date of illness affliction September 25, 1967 predating the insurance coverage. ⁵

Mrs. Rossmann's theory of recovery was for negligence based on a principal-agency relationship: GFC as an agent for Old Republic negligently inserted the September 25, 1967 date of previous affliction. The charge against GFC was in negligently filling out the claim form with the insertion of the September 25 date.

We believe that the Rossmanns have failed to present a submissible claim against either Old Republic or GFC. Mr. Rossmann's theory of Old Republic's tort of bad faith in...