Schneider v. Washington Nat. Ins. Co.

• Decision Date: 27 January 1968
• Docket Number: No. 44946,44946
• Parties: George L. SCHNEIDER, Appellee and Cross-Appellant, v. WASHINGTON NATIONAL INSURANCE COMPANY, Appellant and Cross-Appellee.
• Court: Kansas Supreme Court

Page 798

437 P.2d 798

200 Kan. 380

George L. SCHNEIDER, Appellee and Cross-Appellant, v. WASHINGTON NATIONAL INSURANCE COMPANY, Appellant and Cross-Appellee.

No. 44946.

Supreme Court of Kansas.

Jan. 27, 1968.

Syllabus by the Court

1. Where the truth of statements in an application for a health and accident insurance policy, or the facts as to the making of such application, are in dispute the questions involved are for the determination of a jury.

2. An insurer waives reliance on statements contained in an application for insurance where insurer's agent fills in the application without propounding any of the questions to insured, or to any authorized agent or representative of insured.

3. The fact that an applicant, or his authorized representative, signs an application for insurance in good faith without reading it is not such negligence as would render him liable for an agent's mistake in inserting false answers therein.

4. Under the provisions of G.S.1961 Supp. 40-2205(C) the test of the materiality of a false statement, in an application for health and accident insurance, is whether it could reasonably be considered to be material in affecting the insurer's decisions as to whether or not to enter into the contract, in estimating the degree or character of the risk, or in fixing the premium rate thereon.

5. Generally an insured is bound by an application signed by his authorized agent.

6. Where it does not affirmatively appear that a question raised on appeal was presented to and determined by the trial court, this court does not consider it on review.

7. A supplemental pleading under the provisions of K.S.A. 60-215(d) is a mere addition to or continuation of an original pleading and must relate to the same cause.

8. The purpose and propriety of summary judgments under the provisions of K.S.A. 60-256, and the rules applicable thereto, are considered and applied.

Gerald Sawatzky, Wichita, argued the cause, and L. J. Bond, and Robert M. Bond, El Dorado, and George B. Powers, John F. Eberhardt, Stuart R. Carter, Robert C. Foulston, Malcolm Miller, Robert N. Partridge, Robert M. Siefkin, Richard C. Harris, Donald L. Cordes, Robert L. Howard, Charles J. Woodin, Mikel L. Stout, Benjamin C. Langel, Phillip S. Frick, Jerry G. Elliott, and John E. Foulston, Wichita, were with him on the briefs, for appellant and cross-appellee.

Fred R. Vieux, Augusta, argued the cause and was on the brief, for appellee and cross-appellant.

KAUL, Justice:

This is an action to recover disability benefits under a health and accident insurance policy. The controversy stems from admittedly false answers to several questions in the application for insurance. The case was tried to a jury on the sole question whether plaintiff-appellee was disabled as a result of an accident. In a special verdict the jury found plaintiff totally disabled. Other issues were determined by the trial court in ruling on motions for summary judgment filed by both parties.

The defendant-insurer appealed, and the plaintiff-insured filed a cross-appeal from an order of the trial court denying plaintiff's motion to amend his petition by adding an additional cause of action for damages for 'rough shadowing' by a private detective firm hired by defendant.

The principal points raised by both parties on appeal are aimed at pretrial rulings of the trial court which in effect overruled defendant's motion for summary judgment and sustained that of plaintiff as to all issues except that of plaintiff's disability.

Pertinent facts necessary for our disposition of the issues pertaining to the motions for summary judgment are gleaned from interrogatories and discovery depositions reproduced in the voluminous record.

Plaintiff, George L. (Lorenzo) Schneider, and his brother, Frank Schneider, owned and operated the Schneider Bros. Feed and Grain, Inc., in Augusta, Kansas. The business was incorporated with 100 shares of stock outstanding. Each of the brothers owned forty-nine shares, their mother and sister owned the two remaining shares. Frank was president and George treasurer of the corporation. The two brothers, as partners, were also engaged in some farming operations.

In May of 1960, Robert H. Bridewell, a local agent of defendant, called on the Schneider brothers to solicit insurance. He talked with both brothers in the office of their grain business. In the course of the conversation Schneiders told Bridewell they once had policies with defendant but allowed them to lapse. The brothers also informed Bridewell they each had a problem of ulcers and inquired if they could get policies without an ulcer exclusion. Bridewell told them the company would not issue policies under those circumstances without an exclusion for ulcers. The brothers said they would not take policies under those circumstances and that ended the conversation about insurance on this occasion. After the May conference with the Schneiders, Bridewell attended a company convention and learned the previous underwriting policy had been changed and the company would now allow agents to take applications for the 'Income Protector' policy on a rated basis on an impaired risk. Bridewell testified that, on learning of the company's change in underwriting policy in this regard, he again thought of the Schneider brothers as prospects.

On July 17, 1960, Bridewell again called on the Schneiders. There is a sharp disagreement as to what took place at this meeting. Bridewell says that after some discussion concerning the premium ratings, under which the policy would be written if purchased, he proceeded to fill out applications for both brothers. Bridewell states that he specifically inquired of plaintiff and inserted on the application form the answers obtained, which proved to be false. Plaintiff on the other hand, states the application was filled in by Bridewell without any consultation with or interrogation of plaintiff and even claims the application was filled out by Bridewell without plaintiff's knowledge. Plaintiff's brother, Frank, in an affidavit attached to plaintiff's motion for summary judgment, denies supplying any of the information to Bridewell pertaining to the false answers.

The sharp conflict, as to the taking of the applications by Bridewell, has persevered throughout the entire, lengthy course of this controversy and, except by inference drawn from the trial court's rulings at pretrial conferences, remains unresolved. Bridewell says that after he had filled out the application forms, plaintiff indicated some hesitancy as to whether he wanted the policy after all. At this juncture Bridewell left the unsigned, but otherwise completed, application forms in the Schneider office, and as he departed told the brothers he would return the next day. On the following day Bridewell returned to the Schneider office. He saw Frank but not the plaintiff. Frank told Bridewell they had decided to take the insurance and had signed the applications. Frank gave Bridewell a check for the first month's premium with the applications. Bridewell then dated the applications, witnessed the signature, took the check, and sent the applications in to the company to see, as he testified, if it would issue the policies. Both policies were issued and Bridewell delivered plaintiff's policy, with the application attached, on September 13, 1960.

The signature affixed to the application is as follows:

'Schneider Bros. Grain & Feed Inc.

'/s/ George L. Schneider, Tres.

'Signature of Applicant

'Witnessed by

'/s/ Bob Bridewell

'Agent 4103-42 Code or D. No.'

In his pretrial deposition, plaintiff denied the signature was his, and claimed he didn't know the policy was being applied for. He testified that later he gave a check to Bridewell for the balance of the premium, necessary to bring the policy up to the renewal date.

It is conceded that the signature was not plaintiff's. Defendant takes the position that plaintiff's brother, Frank, signed the application and was so authorized by plaintiff. Plaintiff's position is not clear for it appears that he has neither affirmed nor denied his name was signed by Frank. Generally an insured is bound by an application signed by his authorized agent. (12 Appleman, Insurance Law and Practice, § 7306, pp. 428-430; 29 Am.Jur., Insurance, § 724, p. 984.) If an agent is unauthorized a principal should promptly repudiate his unauthorized acts. (Will v. Hughes, 172 Kan. 45, 238 P.2d 478; and Isaacs v. Jackson Motor Co., 108 Kan. 17, 193 P. 1081.)

Plaintiff stated that Bridewell delivered the policy but that he did not look at it or the application. In this connection plaintiff was questioned and he answered as follows:

'Q. Do you remember my question? Did you ever say to Mr. Bridewell 'there were wrong answers to this application'?

'A. No, I never read the application.

'Q. Did you ever write Washington National and tell them you didn't sign the application and the answers therein were wrong?

'Q. Did you ever go ahead and inform them of that fact?

'A. No.

'Q. When Mr. Bridewell brought the policy out why didn't you say to him: 'I didn't want that, I didn't sign that application, I don't want it'?

'Q. Why didn't you say that to him?

'A. It never entered my mind. I don't know why I didn't say it.

'Q. To the contrary, you went ahead and wrote a check for the rest of the premium, didn't you?

'A. That's right.

'Q. Did your brother have authority from you, as your agent to execute this application and request the insurance from the Washington National?

'A. We had a verbal agreement, whatever he done was all right and whatever I done was all right.

'Q. So your answer is 'yes'?

'A. If we made a deal that was a loss, we shared the loss.

'Q. Your answer would be 'yes' that he had authority?

'A. Verbal authority.'

On October 24, 1960, plaintiff made application to defendant for monthly benefits. Defendant commenced paying plaintiff disability benefits of $400 per month, effective as...