Southards v. Central Plains Ins. Co.

• Decision Date: 08 June 1968
• Docket Number: No. 45063,45063
• Citation: 201 Kan. 499,441 P.2d 808
• Parties: Bruce T. SOUTHARDS, Appellant, v. The CENTRAL PLAINS INSURANCE COMPANY, Incorporated, Appellee.
• Court: Kansas Supreme Court

Page 808

441 P.2d 808

201 Kan. 499

Bruce T. SOUTHARDS, Appellant, v. The CENTRAL PLAINS INSURANCE COMPANY, Incorporated, Appellee.

No. 45063.

Supreme Court of Kansas.

June 8, 1968.

Syllabus by the Court

1. Provisions in a health insurance policy which exclude liability for sickness or disease originating prior to the effective date of the policy are valid and enforceable.

2. Where an insurer seeks to avoid liability under its policy on the ground that the circumstances fall within an exception set out in the policy, the burden is on the insurer to establish the facts which bring the case within the specified exception.

3. It is the general rule that the origin or inception of a sickness or disease, within the meaning of a health and accident policy requiring that sickness and disease be contracted after the effective date of the policy, is that point in time when the disease becomes manifest or active or when there is a distinct symptom or condition from which one learned in medicine can diagnose the disease.

4. Knowledge of his condition on the part of one afflicted with a disease is not essential to establish the existence or date of origin of the disease.

5. Where the evidence in a case stands undisputed and is of such a character that candid and dispassionate persons could not reasonably arrive at differing or opposite conclusions, the matter becomes one of law for determination by the court.

6. The record is examined in an action to recover on a health and accident policy and for reasons appearing in the opinion it is held the trial court did not err in setting the jury's verdict aside and in entering judgment for the defendant.

E. Dexter Galloway, Hutchinson, argued the cause and was on the brief, for appellant.

John F. Hayes, Hutchinson, argued the cause, and Robert J. Gilliland and Victor D. Goering, Hutchinson, were with him on the brief, for appellee.

FONTRON, Justice:

Bruce T. Southards, herein referred to as Bruce or plaintiff, is a young man who purchased an automobile on a conditional sale contract. In the course of his dealings for the car, Bruce was sold a single premium, non-renewable health and accident policy with defendant, Central Plains Insurance Company, Inc., to secure the payments due on the car. This type of policy, we understand, is known to the trade as credit insurance. The premium for the policy, together with finance charges, a life insurance premium, etc., were added to the face of the contract and the tidy sum which resulted was payable at $72.25 per month for 40 months.

The policy bears date of 27 September, 1965. Later that same fall, Bruce was treated for anemia and in November was given a blood transfusion. After a second transfusion in the first week of January, 1966, Bruce was told by his doctor he had glomerulonephritis, more commonly known, and much more easily pronounced, as Bright's disease. On February 2, 1966, Bruce became totally disabled from that disease and we have been advised that he has since undergone a kidney transplant.

Demand was made on the insurance company for payment of $72.25 per month during the period of disability, as called for in the policy. Payment was refused on the ground that plaintiff's illness was contracted prior to the policy date and hence was not covered. This action followed.

Trial was had to a jury, which returned a verdict in plaintiff's favor. The trial court subsequently set the verdict aside and entered judgment for the defendant notwithstanding the verdict. Hence this appeal by plaintiff.

As we have said, the issue is whether the disability is covered under the policy. The policy provisions germane to this lawsuit are two:

1. 'The Debtor is insured * * * against loss of time resulting directly and independently of all other causes from sickness first contracted after the effective date of this Policy.'

2. Exceptions:

'The insurance under this Policy does not cover any disability: * * * (5) where the sickness or disease was contracted prior to the effective date of the Policy.'

The contentions of the litigants can be stated briefly. Plaintiff maintains that since disability did not occur until after the policy was issued, the sickness or disease, whichever glomerulonephritis may be termed, did not originate, or was not contracted, until after the effective date of the policy. On the other hand, defendant argues that although disability did not ensue until after the policy date, the disease was present at the date of issuance in such a stage as to be manifest to one versed in medical science.

Provisions contained in insurance policies covering sickness which exclude or limit liability in case of sickness or disease originating before a certain date are valid and enforceable. (29A Am.Jur., Insurance, § 1156, p. 303; Mutual of Omaha Ins. Co. v. Walley, 251 Miss. 780, 781, 171 So.2d 358.) Our court has held, however, that when an insurer seeks to avoid liability on its policy on the ground the circumstances fall within some exception contained in its policy, the burden is on the insurer to prove the facts which bring the case within the specified exception. (Braly v. Commercial Casualty Ins. Co., 170 Kan. 531, 227 P.2d 571.) The Braly decision accords with general principles customarily applied by tribunals where action is brought on contracts prepared by the insurer.

Although the precise question posed by the divergent views of the present litigants has never before squarely confronted us in its present form, courts of other jurisdictions have had occasion to deal with the question directly. A decided majority, acknowledging the principle expressed in Braly, adhere to the rule that the origin of a sickness or disease, within the meaning of a health and accident policy, is that point in time when it is manifest to a person learned in medicine from symptoms or other physical conditions that the illness or disease exists. We think the rule is well expressed in 53 A.L.R.2d 689:

'It is generally recognized that provisions in a health or hospital insurance policy requiring that the illness or disease from which the assured suffers originate a specified time after the date of the policy to be within the policy coverage are strictly construed against the insurer, and the illness, disease, or disability will ordinarily be deemed to have its inception when it first becomes manifest or active or when there is a distinct symptom or condition from which one learned in medicine can with reasonable accuracy diagnose the disease.'

To like effect are general statements of the law found in 29A Am.Jur., Insurance, § 1156, p. 303 and 10 Couch On Insurance 2d, § 41:814, p. 639.

In American Ins. Co. of Texas v. Brown, 203 Okl. 407, 222 P.2d 757, the Oklahoma Court, in construing a policy which insured against disability resulting from disease originating 30 days after the date of policy, said:

'* * * illness or disability will be deemed to have its inception when the disease becomes manifest or active. * * *' (p. 408, 222 P.2d p. 759.)

This case is cited with approval and followed in Richards v. American Security Life Insurance Co., Okl., 303 P.2d 1110, where the syllabus of the court reads:

'In an action on an insurance policy containing a provision providing indemnity for hospitalization 'resulting from sickness the cause of which originates while this policy is in force, the sickness is deemed to 'originate' when it first becomes manifest by a symptom or condition from which one learned in medicine could with reasonable accuracy diagnose the specific disease which thereafter was the cause of the hospital confinement.'

Similar language appears in Royal Family Insurance Co. v. Grimes, 42 Ala.App. 481, 168 So.2d 262:

'It is a well established rule of law that the word 'originates,' as appears in the exclusionary provision of the policy, refers ordinarily to the time the sickness or disease is manifested, although the medical cause existed prior to this time. (Citing cases.)' (p. 483, 168 So.2d p. 264.)

In a well reasoned opinion, Dowdall v. Commercial Travelers Mutual Accident Association, 344 Mass. 71, 181 N.E.2d 594, the court stated the rule in this fashion:

'* * * While the definitive diagnosis was not made until later, it is apparent that the progress of the disease was well advanced when the policy was issued. Knowledge of the existence of the disease on the part of the plaintiff was not required; it was sufficient if the disease had in fact originated prior to the effective date of the policy. We are mindful that the word 'originating' in a policy of this sort should receive a restrictive construction; otherwise the purported coverage would be illusory. The mere presence of latent germs or seeds of illness in the body prior to the issuance of such a policy would not preclude recovery. 'Few adults are not diseased, if by that one means only that the seeds of future troubles are not already planted.' Grain Handling Co., Inc. v. Sweeney, 102 F.2d 464, 466 (2nd Cir.). Thus, it has generally been held in construing policies of this type that the origin of a sickness or disease is deemed to be the time when it first becomes manifest or active, or when there is a distinct symptom or condition from which one learned in medicine can diagnose the disease. See note, 53 A.L.R.2d 682, 689. Here that test has been satisfied for the symptoms of the disease had become manifest long before the issuance of the policy. See Mutual Benefit Health & Acc. Ass'n v. Patton, 37 F.Supp. 48 (E.D.Ky.). Cf. Jefferson Life & Cas. Co. v. Bevill, 264 Ala. 206, 86 So.2d 292; Cohen v. North Am. Life & Cas. Co., 150 Minn. 507, 185 N.W. 939; Reserve Life Ins. Co. v. Lyle, 288 P.2d 717, 53 A.L.R.2d 682 (Okl.).' (pp. 73, 74, 181 N.E.2d p. 596.)

The plaintiff relies in large part on Milam v. Norwich Union Indemnity Co., 107 W.Va. 574, 149 S.E. 668. In our judgment that case may be distinguished from the one at bar. The insurance policy in Milam...