Zimmerman v. Continental Cas. Co.

• Decision Date: 28 April 1967
• Docket Number: No. 36367,36367
• Citation: 150 N.W.2d 268,181 Neb. 654
• Parties: Gwendolyn Kay ZIMMERMAN, Appellee, v. CONTINENTAL CASUALTY COMPANY, a Corporation, Appellant.
• Court: Nebraska Supreme Court

Page 268

150 N.W.2d 268

181 Neb. 654

Gwendolyn Kay ZIMMERMAN, Appellee, v. CONTINENTAL CASUALTY COMPANY, a Corporation, Appellant.

No. 36367.

Supreme Court of Nebraska.

April 28, 1967.

Syllabus by the Court

1. Section 44--710.14, R.R.S.1943, did not repeal by implication section 44--358, R.R.S.1943, but must be read as in pari materia.

2. Under the particular facts of this case, the issues of whether the insured's misrepresentations or false statements in the application for insurance were made knowingly with intent to deceive and the company was thereby deceived to its injury were for the jury.

3. While we do not hold that fraudulent misrepresentations in an application for accident insurance must also contribute to the accident or the loss, the jury is entitled to consider the facts as to how the loss occurred in connection with its determination of fraudulent intent, and whether the insured's misrepresentations or false statements were made knowingly with intent to deceive and that the company was thereby deceived to its injury.

4. A waiver of protection against the disclosure of privileged communications may be withdrawn at any time before acted upon.

5. An instruction which misstates the issues or defenses and has a tendency to mislead the jury is erroneous.

6. Conflicting instructions are erroneous and prejudicial unless it appears that the jury was not misled.

Tye, Worlock, Tye & Jacobsen, James M. Knapp, Kearney, for appellant.

Munro, Parker, Munro & Grossart, Kearney, for appellee.

Heard before WHITE, C.J., CARTER, SPENCER, BOSLAUGH, SMITH, and McCOWN, JJ., and WEAVER, District Judge.

McCOWN, Justice.

The plaintiff recovered judgment for $2,000 on an accident insurance policy for the death of her husband, the insured. The defendant insurer has appealed.

The insured decedent died September 9, 1964, when struck by a train engine. He was operating a paving breaker run by compressed air and breaking out cement on a railroad bridge backwall as a member of a bridge and building crew for the Union Pacific Railroad. He was facing south with the back of his legs up against the south rail of the eastbound track. Other members of the bridge crew were also working in the immediate area. Some of the others saw the train before it hit the decedent. At least one 'hollered'; one threw gravel at the decedent which hit him on the back; and he 'jerked his head to the right and by that time the train hit him.' The insured apparently died almost instantly.

The accident insurance policy involved had been sold by defendant's agent to the insured decedent on August 6, 1964, while the insured was working with a bridge crew near Sutherland, Nebraska. The application for the insurance was filled in by the soliciting agent at that time, and signed by the insured. The agent testified that: 'He looked at it and signed it. Whether he read it or not, I can't answer.' The policy was an accident policy covering only disability and death benefits 'caused by an accident occurring while this policy is in force and resulting directly and independently of all other causes in loss covered by this policy.'

The policy specifically excluded suicide or any attempt thereat. The form of application was for accident and health or accident policy. Question number 6 was: 'To the best of your knowledge and belief have you ever been medically treated for or had any of the following: Abnormal blood pressure, ulcers, tuberculosis, appendicitis, hernia, diabetes, cancer, gall bladder, syphilis, goiter, paralysis, sciatica, arthritis, rheumatism, any disorder of the mental, nervous, genito-urinary, respiratory or digestive systems, rectum, eyes, back, spine or heart?' This question was checked 'Yes,' the word 'ulcers' was underlined, and to the right the agent wrote: 'Minor case apparently under control Acc. only being applied for.'

Question number 7 was: 'To the best of your knowledge and belief have you had medical or surgical advice or treatment, or been hospital confined during the past 5 years other than stated above?

Question number 8 was: 'To the best of your knowledge and belief do you now have any physical impairment, deformity, or disease other than stated above?'

Both of these questions were answered: 'No.'

Immediately above questions 6 through 8 appeared the language: 'Check 'Yes' or 'No,' circle condition and explain in space provided. If 'yes' is checked on any part of Nos. 6, 7, or 8, state type of condition, treatment, dates, duration, results, doctors' and hospitals' names.'

The insured, while confined in the city jail of Hastings, Nebraska, on June 30, 1963, attempted suicide and was taken from the jail to the Hastings State Hospital where he was confined from June 30, 1963, to July 13, 1963. On October 28, 1963, the insured was again returned to the Hastings State Hospital because he had been drinking and threatened both his own life and that of his wife. He was in the hospital on that occasion until December 2, 1963, when he was again released. His condition in the hospital had been diagnosed as psychoneurotic disorder, depressive reaction.

The defendant insurance company alleged fraud and misrepresentation by the insured with reference to the application; that it had relied upon the truthfulness of the answers and was deceived thereby to its injury; and that had truthful answers been given, no policy would have been issued. It alleged the tender of premiums paid and rescission of the policy, and prayed for dismissal. The issues were submitted to the jury and the jury's verdict was for the plaintiff beneficiary.

Essentially, the assignments of error on the part of the defendant might be summarized as contending that the defendant was entitled to judgment as a matter of law, and that the case should not have been permitted to go to the jury and that, in any event, the instructions were prejudicially erroneous.

The fundamental issue is whether a portion of a statute relating to sickness and accident insurance adopted in 1947 prevails over a general insurance statute adopted in 1913, both of which are still in effect.

In 1913, the Legislature adopted a statute which is now section 44--358, R.R.S.1943, which provided: 'No oral or written misrepresentation or warranty made in the negotiation for a contract or policy of insurance by the insured, or in his behalf, shall be deemed material or defeat or avoid the policy, or prevent its attaching, unless such misrepresentation or warranty deceived the company to its injury. The breach of a warranty or condition in any contract or policy of insurance shall not avoid the policy nor avail the insurer to avoid liability, unless such breach shall exist at the time of the loss and contribute to the loss, anything in the policy or contract of insurance to the contrary notwithstanding.'

The provision adopted in 1947 applied only to sickness and accident insurance. The title, among other things, recited: 'to provide for construction of applications and to prohibit alteration thereof.' The act provided for repeal only of sections 44--504, 44--505, and 44--506, R.S.1943. The provision was recodified in 1957 and now appears as section 44--710.14, R.R.S.1943 and provides: 'The falsity of any statement in the application for any policy covered by this act may not bar the right to recovery thereunder unless such false statement materially affected either the acceptance of the risk or the hazard assumed by the insurer.'

It is the position of the defendant that the later act constituted special provisions relating to particular subject matter and prevails over the provisions in the earlier statute. We cannot agree. That rule of construction applies only insofar as there is a conflict between the two. We can find no authority to support the proposition that the adoption of such provisions repeals, by implication, all provisions of the general act, including those not in conflict. We believe rather that the two statutes should be read in pari materia. This conclusion is supported by the fact that the primary purpose of the Legislature in adopting such statutes is to protect the insured or his beneficiary. See 7 Couch on Insurance (2d Ed.), s. 35:170, p. 196. The repeal by implication of specific requirements of the earlier statute would, for example, remove the requirement that the insurance company be 'deceived to its injury.' It should also be pointed out that the language of the older general statute is mandatory, using the word 'shall' while the later statute uses the word 'may.'

The later statute, if construed as the defendant contends, would require only proof that the statement in an application was false, and that it materially affected either the acceptance of the risk or the hazard assumed. It is pleaded that the insured's answers and representations in the application were misleading, false, and fraudulent; were knowingly made with intent to deceive and mislead the defendant; that the defendant relied and acted upon said statements and misrepresentations; and that as a result thereof defendant was damaged.

These allegations are drawn in the language applicable to the general statute, in addition to the later or special statute and we think quite properly so. The requirement of the older statute that the company be 'deceived to its injury,' and the judicial interpretation of the older statute requiring that the statements or misrepresentations 'were made knowingly by the insured with the intent to deceive,' lie at the crux of the matter. This court has consistently held, at least since 1940, under the older statute, that in order for misrepresentations in an application for insurance to constitute a defense to an action on the contract it is incumbent upon the insurance company to plead and prove, among other things, that the statements or misrepresentations were made knowingly by the insured with the intent to deceive and that the insurance company relied and...