Title: Old American Life Ins. Co. v. McKenzie

State: arkansas

Issuer: Arkansas Supreme Court

Document:

403 S.W.2d 94 (1966) OLD AMERICAN LIFE INS. CO., Appellant, v. Gordon McKENZIE, Appellee. No. 5-3919. Supreme Court of Arkansas. May 30, 1966. *95 Jack Young, Little Rock, for appellant. Martin, Dodds & Kidd, Little Rock, for appellee. COBB, Justice. On March 9, 1964, appellee applied to appellant for two policies of insurance. J. E. Bryant, sales manager for appellant, personally secured said applications and filled in appellee's answers to questions appearing upon same. Appellee signed the applications. As completed the applications for insurance set forth that appellee then had no physical defect. However, they also set forth and disclosed the following medical history: "NameGordon McKenzie; Sickness or DefectDisc operation; Date '62; Duration46; Oper'rYes; Doctor's Name and AddressDr. Logue, States Complete Recovery." Appellant issued two policies upon said applications: No. AD 2456, an accident policy with hospital and disability benefits, and No. 624-2294, a hospital policy with added medical benefits. *96 On April 17, 1964, appellee was involved in an automobile accident requiring hospitalization in the Arkansas Baptist Hospital in Little Rock for thirty-two days. There is no factual dispute between the parties as to appellee having been involved in an automobile accident, having been hospitalized for thirty-two days at the Arkansas Baptist Hospital in Little Rock, and having incurred all of the hospital and medical expenses of which detailed statements were offered in evidence. Seasonable demand was made by appellee upon appellant for payment of his claims under the provisions of said policies and payment of same was refused. Thereafter appellee instituted his action in the circuit court. Appellant answering asserted that the condition for which appellee was required to be hospitalized was a recurrence of a physical condition which pre-existed the date of its policies, and that the policies were procured from it by wilful, fraudulent and material concealment of appellee's true physical condition at the time of his applications for said policies. After the issues were joined, the case was tried to the court sitting as a jury. The court found adversely to all contentions of appellant and judgments were entered for the amounts claimed by appellee, together with statutory penalty and attorney's fee fixed by the court. This contention is based on the fact that, after the 1962 disc surgery, appellee required two subsequent operations on his back (spinal fusions). The record reflects that appellee had made maximum recovery from said fusion operations prior to the purchase of said insurance policies from the appellant. All statements in any application for disability insurance policy are deemed to be representations and not warranties. Ark.Stat.Ann. § 66-3208 (Repl.1966). An omission in the application will not prevent recovery under the policy unless it was fraudulent, material to the acceptance of the risk, or the insurer would not have issued the policy as such had he known the true facts. § 66-3208, supra. Thus, the question is raised whether under the circumstances of the instant case there was an omission by McKenzie which precluded him from recovering under the terms of the policies. We have concluded under the facts of this case that appellee should not be denied recovery against appellant and we discuss our reasons for this conclusion. It is true that appellee did not give a full and complete medical history to appellant in his applications. It is also true, however, that appellee did provide appellant with information concerning a disc operation upon his back in 1962, involving extended disability. Furthermore, appellee set forth the true name of the surgeon who had attended him at the time of said operation upon his back (Dr. Richard M. Logue). Moreover, Dr. Logue is a Little Rock surgeon with offices in close proximity to the offices of appellant and could have been reached by telephone or by call of a personal representative of the appellant at little or no inconvenience. Obviously the attending surgeon and not the patient (appellee) would be the best qualified to provide to appellant the accurate medical history of the case. Few operations on the spine are more severe in character than the removal of an intervertebral disc. When appellee reported this operation he put appellant upon notice as to a serious back operation; and when appellee provided appellant with the name of his surgeon to whom appellant could turn for exact and precise information if so desired, he substantially met all burdens imposed upon him in his relations with appellant under his contracts of insurance and should not be denied the benefits as provided in appellant's policies. *97 In Missouri State Life Ins. Co. v. Witt, 161 Ark. 148, 256 S.W. 46 (1923), the insurance carrier refused to pay the proceeds from the policy for several reasons. One such reason was that the insured, the company maintained, failed to give full, correct and true answers since he concealed the fact that he was confronted with complications following an operation of which he had informed the carrier in the application. The application, as filled out, read as follows: "Operation: Appendicitis. Date Year: 1917. Month: July. Duration: 2 weeks. Results: Good. Name of medical attendant: Dr. J. P. Runyan, Little Rock, Ark." The court rejected the company's contention and said: A headnote to the Missouri State case reads: This is supported by 1 Appleman, Insurance Law & Practice, § 220 (1965): We therefore find no merit in appellant's Point I. Any anxiety which appellee suffered after the accident would not have occurred had it not been for the accident. Appellee had been engaged in full-time work and had been free of anxiety until he was injured by the very event insured against. Also, Dr. Logue, appellee's physician, testified that the injury suffered as a result of the April 17 accident was a strained muscle and not an aggravation of the prior condition and that the two were in unrelated areas of the back. The trial court determined this factual issue against appellant. There is substantial evidence in the record to support said determination by the court as the trier of the facts and we are bound thereby. Anderson v. West Bend Co., 240 Ark. 519, 400 S.W.2d 495 (1966); Milner v. Marshall, 238 Ark. 914, 385 S.W.2d 800 (1965). We therefore find no merit in appellant's contentions as to its Point II. Ark.Stat.Ann. § 66-3238 (Repl.1966) provides that in cases such as the one at bar where a loss occurs and the insurance company *98 fails to pay the proceeds of the policy within the specified time after demand, the company shall be liable to pay the holder of the policy, in addition to the amount of such loss, twelve per cent (12%) of the loss together with all reasonable attorney's fees for the prosecution and collection of said loss. We note that as to the hospital policy issued by appellant, No. 624-2294, the judgment rendered by the trial court was for the exact sum ($397.50) as prayed in the original complaint. Recovery of the exact amount prayed precludes any contentions of appellant as to the propriety of statutory penalty and attorney's fee as to appellee's suit on said policy. As to the accident policy, No. AD 2456, the original complaint prayed for judgment for $320, representing coverage of $10 per day for thirty-two days of hospitalization, and judgment for $100 per month for a total disability of appellee beginning on April 17, 1964. The judgment entered by the trial court gave appellee the $320 exactly as prayed in the complaint for hospital allowance, and gave appellee $300 representing three months of total disability following the accident of April 17, 1964. During the course of the evidence offered on behalf of appellee, it was shown that appellee had been disabled for a period of three months beginning on April 17, 1964, and at the conclusion of appellee's case counsel moved the court for permission to amend the complaint to conform to this proof. The court granted the motion. Thereafter appellant moved for a directed verdict in its favor, which was denied. Significantly, appellant did not confess judgment in conformity with the proof or in any sum, but proceeded to put on its own case seeking to establish its contention that it was not liable in any sum to appellee under its policies of insurance. Had appellant confessed judgment for the three months disability of appellee at $100 per month when the complaint was amended to conform to the proof, it could have avoided its liability for the statutory penalty and attorney's fee as to this item. However, appellant did not take this course but proceeded to trial. Under the circumstances of the case, which are similar to others which have reached this court, we have concluded that the trial court committed no error in its allowance of statutory penalty and attorney's fees in the judgments entered against appellant under both of its policies. We briefly discuss the applicable law. In Progressive Life Ins. Co. v. Hulbert, 196 Ark. 352, 118 S.W.2d 268 (1938), we dealt with this same question and we quote therefrom: Appellant attempts to distinguish the Hulbert case from the one at bar on the grounds that the amendment was made at a different place in the trial proceedings. The above quote reveals this is not a valid distinction. It is discretionary with the trial judge to amend the pleadings to conform to the proof after the trial has begun (Ark.Stat.Ann. § 27-1160 [Repl.1962]). Having concluded that all of appellant's contentions are without merit, the trial court's judgments are affirmed. AMSLER, J., not participating.