No. 89-574 IN THE SUPREME COURT OF THE STATE OF MONTANA 1991

DARLENE SCHNEIDER, Plaintiff and Respondent,

MINNESOTA MUTUAL LIFE INSURANCE COMPANY, a ~innesota corporation, Defendant and Appellant.

APPEAL FROM: District Court of the Sixteenth Judicial District, In and for the County of Carter, The Honorable Nat Allen, Judge presiding.

COUNSEL OF RECORD: For Appellant: Thomas M. Monaghan, Lucas & Monaghan, 

### P.C. 

## , Miles City, Montana For Respondent: Gary 

### A. Ryder, Forsyth, Montana

Filed: Submitted on briefs: August 9, 1990 Decided: February 28, 1991Justice William 

### E. Hunt, Sr. delivered the Opinion of the Court. Following a bench trial, the District Court of the Sixteenth Judicial District, Carter County, found defendant and appellant, Minnesota Mutual Life Insurance Company, liable on a life insurance policy sold to plaintiff and respondent, Darlene Schneider, and her husband, Jock Schneider. Minnesota Mutual appeals. We affirm. The following issues are raised on appeal: 1. Did the District Court err in failing to enter judgment in favor of Minnesota Mutual? 2. Did the District Court err in allowing expert testimony? On March 7, 1983, Jock Schneider renewed his existing loans at the First National Bank of Ekalaka and borrowed an additional $1,500, increasing the total amount of his debt to the Bank to $28,600. At the same time, he applied for insurance coverage in the amount of $20,000 under Minnesota Mutual's Protection Plus program, a group life plan sold through financial institutions to protect the debt of the borrower. At the time of the application, Jock had existing life insurance coverage with Minnesota Mutual in the amount of $30,000. Dean Parks, vice president of the Bank and a partner in the Ekalaka Insurance Agency, assisted the Schneiders in completing the application by asking Jock questions and typing his responses on the form. Parks had known Jock all of his life and had done business with the Schneiders over the years. The insurance application contained two questions relating to health: 2

### 1. During the last three years, have you been hospitalized or have you consulted a physician or physicians for any reason? 2. Have you ever been treated for or advised that you had any of the following: heart, lung, nervous or kidney disorder, high blood pressure, cancer or tumor, diabetes? The application requested additional information if the applicant answered "yes" to either question. Jock answered "no8' to both questions. His wife, Darlene, answered l'yesll to the first question and provided information regarding the removal of a cyst in 1983. 

### On March 23, 1983, Jock died of a gunshot wound to the head. A 

### coroner's jury determined that the death was accidental. The District Court in the present civil case found that the death was not related to alcohol. Minnesota Mutual promptly paid the claims on the life insurance policies procured by Jock prior to the 1983 policy at issue in this case. It did not, however, automatically pay on the 1983 protection Plus Policy. Instead, because the effective date of coverage on the 1983 policy was within two years of the date of death, the insurance company invoked the contestability clause in the policy and conducted a routine investigation of Jock's medical history. During the investigation, Minnesota Mutual obtained the medical records of Dr. Stephen Shaub of Ekalaka. The records showed that Dr. Shaub had seen Jock several times between December 2, 1981 and June 21, 1982. On December 2, 1981, Dr. Shaub diagnosed Jock as suffering from alcoholism and depression. He prescribed medication for the ailments. Follow-up visits occurred 3

### on January 4, January 18, and February 16, 1982 to check medication. On April 26, 1982, the doctor once again assessed Jock's condition as alcoholism and depression. Medication was refilled on June 21, 1982. On June 20, 1983, Minnesota Mutual sent Darlene a letter rejecting her claim for benefits under the $20,000 policy because Jock had failed to disclose the visits to Dr. Shaub in the insurance application. Minnesota Mutual wrote: After careful consideration, we have determined that if this additional information [the visits to Dr. Shaub] had been available to our underwriters at the time they were considering your husband's application for this insurance, they would have declined to insure him. Darlene instituted this action against Minnesota Mutual, alleging breach of contract for failing to pay the claim. She additionally sought punitive damages on several theories. The District Court bifurcated the action and a bench trial proceeded

on the contract issue only. Following trial, the court entered findings of fact, conclusions of law and judgment in favor of Darlene. The court then certified the judgment as final pursuant to Rule 54(b), M.R.Civ.P. This appeal followed. I. 

### Did the District Court err in failing to enter judgment in favor of Minnesota Mutual? Minnesota Mutual argues that § 

### 33-15-403, MCA, allows it to deny Darlene's claim because Jock incorrectly completed the insurance application by failing to reveal the visits to Dr. Shaub. Section 33-15-403, MCA, provides:(1) 

### All statements and descriptions in any application for an insurance policy or annuity contract or in negotiations therefor by or in behalf of the insured or annuitant shall be deemed to be representations and not warranties.

(2) 

### Misrepresentations, omissions, concealment of facts, and incorrect statements shall not prevent a recovery under the policy or contract unless either:

(a) fraudulent ; 

### (b) material either to the acceptance of the risk or to the hazard assumed by the insurer; or

(c) the insurer in good faith would either not have issued the policy or contract or would not have issued a policy or contract in as large an amount or at the same premium or rate or would not have provided coverage with respect to the hazard resulting in the loss if the true facts had been made known to the insurer as required either by the application for the policy or contract or otherwise. Minnesota Mutual contends, and Darlene concedes, that this statute should be read in the disjunctive. Thus, a misrepresentation, omission, concealment of fact or incorrect statement will prevent recovery under an insurance policy if one of the three factors listed in subsection (2) 

### is present. Both parties agree that Jock's failure to notify Minnesota Mutual of his visits to Dr. Shaub constituted a misrepresentation, omission, concealment of facts or incorrect statement as specified in the statute. Darlene maintains, however, that Jock's false

answer on the insurance application does not prevent recovery because it was neither fraudulent nor material nor would Minnesota Mutual in good faith have denied the policy had Jock revealed the consultations with the doctor. Minnesota Mutual, on the other hand, argues first that its denial of the claim was justified under5 

### 33-15-403 (2) (a)

## , MCA, because Jockls concealment of the facts constituted fraud. The District Court found that Minnesota Mutual did not carry its burden of proving that Jock fraudulently completed the application. We hold that this finding is not clearly erroneous. Minnesota Mutual next argues that the information Jock omitted

on the application was material. The requirement that a misrepresentation on an insurance application be Itmaterialeither to the acceptance of the risk or the hazard assumed by the insurer8* in 

### 5 33-15-403 (2) (b)

## , MCA, overlaps a great deal with the condition in 

### 5 33-15-403 (2) (c), MCA, that allows an insurer to deny coverage for a misrepresentation if the insurer in good faith would not have 1) issued the policy; 2) issued the policy in as large an amount; 3) issued the policy at the same premium; or 4) provided coverage with respect to the hazard resulting in the loss. An omission or misrepresentation may be material if, had the truth been known, the reasonable and prudent insurer would not have issued the policy or would have issued it at a higher premium. Cummings v. Prudential Ins. Co. of America, 542 F. 

### Supp 838, 840

(S.D. Ga. 1982); Prudential Ins. Co. of America v. Anaya, 428 P.2d 640, 644 (N.M. 1967). This definition of materiality incorporates the idea of subsection (2) (c), that is, that the policy would not, among other things, have been issued had the insured revealed the true state of affairs. The primary difference between the two subsections is that (2) (b) deals with an objective standard of

### materiality, reasonableness, while (2) (c) refers to a subjective standard, good faith. Minnesota Mutual contends that it justifiably denied coverage under subsection (2) (b) because the diagnosis of alcoholism was material to the risk assumed. The materiality of an insured's misrepresentation is determined by the extent the false answer "initially influenced the insurer to assume the risk of coverage



# . . . . [Tlhe misrepresentation in the insurance application may be material if it diminishes the insurer's opportunity to determine

or estimate its risk." Berger v. Minnesota Mut. Life Ins. Co. of St. Paul, Minn., 723 P.2d 388, 391 (Utah 1986). Thus, the materiality of a misrepresentation generally is measured at the time the insurer issues the policy rather than at the time of the insured's death. Beraer, 723 P.2d at 391. The question of materiality is a question of fact. Beraer, 723 P.2d at 392. In this case, the District Court found that Jock's incorrect statement on the insurance application was not material. This finding is not clearly erroneous. As the District Court pointed out, the Protection Plus group life insurance application failed to ask any specific questions about either alcoholism or alcohol use. The court surmised that the prudent insurer would have specifically requested information about all critical underwriting factors. Thus, if alcoholism was indeed material to Minnesota Mutual's acceptance of the risk, it would have expressly asked questions about alcohol use, just as it specifically requested information about heart, lung, nervous or

### kidney disorders, high blood pressure, cancer and diabetes. Other courts have reached a similar conclusion. Botway v. American Int'l Assurance Co. of New York, 543 N.Y.S.2d 651, 652 (N.Y. App. Div. 1989) ; 

### Kampfe v. Minnesota Mut. Life Ins. Co., C.V. 

### 82-21-BLG, slip op. at 11-12 (E.D. Mont. 1983). Minnesota Mutual's employees testified that alcohol use was material to the decision to accept the risk because the company automatically denied coverage to any applicant who had been diagnosed as an alcoholic and had been drinking within the five years preceding the application. This practice, however, was not reduced to writing in the underwriters1 manual, although other procedures regarding alcohol habits were included in the manual. Substantial credible evidence supported the District Court's finding that alcohol use was not material to the risk assumed by Minnesota Mutual in this case. The District Court did not err in concluding that Minnesota Mutual's denial of coverage was not warranted under § 

### 33-15-403 (2) (b) 

## , MCA. Minnesota Mutual also argues that it legitimately denied coverage under subsection (2) (c) because it would not in good faith have insured Jock if it had known that he had been diagnosed as an alcoholic. Like the question of materiality, the question of good faith is a question of fact. The District Court concluded that Minnesota Mutual did not exercise good faith in reviewing the claim because it conducted only a limited investigation of the facts regarding Jocklsalcohol use and that this investigation was conducted for

### the sole purpose of denying the claim. It also found that Minnesota Mutual failedto follow its own underwriting criteria for applicants who use alcohol. These findings are not clearly

erroneous. Minnesota Mutual's underwriting manual provided: A 

### history of current acute alcoholism, delirium tremens and/or alcoholic psychoses is usuallv RNA 

### [risk not acceptable]. (Emphasis added.) Despite this provision in the manual, a Minnesota Mutual underwriter testified that the company automatically rejected the application of anyone who had been diagnosed as an alcoholic. In addition, the underwriting manual required underwriters to ll[l]ook for the effects on business reputation and acumen, financial standing, home environment, social behavior and alcohol dependence" when investigating an applicant's drinking habits to determine insurability. Minnesota Mutual neglected to conduct such

an inquiry. Instead, it relied solely on Dr. Shaublsmedical records to deny coverage. Dr. Shaub, however, in his deposition introduced at trial admitted that he was not an expert on alcoholism and that Jock did not exhibit any of the physical symptoms of the disease. A 

### chemical dependency counselor testified that there was not enough information in the medical records to determine whether Jock was an alcoholic. From this evidence, the District Court could have properly concluded that had Minnesota Mutual followed its own manual it would have discovered the extent of Jock's problem and may have issued the policy in spite of his alcohol use.

### The District Court did not abuse its discretion in concluding that Minnesota Mutual could not deny coverage under the good faith provision of 

### 5 33-15-403 (2) (c)

## , MCA. Substantial credible evidence supported the finding that Minnesota Mutual conducted only a limited investigation before rejecting Darlene's claim, an investigation that did not comply with the insurer's own written procedures.

Did the District Court err in allowing expert testimony? At trial, Darlene offered the expert testimony of Russell Mann, a chartered life underwriter with 23 years experience in the life insurance industry and past president of the Montana State Association of Life Underwriters. Minnesota Mutual objected several times to the testimony, arguing that Mann was not qualified to comment on home-office underwriting practices in general or the practices of Minnesota Mutual in particular. The District Court overruled the objections. The trial court retains broad discretion to determine whether

a witness qualifies as an expert in a particular field. The degree of those qualifications "affects the weight rather than the admissibility of [the expert's] testimony." Little v. Grizzly Mfg., 195 Mont. 419, 427, 636 P.2d 839, 843 (1981). In this case, the District Court did not abuse its discretion in allowing Mannlstestimony. Mannlsqualifications and testimony demonstrated that he had worked with many types of products sold by 

### the life insurance industry and that he was familiar with the

### factors considered by an underwriter when determining the insurability of an applicant for life insurance. Under these circumstances, the fact that he had never been a home-office underwriter went to the weight rather than to the admissibility of the evidence. An expert need not have been employed by the defendant insurance company before he can comment on the practices of that company. As long as the testimony indicates that the expert has knowledge of the standards and practices of the insurance industry in general, his testimony is admissible to explain the custom of the industry. John Hancock Mut. Life Ins. Co. v. Conway, 240 S.W.2d 644, 646 (Ky. 1951).

Darlene requests an award of attorney fees incurred on this appeal under either Rule 32, M.R.App.P., or Rule 33, M.R.App.P. We decline to grant such an award. Rule 32, M.R.App.P., allows damages for appeals taken without merit. Damages are not warranted, however, whenever a reasonable ground for appeal exists. Tope v. Taylor, 135 Mont. 124, 132, 768 P.2d 

### 845, 850 (1988). In this case, Minnesota Mutual had reasonable grounds for appeal. The questions presented on the appeal were not clear cut but delved into an area in which there is very little Montana decisional law. Rule 33, M.R.App.P., provides for costs on appeal to the prevailing party. The costs allowed under this rule, however, do not include an award of attorney fees unless the fees are based ona contract, Poulsen's, Inc. 

### v. Wood, 232 Mont. 411, 417, 756 P.2d 1162, 1166 (1988), or a specific statute. In this case, no contract or statute granting attorney fees exists. The judgment of the District Court is affirmed and Darlene's request for attorney fees on appeal is enied. 

# P 

# 4 4

# r+/*c

chief J stice

### Schneider v. 

### Mbnesota 

### Mutual 

### Life Ins.

### Co. 48 St-Rep.224



### DARLE*'JESCrnTEIDER, Plaintiff

### and Respondent, v* 

### MINNESOTA MUTUAL

### LIFE ISSCRL'L'CE

### COMPANY, a

### Minnesota corporation, 

### Defendant andAppelIant.

Wiad Feb.28.1991.

IPc'Sm4,YCE, Apdfrom finding that insurance company wes liable on policy sold to p!aintiff where dd wec later found tohave unreprted \isitsto doctrrad suqwtedalcoholism. TheSupremeCourt held: 1. An omidon or misrepresentation may be material if,had thetruthkn known,therezsonable andprudent insurer would not have issued thepolicy 

# I or would have issued it at a higher premium. 2. An expert need no have been employed by the defendant insurmce company&fore hecan comment on thepractices ofthat company. 3. Dmzgesarenot wm+d where 8reasonable ground for appealexists. Appeal from the District Court of Carter County. SirhenthJudicial District. Honorable SatAllen,Judge presiding. For Appllmt:Thomas 

### M. Blonaghan, Luczs & Momghan,P.C., Miles City For kpndent:

### Gaqk Rj-der,Forq-th

JUSTICE HUYT delivered the Opinion of the Court. Following a bnch trial, the District Court of the Sixteenth Judicial District, Cater County, found defendant mdap~llant, Minnesota hlutual Life InsuranceCompany,lia.bleon alife irsuransepliqsold to plaintiff and respondent, Darlene Schneider, and her husband, 

### Jock Schneider. Minnewta 3futual ap PAS. U'e afEr7.n. Thefollowing issues areraked on appeal: 1. Did the District Court err in fiiling to enter judgment in favor of Minnesota Mutual? 2. Did the District Court enin allo~icg expert testimony? On Ahhrch 7, 1983, Jock Schneider renewed his existing loansat theFirst 3ationa.I

### Bd ofEkRlakIl and bornwed an additional $1,500, increzsing the total amount ofhis debt to theBsnlr to $28,600. At the sametime, he applied for ran^ coversge in the amount of $20,000 under Minnesota Mutual's Protection Plus program, a group life plan sold throughfind institutionstoprotectthe debtofthe borrower. At the time of the application, 

### Jock had existing life.insurance coverage with Minnesota Mutual in theamount of $30,000. 

### Dean Parks, \-ice president of the Bank and a partner in the Ekalaka rrsurance Agency, misted the Schneiders in completing the application by askingJock questions and t-vping his resporses on the f~rm. Parks had bourn Jock all of his life and had donebusiness with theSchneidersovatheyears. The irsuranceapplication contained two questions re!ating tohealth: "1. During the 1stthree yars, have you been hospitalized or have you corsuJted a physician or physicians for any rezson? "2. Haveyou ever kn treated for or advbdtbt you had any ofthe following. heart, lung, n- ~YVOUor kidney disorder,high blood pmure,canceror tumor, diabetes?" Theapplicationrequested additionalinf~rrnation if the applicant arswered 'yes"to either question. Jock answered "non toboth questions. His wife, Darlene, arswered '>esn to the Arst question and provided information ~gording theremoval ofa qst in 1983. On Mmh23,1983, Jock died ofa gurshot wound to the head. A coroner's jury determind that the dath was accidental. The District Court in the present chi1-found thatthedeathwsnotrelated to alcohol. MinnesotaMutual promptlypaid theclaimson the life insurance policies procured by Jock prior to the 1983policy at kue in this case. It did not,however, autonatjcallypay on the 1983Protection PlusPolicy. Irskad, the efkctivedate ofcoverage on the 1983policy ~izs within twoyears ofthe dateofdeath, the insurance company invoked the con4atability clauwinthepljcyandconduc!! a routine investigation ofJock's mdical history. During the investigation, Minnesota Mutual obtained the medical rmrdsof Dr. Stephen Shaub of

STATEREPORTER VOLUlE48

# -- 28 Feb. 1991

### .225

..

# . Sehneider v. 

### Minnesota Blutuq

### Life Ins. Co. 48 StStep.224

Ekakh The ncords showed that Dr. SFaub had seen Jock xveral times letwenDecembr 2, 1981 andJune21,1982. On December 2,1981, Dr. Sbub diagnosed Jock as surering from almholkm and depression. He p-rxd medication for the ailments. Follow-up visits oacurred on Jan- 4, January 18,andFebruary 16,1982to check mediation. On April 26, 1982, the doctor once again assesdJock's condition as alcoholisanddepression. 1. Medication was refilled onJune21,1982.



### . . -. 5. OnJune20,1983, ,&nnesota Mutd sentDarlene ' a letter rejecting her claim for benefits under the $20,000 policy becauseJock bad failed to dklasethe visits toDr. Shaubintheinsuranceapplication. bfinnwtahlutual wmte: . - ? - .i - >.' "After carefbl consideration, we have determined that if this additioral information [the visits to Dr.
' Shaub] had been available toourunderw~iters atthe time they were mrsideringyour husband's applimtion for this insurance, they would have declined to irsurehim." Darlene instituted this action against Minnesota 2clutual, alleging breach ofcontract for failingto pay the claim. Sheadditionally mught punitive damzges on severalthsories. TheDistrict Court bifurca!d the action and a bsnch trial procdad on the contract issueonly. Following trial,thecourt entered findings of fact, conclusiors of law andjudgment in favor of Dulene. The court then ertified thejudgment as 6nal pusuant to Rule 54@),3t.R.Civ.P. This appal fo!lowed.

Did the District Court enin failing to enterjudgment in favor ofMinnesota Mutual? bfinnessta Mutual argues that § 33-15-403,MCA, allows it to deny Dulene's claim because Jock inmrredly completed the imumnce application by failing to reveal the visits to Dr. Shaub. Section 33- 15-403, MC.4, provides: "(1) All statements anddescriptions in anyapplimtion for an in-curance policy or mnuity contract or in negotiatiorstherefor by or in beFdf oftheirsured or annuitant sFdlbe deemed to be represe~tatiors md not wmanties. "(2) Iifisrepresentations,omissions, condment of facts, end incorrect staf.ements shall not prevent a reanvery under thepolicy or contract un!-Q either: "(a) fraudulent; "(b) materialeither to the accepknceoftheriskor to the hazard ==urnad by theirsurer; or "(c) theirsurerin good faithwould either not have kuedthepolicy or amtract or would nothave issued a policy or contract in as kgs an amount or at the same premium or mte or would not have provided covere with respect to the haadresulting in the loss ifthe true hcts had keen rrade known to the insurer as required eitber by the application for the - 

### .- policy or contract orotherwise." Minnesota Mutual contends, and-Darlene conceds,that thisstatuteshould be redinthedsjune tive. Thus, a misrepresentation, omission, concealment of fact or incorrect,statement will prevent recc\qry under aninsurancepolicy ifone of

. the three factorslisted in subsaction (2)ispmnt. Both hiesagree that Jwk's fa&& to notify Minnesota .Mutual of his visits to Dr. Shaub constituted a mkrepmntation, omission, concealment of hds or incorrect statement es spwified in'the statute. Darlene maintains, however, that Jock's &be arswer on the irsurance application dw not prevent ravery because it was neither fraudulent nor material nor would Mirnmta Mutual in good faith Fave denied the policy had Jock revealed the corsultationswith thedxtor. ftlinnesota Mutual, on

# -

The District Court found that ftfinnesta Mutual did not carry its burden of proving that Jock fraudulently completed the application. U'e hold that this finding isnot clearly erroneous. .1 ~inn&ta Mutual next mgus that the infomation Jock omitted on the applicationwas ma!erial. The requinment that a misrepresentation on an - "materia! eithertothe assumedby the a great deal with the condition in 

### 3 33-15-403(2)(c),IiICA,that allows anirsurer to deny cove- for a misrepresentationif the irsurer ingmd faithwould not have 1)&ued the policy; 2) issued the policy in as lageanmount;3) issued thepolicy at thesamepremium; or 4)provided coverage with respct to the hazard resulting in the lass.

. [I] An' omission or misreprsentation may be material if,had thetruthbsenknown, therezsonable and prudent irsurer would not bvehuedthepolicy or would have it at a higher premium. Cumminpv. Prudentid Ins.Co. ofberica,542

### F. Supp. 838, 840 

### (S.D. Ga. i982); Prudential Ins. Co. of America v. Amla, 428 P.2d 640, 644 (N.M. 1967). This definition ofrnakriality incorporatesthe idea of subsextion (2)(c),tbat is, that the policy wou;d not,

VOLCME 48

## -- 28 Feb. 1991 STATEREPORTERSchneider v. Minnesota

### MUM 

### Lile Ins. 

### Co. 48 St&p. 224 timongotherthings,havekenissudhad their-sured totbe risk=msd by Minn retdd the true state of af?Xrs. The primary dif- The Di-trict Court did no f~rence between the two subsections is that (2)(b) hlinnmta Mutual's denial of coverage deals with an objective standard of materiality, ratedunder O 33-15-403(2) (b),

### MCA. - ,-&- 

### -:;f r-ndleness, while (2)(c) =fers to a subjective Mimwta 

### a?so argvej tht it legitimatelj stmhd, gd faith. denied covenge under suktion (2)(c) bezw it Minnesota Mutual contends that itjustifiably would not in gcod fajth Fave irsured Jock if ithad denied coverage under subsection (2) (b) because the knownthatheFad bsen diegnd es analcoholic. diagnmis of alcoholism wes material to the risk assumed. Thematerialityofan irsured's mkrepresen- Like the qwstion of makridity, the question of tation is determined by the extant the &he =wer good faith is a question of fact. The District Court therisk of concluded that Minnemta Mutual did not exercise in theirsurance good raith inreviewingtheclaimbecawitmnducted material if it diminishes the only a limited investigation of the facts regarding opportunity to dekmine or estimate its hk's alcohol use and that this investigation was Berger v. *Wnnesota MuteLife 

### Ins. Co. of St. conducted for the alepurpose den~ingthe pa,,], M~~,, 723p.2d 388,391

# wt& 1986). ~h~, the It also found that Minnesota Mutual failed to follow materiality of a misrepresentation generally is its oanunderwriting criteria for applicants who use mezsured at the time the irsurer issues the ~olicv alcohol. These finding arenot clearly erroneous. rather than at thetimeoftheinsured's death. ~.&e;, Minnesota Mutual's underwriting manual 723P.2d at 391. pro\idzd:

. The quetion of materiality is a question of fact. Berger, 723 P.2d at 392. In this case, the District Court found that Jock's incormt statement on the insurance application wasnot matzrial. This finding isnot clear13erroneous. As the District Court pointed out, the Protection Plusgrouplifeinsuranceapplication failed to ask any specific questions about either alcoholism or alcohol we. The court surmised that the prudent in= -urer would hive s~ifically ques!.sc? inf~rmation about all critical underwriting factors. Thus, if alcoholism was inddrna!erial to .wnnmta Mutual's amp tance oftherisk, it would have expm-ly skedquestiorsabout alcoholuse, just asit specifically requested information about heart, lung, nervousor kidney discirders, high blood pressure, czncer and diabe4a. Other courts have reached a similarconclusion. Botway v. .herimIntlhurmceCo.ofXewYork, 543 

### N.Y.S.2d 651, 652 (N.Y. App. Div. 1989);Kampfe v. MinnewtaMut.LifeIns.Co., C.V. 82-21-BLG,slipop. at 11-12(E.D. Mont. 1983). Minnesota Mutual's emplo~ees !stifid that alcoho1 use ~-2.s material to the decision to acept the risk because the company automatically denied covereto my applicantwhohadkn diagnd as an alcoholic and had been drinking within the five yeaspding the applimtion. Thic practice, however, wzs not reduced to writing in the underwriters' rcmual,although other pdures regardingalcohol habits wereincludsd in thercmual. Substantial credible evidence supported the District Court's findingthat alcohol csewasnot material "A history of current acute alcoholism, delirium tremers and/or alcoholic pqchases is usually RVA [risk not acceptable]." (Empbzsis added.) Dspitethisprovision in the manual, a Minnesota Mutual underwriter testified that the mmpany aute matically rejected the application of anyone who had been dizgnozdas an alcoholic. In addition,the underu-ritingmanual required underu-ritersto "[l]wk for theefCi?ctsonbusines: reputation and acumen, finslncial standing, home environment, socialbeha~j~r andalcohol depndence" when investigatingm appliant's drinkinghabits to determine irsurability. Minnesota Mutual neglected to conduct such aninquiry. Irstsad,it relied solely on Dr. Shaub's medical rxords to deny covenge. Dr. Shaub,however, in hisdeposition introduced at trial admitted that hewesnot an expert on alcoholism and thatJock did not exhibit anyoftheph~simlspptoms ofthe disezse.A chemical depndency coursel~rtestified that there wzs not enough information in the medical records to determine whether Jock was an alcoholic. From thiserida-ice, theDistrict Cowtcould hawproperly concluded that had Minnesota Mutual follow& itscwnmanual it would have discovered the extent of Jock's problem and may have issued the policy in spite ofhis alcohol use. The District Court did not abuse its discretion in concluding that Minnesota Mutual could not deny co~~rzge under faith pro\+sion of § 33-15- credible e\<dence pried the only a limit4irrcstigation before rejecting~srlene1s\

STATE REPORTER VOLL9IE 48

## -- 26 Feb. 1991