Case Name: ROBERT E. CATO and Wife, MARGARET E. CATO, v. HOSPITAL CARE ASSOCIATION,. INC.
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1941-12-10
Citations: 220 N.C. 479
Docket Number: 
Parties: ROBERT E. CATO and Wife, MARGARET E. CATO, v. HOSPITAL CARE ASSOCIATION,. INC.
Judges: 
Reporter: North Carolina Reports
Volume: 220
Pages: 479–484

Head Matter:
ROBERT E. CATO and Wife, MARGARET E. CATO, v. HOSPITAL CARE ASSOCIATION,. INC.
(Filed 10 December, 1941.)
1. Appeal and Error § 38—
Where the charge of the court is not in the record it will be presumed that the court correctly charged the law applicable to the evidence.
2. Insurance § 41—
When insured introduces the certificate of insurance, offers evidence that the policy was kept in force by payment of premiums and that insured had filed claim for loss covered by the insurance, insured establishes a prima facie ease and insurer has the burden of proving defenses relied on by it.
3. Insurance § 31c — Policy will not be forfeited for misrepresentations in application filled out by insurer’s agent when insured has no knowledge thereof and was unable to read application.
Insured testified that she correctly answered the only two questions asked her by insurer’s soliciting agent, that the agent filled out the application, that she signed same without reading it because eye trouble pre vented her from reading, and that at the time she was wearing dark glasses. The jury found, upon competent sustaining evidence, that the agent inserted in the application answers to certain questions without the knowledge of insured. Held: Insurer may not assert the falsity of such answers in the application as misrepresentations entitling it to a forfeiture of the policy.
Appeal by defendant from Ervin, Jr., Special Judge, and a jury, at Extra 3 March Civil Term, 1941, of MecxleNbueg.
No error.
This was a civil action originally tried before Gr. W. Denny, justice of the peace, Charlotte Township, Mecklenburg County, N. C., on 19 December, 1939. Defendant appealed to the Superior Court of Mecklen-burg County. The action was tried before S. J. Ervin, Jr., Special Judge, and a jury, at the Extra 3 March Civil Term, 1941, of the Superior Court of Mecklenburg County. The case proceeded to trial before the judge and a jury which was duly selected and impaneled.
The issues submitted to the jury and their answers thereto were as follows:
“1. Was the plaintiff, at the time of making application for the certificate in suit, subject to any medical or physical condition which could require medical or surgical treatment? Ans.: No.’
“2. If so, did the plaintiff fully and fairly disclose all the facts in regard thereto to the defendant’s agent, at the time the application was made ? Ans.: .
“3. Had the plaintiff, before making application for the certificate in suit, consulted a doctor, or received medical or surgical treatment from a doctor, for illness or injury? Ans.: ‘Yes.’
“4. If so, did the plaintiff fully and fairly disclose all the facts in regard thereto to the defendant’s agent at the time the application was made? Ans.: ‘Yes.’
“5. Did the plaintiff, at the time of making application for the certificate in suit, have any abnormality of the eyes or ears? Ans.: ‘Yes.’
“6. If so, did the plaintiff fully and fairly disclose all the facts in regard thereto, to the defendant’s agent, at the time the application was made? Ans.: ‘Yes.’
“7. Did the plaintiff, at the time of making application for the certificate in suit, have any physical deformity, infirmity or disability ? Ans.: ‘No.’
“8. If so, did the plaintiff fully and fairly disclose all the facts in regard thereto to the defendant’s agent at the time the application was made ? Ans.: .
“9. Did the plaintiff, before applying for the certificate in suit, ever have rheumatism, tuberculosis, heart disease, disease of the kidneys, cancer, syphilis, nervous disorder, arthritis, mental disability, ulcers, abscesses, wounds, varicose veins, epilepsy, diabetes, or disease of tbe bones? Ans.: No/
“10. Was tbe plaintiff, at tbe time of applying for tbe certificate in suit, in good bealtb? Ans.: ‘Yes.’
“11. If not, did tbe plaintiff fully and fairly disclose all tbe facts in regard thereto to tbe defendant’s agent at tbe time tbe application was made ? Ans.: .
“12. Were tbe statements in plaintiff’s application for tbe certificate in suit relating to tbe matters mentioned in Issues 1, 3, 5, 1, 9, and 10, inserted in said application by tbe defendant’s agent without tbe knowledge of tbe plaintiff ? Ans.: ‘Yes.’
“13. Was tbe plaintiff prevented from reading her application for tbe certificate in suit and from having tbe same read to her by tbe fraud of tbe defendant’s agent? Ans.: No.’”
Tbe following judgment was rendered by tbe court below:
“This cause coming on to be beard before tbe undersigned presiding Judge and tbe jury, upon tbe issues appearing in tbe record; and it appearing to tbe Court that tbe defendant has judicially admitted, in open Court, that the defendant issued to tbe plaintiffs tbe Certificate of Insurance (dated February 21, 1939) offered in evidence by tbe plaintiffs as Plaintiffs’ Exhibit # 2; and it further appearing to tbe Court that tbe plaintiffs have judicially admitted, in open Court, that tbe plaintiff, Margaret E. Cato, signed an application for said Certificate of Insurance dated February 21, 1939, in words and figures as appears in tbe paper writing marked Defendant’s Exhibit No. 1; and it further appearing to tbe Court that tbe plaintiffs and tbe defendant have judicially admitted, in open Court, that on or about May 23, 1939, tbe plaintiff, Margaret E. Cato, was admitted to a hospital and that she thereafter received medical and surgical attention and hospital treatment, and that she is entitled to recover of tbe defendant tbe sum of $109.00 in tbe event, and only in tbe event tbe defendant is liable to her upon tbe Certificate of Insurance in controversy, which tbe defendant expressly denies; and it further appearing to tbe Court that tbe defendant has judicially admitted, in open Court, that tbe plaintiff, Margaret E. Cato, furnished tbe defendant written proof of her said treatment and claim, on or about June 1, 1939, and that on or about June 1, 1939, tbe defendant refused to pay said claim and denied liability therefor, upon tbe contention that tbe plaintiff, Margaret E. Cato, bad made false statements with reference to material matters in her application for said certificate, and that tbe defendant was not liable upon said certificate by reason thereof; and it further appearing to tbe Court that tbe parties have judicially admitted, in open Court, that on or about tbe said first day of June, 1939, tbe defendant tendered to tbe plaintiffs tbe sum of $9.00, being tbe amount of premiums paid by tbe plaintiffs to tbe defendant upon tbe certificate in suit, and demanded that tbe plaintiffs surrender said certificate for cancellation; and it further appearing to tbe Court tbat tbe plaintiffs refused to accept said tender of said sum and refused to surrender said certificate to tbe defendant for cancellation, tbe plaintiffs insisting tbat said certificate was valid and binding obligation on tbe part of tbe defendant, and tbat tbe defendant was liable to tbe plaintiff, Margaret E. Cato, thereupon — which tbe defendant denied; and it further appearing to tbe Court, and tbe Court finding as a fact, tbat tbe jury have returned tbe verdict which appears in tbe record; and it further appearing to tbe Court, and the Court finding as a fact, tbat upon tbe return of said verdict tbe defendant moved for judgment in favor of tbe defendant, upon tbe authority of tbe case of Inman v. The, Woodmen of the World, 211 N. C., 179, and Equitable Life Assurance Society of the United States v. Ashby, 215 N. C., 280; and tbe Court being of the opinion tbat said motion should be denied and tbat judgment should be rendered herein in favor of tbe plaintiff, Margaret E. Cato, upon tbe authority of tbe case of Cox v. Assurance Society, 209 N. C., 782, and upon tbe authority of Williston on Contracts (Rev. Ed.), Vol. Ill, Sec. 751:
“Now, Therefore, it is hereby Considered, Ordered and Adjudged by tbe Court herein, as follows :
“1. Tbat tbe plaintiff, Margaret E. Cato, do have and recover judgment of tbe defendant, Hospital Care Association, Incorporated, for tbe sum of $109.00, together with interest on said sum from tbe first day of June, 1939, until paid, and tbe costs of this action, to be taxed by tbe Clerk of this Court;
“2. Tbat tbe prayer of tbe defendant for cancellation of tbe Certificate of Insurance in suit be, and tbe same is hereby denied. S. J. Ervin, Jr., Judge Presiding.”
Tbe defendant made certain exceptions and assignments of error and appealed to tbe Supreme Court. They, with the necessary facts, will be set forth in tbe opinion.
John Newitt for plaintiffs.
John T. Manning for defendant.

Opinion:
Clarkson, J.
Tbe defendant appellant contends tbat tbe lower court committed error by not rendering judgment on tbe verdict for tbe defendant appellant and by signing tbe judgment. We cannot so bold on tbe record.
Tbe charge of tbe court below is not in tbe record, and it is well settled in this jurisdiction tbat it is assumed tbat tbe court below charged tbe law applicable to tbe facts. Maynard v. Holder, 219 N. C., 470 (471).
Tbe evidence is to tbe effect tbat tbe agent of tbe defendant went to tbe borne of plaintiffs, on 21 February, 1939, and applications for certificates of membership were signed by plaintiffs and afterwards sent by tbe agent to defendant company and policies were issued. Tbe action is brought on this certificate or policy. Plaintiffs paid tbe agent $4.50 at tbe time of tbe application, a quarterly payment on tbe policy. Tbe service was hospital care. While tbe policy was in force tbe plaintiff, Margaret E. Cato, was operated on for appendicitis. Tbe hospital and surgical bills totaled $109.00, for which plaintiffs instituted this action, after defendant bad denied liability.
It was contended by defendant tbat tbe feme plaintiff answered certain questions in tbe application or certificate falsely, which were material to tbe validity of tbe policy. Tbe feme plaintiff denied this. She -testified tbat she at tbe time the certificate was signed, wore dark glasses and she could not see real good. "I am not able to read fine print — I can't even read normal print. . I will be 59 years old my next birthday. . I have ten living children and one dead. Tbe hospital did furnish service to me during tbe time of my appendicitis operation. Tbe Hospital Care Association has never furnished me any hospital service. . . . He (tbe agent) asked me bad I bad a doctor in tbe last six months and I told him no, I bad not bad a doctor in a year. He asked me if I thought I was in good health. I said I thought I was as far as my age would permit. I will be 59 my next birthday. He did not read anything else or ask me any other questions tbat I can recollect. I was not able to read tbe paper which I signed. (The Court) : You say be asked you just two questions, one was whether you bad had a doctor in the last six months? Ans.: Yes, sir. (The Court) : And the other was whether you were in good health ? Ans.: Yes. (Tbe Court) : And you told him tbat you bad not bad a doctor in the last six months and tbat you were in good health for your age? Ans.: Yes, sir. . . . Q. Mrs. Cato, look at tbat and see if that is your signature (handing witness a paper writing, Defendant's Exhibit 2). 'Ans.: You go ask him, I can't see what tbat word says. Please ask him, will you? I recall signing tbe application tbat night. Q. Did you ask Mr. Eitch to read this over to you? Ans.: No, I trusted him. Q. Did you ask any of your children to read it over to you? Ans.: No, I trusted Mr. Eitch. I just took bis word for it and signed tbe paper. Q. And you did not know whether tbe answers to these questions were right or wrong ? Ans.: I didn't even know there was any questions to be asked, only tbe two he asked me. I knew be asked me two?"
The insurance certificate, or application, was introduced in evidence by plaintiff Margaret E. Cato, tbe beneficiary. Tbe premium was paid and tbe certificate was in force at the time of the need for hospitaliza tion. Tbe medical and hospital bill was for $109.00. Tbe plaintiffs bad filed proper proof and tbe defendant bad denied liability, a prima facie case was made out against defendant.
In Lyons v. Knights of Pythias, 172 N. C., 408 (410), it is said: "On proof of tbe death of tbe member, presentation of the policy by the beneficiary and denial of any liability by tbe company, a prima facie right of recovery is established, and defendant, claiming to be relieved by reason of nonpayment of dues or other like default, has tbe burden of proof in reference to such defenses. Harris v. Junior Order, etc., 168 N. C., 357; Wilkie v. National Council, 147 N. C., 637; Doggett v. Golden Cross, 126 N. C., 477 (480)." Creech v. Woodmen of the World, 211 N. C., 658 (660); Blackburn v. Woodmen of the World, 219 N. C., 602 (606).
In Cox v. Assurance Society, 209 N. C., 778 (782), this Court said: "It is a well settled principle in this jurisdiction that an insurance company cannot avoid liability on a policy issued by it by reason of any facts which were known to it at the time the policy was delivered, and that any knowledge of an agent or representative, while acting in tbe scope of tbe powers entrusted to him, will, in tbe absence of fraud or collusion between the insured and tbe agent or representative, be imputed to tbe company, though tbe policy contains a stipulation to tbe contrary. Follette v. Accident Assn., 110 N. C., 377; Fishblate v. Fidelity Co., 140 N. C., 589; Short v. Ins. Co., 194 N. C., 649; Laughinghouse v. Ins. Co., 200 N. C., 434; Colson v. Assurance Co., 207 N. C., 581; Barnes v. Assurance Society, 204 N. C., 800, and cases there cited." Peebles v. Guano Co., 77 N. C., 233 (237); Alpha Mills v. Engine Co., 116 N. C., 797; Williston on Contracts (Rev. Ed.), Vol. III, sec. 751, supra.
Tbe answers to certain issues in favor of plaintiffs fully support tbe judgment. On tbe verdict we think tbe judgment correct.
Tbe defendant's agent, as was found by tbe jury (and there was competent evidence to* sustain tbe finding), inserted in tbe certificate or application certain answers to questions, without tbe knowledge of plaintiff. Tbe defendant may not now assert tbe falsity of tbe answers. Whitehurst v. Ins. Co., 149 N. C., 273; Currie v. Malloy, 185 N. C., 206; Lunn v. Shermer, 93 N. C., 164.
Tbe cases of Inman v. Woodmen of the World, 211 N. C., 179, and Assurance Society v. Ashby, 215 N. C., 280, are not applicable to tbe facts in tbe present action.
This contract and loss occurred before tbe Hospital Insurance Act of 1941, eb. 338.
For tbe reasons given, we find no prejudicial or reversible error on tbe record.
No error.