Case Name: UNITED FAMILY LIFE INSURANCE COMPANY v. SHIRLEY
Court: Court of Appeals of Georgia
Jurisdiction: Georgia
Decision Date: 1978-01-11
Citations: 144 Ga. App. 722
Docket Number: 54429
Parties: UNITED FAMILY LIFE INSURANCE COMPANY v. SHIRLEY.
Judges: Bell, C. J., McMurray, Smith, and Shulman, JJ., concur. Deen, P. J., concurs specially. Quillian, P. J., Webb and Birdsong, JJ., dissent.
Reporter: Georgia Appeals Reports
Volume: 144
Pages: 722–728

Head Matter:
54429.
UNITED FAMILY LIFE INSURANCE COMPANY v. SHIRLEY.

Opinion:
Banke, Judge.
The appellant, United Family Life Insurance Company, filed a declaratory judgment action to set aside two policies issued on the life of appellee's minor child, now deceased, on the ground that appellee had made material misrepresentations in the application for insurance. The appellee denied the charges and counterclaimed to recover the face amount of both policies. The jury returned a verdict for appellee on his counterclaim. The appellant moved for a new trial, and it now appeals the denial of its motion.
Appellee completed the first insurance application in January 1975 and the second in March 1975. In response to specific questions on the applications, the appellee answered that his son did not at that time have any illness or diseases. Another question on the application asked if "the proposed insured [had] consulted a physician or been confined to a hospital or institution within the past three years?" Appellee answered that his son had received only routine medical attention for a child his age, and the insurance agent recorded an answer of "No" to this question. At trial, the agent testified that he had acted in accordance with training instructions given him by appellant. Chief counsel for the appellant testified that an affirmative answer to any of the involved questions would have materially altered the insurer's risk. The appellee also executed medical authorizations authorizing appellant to secure the medical records of his son for review.
On August 26,1975, Dr. Samuel Haddock diagnosed the insured child as probably having a fatal disease characterized by a progressive degeneration of the central nervous system. In October 1975 a specialist at Emory University confirmed the diagnosis, and the child died from the disease on January 11, 1976.
The applications were deemed merged into the issued policies and a provision on the application limited the agent's authority to modify the contract.
1. The evidence presented at trial was inconclusive as to whether the child was already fatally ill when the appellee, his father, applied for the life insurance coverage in January and March 1975. The evidence was also inconclusive as to whether the appellee had at that time been informed of the possibility that his child might have a serious illness. The appellant relied on the testimony of Dr. Jack Lawrence who stated that he told the child's parents in November 1974 that he believed the child was developing a fatal muscle disease as proof of the fact that the appellee was informed. However, on cross examination Dr. Lawrence admitted that he might only have told one parent of his diagnosis and that he could not now remember which parent that was. The appellee relied on the testimony of Dr. Samuel Haddock that the appellee and his wife did not learn that their son had a fatal disease until October 1975.
Even if we assume, arguendo, that the child was fatally ill at the time the applications were completed, the policies cannot be voided unless appellant's evidence proves that appellee had actual knowledge of his son's condition when he represented him as being in good health. See Pitts v. Gulf Life Ins. Co., 137 Ga. App. 658 (2) (224 SE2d 776) (1976) (cert. denied); United Ins. Co. v. Dixon, 143 Ga. App. 133 (237 SE2d 661) (1977) (cert. denied). Since the evidence introduced at trial on this issue was in conflict, the judge properly denied the appellant's motion for a directed verdict. See Nationwide Mut. Ins. Co. v. Ware, 140 Ga. App. 660 (1) (c) (231 SE2d 556) (1976); United Ins. Co. v. Dixon, supra.
The appellee did not contend that the appellant was barred from voiding the policies because of the representations of its agent (see Peek v. Southern Guaranty Ins. Co., 240 Ga. 498 (1978)), but argued that the failure to list routine visits to the doctor was not material. Under these circumstances the judge was correct in reserving for the jury's determination the issue of whether the appellee's failure to list all medical examinations, even those of a routine nature, within a 3-year period was a misrepresentation so material or misleading that had the insurer known the true facts, it would not have issued the policy under the terms stated. See Code Ann. § 56-2409; Pitts v. Gulf Life Ins. Co., (3) (4), supra. Compare Prudential Ins. Co. v. Perry, 121 Ga. App. 618 (2) (b) (174 SE2d 570) (1970) (knowing misrepresentation material as a matter of law.)
2. (a) The trial judge did not err in denying appellant's request that the jury be charged that if a representation made on an application for insurance is shown to be false and material in that it changed the nature, extent, or character of the risk, the insurer is not liable on the policies, regardless of the applicant's good faith in completing the application. See All Am. Life &c. Co. v. Saunders, 125 Ga. App. 7 (186 SE2d 328) (1971).
We impliedly overruled this section of the Saunders decision in Pitts v. Gulf Life Ins. Co., 137 Ga. App. 658, supra, 659, when we said that since a response on an insurance application is merely a representation, "it must be judged not on the basis of truth/untruth in an absolute sense, as would a warranty, but on the basis of truth/lie, considering the knowledge and understanding of the insured." We also applied this test in United Ins. Co. v. Dixon, 143 Ga. App. 133, supra, (1) without reference to the contrary rulings in our decisions prior to Pitts v. Gulf Life Ins. Co., supra. But see Peek v. Southern Guaranty Ins. Co., 142 Ga. App. 671 (2) (236 SE2d 767) (1977) (reversed on other grounds, 240 Ga. 498, supra).
The Pitts standard for judging the effect of a misrepresentation by the applicant on his application for insurance is fully applicable in this situation where the appellee was applying for insurance on the life of his 2-year-old child. In adopting Pitts v. Gulf Life Ins. Co., supra, and United Ins. Co. v. Dixon, supra, as being the law governing this case, we expressly overrule All American Life &c. Co. v. Saunders, supra; Reserve Life Ins. Co. v. Chalker, 127 Ga. App. 565 (1) (194 SE2d 290) (1972); and Bridges v. World Service Life Ins. Co., 134 Ga. App. 923 (1) (216 SE2d 714) (1975) insofar as they treat responses to insurance applications as warranties, totally disregarding the applicant's good faith (i.e., knowledge) once the falsity and materiality of the representation is proved.
Submitted September 15, 1977
Decided January 11, 1978
Rehearing denied February 8, 1978
McClure, Ramsay, Struble & Dickerson, John A. Dickerson, for appellant.
Cathey & Strain, Dennis T. Cathey, for appellee.
(b) The judge's charges to the jury on this issue, both taken from Pitts v. Gulf Life Ins. Co., supra, were correct statements of the law.
3. The trial judge did not err in denying appellant's motion for new trial. The evidence introduced at trial provided ample support for the jury's verdict; and, as we discussed in Divisions 1 and 2, there was no error in the judge's rulings at trial.
Judgment affirmed.
Bell, C. J., McMurray, Smith, and Shulman, JJ., concur. Deen, P. J., concurs specially. Quillian, P. J., Webb and Birdsong, JJ., dissent.
Rule 26 (c) of the Court of Appeals states that a whole court decision is binding precedent. However, a majority of the judges (see Pitts and Dixon, infra) have indicated their approval of the law as stated in Pitts v. Gulf Life Ins. Co. For this reason, we feel that the Saunders decision has been impliedly overruled.