Case Name: V. B. SHORT v. LaFAYETTE LIFE INSURANCE COMPANY
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1927-12-07
Citations: 194 N.C. 649
Docket Number: 
Parties: V. B. SHORT v. LaFAYETTE LIFE INSURANCE COMPANY.
Judges: 
Reporter: North Carolina Reports
Volume: 194
Pages: 649–650

Head Matter:
V. B. SHORT v. LaFAYETTE LIFE INSURANCE COMPANY.
(Filed 7 December, 1927.)
Insurance, Life — Principal and Agent — Policies—Application—Representations — “Good Health’ ’ — Fraud—Collusion.
Where the application for a policy of life insurance has been signed in blank, and delivered to the agent of the insurer, with the information that the insured had not been well, and the agent agreed that an examination by a physician need not be made, and the policy has been issued, at the death of the insured the policy may not be avoided on the ground that the application had falsely stated that the insured was then in good health, when no fraud or collusion is shown against the insurer by the agent or the insured, the act of the agent in so doing being within the scope of his employment.
Appeal by defendant from Townsend, Special Judge, at May Term, 1927, of GastoN.
No error.
The following verdict was returned:
1. Did the insured falsely represent the condition of her health in her application upon which the policy of insurance was issued ? Answer: No.
2. Did the defendant issue and deliver said policy of insurance with the knowledge of the condition of insured’s health? Answer: Yes.
3. In what amount, if any, is defendant indebted to the plaintiff? Answer: $498 with interest.
Bismarh Gapps for plaintiff.
Ernest R. Warren and Mangum & Denny for defendant.

Opinion:
Adams, J.
This is an action for the recovery of the amount alleged to be due on a policy of life insurance. The insured was Effie Short; the beneficiary is the plaintiff, her surviving husband. The defense interposed was predicated upon false representations said to have been made by the insured in her application for the policy. According to the application she was in good health and had not recently been sick. The plaintiff admitted that the insured had not been well, but he testi- fted that be gave tbis information to tbe defendant's agent; that tbe application was signed in blank, and that tbe agent agreed to write tbe policy without a physician's examination. Tbe pleadings and tbe testimony presented issues of fact which were submitted to tbe jury and answered against tbe defendant.
Tbe exceptions on which tbe appellant relies relate to tbe denial of bis motion for nonsuit and to an instruction given tbe jury. Tbe testimony of tbe witnesses was conflicting, and that which was offered by tbe plaintiff was sufficient to sustain tbe verdict; for tbis reason tbe motion to dismiss tbe action could not properly have been granted. Rush v. McPherson, 176 N. C., 562; Lindsay v. Lumber Co., 189 N. C., 118.
Tbe instruction complained of was as follows: "Upon that second issue, I charge you that tbe knowledge of tbe agent would be tbe knowledge of tbe company unless you find that tbe agent, with tbe knowledge and consent of tbe insured in tbis case, was attempting to practice fraud upon tbe company. The knowledge of tbe agent, if there was no attempt to practice fraud, would be under tbe law tbe knowledge of tbe company."
There was evidence that tbe agent knew of tbe ill health of tbe insured when tbe application was taken; tbe agent's knowledge will therefore be imputed to tbe company and prevent it from avoiding tbe contract on tbe ground of false warranty. Tbis position is approved in Insurance Co. v. Grady, 185 N. C., 348, 353: "Another principle recognized in tbis jurisdiction and pertinent to tbe inquiry is that, in the absence of fraud or collusion between the insured and tbe agent, tbe knowledge of tbe agent when acting within tbe scope of tbe powers entrusted to him will be imputed to tbe company, though a direct stipulation to tbe contrary appears in tbe policy or tbe application for tbe same. Gardner v. Ins. Co., 163 N. C., 367; Fishblate v. Fidelity Co., 140 N. C., 589; Grabbs v. Ins. Co., 125 N. C., 389; Follette v. Accident Assn., 110 N. C., 378; Connecticut Indemnity Assn. v. Grogan's Admr., 52 S. W., 959; McElroy v. British American Assur. Co., 94 Fed., 990; Northwestern Life Assur. v. Findley et al., 68 S. W., 695; Germaine Life Ins. Co. v. Koehler, 63 Ind. App., 188."
Tbe following additional authorities may be consulted: Collins v. Casualty Co., 172 N. C., 543; Robinson v. B. of L. F. & E., 170 N. C., 545; Horton v. Ins. Co., 122 N. C., 498; Bergeron v. Ins. Co., 111 N. C., 45.
No error.