Title: Mutual of Omaha Ins. Co. v. Dingus
Citation: 250 S.E.2d 352
Docket Number: 770704
State: Virginia
Issuer: Virginia Supreme Court
Date: January 12, 1979

250 S.E.2d 352 (1979)
MUTUAL OF OMAHA INSURANCE COMPANY
v.
James E. DINGUS.
Record No. 770704.

Supreme Court of Virginia.
January 12, 1979.
*353 Charles B. Flannagan, II, Bristol (Woodward, Miles &amp; Flannagan, Bristol, on brief), for plaintiff in error.
No brief or argument for defendant in error.
Before I'ANSON, C. J., and CARRICO, HARRISON, COCHRAN, HARMAN, POFF and COMPTON, JJ.
HARRISON, Justice.
James E. Dingus recovered a judgment in the court below against Mutual of Omaha Insurance Company. The recovery was effected under a disability income policy. Mutual defended upon the ground that there was no valid policy of insurance in effect because of material misrepresentations contained in Dingus' application for insurance.
On October 5, 1972, Dingus signed an application for a policy of insurance from Mutual which would provide him specific benefits in event he should incur certain designated medical expenses. This application, which contained questions to be answered by Dingus, read, in part, as follows:
The application reflects that Dingus answered "No" to questions 2(a)(b)(d) and 3(a)(b). Over Dingus' signature and the statement of James Shortt, an agent of Mutual, that he had "truly and accurately recorded in this application the information supplied by the applicant", is the following certification:
Pursuant to the application, Mutual issued and delivered to Dingus its disability income policy. The second paragraph on the first page of the policy contains the following language printed in red letters:
On November 1, 1972, Mutual mailed to Dingus at his correct address its reverification letter containing the following language:
On March 27, 1973, Dingus had a right inguinal hernia operation and, following his discharge from the hospital, applied to Mutual for benefits under his policy. In the routine processing of the claim, the company gained information about Dingus' prior health history and health problems.
Specifically, when Dingus was admitted to the Bristol Memorial Hospital, Bristol, Tennessee, on March 26, 1973, his medical history was taken by Dr. Kermit Lowry and recorded, in pertinent part, as follows:
The secretary of medical records of the Bristol Memorial Hospital advised counsel for appellant on March 27, 1974, that James E. Dingus had been a patient in Bristol Memorial in June, 1958, and in March, 1973. Regarding Dingus' 1958 hospitalization, she certified Dr. B. Y. Cowan's findings to have been as follows:
*355 Dr. W. A. Davis of Dante, Virginia, was asked if he had seen Dingus for any reason other than the hernia and he responded by written report dated July 23, 1973, as follows:
The evidence on behalf of Mutual is that the policy was issued on the basis of the information contained in the application which, on its face, indicated no problems whatsoever concerning Dingus' insurability. Charles Burke, Senior Underwriter for the southeast region of Mutual, testified that had Dingus divulged in his application the information which the company obtained following his hernia operation, the policy would not have been written. Burke said that had Dingus disclosed the fact that he had been hospitalized in 1958 with ulcer-type symptoms, or that he had been told by physicians that he had high blood pressure, or that he had been spitting up blood in 1958 and 1960, or that he had been examined for a hernia in 1971, the company would have pursued this information before issuing any policy. Burke stated the company would have written to the doctors and obtained medical reports and information concerning the true condition of the applicant.
Dingus testified that he advised the company's agent that "I had been hospitalized in 1957 or `58 for bleeding ulcer, and he said, `That's too far back.' He said, `That don't make any difference.' He said, `This is five years.'" Shortt denied that Dingus told him of the 1958 hospitalization. The agent testified that Dingus answered "No" to all the medical history questions and that he accurately recorded all the answers on the application.
Dingus admitted that he did not read the application at the time he signed it, and that he did not read the policy when it arrived. He said he did not "remember getting such [reverification] letter". The position of Mutual is that Dingus had knowledge, actual or constructive, prior to his hospitalization in March, 1973, that facts material to the risk were falsely stated in his application for insurance.
The court, overruling a motion by Mutual to strike and grant it summary judgment, submitted the case to the jury after having granted certain instructions, including the following:
To escape liability under the policy, Mutual of Omaha had the burden of clearly proving that Dingus' answers in his application were material to the risk when assumed and were untrue. Virginia Code § 38.1-336. Mutual of Omaha v. Echols' Adm'rs, 207 Va. 949, 154 S.E.2d 169 (1967); Chitwood v. Prudential, 206 Va. 314, 143 S.E.2d 915 (1965).
A fact is material to the risk to be assumed by an insurance company if the fact would reasonably influence the company's decision whether or not to issue a policy. "Representations in an application for a policy of insurance should not only be true but full. The insurer has the right to know the whole truth. If a true disclosure is made, it is put on guard to make its own inquiries, and determine whether or not the risk should be assumed." 206 Va. at 318, 143 S.E.2d  at 918, quoting Inter-Ocean Ins. *356 Co. v. Harkrader, 193 Va. 96, 100-101, 67 S.E.2d 894, 897 (1951). It is an accepted practice of insurance companies to issue health and accident policies based upon applications without medical examinations. Such companies have a right to be in possession of the true facts and correct information when they make a determination whether or not a risk should be assumed.
Evidence introduced by Mutual disclosed not only a six-day confinement of Dingus in the Bristol Memorial Hospital in 1958, but numerous examinations by physicians, elevated blood pressure, chronic addiction to alcohol, hemetemesis in 1958 and 1960, examination for hernia in August, 1971, and a statement by Dingus, made in March, 1973, to an examining physician, that "[h]e had noticed some discomfort in that area [area of the hernia] about four years ago when he was working". In light of this history of medical problems that would have appeared had a full disclosure been made on the application, it is inconceivable that Mutual would have issued its policy to Dingus without investigating further or requiring a current medical examination. The evidence clearly proves that insured's application for insurance contained answers and statements which were untrue and material to the risk when assumed.
Dingus testified that he answered correctly all questions propounded to him by the company's agent, and that it was the agent who filled in the various answers to the interrogations contained in the application. In the court below[*] appellee relied upon New York Life Ins. v. Eicher, 198 Va. 255, 260, 93 S.E.2d 269, 273 (1956), where it was said:
"`The view generally taken is that the agent in making out the application acts for the insurer, and that the insurer is therefore estopped to assert the mistake or, as has been said in some cases, the mistake is deemed to be waived by the insurer. . . .", quoting from Gilley v. Union Life Ins. Co., 194 Va. 966, 974, 76 S.E.2d 165, 170 (1953).
However, as was pointed out in Eicher:
It is the position of appellant that Dingus had actual or constructive knowledge that his application contained false, material answers and therefore he should not be allowed to profit thereby. It argues that the company should not be estopped by the knowledge or conduct of its agent, if such in fact existed, from asserting the falsity of such answers as a bar to its liability on the policy. Furthermore, it points to our holding in Eicher that in the absence of peculiar circumstances, there is a rebuttable presumption that the applicant has read the application which he signed, and he is prima facie charged with knowledge of its contents. 198 Va. at 260, 93 S.E.2d  at 273.
In the case under review, it has been established that the answers given on an application signed by Dingus were false and material. It was incumbent upon him to rebut the presumption that he knew his application contained false answers and in rebutting this presumption, it was incumbent upon Dingus to prove that the answers were truthfully given by him to the agent Shortt, who incorrectly recorded them.
Dingus did not testify that he advised the agent of any of his health problems, examinations, or treatments, other than his 1958 hospitalization for a bleeding ulcer. Dingus did not tell the agent of his various elevated blood pressure readings, his hemetemesis in 1960 or his chronic alcoholic intake; that his problem had been diagnosed as "alcoholic *357 hemorrhagic gastritis"; that he had psychiatric counseling and had been diagnosed as psychopathic; or that four years prior to his hernia operation he had experienced discomfort in the area where the hernia ultimately occurred.
Even if we assume that the company's agent was told of Dingus' 1958 hospitalization but did not accurately record this fact on the application, this alone does not establish that Dingus gave truthful answers to the various other questions asked in the application, or that he did not know, aside from the omission of any reference to his 1958 hospitalization, that the application contained false answers. We find the evidence in the record insufficient to rebut the presumption that the answers recorded in the application were those given by the insured and that he knew the application contained false answers.
Accordingly, the verdict of the jury will be set aside, the judgment reversed, and final judgment entered here for Mutual of Omaha Insurance Company.
Reversed and final judgment.
[*]  Appellee filed no brief on appeal.