Opinion ID: 2463262
Heading Depth: 1
Heading Rank: 3

Heading: misrepresentations defense

Text: At trial, Reliable sought to avoid liability on all three policies with the defense of fraudulent misrepresentations by Ozell concerning her health. All three application forms contained questions inquiring about the health of the prospective insured. The answers on the application forms indicated that Ozell had not had heart disease, high blood pressure, or disease or injury of her lungs, nor had she had any injury, illness or operation within the past five years, nor had she been confined in the hospital for any reason, nor had she received any treatment by a doctor. All of the applications were signed by Ozell. These answers, of course, were false. In the court's charge to the jury, special issue one inquired whether Ozell had made certain representations concerning her health to Agent Armstrong when he was taking applications for Policies A and B. The jury answered this issue in the negative. Special issues two through five were not answered because they were conditioned upon an affirmative answer to special issue one. These unanswered issues asked whether the representations were false, were related to material facts or matters, were relied on by Reliable in issuing the policies, and were made by Ozell with the intent to deceive Reliable and induce it to issue the policies. Special issues six through ten made the same inquiries concerning the application for Policy C taken by Agent Jones. The jury returned a negative finding on special issue six, concerning Ozell's representations to Agent Jones. Consequently, special issues seven through ten, relating to falsity, materiality, reliance, and intent, were not answered, inasmuch as they were conditioned upon an affirmative finding on special issue six. The trial court entered judgment in favor of A. W. Washington. Reliable moved for judgment non obstante veredicto, contending that the defense of misrepresentations was proven as a matter of law. The trial court overruled the motion. The court of civil appeals disposed of the case on other grounds and did not consider the issue. [6] Reliable bases its argument on the rule that an insured, having signed the application, is bound by the representations therein. In Odom v. Insurance Company of Penn., 455 S.W.2d 195, 199 (Tex.1970), this court stated: [W]here... an application for insurance is attached to and made a part of the policy and is accepted and retained by the insured, the insured is conclusively presumed to have knowledge of its contents and to have ratified any false statements therein. This rule does not pertain to Policies A and C because the application forms were not attached to those policies. The rule does control Policy B, however, because the application was attached to and made a part of that policy. While there was no testimony concerning delivery of Policy B to Ozell, it was admitted in request for admissions that Reliable caused to be delivered to Ozell Washington  all three policies. [Emphasis added.] [7] Under the rule of Odom, then, Ozell was conclusively presumed to have ratified the false statements in the application. Robinson v. Reliable Life Ins. Co., 569 S.W.2d 28, 30 (Tex.1978); Johnson v. Prudential Insurance Co. of America, 519 S.W.2d 111, 114 (Tex.1975). Contrary to what Reliable contends, however, this does not automatically establish the defense of misrepresentations, for there is still outstanding the issue of intentional deception, upon which Reliable had the burden of proof. As explained above, the jury did not reach the issue of intent because it failed to find in special issue one that Ozell made representations concerning her health to Agent Armstrong. Since under Odom v. Insurance Company of Penn., supra , Ozell was conclusively presumed to have ratified the false statements in the application on Policy B, special issue one, asking whether she made representations to Agent Armstrong, was irrelevant and it was improper to condition special issues two through five upon an affirmative answer to special issue one. Reliable is entitled to a new trial on its defense of misrepresentations as to Policy B. First Continental Life & Accident Co. v. Bolton, 524 S.W.2d 727 (Tex.Civ.App.Houston [14th Dist.] 1975, writ ref'd n. r. e.). It is true that Odom denied recovery to the insured without requiring a finding of intent. However, there are at least two reasons why this part of Odom does not apply to the case at bar. First, Odom and the cases cited therein concerned violations of warranties made by the insured, whereas the instant case concerns representations, a distinction of some importance to the court in First Continental Life & Accident Co. v. Bolton, supra . Secondly, there was strong evidence of collusion in Odom. Indeed, the court of civil appeals in that case held that collusion was proved as a matter of law, 441 S.W.2d 584, although that was not a basis of this court's opinion. There is no suggestion of collusion between Ozell and Agent Armstrong here. Similarly, in Johnson v. Prudential Insurance Co. of America, supra , there was a specific finding of willful intent to deceive.