Court Opinion

ID: 9778130
Source: CourtListenerOpinion
Date Created: 2023-08-29 20:33:48.187023+00
Date Added: 2024-06-11T07:33:03.990323
License: Public Domain

Conley Byrd, Justice, dissenting. The relevant facts in the record are uncontradicted except by the conclusion stated in the majority opinion. The credit life policy was issued on March 17, 1976, and Jones died on June 26, 1976, with a heart attack. In the testimony of Mr. Jones’ treating physician, Dr. Allen Gray Talbot testified that in April of 1973, Mr. Lamar Jones, Jr., had an acute myocardial infarction. He treated Jones periodically from April of 1973, until the time of his death in June, 1976. Jones was suffering from heart disease. Jones saw Dr. Talbot January 12, 1976, April 5, 1976, April 19, 1976 and May 31, 1976. Jones had nitroglycerin tablets and anti-coagulant pills. Jones had angina pectoris which is heart pains and one of the symptoms. Appellee, Mrs. Lamar Jones, Jr., testified that she was present during all of the conversations with Mr. Stokes, the soliciting agent, and that she was also there when the contract was signed on March 17, 1976. She testified that she and her husband advised Mr. Stokes truthfully about Mr. Jones’ past health situation, and that Stokes was aware of Jones’ past health when he wrote the policy. Mrs. Jones also admitted that notwithstanding their knowledge of Mr. Jones’ past health, Jones then signed the policy health statement “. . . that to the Best of My Knowledge and Belief lam Now in Good Health. ...” Notwithstanding the foregoing uncontradicted testimony, the majority makes the following assertion: “The insurance form of Ford Life Insurance’s Contract, which is reproduced herein, contains its printed statement that ‘to the best of my knowledge and belief I am now in good health’ with no room for disagreement. Such a statement on such a form should not be used as a defense to liability when, in fact, it is undisputed that there was no misrepresentation or fraudulent statement.” (Italics mine). Under Ark. Stat. Ann. § 66-3208 (Repl. 1966), it was not necessary for Ford Life Insurance Company to show fraud, it was only necessary to show that the insured had made either an incorrect or material misrepresentation which materially affected the risk. Contracts are a two way street and require some integrity on the part of both parties. Can an insured in dealing with a soliciting agent, who has no authority to change or modify the policy, rely upon the statement of such agent when the insured signs an erroneous good health provision upon which the company is supposed to act? The cases hold that an insured cannot become a participant with an agent in making an erroneous or incorrect statement and retain the benefits of the policy. See Theros v. Metropolitan Life Insurance Company, 17 Utah 2d 205, 407 P. 2d 685 (1965) and Norwick v. United Security Life Company, 82 S.D. 640, 152 N.W. 2d 439 (1967). In the last mentioned case it was pointed out “. . . the general law relative to insurance contracts requires good faith in making answers to questions in an application and if applicant discovers that statements made therein were not based upon facts detailed by him to the agent, it becomes his duty to make known the facts to the insurer.” In Theros v. Metropolitan Life Insurance Company, supra, the Supreme Court of Utah stated: “In order to defeat recovery on an insurance policy because of misrepresentation in the application, the misrepresentations must have been made with an intent to deceive and defraud the insurance company. However, such an intent may be inferred where the applicant knowingly misrepresents facts which he knows would influence the insurer in accepting or rejecting the risk. The same rule should apply where the applicant knowingly or with constructive knowledge, permits such misrepresentation to be submitted to the insurance company.” See also Williams v. Black Hills Benefit Life Ass’n., 70 S.D. 611, 19 N.W. 2d 769 (1945), where it was stated: “It is clear that if the applicant for insurance had falsely answered the questions above set out, and the falsity of such answers was not known to the agent, such false answers would have rendered the policy void. Hohenthaner v. Mutual Life Ins. Co., 62 S.D. 8, 250 N.W. 370; Life Benefit, Inc. v. Forbragd, 68 S.D. 38, 298 N.W. 259. However, respondent contends that the facts of the present case estop the defendant from asserting the invalidity of the policy. Respondent bases this contention upon the holdings of this court to the effect that a soliciting agent of a mutual benefit association is in effect the general agent of the association and the agent’s knowledge of any fact that might increase the risk is the knowledge of the company. Thomas et al v. Modern Brotherhood of America, 25 S.D. 632, 127 N.W. 572; Fosmark v. Equitable Fire Ass’n., 23 S.D. 102, 120 N.W. 777. But the rule upon which respondent relies should not be without limitation. The rule, we believe, contemplates the existence of entire good faith on the part of the insured, and the absence of circumstances that would impute to him knowledge that the insurer would be deceived by the application submitted. ‘An agent can never have authority, either actual or ostensible, to do an act which is, and is known or suspected by the person with whom he deals to be, a fraud on the principal.’ SDC 3.0208. Frazier v. Hartford Fire Ins. Co., 51 S.D. 40, 211 N.W. 973.” In view of some statements in the majority opinion such as “Ford Life has a policy of not inquiring of an insured’s health until a claim is made” it appears to me that the majority are more interested in the end result of this litigation than in a fair application of the law. Since Ark. Stat. Ann. § 66-3809 (Repl. 1966), requires a delivery of a certificate of insurance at the time the indebtedness is incurred or within 30 days thereafter with the insurance being retroactive to the date of the indebtedness, a credit life insurer, as a practical matter, has to rely upon the application for the issuance of its policy. The suggestion in the majority opinion that after stipulating to Stokes’ capacity as a “soliciting agent”for Ford Life (later the appellee’s attorney obviously regretted this agreement) (emphasis mine), ignores the fact that insurance agents are licensed by the Insurance Commissioner, Ark. Stat. Ann. § 66-2815 (Repl. 1966). Furthermore by Ark. Stat. Ann. § 66-2823 it is specifically provided that “(4) a solicitor shall not have authority to bind risks or countersign policies.” If the conduct of the soliciting agent here does not fall within the holding of our prior cases that a soliciting agent has no authority to change or alter the provisions of a policy, it would appear the appellant is entitled to a better explanation than “We simply do not feel they apply in this case.” I dare say that such a statement can be made with respect to any prior decision but without some elucidation, the citizens of this State have no warning when the court will just as abruptly say that any other matter will not be controlled by the prior decisions. I plead with the majority to elucidate further so that the citizens of our State will know how to conduct their business or what law the legislature must enact to make their wishes known. Finally the majority without citing a single previous case makes the bold statement “We are not unmindful that a strong argument can be made that we are making a decision that flies in the face of our previous decisions and Ark. Stat. Ann. § 66-3208 (Repl. 1966).” I humbly submit that when the majority recognizes that its decision “flies in the face” of a valid statute that it then owes to the losing litigant and the public in general a detailed explanation of why and how the majority has the authority to render a decision contrary to the established law — this duty the majority brushes aside with the mere assertion “. . . that the law enables people to have a fair decision after their day in court and undoubtedly our decision in this case cannot be characterized otherwise.” Can the majority ignore a statute to reach a result and still logically proclaim that its decision is fair? Is the majority characterizing its decision as fair merely because the credit life insurer loses and the insured wins? For the reasons herein stated, I respectfully dissent. Fogleman, J., joins in this opinion.