Court Opinion

ID: 5023965
Source: CourtListenerOpinion
Date Created: 2021-10-01 04:33:56.680802+00
Date Added: 2024-06-11T08:17:52.775536
License: Public Domain

CHADICK, Chief Justice.
These suits are by the beneficiaries of two insurance policies to enforce collection of the policies and recover penalty and attorney’s fees. The judgments of the trial court denied a recovery against the insurance company and such judgments are affirmed.
Two separate insurance policies are involved and separate suits were filed in the trial court, by consent they were tried together pursuant to Rule 174, Vernon’s Ann.Texas Rules, and the appeal reaches this court from separate judgments, but here, as in the trial court, both cases are consolidated for disposition. The common questions of law and fact being so similar, reference to the policy or the case will include both, unless the context indicates otherwise.
The case was assigned in regular order and a tentative opinion submitted with which the majority is not in agreement. The majority would affirm the case but are not in agreement upon the precise grounds therefor and separate opinions are being prepared. In an effort to economize space, I am assuming that Justice DAVIS’ tentative opinion will become a dissent and together with Justice FANNING’S opinion will record a part of the *653appellate review. In an effort to avoid repetition of facts and excerpts from the record and authorities found in these two opinions, I am reducing my statement to the bare essentials necessary to an understanding of the questions discussed.
In my view, Rule 274, V.A.T.R., is involved and the case turns upon the question of whether or not an objection made to a definition given by the trial judge to the jury in the course of its deliberations is sufficient as an objection to the court’s failure to submit a fact issue. However, I see no way of discussing this question in an understandable way without reciting some of the facts and circumstances of the cases.
Dr. Harold Roosth, a highly-respected physician of Tyler, Texas, on two occasions applied to American General Insurance Company for life insurance. Following the applications of the assured the insurance company on March 21, 1955, issued policy No. 109,680 in the sum of $10,000 with Rosa Lee Leaman Roosth as beneficiary; and on December 9, 1956, issued policy No. 135,404 in the sum of $50,000 payable to Rosa Lee Leaman Roosth as trustee for Thomas Malcolm Roosth, Cynthia Ann Roosth, and Marleen Samea Roosth. Less than two years after issuance of the first policy, on February 7, 1957, Dr. Roosth died suddenly at the end of an uneventful business day while seated at his office desk.
The insurance company declined to make payment on the policies and the suits were instituted. It defended by denying liability generally and setting up a number of affirmative defenses, including the defense that Dr. Roosth in his written application made false statements and misrepresentations of the facts about the state of his health, previous physical examinations and consultations with physicians regarding his ^health and physical condition, and the •cause of the death of his mother. Special issues were submitted to the jury, some of which were found favorably to Dr. Roosth .and some for the insurance company. Five sets of issues submitting the various allegations of fraud were found in favor of the insurance company. It is upon the findings of fact made by the jury to these fraud issues that the trial court rendered a take-nothing judgment. No complaint is made that the jury’s verdict upon these issues was not supported by the evidence. The findings in this regard are as final and binding upon this court as they were upon the trial court and there is no need to discuss the evidence which led the jury to make its findings.
For the purpose of this discussion, the fraud issues 40 to 44 on the $10,000 policy and 69 to 73 on the $50,000 policy will be referred to. Only one set of the issues will be discussed since they are the same as the others with one set applying to one policy and the second set to the other. In this series the jury found Dr. Roosth’s answer in his application that childbirth was the cause of his mother’s death as false; that he knew or should have known that such answer was false; and that he made such answer willfully and with intent to induce the insurance company to issue the policy; that such false answer was material to the risk insured against; and that the insurance company issued and delivered the policy in reliance upon the false answer. No objection was made by the Roosth beneficiaries that this series of fraud issues did not inquire if the answer by Dr. Roosth that his mother died of childbirth was made willfully and with design to deceive or defraud the insurance company.
After the jury retired to deliberate, the foreman addressed this written communication to the trial judge:
“May we have an interpretation of 'willfully and with intent to induce’ or a dictionary definition? Prefer an interpretation.”
The trial judge instructed the jury as follows:
“The term 'willfully and with intent to induce’ means ‘voluntarily and in*654tentionally for the purpose of influencing or persuading.’ ”
Counsel for the beneficiaries objected to the instruction in this language :
“Plaintiffs object to the definition of ‘willfully and with intent to induce’ because it fails to include the element of wrong-doing or, deceit as distinguished from good faith.”
It. is the position of the policy beneficiaries that:
“As originally framed, the issues put to the jury the question whether Harold made the misrepresentations ‘wil-fully and with intent to induce the defendant to issue the policy.’ This left the, jury free to consider the meaning of willfully as requiring a fraudulent intent to deceive, but when the court, gave the definition that ‘willfully and with intent to induce’ means ‘voluntarily and intentionally for the purpose of influencing or persuading,’ it entirely . removed the vital element, the fraudulent intent to deceive.”
In answer the' insurance company states “if the insured knew that the statement's were false and if he made them voluntarily and intentionally for the purpose of persuading the insurer to issue the policies therein sued upon, then it necessarily follows, as a matter of' law, that such statements were made with the intent to deceive the ■ insurer.” The company further asserts that no controverted fact issue on intent to deceive was made by the evidence.
I have reached the conclusion that the evidence raises a controverted fact issue respecting Dr. Roosth’s conscious intent td deceive the insurance company. An analysis of Clark v. National Life & Accident Ins. Co., 145 Tex. 575, 200 S.W.2d 820; Washington National Ins. Co. v. Anderson, Tex.Civ.App., 94 S.W.2d 263; wr. dis.; Great Southern Life Ins. Co. v. Doyle, Tex.Com.App., 136 Tex. 377, 151 S.W.2d 197; Vann v. National Life & Accident Ins. Co., Tex.Com.App., 24 S.W.2d 347; Coxson v. Atlanta Life Ins. Co., 142 Tex. 544, 179 S.W.2d 943; American Central Life Ins. Co. v. Alexander, Tex.Com.App., 56 S.W.2d 864; Imperial Life Ins. Co. v. Cartwright, Tex.Civ.App., 119 S.W.2d 683, n. w. h.; and General American Life Ins. Co. v. Martinez, Tex.Civ.App., 149 S.W.2d 637, wr. dis., judgm. cor., leads me to the conclusion that the burden was on t-he insurance company to plead- and prove- that Dr. Roosth’s' statement of the cause- of his mother’s death must have been made with the design to deceive the insurance company and unless the fact of such issue is established as a matter of law, it should have been .submitted for jury'determination. Bearing, in mind, however, that under Rule 2791 Dr. Roosth’s beneficiaries’ failure to properly object, if they did fail; yvaived its submission and the issue is how to be regarded as having been tried by' the court. And in the light of the judgment, if’ there was a failure to object, the issue must be presumed, to have been found by the .court favorably to the'insurance, .company. , •
Rule 274 directs that- a party objecting to a charge, point out distinctly the .matter to which he objects and the ground of -his objection. It appears to me that no reasonable construction of'the objection the Roosth beneficiaries made to the-'definition of “willfully and with' intent to ’iiiduce” amounts to Sr'is the equivalent of an objection to the court’s failure to submit the issue of Dr. Roosth’s conscious intent to deceive. Nor does it seem reasonable to me that the'-objection made is calculated to put the trial judge and opposing. counsel *655on notice that complaint is made because the charge does not elsewhere submit the particular fact issue of conscious deceit. Its reasonable construction can only be that complaint is being made because the definition is not comprehensive enough to include the element of deceit in the issue to which it refers.
The question arises, in this connection, of whether or not the fact i»e of conscious deceit and the fact issue of intent tó induce the insurer to issue a policy are two separate ultimate issues or only one. I think it cannot reasonably be said that conscious intent to defraud an insurer is the same question as intent to induce the insurer to issue a policy. Some element of bad faith must be present in a factual situation supporting a conscious deceit finding; but an intent to induce the issuance of a policy could be gathered from a factual situation in which bad faith and wrongdoing are entirely absent. I understand Clark v. National Life & Accident Ins. Co., supra, American Central Life Ins. Co. v. Alexander, Tex.Com.App., 56 S.W.2d 864, and Gorman v. Jefferson Standard Life Ins. Co., Tex.Civ.App., 275 S.W. 248, to make a distinction between the two issues and to be authority for their separate submission.
It is arguable that to define the phrase "willfully and with intent to induce” to embrace the elements of wrongdoing or deceit as distinguished from good faith would have tendered the issue of Dr. Roosth’s conscious deceit but to have done so would have coupled it with the insurance company’s fact issue on intent to induce the insurance company to issue the policy. Such definition would have denied the company the submission of the single issue on intent to induce in the form in which it had been given and which Roosth’s beneficiaries permitted it to be submitted without objection. I think that it is clear from the cases cited that the insurance company was under a burden to prove and was entitled to have submitted an issue to determine whether or not the statement was made with the intent of inducing the insurer to issue a policy without intermingling or associating with it in the same special issue the fact issue of conscious deceit. Rule 277 provides that special issues shall be submitted distinctly and separately and on the basis of this record, the court was under a duty to so submit the various elements of the fraud issue series and to have complied with the objection to the definition by defining the phrase as suggested would have been a substantial violation of the procedural rules governing the submission of special issues.
I find no error in the trial court’s overruling the objection made.
By supplemental pleading the Roosth beneficiaries invoke the law of waiver and es-toppel by alleging that when the policies were issued the insurance company had actual knowledge of the fact that Harold Roosth was a patient in Massachusetts Memorial Hospital but nevertheless issued such policies and is thereby estopped to assert such fact as a defense to this suit.
Such pleading made an issue as to the. knowledge, if any, the insurance company had of Dr. Roosth’s attendance at the hospital and the insurance company was called upon to meet this issue by showing what, if any, knowledge it had in this respect. In doing so, the insurer introduced two reports of the Retail Credit Company dated March 17, 1955, and December 1, 1956, respectively, for the limited purpose of showing the nature and extent of the investigation the insurance company made of Dr. Roosth’s applications for the two policies and not as proof of the facts recited in the reports. Objection was made that the reports concerning financial worth were immaterial to any issue in the lawsuit and injected the element of racial prejudice into the case. These reports attribute a net worth of $850,000 to Dr. Roosth and an annual earned income of $20,000 and other income of $30,000 from rentals and investments and that he is a member of a Hebrew congregation. The court instructed the ju*656ry not to consider Dr. Roosth’s financial condition in determining the answers to the issues submitted to them and emphasized that the report was admitted only to evidence the scope of the investigation made by the insurance company and not as evidence of the facts stated.
There is no complaint that any allusion, invidious or otherwise, was made either to Dr. Roosth’s religion or wealth at any time. I believe that the reports were admissible upon the basis'on which they were allowed to go to the jury, but if I am mistaken in that, no harm is shown, and if error, their admission is not of such character as to require reversal. Rule 434.
It is also urged that the trial court committed reversible error in refusing to submit an issue s£s to each policy inquiring if the insurance company had actual knowledge that Dr.’Roosth had been examined as a patient in Massachusetts Memorial Hospital. These issues were submitted as a part of the beneficiaries’ estoppel and waiver defense to the insurance company’s allegations of fraud. If the insurance company issued the policies with knowledge of the truth of misrepresentations it urges to be fraudulent, it waives or is estopped to rely upon the misrepresentations as a means of avoiding the policies. Perry v. Citizens Life Ins. Co., Tex.Civ.App.,, 163 S.W.2d 743, n. w. h.; Baker v. Ft. Worth Mutual Benev. Ass’n, Tex.Com.App., 115 Tex. 300, 280 S.W. 165; Terry v. Texas Prudential Ins. Co., Tex.Civ.App., 77 S.W.2d 761, wr. dis.; Union Assurance Society Limited, of London, England v. Tolivar, 5 Cir., 141 F. 2d 405.
Reference has already been made to the Roosth beneficiaries’ pleading that the ra-surante company had knowledge of Dr. Roosth’s attendance at the Massachusetts Memorial • Hospital as estoppel or waiver. The jury found, as previously discussed, fraud issues concerning the representation that Dr. Roosth’s mother died from childbirth. I am at a loss to relate these fraud issues to the waiver and -estoppel pled. The court in a jury trial has no duty to submit any issues not made by the written pleadings and the proof.
The rule is that knowledge of some fact not in itself knowledge of the falsity of the representations made does not require an insurance company to make an investigation and exercise diligence to ascertain the truth or not of the representations. Brotherhood of Railroad Trainmen v. Roberts, 48 Tex.Civ.App. 325, 107 S.W. 626; Woodmen of the World Life Ins. Co. v. Davenport, Tex.Civ.App., 159 S.W.2d 913; Dos-sett v. Franklin Life Ins. Co., Tex.Com. App., 276 S.W. 1097. As I understand the authorities, knowledge that Dr. Roosth was. a patient 'at Massachusetts Memorial Hospital was not knowledge that Dr. Roosth’s. mother did not die of childbirth and would not put the insurance company on inquiry to. determine by a search of that hospital’s records the cause of Dr. Roosth’s mother’s, death. Knowledge that Dr. Roosth was a patient at Massachusetts Memorial Hospital ' to my mind bears no relation to the cause of his mother’s death and would not excite inquiry nearly so much as the constructive knowledge the law imposes upon everyone, including insurance companies, and their agents, that a death certificate is-, supposed to reveal a cause of death, and an examination of the certificate might develop facts contrary to that represented by Dr. Roosth.
The appeal as it reaches this court does, not question the correctness of the jury’s, finding on the submitted issues nor the trial judge’s findings on the omitted issues and such findings of fact are binding upon this court. No error being shown, it is the duty of this court to affirm the trial court’s judgment. I would affirm. There being a majority for affirmance, an affirmance must be and is ordered.
The judgment of the trial court is affirmed.
FANNING, J., concurs in affirmance.
DAVIS, J., dissents.

. The applicable portion of the Rule states', “If one or' moré of the issues necessary to sustain such ground of recovery or of defense, and necessarily referable ' thereto are submitted to and answered -by 'the jury, and one or moz;e of, such issues are omitted, without. * * * objection, and there is evidence to support a finding thereon, * * * such omitted issue or issues shall be deemed as found by the court in' such manner as to support the judgment.”