Court Opinion

ID: 9767926
Source: CourtListenerOpinion
Date Created: 2023-08-29 05:35:11.753045+00
Date Added: 2024-06-11T07:30:34.808234
License: Public Domain

George Rose Smith, J., concurring. This litigation involves two distinct causes of action: First, the insurer’s suit to rescind the policy for misrepresentations by the insured in his application for the policy; second, the insured’s counterclaim for the $50,000 indemnity for the loss of his leg in a hunting accident. The majority opinion seems to imply, or at least it can be understood to mean, that the insurance company would have prevailed upon both causes of action had it succeeded in proving that Alexander concealed the existence of heart trouble when he applied for the policy. I write these concurring remarks to make it clear that I do not join in that view, because in any event I would affirm Alexander’s judgment upon his counterclaim. My reasoning is simple. According to the proof, the condition of Alexander’s heart had nothing whatever to do with his shooting himself in the leg. I do not construe the Insurance Code to mean than an insurance company, after a loss has occurred, can refuse to pay the claim on the ground that the application for the policy contained a misrepresentation about some fact that had absolutely no causal connection with the actual loss. Such a construction of the Code would encourage ex post facto litigation and would provide insurers with a windfall amounting to unjust enrichment. To me the statute is clear. Section 275 of the Code reads in part: Misrepresentations, omissions, concealment of facts, and incorrect statements shall not prevent a recovery [my italics] under the policy or contract unless either: (a) Fraudulent; or (b) Material either to the acceptance of the risk, or to the hazard assumed by the insurer; or (c) The insurer in good faith [would not have issued the policy that it did issue] if the true facts had been known... [Ark. Stat. Ann. § 66-3208 (Repl. 1966).] All the statute says is that misrepresentations and the like “shall not prevent a recovery” unless they are fraudulent, material, and so forth. Such a statement merely provides a minimum prerequisite to the insurer’s successful defense; that is, the misrepresentation must have been fraudulent, material, etc. That is by no means the equivalent of saying that every fraudulent or material misrepresentation shall ipso facto prevent a recovery. To illustrate, a statute which provides that no contract shall be enforceable unless it is in writing certainly does not mean that every contract which is in writing is thereby necessarily enforceable. To construe the statute more narrowly than I am suggesting runs counter to common sense and justice. Suppose, for example, that the insured fails to mention in his application a stomach ulcer that was treated with complete success. A year and a half later, within the period of contestability, he is instantly killed by lightning. Surely the legislature did not mean to enable the insurance company to defeat a recovery upon the policy by dredging up the irrelevant and harmless misstatement about the stomach condition. Such an interpretation of the Code would permit the insurer to repudiate the policy whenever a loss occurred but to pocket the premiums with impunity when the policy proved to be of no value to the insured or his beneficiaries. I should add that I do not consider our holding in Dopson v. Metropolitan Life Ins. Co., 244 Ark. 659, 426 S.W. 2d 410 (1968), to be contrary to this concurring opinion. There the applicant concealed an earlier instance of back trouble, and the claim that was asserted in the case was for hospitalization due to a back problem. Hence the necessary causal connection between the misrepresentation and the loss was shown to exist. Harris, C.J., joins in this concurrence.