Court Opinion

ID: 9641459
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:32:38.913541+00
Date Added: 2024-06-11T18:10:37.618678
License: Public Domain

Conley Byrd, Justice, dissenting. I disagree with the majority both as to the interpretation of the law and as to the conclusion that the misstatements here were not material. The majority opinion does not state any precedent or authority for its construction of Ark. Stat. Ann. § 66-3208 (Repl. 1966) that there must be a causal relation between the applicant’s misstatement and the eventual loss. A reading of the cases will reveal two types of statutes — i.e., those like or similar to our own and those similar to the Missouri and Texas statutes which provide that no misrepresentation made in obtaining or securing a policy shall avoid the policy unless the matter actually contributed to the loss. As to the latter see, e.g., Doran v. John Hancock Mutual Life Insurance Company, 116 S.W. 2d 172 (Mo. App. 1938), and Pacific Mutual Life Ins. Co. v. Johnson, 74 F. 2d 367 (5th Cir. 1934). Every state with a statute similar to our statute has construed theirs to mean that a misrepresentation as to a material matter renders a policy voidable at the election of the insurer without a showing that the misrepresentation had a causal connection with the loss claimed under the policy. See Jessup v. Franklin Life Insurance Company, 117 Ga. App. 389, 160 S.E. 2d 612 (1968); Lamark v. Lincoln Income Insurance Company, 169 So. 2d 203 (La. App. 1964); Goodell v. Union Automobile Insurance Company, 111 Neb. 228, 196 N.W. 112 (1923); and Bushfield v. World Mutual Health & Accident Insurance Co. of Pa., 80 S.D. 341, 123 N.W. 2d 327 (1963). The statute involved in the Georgia case is an exact replica of ours. The Louisiana code provided: “ . . . The falsity of any such statement shall not bar the right to recover under the contract unless such false statement was made with actual intent to deceive or unless it materially affected either the acceptance of the risk or the hazard assumed by the insurer.” The South Dakota statute provided that the falsity of any statement by the insured “may not bar the right to recover thereunder unless such false statement materially affected either the acceptance of the risk or the hazard assumed by the insurer.” The text writers all agree with my position. 43 Am. Jur. 2d Insurance § 737, p. 724, provides: “ ... In the absence of a statute providing otherwise, however, it is not necessary to the defense of an action on a life insurance policy on the ground that misstatements in the application as to the applicant’s medical history were material to the risk, that the matters not disclosed should have had a causal relation to the death of the insured.” 45 C.J.S. Insurance § 473(4), pp. 177-178, states the matter in this language: “A material matter is one which probably will affect the decision of the company as to the making of the contract or as to its terms. The question of what is a material representation is not affected by the causes which in fact lead to the loss. ...” Í2 Appleman, Insurance Law and Practice § 7294 (1943), pp. 401-403, makes the following statement: “The tests of materiality have been stated in various ways. If the representations materially induce the insurer to make the contract, or would reasonably have influenced the insurer in its action upon the application, the representation is deemed material. Some courts have made the test that of whether or not the insurer would have issued the policy had the true facts been known, or whether, acting in accordance with the usual practice of insurance companies, it would have declined to take the risk. Elsewhere it has been stated that the proper test is whether knowledge of the truth might reasonably have caused the insurer to decline the risk, and under this rule the question of whether the insurer would actually have issued the policy under those circumstances has been held immaterial. And, under this general doctrine, the fact that the risk of loss was not actually increased thereby, or that the loss arose by reason of some fact other than that which was misstated, has been held not to alter the result.” [Emphasis minel. 7 Couch On Insurance 2d § 35:47 (1961), p. 56, makes the following statement: “The concept of materiality to the risk is distinct from that of contributing to the loss. In order to establish that a representation is material it is therefore not necessary to show that it contributed to a loss. Similarly, a misrepresentation in an accident insurance application which would influence insurer’s judgment in accepting the risk is material within the intent of the statute, even though the matter misrepresented does not affect the injury for which insured seeks recovery.” Under our law as it existed before the 1959 Insurance Code, life insurance could not be economically written without the costly and cumbersome procedure of going through a medical examination to weed out persons who waited until they were uninsurable before making application. However, the code through what is now Ark. Stat. Ann. § 66-3208 permitted life insurance to be written without a medical examination. To prevent the seeming injustice that would arise when an individual has paid premiums for a considerable time and during which time the insurer has had the benefit of the premiums, the code also contains a relatively short incontestability clause — see Ark. Stat. Ann. § 66-3304 (Repl. 1966). Aside from the history, however, logic and reason would dictate that we should not be in the position of quibbling over whether a misstatement contributed to the loss involved in an insurance contract. A person who honestly answers the questions in an application has nothing to fear. Old Republic Ins. Co. v. Alexander, 245 Ark. 1029, 436 S.W. 2d 829 (1969). Most litigation arises around issues that are generally debatable as to whether the misstatement involved a matter that contributed to the loss. For instance in this case I contend that the misstatements involved matters that contributed to the insured's death. The misstatements by the insured here before us kept the insurer from finding out that the insured was suffering from diabetes and hypertension for which he was under constant medication and that insured was considered 100 per cent disabled by the Veterans Administration. Dr. Robert Hayes testified. |as abstracted) as follows: “ . . . The death certificate indicates the cause of death is uremia and the contributing factors to the cause of death were chronic renal failure, and arteriolar nephrosclerosis; these conditions all refer to his terminal illness. Chronic renal failure and arteriolar nephrosclerosis are the end result of diabetes and hypertension. ... I would assume that Mr. People apparently went into an acute renal failure episode which overshadowed every other thing he had; the last time I saw Mr. People I certainly didn’t suspect that he was anything like going into an acute renal failure syndrome Dr. Hayes was the appellee’s witness and from the foregoing I can only conclude that the misstatements by the insured here involved matters that contributed to his death. At least Dr. Hayes says that those matters contributed to his death. CONCLUSION There is nothing “just” about the majority’s interpretation of the statute because it will increase the premium rate of life insurance to the honest insured to the bounty of those who misstate the facts in making their applications — for after all life insurance is an actuarial business based upon the business written not necessarily the life of every individual. The authorities all show that there were two different statutes in general use among the several states at the time of the adoption of The Insurance Code in 1959 — i.e. there was (1) the Missouri and Texas type which avoided a policy for a misstatement only when the misstated matter “actually contributed to the loss” and (2) the Louisiana and Nebraska type statute which our legislature adopted. Under those conditions we should have no problem in understanding the policy adopted by the General Assembly. However, if the majority must insist in what I consider to be new legislation, then the majority should at least accept the insured’s witnesses at face value when he states that the matters omitted through the insurer’s misstatements contributed to his death. For the reasons stated I respectfully dissent.