Court Opinion

ID: 9459845
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:33:02.193979+00
Date Added: 2024-06-11T17:36:21.459518
License: Public Domain

CLARK, Circuit Judge
(dissenting):
I respectfully dissent and at the very outset must acknowledge that this is the type of case which rarely justifies such action, let alone a disagreement of this length. Yet with utmost deference to *542my brothers and to the learned trial judge, my study of this appeal has left me with a deep and abiding conviction not only that the Mississippi law governing the waiver of fraud was wrongly applied on the retrial of this case, but also that the factual and procedural issues discussed in Part II of Judge Godbold’s opinion are incorrectly perceived and improperly resolved.
I.
The course of my reasoning begins with a reminder that the policies of insurance which this decision requires be paid were procured by Trawick’s false and fraudulent answers to critically material questions concerning his health. The sole jury issue was whether Manhattan agreed to write these policies despite knowledge of the false answers.
Similarly I would call to the reader’s mind now, the prior opinion rendered by this court in this action (hereinafter Trawick I). There the court found substantial evidence had been introduced indicating that Manhattan had actual knowledge of Trawick’s misrepresentation and therefore reversed the trial court’s grant of a judgment for Manhattan notwithstanding a jury verdict in favor of Mrs. Trawick. In an alternative holding, Trawick I ruled that substantial evidence existed to support a finding of constructive knowledge of Trawick’s medical history and that such constructive knowledge operated as a waiver of the fraud.
In discussing constructive knowledge, Trawick I stated :
This court has held that if an insurer chooses to make an independent investigation of an applicant and if the circumstances are such that it is in a position to ascertain the facts by a reasonable search, then the insurance company cannot avoid liability by pleading reliance on the insured’s application. Apperson v. United States, [318 F.2d 438 (5th Cir. 1963)]; New York Life Insurance Co. v. Strudel, 5 Cir. 1957, 243 F.2d 90. Since the defendant in this case conducted an independent investigation and “ought to have known of the facts, or, with proper attention to its business, would have been apprised of them, it has no right to set up its ignorance as an excuse.” Knights of Pythias of the World v. Kalinski, 1896, 163 U.S. 289, 298, 16 S.Ct. 1047, 1051, 41 L.Ed. 163.
While I agree with the trial judge that Mississippi law does not make the mere act of undertaking an independent investigation a bar to the assertion of fraud as a defense, I do not agree with his view expressed on remand that Trawick I declared this to be the Mississippi rule.
Some of the dicta in Trawick I is frankly troublesome in its breadth; however, the decisional portion of that opinion does not impinge on the well-established waiver test enunciated by the Supreme Court of Mississippi. A “waiver” is an intentional relinquishment of a known right, and is a voluntary act. It must be predicated upon knowledge of the existence of a right and an intention to relinquish it. Supreme Lodge K. P. v. Quinn, 78 Miss. 525, 29 So. 826 (1901). Though waiver is sometimes confused with the broader doctrine of estoppel and some courts have declared that the two concepts are synonymous, Mississippi has consistently recognized the established common-law distinction between the two. Casualty Reciprocal Exchange v. Wooley, 217 So. 2d 632 (Miss. 1969); see also Stonewall Life Insurance Co. v. Cooke, 165 Miss. 619, 144 So. 217 (1932). See generally 16A Appleman Insurance Law and Practice § 9086 (1968).
Apperson v. United States Fidelity & Guaranty Co. correctly stated the Mississippi rule thus:
The mere fact that the insurer makes an independent investigation in order to test the truth of the representations made by the applicant does not absolve the applicant from telling the truth nor lessen the right of the insurer to rely upon his .representations, unless the investigation either disclos*543es the falsity of the representations or discloses facts which would put a prudent person on further inquiry.
318 F.2d 438, 441 (5th Cir. 1963) (footnotes omitted).
To read the dicta in Trawick I as holding that an investigating insurance company is bound by all that it could reasonably have discovered, is to create an improper inconsistency with Apper-son. Trawick I does no more than bind an insurance company to know what its files contain.1
The first sentence of the above-quoted paragraph from Trawick I cannot be read in isolation. This is readily apparent if it is compared with the cases cited as its antecedents. Then, too, if one reads Knights of Pythias of the World v. Kalinski, supra, which is cited to support the second sentence quoted here, it will be found that Kalinski expressly recognized the quoted rule to be inapplicable where the relevant facts “are peculiarly within the knowledge of the assured,” as they most certainly were in this case. In such a case, the Supreme Court stated, waiver would be found only “[where] the facts constituting a forfeiture are known to the company. . . .” 163 U.S. at 298, 16 S.Ct. at 1051.
The problem for the present appeal which all of this leads up to is this: on remand the trial judge depended upon this dicta in Trawick I to authorize the following instruction to the jury.
You are further instructed that as a matter of law if you find from a preponderance of the evidence that the defendant insurance company chose to make an independent investigation of the medical history of the applicant Harrison Trawick and if the circumstances were such that the company was in a position to ascertain the facts by a reasonable search as to the insured’s heart trouble before issuing the policies, then the insurance company cannot avoid liability by pleading reliance on the insured’s medical application.
This instruction, to which Manhattan duly excepted, was such a clear and patent misstatement of the applicable law, and to my mind, one so significant that this case should have remanded for yet another trial.2
II.
No pragmatic mind should discount the force of two jury verdicts for the plaintiff. Here, however, these laymen not only were given an erroneous crucial instruction of law to govern the issue they were to resolve, but also their already misguided task was beset by an additional confusing circumstance which forecloses my ability to give their resolution its usual sanctity. The lawyer’s arguments miscarried over a vital fact point and no corrective reargument was permitted.
What the jury should have been requested to resolve was: Did the insurance company have actual knowledge of Trawick’s actual physical condition, or did it have information which would have moved a reasonable person to make additional inquiry? As shown, they weren’t. To make a bad matter even worse, a sensitive issue of proof as to Manhattan’s constructive knowledge was improperly argued to the jury because the judge changed his mind after argu*544ment as to an instruction and refused to permit clarification.
As the opinion in Trawick I points out, the record disclosed that before Manhattan wrote the insurance, it had four electrocardiograms (together with medical evaluation from Trawick’s physicians) and reports which suggested heart impairment and which stated that Trawick had been refused insurance by another company. The proof also showed that Manhattan issued Trawick’s policies at an increased premium, which, according to Manhattan, was intended to compensate the company only for the possible milder heart condition indicated by the information it had obtained. These same matters recurred in the proof put before the second jury. The crucial factor relevant to this factual issue — which I consider to be the key to the right-to-reargue point of this appeal —was whether, prior to its issuance of the policies, the insurance company had obtained records from St. Dominic’s Hospital which divulged Trawick’s hospitalization for a serious heart disease in 1963. The plaintiff’s contention that the insurance company had so obtained the St. Dominic’s records was predicated entirely on one interrogatory and answer. The question and answer are recopied in the margin.3 This whole question and answer with its limited inquiry and express disclaimer provides scant support for the proposition that Manhattan had knowledge of a heart condition prior to issuance of the policies. The plaintiff, however, asked the jury to draw the inference of the requisite knowledge from the first part of the answer. Pointing to the statement of Manhattan that it had received some information from St. Dominic’s prior to the issuance of the policies, plaintiff argued that if Manhattan had been furnished any of St. Dominic’s records pertaining to Trawick it most probably would have been furnished all such records pertaining to any treatment Trawick had received at the hospital, *545which would include those pertaining to his 1963 heart condition.
Manhattan claimed that the portion of this answer stating that it had received any information from St. Dominic’s prior to the issuance of the policies was the result of clerical error. Before the second trial the lower court permitted Manhattan to amend the answer to read as follows:
Harrison H. Trawick executed a medical authorization in the usual form on December 5, 1967. The defendant secured information relative to the past medical history of Harrison H. Tra-wick from Dr. Gayden Ward, Dr. Temple Ainsworth, Retail Credit Company and the Medical Information Bureau before the policies were issued, but none of those persons or firms informed the defendant prior to the death of Harrison H. Trawick that Mr. Trawick had been confined in St. Dominic [sic] Hospital in 1963 or that there had been a diagnosis of coronary artery disease and angina pecto-ris.
During the course of the second trial the court also permitted the plaintiff to read Interrogatory 7 and Manhattan’s original answer, as set out in Footnote 3 above, into the record.
Manhattan’s requested jury instruction, which the majority recites, sought to have the court rule that the original answer, and plaintiff’s suggested inference therefrom, did not create a jury question as to whether Manhattan had obtained the St. Dominic’s Hospital records indicating serious heart trouble. Pursuant to Fed.R. Civ. P. 51, the trial judge informed counsel before they argued to the jury that the requested charge would be given. Manhattan’s argument totally relied upon the premise that the court’s promised action would eliminate this issue from jury consideration. After both parties concluded their argument, the trial judge did indeed charge the jury in the language of the requested instruction. After plaintiff objected, the court called the jury back and gave them a supplemental charge which expressly withdrew this instruction and told the jury that it would be open to them to decide whether Manhattan had any information from St. Dom inic’s Hospital. Counsel for Manhattan made timely and clear requests to be allowed to recast its argument to the jury to accommodate this newly-submitted question, pointing out that the sole basis for making a fact issue of this matter —the original interrogatory answer— had been strongly argued to the jury by plaintiff and had been countered in defendant’s argument solely by its response that the court’s instructions would inform the jury that there was no valid evidence to support this contention. The trial court acknowledged that counsel had a valid expectation of receiving the requested charge, but nevertheless denied reargument.
It is wrong to make the decision turn upon the propriety vel non of the defendant’s requested instruction, nor should it be dependent upon whether the judge should have changed his mind.
My enduring view that this case is wrongly decided comes from a wholly different analysis of the purpose of reargument. The question goes beyond basic fairness to a party or attorney in the trial’s conduct to the integrity of the jury function. When a major premise of defendant’s original argument has been made in reliance on the trial court’s expressed intention to give a certain instruction and the court determines not to so instruct, more than just professional embarrassment is involved. Argument of counsel plays an important part in the jury’s role in our adversary system of justice. When it miscarries,' the jury is entitled to corrective action, else its ability to do its duty is impaired. It did not get that benefit here. To allow jury resolutions to stand, knowing they are made on faulty presentations which confuse rather than clarify the question, is altogether wrong.
Though I accept the majority’s explication of the applicable law on the right to reargue, I cannot agree that this law *546leads to an affirmance of the trial court’s denial of reargument. I understand Judge God-bold to hold that rear-gument was properly denied since, first, the instruction was misleading in ruling as a matter of law that the insurance company had not received the records before Trawick’s death, rather than instructing that the records were not obtained before issuance of the policy, and, second, the requested charge was not even arguably correct.
A.
Was the requested charge misleading? My analysis of this least significant of the two bases for the majority decision begins with a difficulty — I don’t agree that the charge was “predicated on an erroneous statement of the evidence.” Judge Godbold apparently attaches considerable significance to the fact that the requested instruction would have charged the jury that Manhattan had not obtained the records at the time of Trawick’s death. The relevant question, of course, was whether Manhattan had obtained the records at the time the policies were issued. Since Trawick died after the -policies were issued, if Manhattan had not obtained the records at the time of Trawick’s death, then a fortiori it had not obtained the records when it issued the policies. Moreover, there was no evidence whatsoever, and neither party ever contended, that Manhattan obtained the records during the relatively short period between the issuance of the policies and Trawick’s death. Thus, even if the instruction as written is technically incorrect as to this point —a proposition which is by no means clear — there is no possibility at all that this time difference could have misled the jury. This assumption may be most significantly supported by the fact that the point was never mentioned by the parties here or below, when the instruction was requested, after the charge was given, or after it was withdrawn. Had the point been noted or deemed significant, it is obvious the instruction would have been forthwith corrected. Under these circumstances I am persuaded that the confusion which the majority finds sua sponte is really immaterial.
One other facet of the majority’s “misleading” assumption must be discussed. The amended answer to the interrogatory is interpreted as stating that Manhattan never received the St. Dominic’s records “at all” and thus is inconsistent with the oral testimony of the insurance company’s representative: “We did not receive the records before issuance of the policy.” Reading the complete interrogatory reveals that at least plausibly (and to my mind, most obviously) it inquired whether Manhattan received “past medical data” pertaining to Trawick “prior to the issuance of policies in question” as a result of the medical authorization form signed by Trawick. Conceding this construction to be reasonable, Manhattan’s amended answer merely states that the records were not obtained before issuance of the policies. This is consistent with the rest of Manhattan’s evidence. To bolster my position I note that the interpretation which the majority places on the interrogatory and the amended answer is not even shared by the plaintiff, whose brief contains the following language:
After this case was remanded to the District Court for a new trial, the company sought and received permission to amend its original interrogatory answer to delete St. Dominie’s Hospital as a source from which it had received medical information on the insured prior to issuing him the policies.
With deference, I conclude that the majority’s conclusion that there existed any conflict whatsoever between the amended answer and the oral testimony of its servant is wrong.
B.
Was the defendant’s requested instruction so clearly erroneous and patently incorrect as to bar curative argument? The main support for the ma*547jority’s conclusion that the jury was not entitled to supplementary argument is the premise that the “requested, and promised, instruction was not even arguably correct factually. . . . There was no rational basis on which defense counsel could have thought that it was incorrect.” Even conceding that the requested instruction should not have been given, I must insist that the point is not so clear that Manhattan should have been bound to assume that it could not have in any event prevailed. While the retrial evidence was substantially similar to that adduced at the first trial, it did differ in some particulars. In addition, the first opinion of this court did not even deal with whether or not the original answer was admissible as substantive evidence or only for the purpose of impeachment. These two factors combine in my mind to make a plausibly arguable question as to the propriety of the requested instruction. Hope springs eternal, not only in the human breast but also in the corporate brain. That this hope was not mere fancy is made clear by the fact that the trial judge, thoroughly familiar with this court’s prior opinion in this case, thought enough of the argument to initially rule in the defendant’s favor and actually gave the instruction which was later withdrawn. All of this is to say that while the defendant’s requested charge may have been erroneous, it was not so “clearly erroneous” or “patently incorrect” that it calls for penalizing the jury’s comprehension of its task by decreeing a forfeiture of the right to correct an inapposite argument resulting from reliance on the court’s indicated ruling.
The majority opinion goes on to say: When the matter surfaced the insurance company hung on to its advantage with no effort to correct the error it had induced. It lost its advantage only when the error came to the ultimate — and intended — fruition in the court’s oral charge and plaintiff objected to it, and even then defendant opposed correction,
and in a footnote adds:
The present defendant did not bring the matter to the court’s attention, did not confess error, and opposed any correction but, nevertheless, insists that the court was required to allow it to argue further.
It is undisputed that the counsel for the defendant requested additional time to argue immediately after the court agreed to withdraw the instruction. Contrary to any implication which might be drawn from the majority opinion, this was the first time that the situation requiring corrective action surfaced.
Moreover, there is no prerequisite to the right to additional argument that counsel must confess error. Impact upon the jury is the polestar. Of course, the Alabama Great Southern R. Co. v. Johnson case, cited in the majority opinion at Note 4, involved the very different situation in which a defendant sought to change his position. In such a case, where the same party first moves the court to some action and then asserts that action as error, it is altogether proper to require the party to confess error in order that he not be allowed to reap an advantage from taking inconsistent positions. Here, Manhattan has never adopted inconsistent positions— the essence of the invited error doctrine —but rather has steadfastly and without waiver maintained at all time that there is no probative evidence that it obtained the St. Dominic’s records prior to the issuance of the policies. Its claim on this appeal is not predicated on the tria court’s acceptance or rejection of its proposed instruction; rather it complains of the trial court’s action after it withdrew the requested instruction. The spirit of modern federal practice dictates that except in the most unusual circumstances a litigant desiring to further argue to clarify a confusion caused by the trial court’s change of mind be permitted to do so and still preserve the charged instruction as an issue for appeal.
Today’s decision seriously undercuts the spirit and function of Rule 51 in the scheme of bringing about a fair resolu*548tion of jury issues. The crucial nature of the issue to which the charge was directed, the obvious prejudice suffered by the unintentionally misled attorney, the timely request for additional argument, and the almost minimal inconvenience which the additional argument would have entailed lead me to no other conclusion except that the curative argument should have been allowed.
Either of the two errors would be sufficient to warrant remanding this case for another trial; cumulatively they mandate such action. I would reverse.

. I read the majority opinion here to construe Trawick I as similarly limited.

. I do not wish to be critical of the trial judge. He was not misled as to the law he was .Erie-bound to apply. He acted as he did from an obeisance to his concept of duty to apply the principles he read Tra-wick I to announce. In his order denying Manhattan’s motions for a new trial or judgment nov, the court stated: With great deference, the panel announced a principle which is not compatible with Mississippi jurisprudence I submit to a participation in this unjust verdict only by direction, and not in conformity with my own convictions as to the law and the facts to the contrary.

. It is necessary to make profert of the full text because I cannot agree with Judge Godbold’s paraphrase of the interrogatory which, with the single portion of Manhattan’s response he quotes, forms the lynch pin of his reasoning on this point. Interrogatory No. 7:
Did Mr. Harrison Trawick execute medical authorization forms to allow the Manhattan Life Insurance Company, its agents or representatives to obtain past medical data from other sources prior to issuance of policies in question; if so, give the answers to the following:
(a) When was such authorization executed and delivered to the defendant or its agents?
(b) Give the names of all medical doctors and hospitals that furnished the defendant corporation past medical data on Harrison Trawick.
(c) Give the dates that such information was received in the defendant corporation.
(d) Give the names and addresses of any other persons, agencies, institutions or corporations from which the defendant corporation obtained data or information on Harrison Trawick’s past history.
(e) Attach a copy of such authorization to your answer to these interrogatories.
(f) Give the dates that such additional information was received by the defendant corporation.
(g) Please attach full copies of all data and reports received by the defendant in reference to .interrogatories 7 (b) and 7
(d) above including hospital records and doctors’ reports.
(h) Attach copies of all written requests made by Manhattan Life Insurance Company, its agents, employees or officers for past medical reports and medical history on Harrison Trawick prior to date of policies in question.
Manhattan’s original answer:
Interrogatory No. 7. Harrison H. Tra-wick executed a medical authorization in the usual form on December 5, 1967. The defendant secured information relative to Mr. Trawick’s past medical history from Dr. Gayden Ward, Dr. Temple Ainsworth, St. Dominic Hospital, Retail Credit Company and the Medical Information Bureau before the policies were issued, but the defendant did not know until after the death of Harrison II. Trawick that he had been confined in St. Dominic Hospital and the University Hospital in 1963 or that there had been a diagnosis of coronary artery disease and angina pectoris.