Opinion
No. CA 79-36
Opinion delivered August 15, 1979 and released for publication October 4, 1979
1. INSURANCE — FAILURE OF CREDITOR TO PROCESS APPLICATION OF DEBTOR FOR CREDIT LIFE INSURANCE — ERROR FOR COURT TO DIRECT VERDICT FOR CREDITOR. — Where appellant, as administratrix of her deceased husband's estate, presented evidence that her husband made a written request for credit life insurance to appellee savings and loan association when a loan transaction with appellee was closed, but that his application was never processed and decedent was not so advised until after he learned that he had cancer, at which time he was told by appellee to submit another application which was rejected, and where appellee offered no explanation as to why the first application was not processed or why the decedent was not notified thereof within a reasonable length of time, appellant made a prima facie case of negligence on the part of appellee which should have been submitted to the jury for determination, and it was error for the court to direct a verdict for appellee. 2. NEGLIGENCE — ALLEGED NEGLIGENCE OF CREDITOR IN FAILING TO PROCESS APPLICATION OF DEBTOR FOR CREDIT LIFE INSURANCE — WHETHER CREDITOR REPRESENTED INSURANCE COMPANY OR DEBTOR IN ACCEPTING APPLICATION IMMATERIAL IN DETERMINATION OF CREDITOR'S NEGLIGENCE BY JURY. — Regardless of whether appellee savings and loan association was an agent for an insurance company for which it accepted an application from appellant's deceased husband for credit life insurance or was an agent for decedent, the association's failure to procure the credit life insurance policy for which decedent applied, or to make an attempt to do so and to advise decedent within a reasonable length of time of the unavailability of the insurance, is actionable, the appellant having met the burden of proof necessary for the jury to decide whether or not appellee was negligent.
Appeal from Craighead Circuit Court, Jonesboro District, Gerald Brown, Judge; reversed and remanded.
Arlon L. Woodruff, for appellant.
Bradley Coleman, by: Douglas Bradley, for appellee.
This case was appealed to the Arkansas Supreme Court and by that court assigned to the Arkansas Court of Appeals pursuant to Arkansas Supreme Court Rule 29(3).
This appeal is from a verdict directed by the trial court for the appellee, Home Federal Savings Loan Association. The appellant, Sandra J. Bass, Administratrix of the Estate of Johnny Bass brought suit against appellee for the amount of a Credit Life Insurance policy.
Sandra J. Bass and Johnny Bass secured a loan from appellee to finance the purchase of a home. The transaction was closed by appellee's agent at appellee's place of business on August 18, 1976. The appellee presented the Basses with an instrument entitled Federal Reserve Regulation Z. Appellee's employee typed the words "Credit Life" in a blank on the instrument and also typed in the cost of insurance both on an annual and on a monthly basis. The employee asked the Basses if they wanted Credit Life Insurance. Johnny Bass acknowledged that they did want such insurance and signed his name in the appropriate blank. The employee testified that she kept the applications in her desk drawer. She also testified she could not remember this particular loan closing transaction, but that her normal practice would be to process an insurance application. There was no explanation as to why an insurance application was not processed in this instance. There was no evidence to rebut the appellant's testimony that no application was offered to her, nor was anything further said about the necessary steps required for securing such Credit Life Insurance.
In February 1977 Johnny Bass learned he had cancer. The appellant Sandra Bass checked all of the places where she had loans and learned from appellee that there was no Credit Life Insurance with Home Federal Savings Loan. Home Federal told appellant to come in and fill out an application. Of course Johnny Bass's application was rejected. Johnny Bass died on May 18, 1977.
In reviewing the sequence of events beginning with the loan closing, it appears that the appellant has made a prima facie case of negligence. The Basses were not advised of further action necessary until months later when it was too late. Once the question concerning Credit Life arose, and the appellants indicated their desire for Credit Life, the jury may well have found that appellants were led to believe Credit Life was being provided. The jury may also have found that there was a duty on part of appellee to process an application in the normal way. Derby v. Blankenship, 217 Ark. 272, 230 S.W.2d 481 (1950) and Spink v. Mourton, 235 Ark. 919, 362 S.W.2d 665.
Appellee's employee testified that Home Federal Savings Loan was not an agent of the insurance company. However, she did testify that the chairman of the board is licensed for insurance. Whether Home Federal Savings Loan was agent of the insurance company or agent of the Basses, its failure to procure or at least make an attempt and advise appellants within a reasonable length of time of the unavailability of the insurance is actionable. The appellant met the burden of proof necessary for the jury to decide whether or not appellee was negligent.
Reversed and remanded.