Opinion
37134.
DECIDED MAY 21, 1958.
Action on insurance policy. Coffee Superior Court. Before Judge Roddenberry. February 7, 1958.
Devereaux F. McClatchey, George B. Haley, Jr., Smith, Kilpatrick, Cody, Rogers McClatchey, Gibson Maddox, George E. Maddox, for plaintiff in error.
Ewing Williams, Marshall Ewing, contra.
The court did not err in overruling the demurrer to the petition.
The court erred in denying the motion for a judgment notwithstanding the verdict because the evidence demanded the finding that the application for insurance by the deceased insured was not accepted by the insurance company and that the insured was not an acceptable risk on the date of the application for insurance under the rules, limits and standards of the insurance company.
DECIDED MAY 21, 1958.
Mrs. Maxwell Vickers, individually, and as next friend for her minor children, all parties being beneficiaries, sued Coastal States Life Insurance Company on an alleged insurance contract between her deceased husband and the said insurance company. The cause of action is not based on a contract of insurance embraced in an insurance policy but is based on the application for an insurance policy and a receipt which was given to the insured by the insurance agent who solicited the insurance business from the insured. In addition to the above the petition of the plaintiffs alleges that the said insured was an insurable risk on March 16, 1956, the date of the application, through March 21, 1956, under the terms and conditions of the receipt issued by said agent to the insured. The provisions of the receipt pertinent to the consideration of the questions here involved are as follows: "First — If a full first premium in accordance with the published rates of the company for the form of policy applied for and mode of payment specified on the application has been paid at the time of making such application, and declaration of such payment is made therein, the insurance, subject to the terms and conditions of the policy contract applied for and in use by the company at this date, shall take effect on the date hereof provided the application is completed as agreed therein and provided the applicant is on this date a risk acceptable to the company under its rules, limits and standards, on the plan, for the amount and at the rate of premium declared paid, and provided further that the applicant is on this date in good health; otherwise the payment evidenced hereby shall be returned upon demand and surrender of this receipt. . . Fourth — It is agreed that the company shall be entitled to sixty days from the date of this application within which to consider and act upon the same; and if within that period no notice of the approval or rejection of this application, nor any policy in connection there-with has been received by the applicant, then this application shall be deemed to have been declined by the company."
The theory upon which the plaintiffs seek to recover in the petition is that the insured was an insurable risk on the date of the application under the rules, limits and standards of the said insurance company and that since the application was completed before the death of the insured on March 26, 1956, the insurance coverage had attached and the company had become liable for the amount of insurance applied for. The petition also alleges that the insurance company accepted the application of the insured and alleges that a letter was written by the president of the insurance company to the insured on March 20, 1956, the date on which the application was received by the insurance company. Copy of the letter follows:
"Coastal States Life Insurance Company Atlanta, Georgia March 20, 1956.
"Mr. Maxwell Vickers R. F. D. # 1 Ambrose, Georgia "Dear Mr. Vickers:
"Please allow me to take this means of welcoming you to our ever increasing number of boosters and centers of influence. Your application for participation in Coastal's expansion program is genuinely appreciated. No doubt you share our feeling that Coastal's participating investment savings policy will prove to be one of your finest investments.
"As explained to you, the dividends you will receive each year as the owner of Coastal's participating investment savings policy are in addition to the guaranteed values. Since dividends are based upon profits, it follows that the more business we have, the larger the profits will be.
"In this, you are directly concerned; therefore, we are enclosing four recommendation cards with a self-addressed, postpaid envelope and ask that you fill in the cards with the names and addresses of relatives and friends who you think will be interested and can qualify for a savings program or one of the many fine policies we issue.
"We very much appreciate your interest in Coastal States Life and the splendid assistance you can give us in bringing the services we offer to the attention of more and more people.
"With kindest regards and best wishes,
"Sincerely yours,
S/ C. H. Poindexter
C. H. Poindexter
President"
The application for insurance, including the doctor's report is attached to the petition and shows that the insured knew that the first part of the application which was received by the insurance company on March 20, 1956, was not the completed application and that additional information had to be forwarded to the company after the examining physician had made his examination nation of the insured. The petition shows that on March 19th, the examining physician filled out his part of the application in which the following information was divulged: Q. When did you last consult a physician and for what? A. March 6, 1956. Q. Illness? A. Mild pain in chest. Q. Duration of illness. A. 2 weeks. In the space provided for answer to the following question, "Have you now any disease or disorder," the examining physician wrote, "See letter attached." The attached letter is as follows:
"Dan A. Jardine, M.D.F.A.C.S. Doctors Building
314 N. Peterson Avenue Mar 26 1956
Douglas, Georgia March 21, 1956
"Coastal States Life Insurance Company Atlanta, Georgia "Gentlemen:
"I am enclosing medical form on Maxwell Vickers. Due to the fact that it is a little difficult to answer some of these questions in the space provided, I am taking the liberty of writing you this letter as explanation of this applicant's last consultation with me which occurred some two weeks ago.
"This patient came to me complaining of mild chest pain aggravated by exertion. Physical examination showed no striking abnormalities as above recorded on the enclosed form. I had an X-ray examination of this patient's stomach and intestinal tract done by Dr. Neal Yeomans, roentgenologist, at the Douglas Coffee County Hospital, who reported his findings as normal. I then had Dr. Sage Harper do an elector-cardiographic tracing on Mr. Vickers, and Dr. Harper stated there was no evidence of myocardial damage, however there was some suspicion of slight coronary insufficiency.
"This patient was smoking some two to three packs of cigarettes daily at the time of this examination, however, he has since stopped smoking upon our advice, and for the past several days he has had no recurrence of his symptoms.
"Thanking you, I am,
"Yours very truly,
Dan A Jardine
Dan A. Jardine, M.D."
The defendant's general and special demurrers were overruled. The jury rendered a verdict in favor of the plaintiffs for the full amount sued for. The defendant made a motion for new trial and for a judgment notwithstanding the verdict, both of which were denied. The defendant excepts to the overruling of its general demurrer and to the denial of the motion for new trial and of the motion for judgment notwithstanding the verdict.
1. It was not error to overrule the general demurrer. The petition alleged that the insured was an insurable risk on the date of the application under the company's rules, limits and standards. The petition does not allege the cause of the insured's death and it could have been possible under the allegations to show that the insured was an acceptable risk, as alleged, the proof of which would have bound the insurance company under the first provision of the receipt. We shall cover the question of whether the application was accepted by the insurance company in a ruling on the motion for a judgment notwithstanding the verdict.
2. The letter from the president of the defendant insurance company to the insured, dated March 20, 1956, was not, under the evidence, an acceptance of the application for insurance. Mr. Charles Van House testified for the insurance company that he was its administrative vice-president and was in the month of March, 1956, and was also vice-president and actuary; that the company used the North American Reassurance Manual for rating and underwriting with reference to medical examinations; that he was familiar with the receipt of the application for insurance by the insured in this case; that the application was received on March 20, 1956, and that the medical examination was received on March 26, 1956, that upon receipt of the medical examination the application was declined by the underwriting committee because of Dr. Jardine's letter which stated that there was a slight coronary insufficiency and according to the manual the company would postpone for one year from time condition is diagnosed and then consider only with full study as required for coronary occlusion; that the application was denied on March 27th, the day after the insured's death; that the the manual provided as follows: "The description of angina pectoris given above is applicable here with the diagnostic difference being the increased duration of the attack of chest pain in coronary insufficiency. The electro-cardiogram may be entirely normal and changes, if any are present, are minimal." This quotation is opposite the paragraph title, "Coronary insufficiency." He testified further that according to the rules of the company it is a policy of the company to defer further action on such an application when there is proof of coronary insufficiency; that as to the letter written by the president of the insurance company to the insured, at the time the letter was written the application had been received; that the letter was based on the assumption that the policy would be issued; that the letter was sent prior to the receipt of the medical report and the letter transmitted therewith by Dr. Jardine; that it was the general policy of the defendant company to write this form letter upon receipt of all applications for insurance, medical or non-medical; that the purpose of the letter was not to lead an applicant for insurance into believing that a policy would be issued nor to lull the applicant to sleep so he would not go somewhere else and get his insurance; that the purpose of that letter is to thank the man for the application and indicate in effect that the company was glad to have the insured do business with it.
(a) The evidence demanded a finding that the insured was not a reasonable risk on the date of the application under the rules, limits and standards of the company, and the plaintiffs were not entitled to recover the amount sued for under this theory, assuming and we think correctly so, that the contract would obligate the insurance company if the insured had been so insurable. Under the terms of the contract in this case the only question as to this matter was whether the insured was insurable under the rules, limits and standards of the company and not whether as a general proposition the insured was an insurable risk on the date of the application. The only other theory on which the defendant could possibly be liable is that the letter from the president of the insurance company to the insured, sent before the company received the medical report, constituted an acceptance of the application. We think that the evidence shows conclusively that the letter was not intended as an acceptance of the application. The letter could have been worded with a little more wisdom, but there is no express statement in the letter that the application was accepted and the only reasonable interpretation which could be placed on it is that it assumed that the application would be accepted otherwise than by the letter itself. There is no question of estoppel in this case which would debar the insurance company from contending that the letter was not an acceptance for the simple reason that the insured in this case was not seeking insurance but the soliciting agent was the source and cause of the interest of the insured in the application for the insurance here involved nor was there involved the fact that other insurance was allowed to lapse on the prospect of the acceptance of this particular application. In the case of Beaty v. Southland Life Ins. Co., (Texas Civ. App.) 28 S.W.2d 895, a similar letter was involved which was as follows: "Mr. Aubrey A. Beaty, R. F. D. No. 3, Cameron, Texas. I want to express my personal appreciation of your application for life insurance in this company. That you have made no mistake in the selection of a company in which to insure is evident from the steady and persistent growth that has marked the nineteen years existence of the Southland. The remarkable progress of the Southland Life Insurance Company did not just happen, but is the result of a very definite conviction that no life insurance company could endure or even succeed unless it rendered a real service to its policyholders. It is our hope that in the following years we may have the opportunity to render to you the same service on which our present success rests.
"May I point out one incontrovertible fact that applies to any life insurance policy? It is only by carrying that policy to its contemplated maturity that you can secure full benefit of the premiums paid. Be sure that you have chosen the plan and amount that fits your needs and circumstances and then let nothing tempt you to lapse or surrender your insurance. If it ever becomes inconvenient for you to pay your premiums, or if you conclude that the plan you selected is no longer appropriate, I will take it as a favor if you will write me personally. I may be able to be of assistance to you."
The court ruled in that case that it was the custom of the insurance company to send such circular letter to each applicant for insurance. In that case also the president of the insurance company did not pass upon or approve applications but such power was delegated to a "Risks Committee."
In the case of guarantee Fund Life Asso. v. Barclay (Texas Civ. App., 1928) 11 S.W.2d 231, it was held that a notice sent out by mistake advising an applicant that his application had been approved was not binding on the insurance company in the absence of any facts showing an estoppel.
We think the evidence demanded the finding that the insured was not an insurable risk on the date of the application under the rules, limits and standards of the company since the insured died on March 26, 1956, about two weeks after an attack caused by coronary insufficiency of a two-weeks duration and died as a result of coronary occlusion with coronary insufficiency as an antecedent cause, as shown by the death certificate in this case. We think the evidence further demands a finding that the application was not accepted by the company and in the absence of anything showing estoppel the verdict against the insurance company was not authorized. The judgment overruling the demurrers to the petition is affirmed. The judgment overruling the motion for a judgment notwithstanding the verdict is reversed with the direction that the court enter up judgment in accordance with the said motion.
Judgments affirmed in part and reversed in part. Quillian and Nichols, JJ., concur.