Summary
holding insurer liable for misrepresentations of soliciting agent
Summary of this case from Celtic Life Ins. Co. v. CoatsOpinion
No. 13-83-436-CV.
May 31, 1984. Rehearing Denied June 21, 1984.
Appeal from the 94th District Court, Nueces County, Margarito C. Garza, J.
J. Norman Thomas, Harris, Cook Browning, Corpus Christi, for appellant.
Russell H. McMains, Edwards, McMains Constant, Corpus Christi, for appellee.
Before NYE, C.J., and KENNEDY and GONZALEZ, JJ.
OPINION
This is an appeal from a judgment in favor of an insured, Ottis M. Harris, and against the insurer, Tidelands Life Insurance Company, based on the insurer's violation of the Deceptive Trade Practices Act, TEX.BUS. COM CODE ANN. § 17.46 et seq. (Vernon Supp. 1984), and the TEX.INS CODE ANN. art. 21.21 (Vernon 1981), both of which prohibit misrepresentation of insurance policy terms. We affirm.
STATEMENT OF FACTS
Don R. Evans, an agent for Tidelands Life Insurance Company, approached Mr. and Mrs. Ottis M. Harris to sell them a family health insurance policy. During the course of completing the application for the policy, Harris informed Evans that he had a heart problem for which he had been hospitalized. Evans represented to Harris that Harris would be covered for future heart problems. Harris paid a premium in excess of six hundred dollars for the policy.
While the policy was in effect, Harris suffered a heart attack. Tidelands refused coverage based on a pre-existing condition clause. It is stipulated that the pre-existing condition clause is applicable to the loss. The case was tried on the theory of misrepresentation in violation of the Deceptive Trade Practices Act and the Insurance Code.
Trial was to the court, and findings of fact and conclusions of law were filed. In summary, the court found that, at the time the policy was sold to Harris, Evans was an agent of Tidelands with actual, apparent and implied authority to represent the terms of the policy; that it was reasonable to believe that Evans was Tidelands' agent with authority to represent the terms of the policy; that Tidelands expected the public to rely on both the brochure and Evans' statements; that the brochure was deceptive because it failed to state that the policy had a pre-existing condition exclusion; that Evans represented to Harris the policy would cover the future heart problems despite the fact that he had prior problems with his heart; that Harris relied on the representations of Evans regarding the coverage of the policy; that Harris would not have purchased the policy but for the representation that the policy would cover future heart problems; that Harris would have purchased other insurance but for the representations of Evans; that Harris suffered actual damages, medical expenses which would have been paid had the policy been as represented, in the amount of seven thousand five hundred eighty-four dollars and thirty-four cents ($7,584.34); that Harris complied with all policy requirements in filing his claim; that the policy did not cover the claim because of the pre-existing condition exclusion. Harris' reasonable and necessary attorney's fees were stipulated at $5,000.00. The court concluded that the conduct of Evans was a deceptive act or practice for which Tidelands was accountable under both TEX.INS CODE ANN. art. 21.21 and TEX.BUS. § COM CODE Sec. 17.46(b)(12); that such deceptive act or practice was a producing and proximate cause of Harris' damages in the amount of $7,584.34; that Harris was a consumer under the Texas Deceptive Trade Practices Act; that Harris was adversely affected by Evans' misrepresentation; that Harris was entitled to three times his actual damages.
The trial court entered judgment for Harris and against Tidelands in the amount of $27,753.02 (which was treble damages plus attorney's fees). Tidelands appeals that judgment.
SUFFICIENCY OF THE EVIDENCE
By its first, second and fourth points of error, appellant questions the sufficiency of the evidence to support the judgment. In considering a "no evidence" or "insufficient evidence" point of error, we will follow the well established test set forth in Glover v. Texas General Indemnity Company, 619 S.W.2d 400 (Tex. 1981); Garza v. Alviar, 395 S.W.2d 821 (Tex. 1965); Allied Finance Company v. Garza, 626 S.W.2d 120 (Tex.Civ.App. — Corpus Christi 1981, writ ref'd n.r.e.); CALVERT, No Evidence and Insufficient Evidence Points of Error, 38 Tex.L.Rev. 361 (1960). However, upon reviewing the record we find that it is incomplete. Introduced into evidence, but not before this Court, are the depositions of Dr. Gaston and Nolan J. La Borde, Jr. With only a partial record, we must presume that the missing evidence supports the findings of the trial court. The Englander Co. v. Kennedy, 428 S.W.2d 806 (Tex. 1968), Gerdes v. Mustang Exploration, 666 S.W.2d 640 (Tex.App. — Corpus Christi 1984, no writ). The burden is on the appellant to demonstrate that the trial court committed reversible error. When the complaint is that the evidence is insufficient or inconclusive, a complete or agreed statement of facts is required. The Englander Co. 428 S.W.2d at 807; Gerdes 666 S.W.2d at 642. However, even if we were to disregard the presumption mentioned above, we still believe there is sufficient evidence to support the findings in the record before us.
Appellant's first and second points of error are that there is no evidence or, in the alternate, insufficient evidence of Evans' misrepresentation because the testimony of Mr. and Mrs. Harris is barred by the Parol Evidence Rule. The only evidence of Evans' representation was the testimony of Mr. and Mrs. Harris. The Parol Evidence Rule is not a bar to the introduction of evidence to prove fraud. Dallas Farm Machinery Co. v. Reaves, 158 Tex. 1, 307 S.W.2d 233 (1957). Misrepresentations under the Deceptive Trade Practices Act are another exception to the Parol Evidence Rule. Anthony Industries, Inc. v. Ragsdale, 643 S.W.2d 167 (Tex.App. — Fort Worth 1982, writ ref'd n.r.e.). See TEX.BUS. COM CODE ANN. § 17.46(b)(12). Appellant's first and second points of error are overruled.
Appellant's fourth point of error is that there is no evidence that appellee, Harris, saw the sales brochure. A copy of the brochure was introduced into evidence as Plaintiff's Exhibit No. 2 and is reproduced as an appendix to this opinion. It is comprised of a single sheet of paper 17 inches by 11 inches, folded in half and perforated so as to form two 8 1/2 x 11 pages. On the "front" are graphics and highlights of the "Medical Protector Hospital and Surgical Policy." On the inside of the "front" is a policy summary giving the hospital benefits, other benefits and exclusions. At the bottom of this page is a receipt and the following instruction:
IMPORTANT INSTRUCTION TO AGENT
In leaving receipt with prospective policyholder, please complete the receipt tab BELOW and leave this entire sheet for receipt, NOT just the receipt tab. THIS IS VERY IMPORTANT to the policyholder, as the policyholder can compare this policy with this sheet to see that he has received exactly what he applied for. THIS IS A MUST and is a company rule. [Emphasis in original]
On the inside of the "back" is a one-page application for the described policy. On the "back" are the rates to be charged. Introduced into evidence as Defendant's Exhibit No. 1 is a completed copy of the application with appellee's signature. The brochure was regularly provided by Tidelands to its agents with the intention that it be used during the sales presentation. We believe that this evidence was sufficient to raise the inference that appellee saw the brochure. Appellant's fourth point of error is overruled.
INSURANCE CODE
Appellant's third point of error complains that the trial court erred in entering judgment against appellant because appellant was not liable for misrepresentations made by Evans.
Appellant asserts that Evans was a soliciting agent under TEX.INS CODE ANN. art. 21.04 (Vernon 1981), which reads:
Art. 21.04. Solicitor Deemed Company's Agents
Any person who shall solicit an application for insurance upon the life of another shall in any controversy between the assured and his beneficiary and the company issuing any policy upon such application be regarded as the agent of the company, and not the agent of the insured, but such agent shall not have the power to waive, change or alter any of the terms or conditions of the application or policy. [Emphasis Added]
Article 21.04, by its terms, is not applicable to a health insurance policy. However, we hold that the governing provision is TEX.INS CODE ANN. art. 21.02-1 which reads:
Art. 21.02-1. Who Are Agents
Whoever solicits insurance on behalf of any insurance company, . . . or who takes or transmits . . . any application for insurance, or any policy of insurance, to or from such company, . . . or shall receive or deliver a policy of insurance of any such company, . . . or receive or collect or transmit any premium of insurance, . . . or do any other act in the making or consummating of any contract of insurance for or with any such insurance company, . . . shall be held to be the agent of the company for which the act is done or the risk is taken, . . .
This provision, together with the court's findings of actual apparent and implied authority for Evans to represent the terms of the policy, forms the basis of appellant's liability. See Royal Globe Insurance Co. v. Bar Consultants, Inc., 577 S.W.2d 688 (Tex. 1979). Appellant's third point of error is overruled.
The judgment of the trial court is AFFIRMED.