Clover Mink HILL
v.
FEDERAL LIFE AND CASUALTY COMPANY.
No. 609.
Supreme Court of North Carolina.
June 10, 1960.*651 James W. Clontz, High Point, for plaintiff appellee.
Smith, Moore, Smith, Schell & Hunter, Greensboro, for defendant appellant.
RODMAN, Justice.
Defendant's first assignment of error is based on its motion to nonsuit. Two reasons are urged in support of the motion: first, the defenses of material false representation rendering the policy void are established by the evidence, and second, plaintiff failed to prove her allegation that she was the holder of the certificate issued by Investors Syndicate and because of such failure has not shown that she is entitled to the proceeds of the policy, if valid.
The charges of false representation permitting defendant to avoid its contract are affirmative defenses as to which it had the burden of proof.
When a motion to nonsuit is based on asserted proof of an affirmative defense, the court cannot rely on defendant's evidence only. It must examine all of the evidence. If such an examination permits different inferences, some supporting and others negativing the defense, the motion must be overruled. Solon Lodge No. 9 Knights of Pythias Co. v. Ionic Lodge, 247 N.C. 310, 101 S.E.2d 8; Howard v. Bingham, 231 N.C. 420, 57 S.E.2d 401; MacClure *652 v. Accident & Casualty Ins. Co., 229 N.C. 305, 49 S.E.2d 742; Barnes v. Security Life & Trust Co., 229 N.C. 409, 50 S.E.2d 2.
Defendant relies on the testimony of Dr. J. W. Hunt, a medical expert specializing in internal medicine, that insured had consulted him. The witness had no independent recollection of the date when he first saw the insured. According to his records it was 20 September 1954. He sent insured to the hospital on 21 September where he made certain tests and diagnosed insured's trouble as cirrhosis of the liver. The insured was under treatment by Dr. Hunt from 21 September to 2 October when he was discharged from the hospital. His condition had at that time improved, but he was not completely cured. The insured saw Dr. Hunt on 7 October, 25 October, and 8 December 1954 with respect to treatment which had been prescribed by Dr. Hunt. The insured was running fever when discharged from the hospital and his liver was still enlarged. The witness stated that he would not consider the insured's condition serious at the time he examined him, testifying: "Even with cirrhosis of the liver, he could have still lived, in my opinion, a natural span of lifetime with proper diet and treatment."
Plaintiff also testified that her husband consulted and was under treatment by Dr. Hunt in September or October 1954, and for a period of time thereafter went back to the hospital for checkups but not for treatment.
Dr. Karl Shepard, a specialist in internal medicine and medical examiner for defendant, testified that he examined him on 3 October 1956. He again examined him on 24 October 1956 in connection with the policy of insurance in question. Dr. Shepard testified: "If I were called to give an opinion as of October 24, 1956, I would say that he did not have cirrhosis of the liver. Cirrhosis is not necessarily fatal in every case, certainly not during its early stages. Folks live a long time with cirrhosis if they follow the rules."
Insured's answers to questions 11, Part 1, and 15, Part 2, of the application would, we think, justify a jury in finding that Mr. Hill recollected his treatment by Dr. Hunt as occurring more than two years prior to the application, and he did not by his answers intend to conceal his treatment by Dr. Hunt.
The official who examined the application and authorized the issuance of the policy testified that the answers given were sufficient to enable him to ascertain the reason for the hospitalization which applicant stated occurred about 1953.
The rule applicable to the facts of this case is, we think, correctly stated in Owen v. Metropolitan Life Ins. Co., 74 N.J.L. 770, 67 A. 25, 26, 122 Am. St. Rep. 413. It is there said: "The expression `two years,' as colloquially used, is always understood as an approximate statement. In this sense we think it must be interpreted in this application. An attendance by the physician beginning one year and nine months and ending one year and seven months before the application was not necessarily, and as a matter of law, a breach of the warranty."
It follows, we think, that defendant was not entitled to have its motion for nonsuit allowed for the reason first assigned by it.
Was defendant entitled to have the action dismissed because of plaintiff's failure to offer evidence showing that she was the holder of the certificate numbered and described in the policy? She alleged and defendant in effect denied that fact. Hence the burden of proof was on plaintiff, and the motion should have been allowed unless defendant has waived proof of that fact. Plaintiff insists that it has. To support her claim of waiver she points to these facts: When the claim was first made defendant refused to pay, not because she had not established that she was the holder of the certificate but because of asserted misrepresentations which rendered the policy invalid. The answer does not in express *653 language deny that plaintiff is the holder. The denial is indirect and defendant further says in its answer "that it has rightfully refused to make such payment because said policy of insurance is void and without effect for the reasons hereinafter set forth."
The manner in which defendant denied liability led not only plaintiff's counsel but the court to believe that the only disputed facts related to the asserted misrepresentations, and the case was tried on that theory. During the trial the company's official who handled the claim testified: "There is no question about the payment of these premiums. There is no question about the fact that we got proof of claim and notice of his death properly given. I have the figures as to the amount that would be due under this policy if it were valid. I had it figured out. $8,088.73 was the amount payable on the date of death, August 1, 1958." Certainly that evidence is subject to the inference that plaintiff had satisfied the defendant in her proof of claim that she was the holder of the certificate, and the only reason for failing to pay was the asserted invalidity.
Counsel for defendant, recognizing the responsibility imposed on him (G.S. § 1-200), prepared and tendered issues which he thought necessary for a determination of the controversy. Defendant tendered no issue which questioned the fact that plaintiff was the holder of the certificate nor did it except to the failure of the court to submit such an issue. It is, we think, apparent from the record that the case was, with the acquiescence of defendant, tried on the assumption that the only disputed factual questions were those pleaded by defendant as affirmative defenses. The case having been tried on that theory, defendant cannot now urge, to defeat plaintiff, a defense which it waived. Bowling v. Bowling, N.C., 114 S.E.2d 228; Waddell v. Carson, 245 N.C. 669, 97 S.E.2d 222; Paul v. Neece, 244 N.C. 565, 94 S.E.2d 596; Peek v. Wachovia Bank & Trust Co., 242 N.C. 1, 86 S.E.2d 745; Crowell v. Eastern Air Lines, 240 N.C. 20, 81 S.E.2d 178; Baker v. Varser, 240 N.C. 260, 82 S.E.2d 90; Gorham v. Pacific Mut. Life Ins. Co., 214 N.C. 526, 200 S.E. 5; Ammons v. Fisher, 208 N.C. 712, 182 S.E. 479.
Since the cause must go back for a new trial for the reasons hereafter given, defendant can on such trial, if it so desires, require plaintiff to establish the fact that she is the holder of the certificate referred to in the policy.
Defendant's second assignment of error is directed to the defense asserted in its answer that the insured, by his answers to questions 8, Part 1, and 6, Part 2, of his application had made material misrepresentations with respect to the rejection of his application for insurance by another company. That such a misrepresentation, if made, is material is not controverted.
Marvin Garner, District Manager of Woodmen of the World, witness for defendant, testified without objection that Clarence Edward Hill applied to him for policies of insurance on the lives of Mr. Hill's two minor sons. He made the applications on 9 March and 20 March 1955, "and at the same time applied for a payor benefit on himself which was in case anything should happen to him, it would be paid for. Under the insurance that he applied for, Mr. Hill was to pay the premiums. This payor benefit is generally considered as a rider that is put on the life of the applicant that should he die prior to the completion of the payment on the certificate, or in our particular case, before the child reaches the age of 21, that the payments would either bein other words, the payments would be completed before the child reached 21, and the certificates of policy would be paid up. * * * Mr. Hill applied for the payor benefit type thing on each of those policies. He was the applicant in relation to this application. He was the one that signed the application. I was the one who presented the application to him. If Mr. Hill died some short time after these type policies came into being with this payor benefit provision in effect, that would *654 mean that the company would waive the premiums upon his death." The witness further testified that he was concerned with Mr. Hill's insurability. The application contained questions relating to Mr. Hill's health and consultations with doctors.
The witness was then asked: "And what did you do with the application after it was filled in and signed by Mr. Hill?" Plaintiff objected and the objection was sustained. Counsel for plaintiff in support of his objection said: "My objection is founded on the way this question is phrased in their application. Of course, they put this terminology together, and therefore the law says if there is any ambiguity, it would be interpreted against the Federal Life and Casualty Company." Whereupon the court directed the jury to retire and then said: "Put in the record that the Court sustained the objection made by the plaintiff, and that the Court sustained it on the ground that according to this witness' testimony the application that he refers to is not for insurance upon himself but something in connection with insurance for his sons." Thereafter, in the absence of the jury, the witness was permitted to testify that the application Mr. Hill signed contained a question with respect to treatment by physicians, that he asked the question and Mr. Hill answered it. He secured the name of the physician who had treated Mr. Hill. He inquired if Mr. Hill had had any sickness, and he answered that he had an enlarged liver. After the application was completed and signed, the witness mailed it to the home office of Woodmen of the World. Woodmen of the World issued the policies of insurance on the lives of the sons but refused to issue the payor benefit provision by which it would waive payment of premiums in the event of Mr. Hill's death.
Dr. Hunt had previously testified that on 30 March 1955 in response to an inquiry directed to him by Woodmen of the World he informed it of the treatment given and Mr. Hill's condition as diagnosed by the witness.
Based on the testimony of Garner and Dr. Hunt, defendant tendered the following issues:
"1. Did Clarence Edward Hill represent in Part One of his written application to the defendant that he had never applied for any life, accident and health, or hospital insurance which had been rejected or rated up?
"2. Was said representation false?"
"7. Did Clarence Edward Hill represent in Part Two of his written application to the defendant that no company had ever rated up, rejected his application, canceled or declined to renew his policy?
"8. Was said representation false?"
The court declined to submit these issues.
No question is raised with respect to the competency of Garner to testify to the contents of the application which Mr. Hill made to Woodmen of the World. We are not called upon to decide whether under the best evidence rule the contents of that application could be shown by parol. Since plaintiff limited her objection and the court ruled on the evidence upon the theory that the application for waiver of premiums in the event of the death of Mr. Hill did not constitute an application for insurance within the meaning of questions 8 and 6, that became the theory of the trial, and we pass on the assignments excluding the evidence and refusing to submit the issues tendered on that theory.
The court, we think, failed to appreciate the full import of Garner's testimony. According to Garner, Mr. Hill made two applications for insurance for each son. One application provided for the payment of a fixed sum to an undisclosed beneficiary upon the death of the son. Presumably inquiries were made with respect to the health of the son and a physical examination of the son was required. A contract rejected on that application would not be material to insurance on the life of Mr. *655 Hill, and the questions asked in the application made to defendant were not directed to the contract of insurance on the life of the son. But insurance on the life of the son was not the only, or rather the full contract which Mr. Hill sought to make with Woodmen of the World. He sought insurance on his life for the benefit of his son. True, no payment would be made directly to the son, but he would benefit by the waiver of payment of the premium which Mr. Hill expected to pay if he lived. Such an application is an application for life insurance and required an affirmative answer to questions 8 and 6 asked by defendant. Fox v. Swartz, 235 Minn. 337, 51 N.W.2d 80, 30 A.L.R. 2d 739; Prudential Ins. Co. v. Green, 231 Iowa 1371, 2 N.W.2d 765, 141 A.L.R. 1401; Ritter v. Mutual Life Ins. Co., 169 U.S. 139, 18 S. Ct. 300, 42 L. Ed. 693; In re Hamilton's Estate, 113 Colo. 141, 154 P.2d 1008; 44 C.J.S., Insurance § 25, p. 484; 29 Am.Jur. 435.
The court was in error in excluding the evidence for the reasons given by it and in declining to submit the issues tendered.
New Trial.