283 S.E.2d 421 | N.C. Ct. App. | 1981
Kester W. BUCHANAN and Ora W. Buchanan
v.
NATIONWIDE LIFE INSURANCE COMPANY.
Court of Appeals of North Carolina.
*424 Powell & Settlemyer by Douglas F. Powell, Morganton, for plaintiffs-appellees.
Patton, Starnes & Thompson by Thomas M. Starnes, Morganton, for defendant-appellant.
HARRY C. MARTIN, Judge.
Defendant first assigns as error the trial court's denial of its motion for directed verdict. Plaintiffs, by proving the execution and delivery of the policy of life insurance, payment of the premium, and death of the insured, established a prima facie case, and the burden shifted to the defendant to prove that the insured made misrepresentations which voided the policy. Tolbert v. Insurance Co., 236 N.C. 416, 72 S.E.2d 915 (1952); Willetts v. Insurance Corp., 45 N.C.App. 424, 263 S.E.2d 300, disc. rev. denied, 300 N.C. 562 (1980). For a directed verdict in favor of the party with the burden of proof to be proper under these circumstances, there must be no conflict in the evidence, or the material facts must be admitted by the adverse party. Hodge v. First Atlantic Corp., 10 N.C.App. 632, 179 S.E.2d 855, cert. denied, 278 N.C. 701, 181 S.E.2d 602 (1971). See also Bank v. Burnette, 297 N.C. 524, 256 S.E.2d 388 (1979).
In dispute was the evidence bearing on issues 1 and 2, which were submitted to the jury without objection. With respect to the first issue, the insurance application which was introduced at trial indicated only that insured, Mrs. Jones, had consulted with Dr. Lang in Morganton in January 1978 and that she had had a normal childbirth under Dr. Wilson in Hickory. However, Ora Buchanan testified that she had informed Bowers of Mrs. Jones's overnight hospitalization after the automobile accident. Bowers' testimony disputed this, and the application contained no reference to the accident. Mrs. Buchanan also testified that she had told Bowers that her daughter was hospitalized and under the care of Dr. Lang in December 1976 for what she believed to be the flu. According to Mrs. Buchanan, Bowers had misunderstood her and had erroneously entered the date as January 1978. Thus Mrs. Buchanan's testimony presented a question of fact as to whether that information had been revealed to defendant through its agent.
In Jones v. Insurance Co., 254 N.C. 407, 119 S.E.2d 215 (1941), it was stated that an insured is not responsible for false answers in an application for insurance if the insured is justifiably ignorant of the untrue answers, has no actual or implied knowledge of their falsity, and has been guilty of no bad faith or fraud. In Jones, a judgment allowing defendant's motion for nonsuit was affirmed based on the insurer's lack of knowledge, actual or constructive, of the falsity of the statements appearing in the application. See also Assurance Society v. Ashby, 215 N.C. 280, 1 S.E.2d 830 (1939); Inman v. Woodmen of the World, 211 N.C. 179, 189 S.E. 496 (1937).
We find the present case distinguishable on its facts and more appropriately decided under the law stated in Chavis v. Insurance Co., 251 N.C. 849, 112 S.E.2d 574 (1960). In Chavis, whether responsibility for the false answers was attributable to the insured or to the agent of the company was in dispute. The defendant contended that the insured had concealed from its agent the fact that she was under treatment for a disease (cancer) from which she died within four *425 months of the date of the policy. The Court held that defendant's assignment of error based on the trial court's refusal to nonsuit could not be sustained. "[T]he credibility of the evidence to support the defendant's defense was a matter for the jury." Id. at 852, 112 S.E.2d at 576. See also Heilig v. Insurance Co., 222 N.C. 231, 22 S.E.2d 429 (1942); Cato v. Hospital Care Association, 220 N.C. 479, 17 S.E.2d 671 (1941).
We turn next to defendant's contention that any knowledge of the agent concerning the falsity of the representations would not be imputed to Nationwide. Inman, supra. Upon this question defendant has misapplied the law. We are not concerned here with knowledge of false representations made by an insured, but knowledge of facts which, if made, would have provided true and complete answers to the questions propounded in the application.
[A]n insurance company cannot avoid liability on a policy issued by it by reason of any facts which were known to it at the time the policy was delivered, and that any knowledge of an agent or representative, while acting in the scope of the powers entrusted to him, will, in the absence of fraud or collusion between the insured and the agent or representative, be imputed to the company ....
Cato, supra, at 484, 17 S.E.2d at 674. See also Heilig, supra.
With respect to the insured's undisclosed visits to the Foothills Mental Health Center, we believe that a jury could have found that these visits were not within the ambit of the second issue. At the mental health center the insured was a "client" of social workers. She had been seen by a psychiatrist for two short counseling sessions. In summary, the evidence adduced at trial contained conflicts concerning whether the insured had seen any doctor or had been treated at any center other than the ones insured had disclosed to defendant's agent. Defendant's motion for directed verdict on the issues submitted to the jury were, therefore, properly denied.
Defendant next contends that the trial court erred in instructing the jury as to the manner in which evidence elicited by defendant was to be considered. The record shows that before Bowers began testifying about the questions which appeared on the insured's application for insurance, the judge gave the following instruction, to which defendant took exception:
Members of the jury, he is going to read you the questions that he asked and he is going to read you the responses that were given, and the questions as to who gave the answers to those questions you will resolve yourselves, but he will read you a question and response, but you are not to consider who gave him the response.
This instruction was clearly erroneous, and a review of the trial court's final instructions to the jury reveals no charge which corrected the court's error. The evidence clearly established that the insured, Joy B. Jones, signed the application. While there was contradictory evidence as to whether the insured or Mrs. Buchanan supplied the answers to the questions on the application form, there was no dispute about the fact that Mr. Bowers went over the questions on the form with the insured. By signing the application, she adopted the answers as her own. Jones, supra.
The trial judge's instruction quoted hereinabove failed to inform the jury about this aspect of the law, and his later instructions omitted any reference as to the effect of the insured's signing the application. In reviewing the issues concerning the insured's representations, the jury could have found erroneously that insured did not supply the answers and that she made no representations at all. We cannot find that this error was harmless; therefore, we find it necessary to remand this case for a new trial.
We have reviewed the additional assignments of error brought forth by the defendant, but as they are unlikely to recur at a new trial, we shall not address them.
New trial.
ROBERT M. MARTIN and BECTON, JJ., concur.
