This is an action to recover proceeds allegedly due under a life insurance policy issued by defendant on the life of plaintiffs deceased husband. Refusing to pay the proceeds, defendant relies on what it contends are material misrepresentations made in the application for the policy. The question is whether on the factual showing made at the hearing defendant is entitled to summary judgment on the material misrepresentation defense. The Court of Appeals conсluded it was not.
Ward v. Durham Life Ins. Co.,
I.
In support of its motion for summary judgment defendant offered three affidavits, one from each of three vice-presidents. These affidavits tended to show the following:
On 5 October 1985 plaintiff and her husband, Vernon J. Ward, agreed to apply for a life insurance policy through defendant’s agent and Mr. Ward’s first cousin, Brenda W. Ward. After advising the Wards that she was an agent for defendant, Brenda asked the Wards to answer questions from an insurance application form. After the Wards answered the questions orally, Brenda recorded their answers on the application form. After all questions had been asked and answered and recorded by Brenda on the form, Mr. Ward signed the application and paid the requested premium.
Apparently “Question 30.k” on the form asked whether the applicant had ever been “arrested for the use of alcohol,” and “Question 32.d” asked whether applicant had ever been treated for high blood pressure. The form as signed by Mr. Ward showed negative answers to these questiоns. 1
On 15 October 1985 defendant issued its policy insuring the life of Mr. Ward in the amount of $10,000 with an additional accidental death benefit of $10,000. The policy designated plaintiff as beneficiary.
*206 On 26 January 1986 Mr. Ward was killed in a single car accident on the Pamlico Beach Road in Beaufort County. Thereafter Mrs. Ward submitted to defendant a timely notice of Mr. Ward’s accidental death and claimed the benefits allegedly due her under the policy.
Because Mr. Ward’s death occurred within the two-year contestable period provided for in the policy, defendant investigated Mr. Ward’s medical history. Mr. Ward’s medical records showed that on 29 September 1983 Mr. Ward was diagnosed by a local physician as having high blood pressure for which the physician prescribed medication. Because his death resulted from an automobile accident, defendant obtained a copy of the investigative report of the accident from the Division of Motor Vehicles. The accident report indicated that at the time of thе accident Mr. Ward was traveling at an excessive speed and had been using alcohol. Prompted by this information defendant checked local court records, which showed that Mr. Ward had pled guilty to “driving under the influence on October 5, 1982.”
Claiming that Mr. Ward had not provided truthful answers on his insurance application form with regard to his high blood pressure and his arrest relating to alcohol use and that had truthful answers been given defendant would not have issued its policy, defendant on 5 June 1986 denied Mrs. Ward’s claim for benefits and offered a full refund of premiums paid. This action followed.
Mrs. Ward offered in opposition to defendant’s motion for summary judgment her own affidavit. In it she swore essentially as follows: When in October 1985 defendant’s agent, Brenda Ward, reached question 30(d) on the application form, she asked Mr. Ward if he had ever been convicted of driving under the influence. 2 Mr. and Mrs. Ward informed Brenda that he had been so convicted in October 1982. Brenda responded that since the conviction was more than two years оld it would not prevent him from obtaining insurance with her company. As to question 32(d), Brenda asked Mr. Ward if he had ever been treated for high blood pressure. Mr. Ward informed Brenda that: He had been treated for high blood pressure in 1983; medication was prescribed and taken according to the prescription; the prescription was not refilled; and Mr. Ward, who had reduced his intake of salty and fatty foods, had had no symptoms of high blood pressure since that time. Brenda responded that since the treatment had оccurred more than two *207 years ago it “was all right” and would not prevent Mr. Ward from obtaining insurance with her company.
Mrs. Ward swore in her affidavit that “my husband and I truthfully and completely answered the questions on the application taken by Ms. Brenda Ward, the agent for Durham Life Insurance Company. . . . That Brenda Ward said that these things were no problem and would not prevent us from obtaining insurance and she marked the application accordingly.” After Brenda completed marking the application, Mr. Ward signed it and paid the initial premium.
Defendant moved to strike the following four quoted portions of plaintiff’s affidavit as inadmissible evidence:
That as to question 30(d) and (k), my husband and I advised Ms. Ward that he had in fact been convicted of driving under the influence in the District Court of Beaufort County in October of 1982 and that he had obtained a limited driving privilege.
My husband advised her that he had been treated by Dr. Boyette for high blood pressure in 1983. Then she asked whether or not this had occurred within two years. My husband and I then conferred and advised her that it had been more than two years since he had been treated by Dr. Boyette and he had not had any problems since that time.
That as a result of the responses that were given by my husband and I to Ms. Brenda Ward, Durham Life Insurance Company had notice of my husband’s medical treatment for high blood pressure and his conviction for driving under the influence of alcohol in 1982.
My husband signed the application based on this representation.
The trial court allowed the motion and granted summary judgment in favor of defendant.
A majority of the Court of Appeals concluded that the trial court erred in striking portions [1] and [2] from plaintiff’s affidavit but that it properly struck portions [3] and [4].
Id.
at 289,
II.
As to the trial court’s order striking portions of plaintiff’s affidavit, we hold the Court of Appеals correctly affirmed as to those portions of the affidavit designated above as [3] and [4] inasmuch as those portions are conclusions rather than statements of fact.
See
1 Brandis on North Carolina Evidence § 130 (3d ed. 1988);
see also Singleton v. Stewart,
Those portions of plaintiff’s affidavit designated [1] and [2] are not hearsay as the trial court apparently thought and defendant argues. “ ‘Hearsay’ is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” N.C.R. Evid. 801(c);
accord State v. Sidden,
The statements made to defendant’s agent by Mr. and Mrs. Ward, as related by Mrs. Ward’s affidavit, were not, as the Court of Appeals correctly concluded, offered to prove the truth of the matters contained in the statements. They were offered to prove simply that defendant’s agent had notice of these matters. They were properly admissible and should not have been stricken by the trial court.
III.
The more diffiсult question is whether Mrs. Ward’s affidavit is a sufficient forecast of evidence to show that at trial she will be able to surmount defendant’s affirmative defense of material misrepresentations in Mr. Ward’s application for insurance.
Familiar, pertinent principles applicable to the ruling on summary judgment are:
The movant must clearly demonstrate the lack of any triable issue of fact .... “[A]ll inferences of fact from the proofs proffered . . . must be drawn against the movant and in favor of the party opposing the motion.”
In ruling on summary judgment, a court does not resolve questions of fact but determines whether there is a genuine issue of material fact. . . . Thus a defending party is entitled to summary judgment if he can show that claimant cannot prove the existence of an essential element of his claim or cannot surmount an affirmative defense which would bar the claim. *210 anees claimant need not present all the evidence available in his favor but only that necessary to rebut the defendant’s showing that an essential element of his claim is non-existent or that he cannot surmount an affirmative defense.
*209 Summary judgment is ... a device by which a defending party may force the claimant to produce a forecast of claimant’s evidence demonstrating that claimant will, at trial, be able to make out at least a prima facie case or that he will be able to surmount an affirmative defense. Under such circum-
*210
Dickens v. Puryear,
There is little question that, standing alone, the misrepresentations in the application would be enough to void the policy. “A policy of life insurance may be avoided by showing that the insured made representations which were material and fаlse.” 7 Strong’s N.C. Index 3d
Insurance
§ 18 (1977);
accord Rhinehardt v. Insurance Co.,
The misrepresentation in Mr. Ward’s application concerning his health history is, under the foregoing authorities, material. So, аrguably, is the misrepresentation concerning his arrests for violations involving alcohol, although we do not here decide this question.
Even material misrepresentations in applications for insurance do not void the policy if the insurer knew the facts surrounding the misrepresentations at the time it accepted the application and issued its policy based thereon. It is well settled that
an insurance company cannot avoid liability on a policy issued by it by reason of any facts which were known to it at the *211 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, though the policy contains a stipulation to the contrary.
Cox v. Assurance Society,
The question before us thus distills to this: Are the facts contained in Mrs. Ward’s affidavit, if believed, sufficient to show that defendant’s agent, Brenda, had knowledgе of the misrepresentations contained in Mr. Ward’s application under circumstances which would, under applicable legal principles, make this knowledge imputable to defendant. If they are and if offered at trial, then the defense of material misrepresentations in the application would be surmounted and defendant would not be entitled to summary judgment on the basis of this defense.
First we deal with defendant’s contention that its agent, Brenda, was acting outside the scope of her authority if shе accepted Mr. Ward’s application with knowledge of the misrepresentations. The doctrine of apparent authority completely answers this contention adversely to defendant. In
Hornthal v. Insurance Co.,
A general agent . . . represents his principal . . . and may bind him by any act or agreement fairly within the apparent cope [sic] of his employment; and this, although there may have been limitations put on his authority unknown to those with whom, in such capacity, he may have dealings. Thus . . . notice to him is notice to his рrincipal, and his knowledge is the knowledge of the company; he may waive a forfeiture and dispense with what would otherwise cause it.
Id.
at 74-75 (citations omitted). Subsequently, in
Thompson v. Assurance Society,
*212 The principal is not bound by or liable for the act of his agent which is beyond the actual, and not within the apparent scope of the agent’s authority. . . . Where the act of the agent, although beyond the actual scope of his authority, is within its apparent scope, and the person dealing with the agent acts in good faith, and with reasonable prudence, the principal is bound.
Id.
at 64,
There can be no question here but that defendant had clothed its agent, Brenda, with apparent authority to act for it in receiving insurance applications and assisting applicants in properly completing them.
See, e.g., Thompson v. Assurance Society,
We are now brought to the central and most difficult question raised by this appeal. There is no doubt, if Mrs. Ward’s affidavit is believed, that defendant’s agent, Brenda, knew of the falsity of some of the answers on Mr. Ward’s application. The troublesomé question is whether her knowledge under the forecast of evidence presented by Mrs. Ward’s affidavit could at trial be shown to be imputable to defendant. The rule is that an insurer’s authorized agent’s knowledge of false material answers on an insurance application is imputed to the insurer unless both the agent and the applicant intend to perpetrate a fraud on the insurer by submitting the false answers. “In the absence of fraud or collusion between the insured and the agent, the knowledgе of the agent when acting within the scope of the powers entrusted to him will be imputed to the company, though a direct stipulation to the contrary appears in the policy or the application for the same.”
Ins. Co. v. Grady,
*213
Defendant argues “the fact that Mr. Ward could read and write and yet signed the application containing the misrepresentations makes the false information imputable to the applicant and not the insurer. . . .” There is language in several cases relied on by defendant and the dissenting opinion below which support this proposition. The cases are
Thomas-Yelverton Co. v. Insurance Co.,
In
Thomas-Yelverton,
questions on the application asked whether the applicant had ever suffered from stomach disease and whether he had been attended by a physician during the last two years.
Thomas-Yelverton Co.,
[W]hen the insured signed the application he knew the agent had written the answers to the questions contained in it; and by *214 signing it in the form submitted, he represented that the answers were true. The plaintiff’s еvidence clearly establishes the truth of the affirmative defenses [material misrepresentations in the application] of the defendant.
Id.
at 283,
Notwithstanding this statement, which is the concluding paragraph of the Court’s opinion in
Thomas-Yelverton,
the holding in the case rests on the general rule that absent fraud or collusion between agent and applicant knowledge of the agent is imputed to the insurer. This rule is set out and discussed in the opinion.
Id.
at 281-82,
Defendant’s reliance on
Inman v. Woodmen of the World,
We agree with the Cоurt of Appeals that the case before us is distinguishable from
Inman.
See
Ward v. Durham Life Ins. Co.,
Significant to the
Inman
decision is the agent’s statement to the applicant after the applicant had doubted his ability to obtain insurance because of his medical history, that “I think I can get you by. You don’t have to have a medical examination anyhow.” This was followed by the agent’s request that the applicant sign the application without having it read to him and, apparently, without reading it himself.
Id.
at 181,
The concluding paragraph of the main opinion in
Inman
that the applicant’s failure to read, or have read, the application “was not induced by any fraud on the part of the agent” should be read to mean that the agent did not commit a fraud on the applicant, not that there was an absence of fraud by both agent and applicant on the insurer.
Id.
at 182,
In
McCrimmon,
plaintiff purchased life insurance on his son who suffered brain damage at birth.
McCrimmon,
69 N.C. App. at
*216
684,
There is a fundamental factual difference between
ThomasYelverton, Inman,
and
McCrimmon
and the case before us. In all these other casеs the evidence showed a culpable applicant. In these cases the applicants either knew or should have known that the application contained false answers to questions relating to their insurability.
Thomas-Yelverton,
Here plaintiff’s forecast of evidence presented by Mrs. Ward’s affidavit is enough to demonstrate that she will at trial be able to show that Mr. Ward was an innocent applicant. She will be able to show that he signed the application only after defendant’s agent assured him that since the events in question occurred more than two years earlier, they would not affect his insurability. Mr. Ward could, then, have reasonably believed the questions, as explained by defendant’s agent, called for positive answers only if the events to which they related occurred within two years of the application. The questions were, therefore, truthfully answerable in the negative because none of the events to which they referred occurred within this two-year period. If, indeed, the insurer’s agent sought to mislead her company, the forecast of evidence at the summary judgment hearing indicates that Mr. Ward was not a participant in this effort.
*217 In conclusion and for the reasons stated, we hold that the factual showing at the summary judgment hearing presents a material issue of fact on whether the agent’s knowledge of misrepresentations in the application for insurance should be imputed to defendant insurer. The Court of Appeals’ decision reversing the trial court’s summary judgment for defendant is, therefore,
Affirmed.
Notes
. Although the actual application form is rеferred to as Exhibit F in defendant’s affidavits, neither this nor other exhibits referred to in these affidavits were brought forward on appeal. Thus, we cannot tell precisely what the questions on the form were. There is some discrepancy in the references to the questions on the form made by the plaintiff’s affidavit on one hand and defendant’s affidavits on the other; but we do not think the discrepancies are material to the issues in the case. The characterization of questions in the text comes from defendant’s affidavits.
. This and the following characterizations in the text come, as indicated, from plaintiff’s affidavit. See n.l, supra.