263 S.E.2d 300 | N.C. Ct. App. | 1980
Edna Faye WILLETTS
v.
INTEGON LIFE INSURANCE CORPORATION.
Court of Appeals of North Carolina.
*303 Ray H. Walton, Southport, for plaintiff-appellee.
Crossley & Johnson by Robert White Johnson, Wilmington, for defendant-appellant.
MORRIS, Chief Judge.
Through the pleadings and admissions, plaintiff established the execution and delivery by defendant of a life insurance policy issued to the deceased with plaintiff as beneficiary, the death of the insured, and payment of premiums. The death of the insured was shown by medical evidence to have resulted from injuries sustained in an automobile accident during the period the policy was in force. Nothing else appearing, plaintiff has established a *304 prima facie case of her right to the insurance proceeds. Rhinehardt v. Insurance Co., 254 N.C. 671, 119 S.E.2d 614 (1961); Tolbert v. Insurance Co., 236 N.C. 416, 72 S.E.2d 915 (1952). An insurer's duty under an insurance contract may be avoided by a showing that the insured made representations in his insurance application which were material and false. G.S. 58-30; Tolbert v. Insurance Co.,, supra; Gardner v. Insurance Co., 163 N.C. 367, 79 S.E. 806 (1913). A representation in a life insurance application is deemed material if the knowledge or ignorance of it would naturally influence the judgment of the insurer in making the contract and accepting the risk. Carroll v. Insurance Co., 227 N.C. 456, 42 S.E.2d 607 (1947). After plaintiff has made a prima facie case, the burden of proof is on the insurer to establish the misrepresentations relied on by it to avoid the policy. Rhinehardt v. Insurance Co., supra; Wells v. Insurance Co., 211 N.C. 427, 190 S.E. 744 (1937). In this case, the jury answered the question of whether plaintiff and her deceased husband represented to defendant that the insured had not been charged with a moving violation other than speeding 60 miles per hour in a 45 mile-per-hour zone in favor of the plaintiff. Thus, the question of materiality is not before us.
Defendant's contention in this action is that plaintiff and insured, by signing the life insurance application in which the answer to question No. 7 was incomplete, misrepresented the truth to defendant insurer. Plaintiff, on the other hand, contends that she, her husband, and defendant's agent discussed insured's driving record at length, and that they did not represent to defendant's agent that there had only been one charge within the preceding three years. Some evidence supporting plaintiff's position was admitted without objection during direct examination of Mrs. Willetts. A portion of her testimony, however, concerned statements allegedly made by Agent Kopp to plaintiff and the insured, to the effect that they need not worry about whether the charges were within three years because Integon Company would obtain a copy of insured's driving record, and they would be notified if there was any problem. None of this evidence was incorporated into the insurance application, and it obviously contradicted the clause printed in the application disclaiming knowledge on the part of Integon Company.
In North Carolina, evidence of prior parol representations will not be received into evidence to alter the terms of a written insurance contract. This rule is explained as follows:
[W]hen the parties have bargained together touching a contract of insurance and reached an agreement, and in carrying out, or in the effort to carry out, the agreement [sic], a formal written policy is delivered and accepted, the written policy, while it remains unaltered, will constitute the contract between the parties, and all prior parol agreements will be merged in the written instrument; nor will evidence be received of prior parol inducements and assurances to contradict or vary the written policy while it so stands as embodying the contract between the parties.
Floars v. Insurance Co., 144 N.C. 232, 235, 56 S.E. 915, 916 (1907). See also Rutherford v. Insurance Co., 562 F.2d 290 (4th Cir. 1977); Cavin's, Inc. v. Insurance Co., 27 N.C.App. 698, 220 S.E.2d 403 (1975). Applying this principle, defendant contends that evidence of Agent Kopp's statements were immaterial, and their admission was, therefore, improper. Without ruling on the admissibility of the statements, we do not find defendant's argument persuasive, in that Agent Kopp, on direct and cross-examination, testified without objection that he told Mrs. Willetts that the company would check her husband's driving record and that she would be notified if the results affected the policy. It is clear that defendant's exception to the admission of this evidence was waived when Agent Kopp testified to the same matter. State v. Byrd, 40 N.C. App. 172, 252 S.E.2d 279 (1979). By so holding, we also reject defendant's argument with respect to the trial court's instructions containing those statements.
*305 Notwithstanding defendant's contentions regarding the inadmissibility of its agent's parol representations, it is apparent that such evidence, admitted without objection constitutes knowledge on the part of defendant which precludes it from avoiding liability under the policy.
It is well established that an insurance company cannot avoid liability on a life insurance policy on the basis of facts known to it at the time the policy went into effect. Cox v. Assurance Society, 209 N.C. 778, 185 S.E. 12 (1936). Defendant argues that it had no knowledge of insured's prior driving record because there was nothing on the face of the insurance application to that effect and nothing to put it on notice that further inquiry should have been made. Defendant overlooks, however, the rule as stated in Insurance Co. v. Grady, 185 N.C. 348, 117 S.E. 289 (1923), wherein the Court stated:
[I]n the absence of fraud or collusion between the insured and the agent, the knowledge 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.
185 N.C. at 353, 117 S.E. at 291. Cox v. Assurance Society, supra. See 16A Appleman, Insurance Law and Practice § 9101 (1968) [Appleman]. In Gouldin v. Insurance Co., 248 N.C. 161, 102 S.E.2d 846 (1958), the Court, quoting from Appleman, stated the rule with respect to the degree of knowledge required to constitute notice on the part of the agent and the insurer:
Knowledge of facts which the insurer has or should have had constitutes notice of whatever an inquiry would have disclosed and is binding on the insurer. The rule applies to insurance companies that whatever puts a person on inquiry amounts in law to "notice" of such facts as an inquiry pursued with ordinary diligence and understanding would have disclosed.
248 N.C. at 165, 102 S.E.2d at 849. Applying these principles to the facts before us, it is evident that Agent Kopp had knowledge of the insured's driving history, and that Kopp was at least put on notice that there may have been driving charges within the three years preceding the application other than the charge for speeding 60 miles per hour in a 45 mile-per-hour zone. Such knowledge is sufficient to put Kopp on notice as to the other charges which would have been revealed by further inquiry. Thus, Integon is deemed to have notice of the insured's driving record for the three years preceding the application. By so holding we reject defendant's assignment of error relating to the trial court's instruction to the jury that it could consider in its deliberations defendant's ability to obtain insured's driving record.
We have carefully reviewed defendant's other assignments of error concerning the admission of evidence and jury instructions. We find no error sufficiently prejudicial to warrant granting defendant a new trial. Further, we find the evidence supportive of the jury's finding that plaintiff and its insured did not misrepresent to defendant information regarding insured's past driving record.
No error.
PARKER and HILL, JJ., concur.
