Wells v. Jefferson Standard Life Insurance, 211 N.C. 427 (1937)

April 7, 1937 · Supreme Court of North Carolina
211 N.C. 427


(Filed 7 April, 1937.)

1. Insurance § 13—

Laws in force at tlie time of the issuance of a policy of insurance become a part of the contract, and stipulations in the policy contrary to statutory provisions are of no effect. C. S., 6287, 6288.

2. Insurance § 31b — Material misrepresentation for which policy may be avoided is one which would influence insurer in making contract.

It is provided by C. S., 6289, that misrepresentations in an application for insurance will not prevent recovery on the policy unless the misrepresentations are fraudulent or material, and under this section all representations which would naturally influence the judgment of insurer in making the contract are material, and it is not necessary that they be fraudulent in order to bar a recovery, but a stipulation in the policy that all representations in the application should be deemed material is contrary to the statutory provision, and is of no effect.

3. Same — "Whether misrepresentation was material, entitling insurer to avoid policy, held question for jury on evidence in this case.

The evidence, considered in the light most favorable to plaintiff, tended to show that insured stated in her application for insurance that she had not consulted a doctor for any cause other than as disclosed in the application, while insured had consulted a physician who determined that she had a mild form of malaria causing one-half degree of fever, that at the time of signing the application insured had completely recovered and that the malaria was in no way a cause or contributing cause of her death. Held: Whether the misrepresentation in the policy was material is a question for the jury under the evidence in the beneficiary’s action on the policy, and the granting of insurer’s motion to nonsuit.is error.

4. Same — Evidence held insufficient to establish falsity of representation as a matter of law.

The evidence disclosed that insured stated in her application that she was not pregnant and that her menstruation was regular and normal, and that she died in childbirth nineteen days less than nine months thereafter. It also appeared that insured was thirty-three years old and married, and paid an additional premium to insurer to cover the risk of childbirth, and that a physician whom insured consulted more than a month after signing the application was unable to determine at that time that she was pregnant. Held: The evidence does not affirmatively show that the childbirth *428was not premature, and is insufficient to establish as a matter of law that insured’s representations in regard thereto in her application were false, and the granting of insurer’s motion to nonsuit in the beneficiary’s action on the policy is error.

5. Insurance § 37 — Burden is on insurer to establish misrepresentations relied upon by it to avoid policy.

Where plaintiff! beneficiary offers the policy in evidence, and insurer admits its execution and delivery and the death of insured, plaintiff establishes a prima facie case, and the burden is on insurer to establish misrepresentations relied on by it to avoid the policy, and the burden of proof is not affected by anticipation of such defense and the offering of evidence upon the issue of misrepresentation by plaintiff, and in passing upon insurer’s motion to nonsuit on the ground of such misrepresentations, all the evidence must be considered in the light most favorable to plaintiff.

Appeal by plaintiffs from Spears, J., at December Term, 1936, of DupliN.


Three actions upon policies of insurance issued by defendant insurance company upon the life of Mary Nicholson Wells were resisted by the defendant upon the ground of falsity of material representations by the insured in the application for the insurance. The application was dated 28 June, 1935.

Plaintiffs offered, in addition to the defendant’s admission of the issuance of the policy and of the death of insured, the testimony of three physicians as to the physical condition and health of insured.

At the close of plaintiffs’ evidence motion for nonsuit was sustained, and from judgment dismissing the action, plaintiffs appealed.

Oscar B. Turner and Norwood B. Boney for plaintiffs.

Smith, Wharton ■& Hudgins and Beasley & Stevens for defendant.

Devin, J.

The decision of this appeal turns upon the question whether the representations made by the insured in the application for the policies of insurance sued on were material.

The defense set up in the answer was that the replies to the following three questions in the application were false and material:

(1) Have you consulted a doctor for any cause not included in above answer? No.
(2) Is menstruation regular and normal ? Yes.
(3) Are you pregnant ? No.

I. Relating to the first of these questions, it was testified by the family physician that on 7 May, 1935, the insured came to him and he found she had one-half degree of fever due to malaria, that he saw her on 14 May and she was feeling better, that he saw her again on 20 May and she had no fever, that he saw her next 23 May and her condition *429was good, tbat she came back 25 June and an examination showed no malaria. “I never heard of anybody dying from this type (of malaria).”

The examining physician, who wrote down the answers to the interrogatories on 28 June, 1935, testified: “I never made any special examination for malaria. I wasn’t looking for malaria. ... I wouldn’t have asked her a specific question like that (whether she had had malaria), because it is not included as a specific question. I did not find any trace of malaria.”

Another physician testified that malaria had nothing to do with her death.

It is provided by statute that all insurance contracts shall be deemed to have been made subject to the laws of the State. C. S., 6287, 6288. Among these laws is the following: “All statements or descriptions in any application for a policy of insurance, or in the policy itself, shall be deemed representations and not warranties, and a representation, unless material or fraudulent, will not prevent a recovery on the policy.” C. S., 6289. Construing these provisions, it is held by this Court “that every fact untruly asserted or wrongfully suppressed must be regarded as material if the knowledge or ignorance of it would naturally influence the judgment of the insurer in making the contract, or in estimating the degree and character of the risk, or in fixing the rate of premium.” Ins. Co. v. Box Co., 185 N. C., 543; Bryant v. Ins. Co., 147 N. C., 181; Fishblate v. Fidelity Co., 140 N. C., 589.

Fraud is not essential and as a general rule recovery will not be allowed if the statements made and accepted as inducements to the contract of insurance are false and material. Ins. Co. v. Woolen Mills, 172 N. C., 534; Ins. Co. v. Box Co., 185 N. C., 543.

Whether the representation was material depends upon whether it was such as would naturally and reasonably influence the insurance company with respect to the contract or risk. Schas v. Ins. Co., 166 N. C., 55.

The defendant contends that the testimony of the physician shows that the negative answer to the question, whether the insured had consulted a doctor for any cause not included in the other interrogatories, was false, and that her statement was a representation and deemed material under the rule in Ins. Co. v. Woolen Mills, supra; and further, that in the application it was distinctly agreed that every statement therein made was material.

But the evidence offered, considering it in the light most favorable for the plaintiff (as we are required to do on a motion to nonsuit) permits the reasonable inference therefrom that the indisposition of the insured in May, 1935, was slight and temporary, and that it had entirely passed away before the application for insurance was made, and that it had no connection whatever with her death the following March. Hines v. Casualty Co., 172 N. C., 225.

*430We are unable to bold tbat tbe failure to disclose tbe fact tbat insured bad bad some time previous to ber application one-balf degree of fever due to a mild form of malaria and from wbicb sbe bad entirely recovered, taken in connection with tbe further fact tbat sbe was at tbe time of tbe application in sound bealtb and otherwise insurable, was such a withholding of information as would necessarily have been calculated to influence tbe action or judgment of the insurance company. Tbe evidence in its most favorable light tends to support tbe view tbat tbe representation, or withholding of information, was neither fraudulent nor material.

It was held in Anthony v. Protective Union, 206 N. C., 7, Adams, J., speaking for tbe Court, tbat tbe failure of tbe insured to inform tbe defendant’s representative tbat in tbe previous spring a physician bad treated ber for a temporary indisposition was of negligible significance and in no event an adequate cause for canceling tbe policy.

II. Referring to tbe representations of tbe insured contained in tbe application for insurance and hereinbefore quoted as numbered (2), tbe evidence does not .disclose tbe falsity of tbe statement tbat tbe menstruation of the insured was normal.

Tbe defendant, however, contends tbat tbe insured represented, on 28 June, 1935, tbat sbe was not pregnant, and tbat this statement was false and material, as sbe died in childbirth 9 March, 1936.

On tbe other band, it does not affirmatively appear tbat tbe childbirth was not premature, and hence it would seem tbe falsity of tbe representation as to pregnancy would not be a necessary deduction. Tbe plaintiffs further take tbe position tbat if sbe was pregnant on 28 June, 1935, sbe did not know it, and tbat ber statement was not fraudulent, and tbat tbe risk from this cause entered into tbe contract and was provided against by tbe defendant by tbe requirement of an additional premium for tbat reason wbicb was paid to tbe defendant, as shown by tbe rider attached to tbe policy.

In this connection it appears from tbe record tbat tbe physician testified tbe insured consulted him 2 August, 1935, presumably about her possible pregnancy, and tbat be was unable to decide with certainty, and tbat be told ber to come back in a month, when be could tell ber definitely.

In view of tbe evidence tbat defendant issued its policies on tbe life of tbe insured when it knew sbe was 33 years of age, bad been married about a year, and tbat ordinarily pregnancy might be expected, and tbe fact tbat it required an additional premium on tbat account, we are unable to bold on this 'record tbat tbe plaintiffs are precluded by tbe statement complained of, or by tbe failure of tbe insured thereafter to *431disclose to the insurance company her condition, when she had paid an extra premium to compensate the defendant for the additional risk.

By offering in evidence the policy of insurance and the defendant’s admission of its execution and delivery and of the death of the insured, the plaintiffs made out a prima facie case, and the burden was then upon the defendant to rebut it by proof of the matters alleged in the affirmative defense in the answer. Though the plaintiffs, in anticipation of the defense, elected to offer the testimony of the witnesses, this did not change this rule as to the burden of proof. Nevertheless, the motion for judgment of nonsuit requires the consideration of all the evidence in the light, however, most favorable to the plaintiffs.

We have examined the authorities cited by counsel for the defendant in their well prepared brief, but conclude that the evidence here presented does not necessarily require the holding as a matter of law that the quoted representations, contained in the application of the insured, were both false and material, as contended by the defendant.

We are of opinion, and so decide, that the learned judge was in error in sustaining the motion for judgment of nonsuit.