Carroll v. Carolina Casualty Insurance, 227 N.C. 456 (1947)

May 21, 1947 · Supreme Court of North Carolina

227 N.C. 456

JOSEPH J. CARROLL and DAISY C. CARROLL v. CAROLINA CASUALTY INSURANCE COMPANY.

(Filed 21 May, 1947.)

1. Insurance § 41—

In this action on a policy of hospital insurance, plaintiff’s evidence tended to show that she incorrectly stated in her application that she did not have hernia but that the statement was not made with intent to deceive, that plaintiff was hospitalized and operated upon for appendicitis, and that during the operation the surgeon incidentally repaired the , hernia but there was no evidence that any additional charge therefor was included in the surgical fee. Held: Whether the misrepresentation was material was a question for the jury upon the evidence, and defendant’s motion to nonsuit was properly denied.

2. Insurance § 31a—

A misrepresentation in an application for a policy will not avoid the policy unless it was made with intent to deceive or unless it materially affected the acceptance of the risk by insurer and contributed to the event on which the policy became payable.

3. Insurance § 41—

The burden is upon insurer to prove that a misrepresentation in an application for insurance was fraudulent, and where insured’s- evidence negates fraud and insurer offers no evidence, an instruction to the jury that there was no evidence of intent to deceive is without error.

4. Same—

The evidence 'tended to show that in her application for hospital insurance plaintiff inadvertently misrepresented that she did not have hernia, that subsequent to the issuance of the policy plaintiff was hospitalized for appendicitis, that during this operation the surgeon incidentally repaired the hernia. Held: A charge to the effect that the misrepresentation would bar recovery if the hernia in any way contributed to the hospitalization or materially affected the acceptance of the risk by insurer so that insurer would not have written the policy in the form it was issued if the existence of the hernia had been known, is held without error, G. S., 58-30, the question of materiality of the misrepresentation! being for the jury upon the evidence.

Appeal by defendant from Olive, Special Judge, at February Term, 1947, of Gutleoed.

No error.

Tbis was an action on a policy of hospital insurance, to recover $145, the amount expended for hospital and surgical expenses incident to an operation for appendicitis on plaintiff Daisy 0. Carroll.

Plaintiffs’ claim was contested by defendant on the ground that in the application for insurance to the Pennsylvania Casualty Company (re-insured by defendant Carolina Casualty Insurance Company) the plaintiff Joseph J. Carroll had represented that the feme plaintiff had not had hernia, whereas it was shown that she had had hernia for some time, though it was testified she did not complain of it and it had never “bothered” her. It appeared that during the operation for appendicitis the surgeon incidentally repaired the hernia. However, there was no evidence that any charge or additional charge therefor was included in the surgical fee covered by the insurance. Defendant offered no evidence.

Issues were submitted to the jury and answered in favor of the plaintiffs, establishing (1) that the policy was in force at the time of the operation; (2) that, though it was incorrectly stated in the application that feme plaintiff did not have hernia, (3) the statement was not made with intent to deceive; (4) that the hernia did not contribute to her hospitalization and did not materially affect acceptance of the risk by the defendant; and (5) that under the terms of the policy plaintiffs were entitled to recover-$145.

From judgment on the verdict the defendant appealed.

Smith, Wharton S Jordan and McNeill Smith for plaintiffs.

Gold; Me Anally & Gold for defendant.

Devin, J.

Tbe defendant assigns error in tbe trial below in two respects: (1) in tbe court’s denial of its motion for judgment of nonsuit, and (2) in tbe court’s instructions to tbe jury.

Tbe plaintiffs’ evidence was sufficient to carry tbe case to tbe jury and to support tbe verdict. Notwithstanding tbe incorrect answer to tbe question in tbe application as to absence of bernia, under tbe terms of tbe policy, tbis would not defeat plaintiffs’ action on tbe policy, otherwise incontestable, unless tbe answer was made witb intent to deceive, or materially affected tbe acceptance of tbe risk and contributed to tbe event on wbicb tbe policy became payable. There was evidence to sustain plaintiffs on tbis point, and tbe motion for judgment of nonsuit was properly denied. Tbe court charged tbe jury that there was no evidence of an intent to deceive tbe defendant in tbe application for tbe policy of insurance. There was no error in tbis instruction. Tbe plaintiffs’ evidence negatived fraud, and tbe burden on tbis issue was upon the' defendant. There was no evidence contra.

Tbe court charged tbe jury in substance if they found that the feme plaintiff was sent to tbe hospital for an appendix operation, and that the hernia in any way contributed to her hospitalization; or that it materially affected tbe acceptance of tbe risk, or contributed to tbe contingency; or that but for the answer to tbe question in tbe application the Insurance Company would not have written tbe policy as it did, or not at all, or changed it, they should answer tbe issue yes, and that, before they could answer it no they must find tbe hernia did not contribute to her hospitalization or materially affect tbe acceptance of tbe risk.

Tbis charge presented tbe determinative question in tbe language of tbe policy wbicb provided that falsity in an answer in tbe application would bar recovery “if such answer is made witb intent to deceive or materially affects tbe acceptance of tbe risk by tbe Company and contributes to tbe contingency or event on wbicb tbe policy is to become due and payable.” Tbe charge is in substantial compliance witb tbe rule laid down in Wells v. Ins. Co., 211 N. C., 427, 190 S. E., 744, and in accord witb the provisions of G. S., 58-30, that “a representation, unless material or fraudulent, will not prevent a recovery on tbe policy.” The general rule is that the materiality of tbe representation depends on whether it was such as would naturally and reasonably have influenced tbe insurance company witb respect to the contract or risk. Wells v. Ins. Co., supra; Schas v. Ins. Co., 166 N. C., 55, 81 S. E., 1014. Tbe question was one for tbe jury. Bank v. Ins. Co., 223 N. C., 390, 26 S. E. (2d), 862.

It is true the court, in one instance, inadvertently told tbe jury if they found certain facts to answer tbe issue “no” when “yes” was indicated and intended, but in tbe succeeding paragraph tbe court corrected tbe instruction, and properly and fully charged on this point, as was also done in tbe preceding paragraph. Tbe defendant does not raise the-point, or suggest, that there was any misunderstanding of tbe court’s instructions on this issue, and merely finds fault with this portion of tbe charge for that the court submitted “a question of law to the twelve jurors.” The exception to tbe charge as to tbe amount of recovery is without merit.

We think the case was fairly and properly submitted to tbe jury, and tbe result reached will not be disturbed.

No error.