There was sufficient evidence to authorize a jury to find that the insured did not give any such false answers to questions concerning his health, contained in the application for insurance, as materially affected the risk and as would prevent a recovery on the policy. The court erred in directing a verdict for the defendant and in denying the motion for a new trial.
Mrs. Mayme C. Barber sued All American Assurance Company of Louisiana on two health and accident policies insuring the plaintiff's husband, who died on March 18, 1951. The plaintiff alleged that her husband's death was caused by an accidental fall at home. She alleged that her husband was seriously injured when he fell, that his feet slipped out from under him causing him to fall on a wooden shell box breaking his ribs and puncturing his lungs. The plaintiff further alleged that such injuries alone caused her husband's death on March 18, 1951, when the policies were in force and that she had given due notice and proof of death; and she alleged demand, refusal, and bad faith.
The defendant admitted notice, demand, and refusal to pay, but defended on the ground that the insured was in poor and ill health and unable to perform manual labor, had received medical treatment for a heart ailment in 1948, and was suffering with a heart ailment at the time the applications for insurance were made. The defendant further alleged: that the insured's fall was caused by a heart attack, and that the cause of death was the heart attack; that in the written applications for insurance the insured made false and material representations and wilfully and fraudulently concealed facts material to the risk by answering "yes" to the question, "Are you sound physically and mentally to the best of your knowledge?" When he knew he was in ill health and had consulted a physician for treatment; that he falsely and fraudulently answered the question, "Have you ever had any of the following diseases: Heart Disease?" in the negative, when he knew that he had suffered from a heart ailment and had been treated by a doctor.
At the conclusion of the evidence the defendant moved: "At this time the defendant moves for a directed verdict for the defendant on several grounds: (1) that it conclusively appears that the insured had within five years of the date of his application, been treated by a doctor for a serious illness, which materially increased the risk of the insurance company and which was not disclosed on the application which was attached and became a part of the policy; (2) secondary and merely incident to that, certainly no case has been made out showing bad faith of the insurance company that would allow attorneys' fees." On such motion the court directed a verdict for the defendant. The plaintiff's motion for new trial was denied and she excepts.
The plaintiff testified in part: "I was present when that application for insurance was taken, at the time that the application for insurance was taken my husband and I had just come out of the cotton patch and we were sitting on the porch at my brother's home. At the time the application was written, Mr. Powell asked Mr. Barber when he was born, his height, weight and what month he was born in, and Mr. Powell asked Mr. Barber whom he wanted the insurance policies made payable to. Mr. Powell did not ask Mr. Barber any other questions. Mr. Powell did not ask the question, 'Are you sound physically and mentally to the best of your knowledge?' Mr. Powell did not ask Mr. Barber the question, 'Are your habits correct and temperate?' Mr. Powell did not ask Mr. Barber the question, 'Are you maimed or deformed?' and he did not ask him the question, 'Have you any impairment of sight or hearing?' Neither did Mr. Powell ask Mr. Barber the question, 'Have you ever had a hernia?' The question was not asked of Mr. Barber whether he had ever had rheumatism, diabetes, epilepsy or heart disease. Mr. Barber was not asked the question by Mr. Powell, 'Have you or any member of your family ever had T. B., any disease of the brain or nervous system?' Mr. Powell did not ask Mr. Barber, 'Have you received medical or surgical advice or treatment or had any local or constitutional disease not mentioned above within the past five years?' Mr. Barber did not sign the application for insurance. I signed it myself because Mr. Barber asked me to sign it for him. As a matter of fact I took out an insurance policy at the same time and signed it along with signing for Mr. Barber his insurance policy. Mr. Powell did not read the questions and answers on this paper before I signed it or when I signed it. I signed the application at the request of my husband and in his presence. When I signed the application Mr. Powell came over and held the same and told me to sign on the line, holding his hand on it, and he put his hand down there and said sign here. When I signed the application I did not know that there were any other questions in the application other than those which Mr. Powell asked about his birth date, age, height, weight and who was going to be beneficiary. Before me here is the second insurance policy dated October 17, 1950. The photostat of the application which I and looking at of said policy is dated in the left hand corner thereof October 2, 1950. The application for this insurance policy was taken by the agent, Mr. Powell, and I was present when that application for insurance was taken. When this application for insurance was taken in October, 1950, my sister-in-law, my brother, and a neighbor of his, Mr. Hubert Whitehead were present, along with my husband. As a matter of fact my sister-in-law, Mrs. Cowart, was present when the first application for insurance was taken in July of 1950. On October 2, 1950, Mr. Powell who sold this insurance did not ask any questions on taking this application. At this time, the time of taking the second application, Mr. Powell said, 'I already have a previous application from you and I can follow that one.' I signed the second application for insurance in the same manner as I had signed the first one for my husband. And as a matter of fact at the taking of the second application I took out personally another insurance policy. I signed this second application for Mr. Barber because he asked me to, and he was present when I signed it. I signed the second application for Mr. Barber at the same time I signed application for insurance on myself. I did not know that that application for insurance contained any questions other than the questions about height, birth date and name of beneficiary. At the time that this second application
for insurance was signed by me for Mr. Barber and at the same time when I signed the application for my personal insurance, Mr. Powell handed me the application and pointed to the place for me to sign. Mr. Powell did not return the application to me or Mr. Barber at that time nor any questions and answers did he read to us. The two insurance policies of Mr. Barber, the one written in October, 1950, and the other in July of 1950, were not delivered to Mr. Barber, rather they were delivered to me while I was working at Mosely Hospital. When I got the policies I gave them to my brother, and he put them in a steel box and Mr. Barber never did see the policies and I told him that I had them."
Mrs. Clyde Cowart testified on behalf of the plaintiff in part as follows: "I am related to Mrs. Mayme C. Barber. I am her sister-in-law. I was present in July 1950, at the time Mr. Powell called to sell insurance to Mr. Barber. Mr. and Mrs. Barber had just come out of the field. We were all sitting on the porch. At that time they lived in my home. I heard the conversation about the insurance, and I was present throughout the visit of Mr. Powell. The questions Mr. Powell asked in connection with the insurance were how old he was, his height and weight. He asked the question to whom did he want the insurance paid, and he did not ask Mr. Barber anything about his health. Mrs. Barber signed the application for the insurance, and Mr. Barber told her to. Mr. Powell showed Mrs. Barber where to sign the application for insurance by taking a book and putting it down on the application and pointing to the line with his finger, like this, for her to sign. At that time he did not read any questions to her. I was also present in October, 1950, when Mr. Powell called again to sell some insurance. Nobody else was present at that time. A little later my husband, his son-in-law and nephew came in. Mr. Powell took the application of Mr. Barber on October 2, 1950, and he also took one from Mrs. Barber. Mrs. Barber signed both applications. Mr. Powell did not ask any questions at that time. He said that he already had one application and he did not need it."
Hugh Powell testified in part as follows: "My name is Hugh Powell, and I was agent for the All American Assurance in July and October, 1950. I know Mrs. Mayme C. Barber, and I knew her late husband, Lonnie B. Barber. I have seen the application before me, this document here, it is the policy which I wrote, and this is my signature. This is the application of Lonnie B. Barber for what we call A & H, Health and Accident. I signed this similar application on October 2, 1950. The best I remember Mrs. Barber was present at the time the application was taken for Lonnie B. Barber. I wrote about 2500 policies for All American during the year and six months I worked for them, but the best I remember, she called Lonnie Barber from the field and they sat on the front porch. They had written into the All American Assurance Company and that is what we call a lead, and I went to call on them, from that lead. This was the first application. I remember that when I called upon them, Mrs. Mayme C. Barber was present. I remember that Mrs. Barber signed the application, she started to hand the book to Lonnie Barber, and he, Lonnie Barber, asked her, Mrs. Barber, to sign the application. I think Lonnie asked her to sign it. In response to the question, 'Did you read each and every question on this application and received the answers from them before putting them down?' I answer, 'I always do.' Sometimes I ask, 'Is anything the matter with either one, if so to let me know,' and they tell me they are perfectly healthy all right, then I go ahead and write the application. I asked them the question in regards whether or not they were in good health. I am not now with the All American Assurance Company . . . I was just testifying about the application of July 9th, 1950, when I called Mr. Barber out of the field. The application of October, 1950, I do not recall the particulars about. I don't remember about it. I wrote another one for Mrs. Barber. I went to the home they had moved out of. I wrote one for Mrs. Barber at the hospital later . . . It is impossible for me to remember every little fact of every policy I wrote. As to whether or not I asked all the questions or not I can say that is supposed to be done. I either asked the questions or I asked if there is anything wrong with them to let me know. Lonnie B. Barber was sitting there and if there was anything wrong with him I could not tell it."
The sole question for determination here is whether the evidence demanded a finding that the deceased insured made false answers to questions contained in the applications for insurance which materially affected the risk and would prevent recovery on the policies by the plaintiff, beneficiary under the policies. The evidence did not demand such a finding. A jury would have been authorized to find from the evidence that the defendant's agent did not propound the questions to which the alleged false answers were given. This case differs from Stillson v. Prudential Ins. Co., 202 Ga. 79 (42 S. E. 2d 121), only in the respect that in that case the agent asked the questions concerning the applicant's health contained in the application, received truthful answers thereto, but put false answers on the application, whereas in the present case it is contended that no questions, except as to age, birth date, height, weight, and beneficiary, were asked by the agent, and that the agent answered any questions other than those enumerated above on his own accord and without the knowledge of the insured or his beneficiary. But regardless of this difference, the principle announced in the Stillson case applies here, i. e., "In an action on a contract of insurance, the insurance company is generally considered estopped to deny liability on any matter arising out of the fraud, misconduct, or negligence of an agent of the company. If either party must suffer from an insurance agent's mistake, it must be the insurance company, his principal." 29 Am. Jur. 634, 833.
As we understand the ruling in the Stillson case, the Supreme Court attached no significance to the fact that the evidence showed that the applicant was fraudulently prevented from reading the application before signing and the case was decided without reference to that fact. The question of the insured or beneficiary having had constructive notice of what the application contained was not discussed in the Stillson case. We think that, if the insured and beneficiary are not bound originally by the contract between the parties limiting the authority of the agent where false answers are inserted by the agent and the reading of the application is thus excused, there is no duty on the insured or beneficiary to examine the application after the policy is issued. We think that the insurance company would have to show actual knowledge of the false answers after delivery of the policy in order to show such fraud as would avoid the contract. While the Supreme Court in the Stillson case did not mention this point, it seems to us that it would be unreasonable to say that the insured or beneficiary were excused in the first instance from reading the application, and then to charge them with the duty of reading the application after the policy was delivered. We think that the ruling in the Stillson case is controlling in principle on the issues in this case. It should also be noted that there was no limitation on the authority of the agent in the applications in this case, which fact makes this case much stronger for the beneficiary than was the Stillson case.
The jury would have been authorized to find from the evidence that questions concerning the insured's health were not propounded to him, and that the agent on his own accord inserted the answers to the health questions without the knowledge of the insured or the plaintiff.
Since the defendant's agent used the first application as a basis to fill out the second application after the plaintiff had signed it for her husband, what has been held concerning the first application equally applies to the second application.
The court erred in directing a verdict for the defendant and in denying the motion for new trial. Stillson v. Prudential Ins. Co., supra; National Life &c. Ins. Co. v. Sneed, 40 Ga. App. 131 (2, 3) (149 S. E. 68).