Gorham v. . Insurance Co. , 214 N.C. 526 ( 1938 )

BARNHILL, J., took no part in the consideration or decision of this case.

DEVIN, J., dissenting. Civil action to recover on a policy of accident insurance.

Upon receipt of the payment in advance of the first annual premium of $52.50, the defendant, on 6 April, 1921, issued to Louis Rhodes Gorham a $2,500-policy of accident insurance, payable to his wife, plaintiff herein, as beneficiary in case of death of the insured through accidental means, containing, among others, the following provisions:

"The Pacific Mutual Life Insurance Company of California hereby insures Louis Rhodes Gorham . . . against loss of life resulting directly and independently of all other causes, from bodily injury effected during the term of this policy solely through accidental means . . .

"4. In the event of accidental death immediate notice thereof must be given the company. . . .

"5. Failure to give notice within the time provided in this policy shall not invalidate any claim if it shall be shown not to have been reasonably possible to give such notice and that notice was given as soon as was reasonably possible. . . .

"7. Affirmative proof of loss must be furnished to the company . . . within ninety days after the date of such loss.

"21. This insurance does not cover . . . suicide, sane or insane. . . .

"22. Failure to comply with any of the provisions of this policy shall render invalid any claim under this policy."

It is admitted that all the premiums due on the policy had been paid and that the contract of insurance was in full force and effect on 8 March, 1933, when the insured was found dead in his office as the result of a pistol-shot wound. The bullet had entered the back of his head, a little behind and slightly above his right ear, and was afterwards located just inside and against the skull, near the left eye.

On the trial, the court announced that as plaintiff had shown a violent death, the evidence would appear to be sufficient to warrant the inference of accidental death, rather than suicide, and that in this respect the case would seem to be one for the jury. Counsel on both sides agreed that this was a correct statement of the law applicable to the case.

It is in evidence that on 5 September, 1934, I. T. Valentine, attorney for the plaintiff, addressed a letter to the defendant "making claim on account of accidental death under this policy," and requesting blanks upon which to make formal application for the insurance benefit. The defendant answered on 13 September, 1934, with an equivocal reply; no blanks were furnished; and complete information was asked as to the date and exact cause of insured's death. J. Beach Rhodes, junior vice president and superintendent of the claim department of the defendant company, admitted on cross-examination that he knew the date and what had been stated as the apparent cause of death when this answer was written; that such information came from certified copy of the death certificate of Dr. Gorham, which was received by the defendant as early as 16 June, 1933, and that "we simply made a Yankee answer and asked him for further particulars from his side." He further testified: This death certificate came in from our claim representative in North Carolina. It shows as a cause of death: "Pistol-shot wound of the head entering the parietal region on right side. Apparently self-inflicted. . . . Suicide."

This action was instituted on 25 February, 1935.

In explanation of plaintiff's delay in giving the defendant notice of the death of the insured, there is evidence tending to show that Mrs. Gorham suffered a physical and mental collapse, when informed of the death of her husband and the circumstances surrounding it, and that within a few weeks thereafter it became necessary to commit her to the hospital for the insane at Raleigh, N.C. where she remained in confinement until 19 August, 1933, when, it was found that her being at large would not be injurious to herself or dangerous to the community, she was released on probation. This status continued until 16 May, 1934, when a certificate of discharge was issued by the superintendent of the hospital at the request of some banker in Rocky Mount. According to the testimony of her physician and members of her family she did not recover her sanity or her physical health until after an operation and hospital treatment which she underwent in April, 1935.

Dr. Richard H. Speight testified: "In my opinion at the time I first saw Mrs. Gorham in April, 1933, a month after the death of Dr. Gorham, and until this operation (in April, 1935) her mental and physical condition was not such as to enable her to read a contract or several pages of insurance policy and to comprehend and know what was required of her by the contract of the policy."

Josephine Gorham testified: "From the time of my father's death until the time of mother's operation I would not say she was of a mental condition to transact any business. She was not able to attend to any business. The bank carried on most of her business. I don't think she did any business that amounted to anything of importance. . . . I thought she was insane. . . . Her condition which I have described continued from the time of my father's death until the operation in 1935."

In reply, the defendant offered evidence tending to show that on 21 March, 1933, Mrs. Gorham and the Planters National Bank Trust Company qualified as co-executors of her husband's estate, and that they have continuously acted as executors ever since. That after Mrs. Gorham's release from the hospital for the insane she carried on numerous business transactions; executed with her co-executor proofs of death on life insurance policies payable to the estate (though the co-executor admits that she neither read nor knew the contents thereof when she signed them); executed divisional deeds with her brothers and sisters in the fall of 1933, etc.

The court being of opinion that the plaintiff's failure to give the defendant "immediate notice" of her husband's death, and that adequate excuse for such failure had not been shown, entered judgment of nonsuit, from which the plaintiff appeals, assigning errors. It is admitted that the policy in suit was in full force and effect on the date of the death of the insured. Recovery is resisted on two grounds: First, suicide; second, failure to give immediate notice of insured's death and furnish proof of loss within ninety days thereafter.

First. It was the opinion of the trial court, concurred in by counsel on both sides at the time, that the evidence of violent death, without more, was sufficient to carry the case to the jury on the issue of accidental death or death through accidental means within the meaning of the policy.Parker v. Ins. Co., 188 N.C. 403, 125 S.E. 6; Kinsey v. Ins. Co.,181 N.C. 478, 106 S.E. 136; Wharton v. Ins. Co., 178 N.C. 135,100 S.E. 266; Thaxton v. Ins. Co., 143 N.C. 33, 55 S.E. 419; Harrisv. Ins. Co., 204 N.C. 385, 168 S.E. 208; Mehaffey v. Ins. Co., 205 N.C. 701,172 S.E. 331; Scott v. Ins. Co., 208 N.C. 160, 179 S.E. 434.

The defendant now urges a different view, citing Hill v. Ins. Co.,150 N.C. 1, 63 S.E. 124; N. Y. Life Ins. Co. v. Gamer, 82 Law Ed., 480;DeIvecchio v. Bowers, 80 Law Ed., 163; Watkins v. Prudential Ins. Co.,315 Pa. 497, 95 A.L.R., 869, and particularly Jefferson Standard L.Ins. Co. v. Clemmer, 79 F.2d 724, 103 A.L.R., 171, and note, in support of its present position; distinguishing, Hedgecock v. Ins.Co., 212 N.C. 638, 194 S.E. 86; and Spruill v. Ins. Co.,120 N.C. 141, 27 S.E. 39, as involving life insurance policies rather than accident contracts of insurance; and suggesting that Wharton v.Ins. Co., supra, should be reconsidered as the distinction between life insurance and accident insurance was not then discussed or brought to the attention of the Court in any way. See Cooley's Briefson Insurance, Vol. 7 (2nd) Ed.) 6022; Moore v. Accident AssuranceCorp., 173 N.C. 532, 92 S.E. 362; Rand v. Ins. Co., 206 N.C. 760,174 S.E. 749.

The rule is, that an appeal ex necessitate follows the theory of the trial. Dent v. Mica Co., 212 N.C. 241, 193 S.E. 165; Keith v. Gregg,210 N.C. 802, 188 S.E. 849; In re Parker, 209 N.C. 693,184 S.E. 532. Having tried the case upon one theory, the law will not permit the defendant to change its position, or "to swap horses between courts in order to get a better mount in the Supreme Court."Weil v. Herring, 207 N.C. 6, 175 S.E. 836; Holland v. Dulin,206 N.C. 211, 173 S.E. 310. "The theory upon which a case is tried must prevail in considering the appeal, and in interpreting a record and in determining the validity of exceptions" — Brogden, J., inPotts v. Ins. Co., 206 N.C. 257, 174 S.E. 123.

But for the ruling of the trial court in respect of the sufficiency of the evidence to carry the case to the jury on the issue of accidental death or death through accidental means, and the ready acquiescence therein by counsel, the plaintiff might have pursued a different course. Midgett v.Nelson, 212 N.C. 41, 192 S.E. 854; Morgan v. Benefit Society, 167 N.C. 262,83 S.E. 479. In fact, the ruling of the court in this respect is not challenged by the appeal. The nonsuit, therefore, ought not to be upheld on a ground different from that upon which the judgment was rendered, or on defendant's volte face between the trial court and the appellate court. Lumber Co. v. Perry, 213 N.C. 533.

Second. We then come to the ground upon which the demurrer to the evidence was sustained. The question is whether the plaintiff has forfeited her rights under the policy by failing to give the defendant "immediate notice" of the death of the insured and furnish proof of loss within ninety days thereafter. The expression "immediate notice," as used in the policy, we apprehend, was intended to impose upon the plaintiff the exercise of reasonable diligence in giving the stipulated notice, which, under the apparent weight of authority, should be measured by her ability and opportunity to act in the premises. Woodell v. Ins. Co., ante, 496; Ball v.Assurance Corp., 206 N.C. 90, 172 S.E. 878; Mewborn v. Assurance Corp.,198 N.C. 156, 150 S.E. 887; Mutual Life Co. v. Johnson, 293 U.S. 335. Indeed, the fifth paragraph of the policy apparently embodies this idea in the contract. By its terms the requirement of notice is not inflexible.Ball v. Assurance Corp., supra. Nor is the statutory requirement less pliable. C. S., 6479, subsec. 5. Moreover, it should be remembered the provision is one of forfeiture, and not one which affects the nature and desirability of the risk. Mewborn v. Assurance Corp., supra; Rhyne v. Ins.Co., 199 N.C. 419, 154 S.E. 749. See Clifton v. Ins. Co., 168 N.C. 499,84 S.E. 817. Forfeitures are not favored in the law. Grabbs v. Ins.Co., 125 N.C. 389, 34 S.E. 503; Ins. Co. v. Norton, 96 U.S. 234.

There is evidence permitting the inference that plaintiff was not capable of acting in the matter. Rand v. Ins. Co., supra; Nelson v. Ins.Co., 199 N.C. 443, 154 S.E. 752; Rhyne v. Ins. Co., 196 N.C. 717,147 S.E. 6; Ball v. Assurance Corp., supra; Mewborn v. Assurance Corp.,supra. There is evidence to the contrary. Thigpen v. Ins. Co., 204 N.C. 551,168 S.E. 845; Whiteside v. Assurance Society, 209 N.C. 536,183 S.E. 754; Peeler v. Casualty Co., 197 N.C. 286, 148 S.E. 261. This makes it a case for the jury under the theory of the trial. Brooks v. Ins. Co.,211 N.C. 274, 189 S.E. 787; Diamond v. Service Stores, ibid., 632,191 S.E. 358; Moore v. Ins. Co., 193 N.C. 538, 137 S.E. 580. For otherwise to hold as a matter of law that plaintiff's business activities as shown by defendant's evidence, destroy any excuse she may have for not acting in the present matter, would be not only to pass upon the contradictory evidence in the case, but also to suggest the validity of these transactions. Wadford v. Gillette, 193 N.C. 413, 137 S.E. 314. Often an insane person is capable of doing many intelligent acts. The rule is, that upon conflicting evidence, or if diverse inferences may reasonably be drawn therefrom, some favorable to the plaintiff and others favorable to the defendant, the case should be submitted to the jury under proper instructions from the court. Lithograph Corp. v. Clark, ante, 400; Hobbs v.Mann, 199 N.C. 532, 155 S.E. 163.

The risks assumed by the defendant have not been increased, nor its rights jeopardized, by the failure of the plaintiff forthwith to give the defendant notice of the death of the insured. No such claim is made; actual notice is admitted. Whether the plaintiff was capable of giving the stipulated notice is in dispute. The record precludes a forfeiture by nonsuit, or as a matter of law, without the voice of the twelve.

On motion to nonsuit, the plaintiff is entitled to the benefit of every fact and inference of fact pertaining to the issues involved, which may reasonably be deduced from the evidence. Cole v. R. R., 211 N.C. 591,191 S.E. 353; Diamond v. Service Stores, supra.

Third. There is another view of the case which may simplify the questions of notice and proof of loss on the further hearing. For this reason we advert to it now.

It is generally held that "failure to give notice or furnish proofs of loss, or defects in the notice and proofs, are waived by a denial of liability on other grounds," the reason being that a denial of liability on other grounds is generally regarded as tantamount to saying payment would not have been made had notice been given, or proofs of loss furnished, and the law is not disposed to require a vain thing. Cooley's Briefs on Ins., Vol. 7 (2d Ed.), 6019; Guy v. Ins. Co., 207 N.C. 278, 176 S.E. 554;Misskelley v. Ins. Co., 205 N.C. 496, 171 S.E. 862; Proffitt v. Ins.Co., 176 N.C. 680, 97 S.E. 635; Mercantile Co. v. Ins. Co., ibid., 545, 97 S.E. 476; Moore v. Accident Assurance Corp., supra;Higson v. Ins. Co., 152 N.C. 206, 67 S.E. 509; Gerringer v. Ins. Co.,133 N.C. 407, 45 S.E. 773; 14 Rawle C. L., 1349.

"The preliminary proof of loss or death required by a policy is intended for the security of the insurers in paying the amount insured. If they refuse to pay at all, and base their refusal upon some distinct ground without reference to the want or defect of the preliminary proof, the occasion for it ceases and it will be deemed to be waived. And this can work no prejudice to the insurers, for, in an action on the policy, the plaintiff would be obliged to prove the death of the person whose life was insured, whether the preliminary proofs were exhibited or not" — Mr.Justice Bradley in Knickerbocker Life Ins. Co. v. Pendleton,112 U.S. 696, 28 L.Ed., 866.

In Omaha Fire Ins. Co. v. Dierks, 43 Neb. 569, it was held that the right of an insurance company to notice of loss is a right which it may waive; and when the insurer denies all liability for the loss and refuses to make payment, and places such denial and refusal upon grounds other than the failure of the insured to give notice of the loss, such denial and refusal avoid the necessity of notice. To like effect are the decisions inCobb v. Ins. Co., 11 Kan. 93; California Ins. Co. v. Gracey, 15 Col., 70;Phillips v. Protection Ins. Co., 14 Mo., 221; Phoenix Ins. Co. v. Rucker,92 Ill. 64; Newman v. Ins. Co., 17 Minn. 98.

Still further as illustrative of the principle may be instanced the following:

Illinois case, Ins. Co. v. Cary, 83 Ill. 453: "When an insurance company refuses to pay a loss, placing its refusal upon its nonliability in any event, it cannot insist, in defense of an action, that the preliminary proof was insufficient" — 5th syllabus.

Minnesota case, Ins. Co. v. Taylor, 5 Minn. 393: "Where an insurance company puts its refusal to pay a loss on another ground, it is a waiver of objections to insufficiency in the proofs of loss required by the policy" — 4th syllabus.

The manner in which the Supreme Court of the United States disposed of the question in Tayloe v. Merchants Fire Ins. Co., 50 U.S. 390, gives added force to the rule: "Another objection taken to the recovery is, that the usual preliminary proofs were not furnished, according to the requirement of the seventh article of the conditions annexed to the policies of the company. These are required to be furnished within a reasonable time after the happening of the loss. The fire occurred on the 22nd of December, 1844, and the preliminary proofs were not furnished till the 24th of November, 1845. This was, doubtless, too late, and the objection would have been fatal to the right of the complainant, if the production of these proofs were essential to the recovery. But the answer is, that the ground upon which the company originally placed their resistance to the payment of the loss, and which is still mainly relied on as fatal to the proceedings, operated as a waiver of the necessity for the production of the preliminary proofs."

Speaking to the subject in Parker v. Ins. Co., 143 N.C. 339,55 S.E. 717, Walker, J., delivering the opinion of the Court, said: "The defendant having denied its liability to the plaintiff on the policy by alleging that there was a violation of the iron-safe clause, whereby the policy became null and void, it cannot now successfully plead the failure of the plaintiff to file proofs of loss and defeat his recovery. It cannot blow hot and cold, so to speak, at one and the same time. When it insists that proofs should have been filed, it asserts, of course, the validity of the policy; for why file proofs of loss under a void policy? There can be no loss under such a policy. This defense, therefore, is inconsistent with that of noncompliance with the iron-safe clause, which implies that the policy is invalid. The one necessarily excludes the other, and in the sense that an election must be made between them. This is a most just and reasonable rule, and we have held, in accordance with it, that a denial of liability by a fire insurance company dispenses with the necessity of filing proofs of loss. Gerringer v. Ins. Co.,133 N.C. 407. If the plaintiff had made the required proof, he would have been met with the denial by the defendant of any liability whatever for the loss. It would be unjust to permit the company thus to trifle with a policyholder. We are not speaking of inconsistent pleas, which are allowable, but of defenses which are in substance opposed to each other."

While the matter was not debated in the trial court and there ruled upon, the plaintiff has insisted on the argument here that the denial of liability on the ground of suicide waives the claim of forfeiture and that the case is one for the jury under the unchallenged ruling that the evidence of violent death, without more, is sufficient to warrant an inference of accidental death, rather than suicide. Hence, it appears that the question of waiver will become an important one on the further hearing; See Misskelley v. Ins. Co., supra; Thaxton v. Ins. Co., supra; Grabbs v.Ins. Co., supra; Jordan v. Ins. Co., 151 N.C. 341, 66 S.E. 206; 14 Rawle C. L., 1350; Notes, 108 A.L.R., 901; and 22 A.L.R., 424-425.

Nothing was said in Fulton v. Ins. Co., 210 N.C. 394, 186 S.E. 486, or Whiteside v. Assurance Society, 209 N.C. 536, 183 S.E. 754, orDewease v. Ins. Co., 208 N.C. 732, 182 S.E. 447, or Carter v. Ins. Co.,ibid., 665, 182 S.E. 106, which militates against the principle of waiver. The discussion by Schenck, J., in Fulton's case, supra, is fully accordant therewith. Nor is there any turning from the doctrine of waiver in those cases where it is held that the measure of liability is to be determined by the terms, provisions, and limitations of the contract.Whitaker v. Ins. Co., 213 N.C. 376, 196 S.E. 338; McCabe v. Casualty Co.,209 N.C. 577, 183 S.E. 743.

Fourth. It is also in evidence that the defendant had notice of the insured's death as early as 16 June, 1933, a certified copy of the death certificate having been sent to the home office of the defendant by its claim representative in North Carolina.

The case of Omaha Fire Ins. Co. v. Dierks, 43 Neb. 473, was an action on a fire insurance policy which provided that in case of loss the insured should forthwith give the insurance company written notice thereof. The insured did not himself give such notice, but the insurer soon after the destruction of the insured property by fire received notice in writing thereof from one of its agents residing in the vicinity where the loss occurred, and through whom the insurance was placed, and refused to pay the loss on the ground that the policy at the date of the fire was not in force. It was held that the insurance contract should not be so technically construed as to compel the insured to furnish information to the insurer which it already had. 33 C. J., 8. Contra: Continental Ins. Co. v. Parkes,142 Ala. 650, 39 S., 204; California Sav. Bank v. Surety Co., 87 Fed., 118.

In Arkansas Burial Society v. Hough, 104 S.W.2d 809, where, as here, the defense was based, not upon want of notice, but failure to give notice, it was said that "no one needs notice of what he already knows" for "when a person knows a thing he has ``notice' thereof."

We do not place our decision upon this ground, however, as it is unnecessary to do so. The circumstance is mentioned only to show the attenuateness of the claim of forfeiture and to point out how the matter has been dealt with in other jurisdictions.

It all comes to this: The policy had been carried for twelve years and was in force at the death of the insured. Plaintiff demands payment. Defendant pleads noncoverage and forfeiture. Plaintiff replies by saying that, in her helplessness, neither the contract nor the law required of her an impossible or vain thing, and she craves the privilege of being heard before a jury. The law will not deny her this right.

As the case is to be tried again, we refrain from discussing the evidence so as not to prejudice either side on the further hearing.

Reversed.

BARNHILL, J., took no part in the consideration or decision of this case.