Kentucky Central Life Insurance Company v. Combs

432 S.W.2d 415, 1968 Ky. LEXIS 335

• Court: Court of Appeals of Kentucky (pre-1976)
• Decided: April 26, 1968
• Status: Published

Opinions

MONTGOMERY, Judge.

Kentucky Central Life Insurance Company has been granted an appeal from a judgment of $1,000 in favor of Dove Combs, beneficiary under a policy of insurance on the life of Jim Combs. KRS 21.060(2). Appellant insists that it was entitled to a directed verdict because of false material answers to certain questions in the application for insurance.

The application for the policy was taken by appellant’s agent, George Lucas, on March 1, 1964. The insurance became effective on March 9, 1964. The insured died of congestive heart failure on September 12, 1964.

The application contains the following questions and answers:

“8. Has Proposed Insured had any illness, injury or accident in past five years? (No)”

“10. Has Proposed Insured ever had any disease of the heart, liver or kidneys; cancer or diabetes? (No)”

Appellant says that after claim was made it discovered through a routine retail credit investigation that the insured had been confined in the Hazard Miners Memorial Hospital for a heart ailment and diabetes on October 22, 1962, for four days’ treatment, and that he was still suffering from diabetes and heart disease at the time of his death.

Upon the trial, appellee, wife of the insured, admitted that her husband had the ailments prior to the application and that the answers to questions 8 and 10 in the application were false. Logan Combs testified that he was present when the agent of appellant took the application from his father. He described what transpired as follows:

“A. Asked him if he had been in the hospital in the last three years, writing up an application for a policy, he told him a year and a half ago. He asked him what his trouble was and he told him he had a little heart trouble, and I started laughing then, just making a joke out of it, I told my Dad, ‘They won’t sell you an insurance policy and you with heart trouble,’ and George said, ‘We’ll not put that on there,’ and he wrote it up.”

Lucas denied this conversation. Jim Combs was illiterate. Either Logan Combs or George Lucas signed Jim’s name to the application for him.

KRS 304.656 provides:

“All statements or descriptions in any application for an insurance policy or in negotiations therefor, by or in behalf of the insured, shall be deemed to be representations and not warranties. Misrepresentations, unless material or fraudulent, shall not prevent a recovery on the policy.”

This statute has been construed to mean that a misrepresentation which is material or fraudulent bars a recovery. Metropolitan Life Insurance Company v. Tannenbaum, Ky., 240 S.W.2d 566; Reserve Life Insurance Company v. Thomas, Ky., 310 S.W.2d 267; Mills v. Reserve Life Insurance Company, Ky., 335 S.W.2d 955.

The rule gleaned from the statute, as so construed, is that when the falsity of the representation is established and its materiality is not disputed, there can be no recovery. This is true despite the illiteracy of the applicant. The cases cited say that an illiterate shall not permit an application to be signed for him until he has had a responsible person to examine for correctness the answers inserted by the agent. It is admitted by appellee that the applicant had his son at his side who could have checked the accuracy of the answers in the application. In each of the cases cited, the fact that the agent had inserted false answers did not relieve the applicant of this responsibility.

Admittedly, the answers given to questions 8 and 10 were false and material. Falsity and materiality of the answers seem to be the controlling standards. An exception is when the insurer is fully cognizant of all material facts concerning the insured’s state of health, in which event it cannot be said as a matter of law that the insurer relied on the written statements in the application. Lincoln Income Life Insurance Company v. Burchfield, Ky., 394 S.W.2d 468. Such was not the case here.

The present case was submitted to the jury on the issue of whether the applicant signed the application, knowing that the agent had inserted false answers therein. This was a false issue. Under the statute and the cases cited, the true issue was whether the misrepresentations were material, as they admittedly were. In such case, a directed verdict should have been granted in favor of the appellant, whose motion for judgment n. o. v. should also have been sustained.

Judgment reversed.

WILLIAMS, C. J., and EDWARD P. HILL, MILLIKEN and STEINFELD, JJ., concur. OSBORNE and PALMORE, JJ., dissent.