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NATIONAL LIFE AND ACCIDENT INSURANCE COMPANY v. CAROLYN MILLER AND MARVIN RAMSEY MILLER

NOVEMBER 13, 1985

NATIONAL LIFE AND ACCIDENT INSURANCE COMPANY
v.
CAROLYN MILLER AND MARVIN RAMSEY MILLER, SR.



BEFORE PATTERSON, DAN LEE AND SULLIVAN

DAN LEE, JUSTICE, FOR THE COURT:

This appeal comes to us from the Circuit Court of Forrest County wherein Carolyn Miller and Marvin Ramsey Miller, Sr., the appellees, received a judgment against the appellant, National Life and Accident Insurance Company, in the amount of $352,500. The Millers had filed suit against National claiming that National had failed to pay on a life insurance policy the Millers had purchased covering their son, Marvin Ramsey Miller, Jr. In addition to the policy limits, the Millers also sought punitive damages for what they alleged to be National's bad faith refusal to make payment due under the policy. Following the trial and the rendition of the aforementioned judgment against it, National now brings this appeal. We have carefully studied the record and briefs of counsel in this cause and found no reversible error. We therefore affirm.

THE FACTS

 The first witness produced at trial was Lavern Dillon, an agent for National, who was called adversely by the Millers. Dillon had worked for National since August, 1980. He testified that he had received information that the Millers desired to purchase some insurance so he and his staff manager, Joe Blount, called on them. Mr. Miller was not at home so Blount and Dillon discussed insurance with Mrs. Miller. She agreed to purchase a life insurance policy from National covering her and her husband for $5,OOO and their child for $2,500.

 In filling out the application, Blount held it in

 his hand and read the questions to Mrs. Miller. The only thing Mrs. Miller did was to sign the application. This was on April 9, 1981. Because Mr. Miller had not been at home, Blount and Dillon left the application with Mrs. Miller and Blount returned the next day to pick it up after Mr. Miller had signed it.

 Dillon testified that in filling out the application for insurance, question 26 (b) asks: "Has any proposed insured (or provider) ever consulted with or been treated by a doctor for, or been told by a doctor he had disease of the heart, blood, lungs, kidneys, digestive system or brain or nervous system?" Dillon stated that Mrs. Miller told them that her child had a heart murmur. Instead of recording Mrs. Miller's response, Blount answered the questions by marking a box labeled "No." Question 24 asked "Has any proposed insured (or provider) within the past five years consulted with or been treated by a doctor, or been confined to any hospital?" Again, Blount marked the "No" box; however, Dillon testified that Mrs. Miller told them that the child had been treated by a doctor for the heart murmur and had been in the hospital within the last five (5) years.

 Dillon testified that he knew that it was important to furnish the correct information on the application. He stated that he did not consider a heart murmur significant and thought that it was only an irregular beat. At that time, he saw no harm in omitting the information from the application. He testified that he knew that he and Blount had not accurately recorded Mrs. Miller's responses.

 The child died during open heart surgery on July 22, 1981. Approximately one and one-half to two months after that, Dillon called on the Millers to collect the premium. At that time the Millers told him of their son's death. Dillon assisted them in filling out the appropriate papers to make a claim on the policy. On October 5, 1981, Dillon received a letter from Blount's superior, Martin Brashier, National's District Manager. Brashier was simply forwarding the letter from the Company's home office in Nashville, Tennessee. That letter inquired whether all of the questions on the application had been asked and answered as recorded. Dillon replied that they had been. The letter also asked who was present at the time of the taking of the application. Dillon replied that only he and Mrs. Miller were present. Finally, the letter asked if Dillon had any knowledge of the child's heart condition. Dillon responded that he did not. Dillon gave the letter and his responses to Blount who forwarded them to the home office.

 A second letter from the home office to Dillon on November 16, 1981, requested further information. That letter inquired of Dillon whether the Millers had discussed their problems with him. Dillon replied that they had not. The letter also asked if he had any idea why the Millers thought that he was aware of their child's heart condition. Dillon replied that he had no idea. This letter and Dillon's responses were also forwarded to the home office through Blount.

 In December, 1981, National decided not to pay the claim because its investigation revealed that the child had been born with a congenital heart defect and had been hospitalized many times for treatment of that condition. National's position was that the Millers had made false statements on the application for insurance. Dillon testified that he and Blount had discussed four or five times the fact that Mrs. Miller had mentioned the heart murmur to them. He had also discussed it with Brashier three or four times. Nonetheless, Dillon never attempted to notify anyone else in the company that the responses recorded on the application were not the responses Mrs. Miller gave them.

 At trial, the Millers introduced a transcript of a tape recorded conversation between Mrs. Miller and Dillon. The call was placed from the Millers' attorney's office and Dillon was unaware that it was being recorded. In that conversation, Mrs. Miller sought information about why it was taking so long to process her claim. Several times in the conversation Dillon told her to "Just say it like you said, say that you told me about it . . ." Dillon stated "Right, yes, mam, I remember you telling me. I mean if I say I did not know it, then they could, could still go ahead and deny the claim." Dillon went on to say, "Just tell them the truth, that you told me about it, everything about it. That's all I need you to do." Mrs. Miller then asked, "Okay, and you say you are going to tell them what?" To which Dillon replied, "That I didn't know about it." Mrs. Miller then asked, "Oh! and this is supposed to help me, right?" To which Dillon stated, "Right, yes, mam its supposed to help you out."

 Following the introduction of the transcript of the tape recorded conversation, Dillon testified that he now denies that Mrs. Miller had told him about the child having been treated in the hospital within the last five years. He stated that his admonition to her to tell "Everything" referred only to what he thought was an insignificant heart murmur.

 Dillon was recalled to the stand as a defense witness. At that time he testified that his salary was based on a commission from his sales. He then again denied that Mrs. Miller had told him about the child having been in the hospital. He also denied that she had mentioned that the child had had surgery. He stated that in his responses to the company inquiries about his knowledge, he "didn't put a lot of thought into them."

 On cross-examination Dillon stated that National had no claims department in Mississippi. They got all of their claims information from their soliciting agents. Part of his duties included helping to adjust claims. He admitted that when he testified as an adverse witness he had stated that Mrs. Miller had told him about the heart murmur. He also admitted that when testifying at that time he stated that Mrs. Miller had told him about the child's doctors treatments and hospitalizations. He then denied that those responses were true.

 Dillon testified that he knew Mrs. Miller relied on him to help settle her claim. He also stated that he, Blount and Brashier all knew that his responses to the company's inquiries concerning his knowledge misrepresented the truth.

 Carolyn Miller testified after Dillon. She is a dietary aide who has never finished high school. The child in question had been born with a heart defect that the physicians described to her only as a "murmur." They never referred to the child's condition by any other name to her. Through the six (6) years of the child's life he was never released from a doctor's care. He had had a heart catherization when first born and many subsequent hospitalizations.

 Mrs. Miller testified that she and her husband decided that they needed some insurance so she asked at work if anyone there could advise her on an insurance company. A friend recommended National Life. Her friend asked Dillon to call on Mrs. Miller. As a result, Dillon and Blount came to Mrs. Miller's home. Mrs. Miller testified that she answered all of the questions on the application honestly. She told Blount and Dillon about the heart murmur and the child's having been under a doctor's care. She also told about the hospitalization and the surgery he had had. Mrs. Miller stated that Blount held the application, read the questions and filled in the responses.

 When Dillon came by the Miller home to pick up the insurance premium, after the child died, Mrs. Miller informed him of the death. Mrs. Miller testified that Dillon helped her fill out some papers and then after that he appeared to be avoiding her.

 On cross-examination, Mrs. Miller testified that she knew that her son's heart condition was serious. She admitted signing the application and stated that she now knows that the application contains incorrect information. She testified that she did not know the application had been filled out wrong until sometime in November or December when the insurance company refused to pay on the policy. She stated that she had never read over the application and had surrendered it and the policy to Dillon when she first told him of her son's death. She testified that she was led to believe that Dillon was taking care of everything for her and that she did not know anyone else in the insurance company to contact.

 Marvin Miller, Sr. testified that he was twenty-seven (27) years old, and had only been through the ninth grade. He could read and write only poorly. Miller testified that he was not present when Dillon and Blount came to his home. His wife gave him the application to sign the next morning and he did so without reading it. Following Mr. Miller's testimony, the Millers rested their case.

 Dillon had been named as a defendant; however, after the Millers rested the trial court granted a directed verdict for Dillon. A motion to dismiss as to Carolyn Miller because Marvin Miller was the policyholder was overruled.

 Following Lavern Dillon's further examination, Joe Blount was called to the stand. He testified that he was Dillon's superior. He stated that he and Dillon had authority only as soliciting agents and had no authority to bind a contract. Blount stated that he asked the questions on the application to Mrs. Miller and filled out the responses. He denied that Mrs. Miller had told them about the child having been in the hospital.

 After a claim had been made on the policy, Blount received an inquiry from Brashier and forwarded it to Dillon. He admitted that he reviewed Dillon's responses. He did the same with the second inquiry.

 Blount testified that he had had a heart murmur at birth and that he considered the situation insignificant. He particularly thought ...


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