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SOUTHERN UNITED LIFE INSURANCE CO., and FIRST STATE BANK OF WAYNESBORO v. MAVON ARD CAVES

NOVEMBER 27, 1985

SOUTHERN UNITED LIFE INSURANCE CO., and FIRST STATE BANK OF WAYNESBORO
v.
MAVON ARD CAVES



BEFORE PATTERSON, HAWKINS AND ANDERSON

ANDERSON, JUSTICE, FOR THE COURT:

I.

This appeal is an action wherein Mavon Ard Caves, administratrix of the Estate of Elvin Allen Caves, sued Southern United Life Insurance Company, (hereinafter Southern) for failing to pay an amount due under a credit life insurance policy. The trial court granted summary judgment for Mrs. Caves on the issue of liability. The issue of punitive damages went to the jury, which awarded $10,000 damages to the appellee.

 The appellants raised numerous assignments of error on this appeal. The main issues, however, are (1) whether summary judgment should have been granted and (2) whether the question of punitive damages should have been submitted to the jury. We are of the opinion that the trial court

 was correct in both rulings, and we affirm.

 II.

 Mr. Elvin Allen Caves, the deceased, purchased an automobile on January 8, 1982, financing it through First State Bank of Waynesboro. The loan transaction was conducted by Sue Tanner, an officer of the bank and undisputed licensed agent for Southern United Life Insurance Company. Mrs. Tanner had known Mr. Caves and done business with him for many years and admittedly knew of a prior serious heart attack he had suffered in 1974; however, she also knew that he had been engaged in construction and oil field work since that time.

 During the loan transaction, Mrs. Tanner asked Mr. Caves if he desired credit life insurance on the loan and he indicated that he did. Tanner then asked Caves if he had a physical examination for his current employment and he indicated that he had. Tanner then checked the appropriate box for credit life insurance and had Caves sign and retain a copy of the certificate. Tanner was under no duty or direction from Southern to inquire about the health of the potential insureds, but was to use her own discretion in issuing insurance to those applying. The certificate contained a condition that the insured must be in insurable health at the time it was written and referred to the master policy (not in the insured's possession) which provided that only the president, vice president, secretary or assistant secretary, had power to change, modify or waive the conditions of the policy. The certificate also provided that the company had 31 days from the receipt of their copy in the home office to investigate and accept or reject the insurance.

 Caves had, in fact, suffered a heart attack in 1974 and had been under a doctor's care since that time. He was taking three different medicines, including nitroglycerin and collecting total social security disability benefits. He was also in pain and had been diagnosed as having a progressively worsening heart disease.

 The total payment for the loan was $11,902.80, less $1,041.50 for credit life and disability insurance. The cost of credit life alone was $416.60.

 Caves died on January 30, 1982, before the first loan payment was made. The cause of death was a heart attack associated with his pre-existing heart condition. Southern was notified of the insured's death, and payment

 of the claim was postponed pending investigation. The standard investigation by Equifax (which ordinarily only determined character and mode of living) was ordered, and the response was that the insured had already died. After obtaining medical records and reports of the insured, the insurance company rejected the claim, finding that the insured was not in insurable health at the issuance of the policy. The company then refunded the $145.82 premium, less their commission.

 Mavon Ard Caves, the widow and administratrix brought suit on behalf of the estate. The court granted summary judgment for the plaintiff/appellee, directing Southern to pay the amount of the policy in full to the bank, the creditor beneficiary. The judge held that the question of punitive damages was a jury issue and the jury awarded $10,000 punitive damages to Mrs. Caves.

 III.

 The question of liability is not a difficult one. The appellant bases its refusal to pay on its contention that Caves was not in insurable health at the time of the issuance of the certificate. The policy provided that this condition could not be waived by the soliciting agent. Appellants contend that Tanner was not aware of the extent to which the insured's illness had progressed at the time and even if she was, she had no binding authority to waive the condition. It is a well established principle that the general laws of agency apply to insurance agency relationships. Gulf Guaranty Life Ins. Co. v. Middleton, 361 So.2d 1377 (Miss. 1978). In National Life v. Miller, No. 54,702 decided November 13, 1985, and not yet reported, the insurance company took the same position in seeking to disclaim the knowledge of its agents. The court stated:

 National next asserts that the knowledge gained by Dillon and Blount while taking the application from Mrs. Miller cannot be imputed to it because they were merely soliciting agents. That position is contrary to the ...


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