If you are a Mason County Texas life insurance lawyer, here is a 1967, Tyler Court of Appeals opinion you need to know. The opinion is styled, Southern Life & Health Insurance Company v. Gordon Grafton.
This lawsuit resulted from the denial of life insurance benefits from Southern Life to Gordon after the death of his wife. Southern Life denied the claim due to policy language stating: “This policy shall take effect on the date of issue provided the assured is then alive and in sound health and free from accidental injury.”
Southern Life asserts that Gordon’s wife, Marjorie was not in good health. They then returned the paid premiums.
The assertion of bad health was based on the belief that Marjorie suffered from diabetes mellitus at the time the policy was taken out.
Gordon testified that Marjorie had not taken any kind of medicine for several months prior to taking out the policy and that she was working eight to ten hours per day. That Marjorie had a plaster figurine business and still did her housework.
The facts show that Marjorie was putting tar paper on the roof of the building where she stored her plaster products when the scaffold she was standing on, broke causing her to fall and suffer a head injury that eventually resulted in her death.
The agent who sold the policy testified that he observed Marjorie to be a strong lady and in good physical health. Marjorie’s doctor testified that Marjorie died solely from the injuries sustained in the fall and opined that he did not think diabetes caused Marjorie’s death.
In the trial of this case, the court ruled in favor of Gordon. This appeals court upheld the trial court findings. In sustaining the trial court findings this court cited what is found today in the Texas Insurance Code, Section 705.004 which states:
(a) An insurance policy provision that states that false statements made in the application for the policy or in the policy make the policy void or voidable;
(1) has no effect; and
(2) is not a defense in a suit brought on the policy.
(b) Subsection (a) does not apply if it is shown at trial that the matter misrepresented:
(1) was material to the risk; or
(2) contributed to the contingency or event on which the policy became due and payable.
(c) It is a question of fact whether a misrepresentation made in the application for the policy or in the policy itself was material to the risk or contributed to the contingency or event on which the policy became due and payable.
This court then stated that the forgoing statute places the burden on Southern Life to show that the statement that the insured gave to the effect that she had not suffered from diabetes was material to the risk or actually contributed to the contingency or event on which said policy became due and payable. All the evidence negatives the idea that Marjorie’s death was due to diabetes, but on the contrary, her death was the result of the fall and injury.