Lumbermens Mutual Casualty Company, Plaintiff-appellant, v. Clarence Carl Myrick and Cox & Associates, Inc.,defendants-appellees.c. C. Myrick, Plaintiff-appellee, v. Lumbermens Mutual Casualty Company, Defendant and Thirdparty Plaintiff-appellant, v. Cox & Associates, Inc., Third Party Defendant-appellee, 596 F.2d 1313 (5th Cir. 1977)

C. C. Myrick wished to insure a piece of his lumbering equipment, a log skidder. Myrick's business associate, John Harrison, contacted Dorothy Howard, an employee of Cox & Associates, Inc. (Cox), who completed a blank application for insurance during her telephone conversation with Harrison. Under "previous losses occurring in the past three years," Mrs. Howard wrote, "none," based on information received from Harrison. On January 20, 1977, Mrs. Howard mailed the unsigned application, accompanied by a request that the policy be issued with an effective date of January 20, to Lumbermens Mutual Casualty Company (Lumbermens). She also sent a copy of the application to Harrison for Myrick's signature. Frank Hull, the Lumbermens underwriter responsible for evaluating all applications for insurance on lumbering equipment, accepted the application; the Lumbermens policy on the log skidder was countersigned on January 26 with an effective date of January 20, 1977. On February 11, 1977, Lumbermens received the application signed by Myrick, who testified that he did not read it.

In July 1977, the log skidder was stolen. Lumbermens, however, denied Myrick's claim because his insurance application contained a false representation. Had the application shown that Myrick recovered $20,000 for a log skidder that burned in April 1975, Lumbermens argued, the policy would not have been issued. Lumbermens filed an action against Myrick and Cox requesting a declaratory judgment. Myrick then filed suit against Lumbermens, who removed the action to federal court and filed a counter-claim against Myrick and a third-party claim against Cox. Myrick's suit and Lumbermens' original action were consolidated, and the cases were tried before a jury. A verdict in favor of Cox and Myrick and against Lumbermens was returned. Lumbermens appeals the district court's denial of its motion for a directed verdict for judgment notwithstanding the verdict and, in the alternative, for a new trial.¹  We affirm.

Under section 27-14-7 of the Code of Alabama, all descriptions and statements in an insurance policy application are considered representations, not warranties,²  and a misrepresentation does not prevent recovery under the policy unless it is fraudulent, it is material, or the insurer would not have issued the policy had the truth been disclosed. Lumbermens contends that recovery under the policy in issue was precluded as a matter of law because Lumbermens would not have issued the policy had it known of the previous loss.

In deciding whether a directed verdict or a judgment notwithstanding the verdict should be granted, a court must examine all the evidence in the light most favorable to the party who opposes the motion. Boeing Co. v. Shipman, 411 F.2d 365 (5th Cir. 1969); World Insurance Co. v. Hall, 384 F.2d 138 (5th Cir. 1967). A conflict in substantial evidence must be present to create a jury question. Boeing Co. v. Shipman, 411 F.2d at 375.

The policy on Myrick's log skidder was issued with an effective date of January 20, 1977, days before the date on which Mr. Hull claims to have accepted the policy or the date on which Lumbermens received a signed copy of Myrick's application. Some testimony indicated that Lumbermens had issued policies on lumbering equipment without having received a signed application showing that the insured had sustained no losses within the previous three years. Mrs. Howard testified that coverage under Lumbermens' policies became effective when she mailed the unsigned application. This evidence supports the inference that Myrick's previous loss was not material and would not have prevented the issuance of the policy. The question whether Lumbermens would have issued the policy was thus correctly submitted to the jury.

AFFIRMED.