BROWN v. MISSOURI STATE LIFE INS. CO.

BROWN v. MISSOURI STATE LIFE INS. CO.
1926 OK 1012
254 P. 7
124 Okla. 155
Case Number: 16805
Decided: 12/21/1926
Supreme Court of Oklahoma

BROWN
v.
MISSOURI STATE LIFE INS. CO.

Syllabus

¶0 1. Insurance--Liability of Company for Damages for Negligent Delay in Passing Upon Application.
It is the duty of an insurance company, having solicited and obtained application for insurance and having received the premium exacted therefor, to pass upon the application within a reasonable time by denying the insurance or by writing and delivering the policy as applied for; and the insurance company is liable for damages occasioned by its negligent or unreasonable delay in passing upon such application.2. Same--Incompetent Evidence on Defense of Diligence.
In an action to recover damages for delay in passing upon an application for insurance, letters written by the insurance company to its agents instructing them to have the applicant to submit to an additional examination, when it is not made to appear that the agents executed such instructions, are immaterial and incompetent and not admissible as evidence tending to show diligence on the part of the company.

Commissioners' Opinion, Division No. 2.

Error from District Court, Cotton County; A. S. Wells, Judge.

Action by Alanson C. Brown against Missouri State Life Insurance Company. Judgment for defendant, and plaintiff brings error. Reversed and remanded.

Robert E. Moloney, Stevens & Cline, Madden & Hubbell, and West, Gibson, Sherman, Davison & Hull, for plaintiff in error.
Keaton, Wells & Johnston, Jourdan & English, and A. H. Japp, for defendant in error.

JARMAN, C.

¶1 Alanson C. Brown, hereinafter referred to as plaintiff, was associated with Joseph F. Drake, hereinafter referred to as the applicant, in an oil venture. Plaintiff was to furnish the money, while the applicant, who was an experienced and practical oil man, was to contribute his knowledge, services, and skill to the project. All of the transactions hereinafter referred to occurred in 1923. The plaintiff had contributed about $ 90,000, and it was agreed that the applicant should procure a five-year term policy of insurance in the sum of $ 100,000 on his life, payable to the plaintiff as beneficiary for the purpose of indemnifying plaintiff for the sums of money advanced and to be advanced, and the policy was to be delivered to the plaintiff and the premiums to be paid by the plaintiff. Pursuant to this agreement, application was made by Mr. Drake on August 8th to the Missouri State Life Insurance Company, hereinafter referred to as defendant, through its local soliciting agent at Walters, Okla. At the time of making application, the applicant submitted to a medical examination conducted by Dr. Janes, who reported that the applicant was a first-class risk for insurance. The amount of the first premium, as represented by the soliciting agent, was $ 1,031, which the applicant paid at the time his application was taken for the insurance, out of funds furnished by the plaintiff, and the soliciting agent executed a receipt therefor, stating that the policy when issued and delivered by the company "shall * * * be dated and be effective in accordance with the provisions of such policy on and from the date of the medical examination." The application and the medical report were forwarded to the home office of the defendant at St. Louis and received on August 13th. On account of the large amount of insurance applied for, the defendant, acting under its rules, notified its agent at Walters on August 14th to cause a second medical examination of the applicant to be made by a different medical examiner. On August 20th, in keeping with these instructions, the applicant submitted to a second examination by Dr. A. M. Jones of Walters, who likewise reported that the applicant was a first-class risk for insurance. The report of Dr. Jones and a specimen of the urine of the applicant were forwarded to and received by the home office of the defendant on August 22nd. The applicant heard nothing further about the insurance until about September 26th, when Mr. Brown, the soliciting agent of the defendant, notified him that the defendant required that the applicant be examined a third time and that he be given a "glucose meal." At that time, the applicant was at Ryan or out in the country some distance from Walters, where the examination was to be made, and on account of drilling operations requiring his personal and immediate attention he was not able to go to Walters at that time, but stated that he would do so and submit to the examination at his first opportunity. On October 15th, the applicant reported to Dr. Jones for the glucose test, which was administered for the purpose of enabling the defendant to ascertain positively whether the applicant had any trace of sugar in his urine. A specimen of applicant's urine was then forwarded to and received by the home office of the defendant on October 17th, and an analysis thereof showed that the specimen contained no sugar, and on October 19th, the application for insurance was approved by the defendant and the policy was written, but before the same was mailed or delivered the defendant received information that the applicant had been killed in an automobile accident, and the policy was thereupon canceled.

¶2 This action was commenced by the plaintiff to recover damages which he alleged were caused by the negligent or unreasonable delay of defendant in acting or passing upon the application for insurance, thereby preventing a delivery of the policy prior to the death of the applicant. The trial resulted in a verdict for defendant, on which judgment was rendered, and the plaintiff has appealed.

¶3 It is well settled in this jurisdiction that damages may be recovered when an insurance company negligently or unreasonably delays in acting or passing upon an application for insurance; and in such case it is for the jury to determine whether the delay was negligent or unreasonable. Columbian National Life Ins. Co. v. Lemmons, Adm'r, 96 Okla. 228, 222 P. 255; Security Ins. Co. v. Cameron, 85 Okla. 171, 205 P. 151; Duffy v. Bankers' Life Ins. Co. (Iowa) 139 N.W. 1087, 46 L.R.A. (N.S.) 25.

¶4 The main issue submitted to the jury in the instant case was whether the defendant negligently or unreasonably delayed passing upon the application for insurance.

¶5 The assignment of error, decisive of this appeal, urged by plaintiff is that the jury was prejudiced by incompetent and irrelevant testimony introduced by the defendant over plaintiff's objection.