#### Aetna Life Insurance Company v. Mahaffy.

4-8933

224 S. W. 2d 21

Opinion delivered October 24, 1949.

Rehearing denied November 28, 1949.

John M. Lofton, Jr., and Owens, Ehrman & McHaney, for appellant.

Coleman, Gantt & Ramsay, for appellee.

Leflar, J.

In March, 1942, the defendant Edward P. Mahaffy applied for and was issued $20,000 of life insurance, in eight policies for $2,500 each, by plaintiff Aetna Life Insurance Company. The policies contained identical clauses providing for double indemnity in event of death by accidental means and for waiver of premiums *893in event of total disability before age sixty. A two-year incontestability clause applied only to tbe principal life insurance obligation, and not to tbe double indemnity and waiver of premium on total disability provisions.

On or about March 1, 1946, Mabaffy made claim for Avaiver of premiums under tbe total disability clauses, asserting blindness as a ground, this being one of tbe forms of total disability listed in tbe policies. After some investigation of tbe circumstances connected with tbe inception of tbe policies, tbe Company in May, 1946, notified Mabaffy that it would cancel tbe contestable portions of tbe policies on account of alleged “material misrepresentations ’ ’ connected with bis application for tbe insurance in 1942. Tbe effect of tbe Company’s allegations was that Mabaffy bad concealed bis approaching blindness when be applied for tbe insurance. Mabaffy refused tbe Company’s request that be deliver up tbe policies for rewriting. The Company then filed this bill in equity praying that the contestable portions of tbe policies bé cancelled, and Mabaffy cross-complained asking that the clauses providing for waiver of premiums be declared operative as of tbe date when total disability was claimed. Tbe Chancellor after bearing evidence found all issues for tbe defendant, both on tbe original bill and tbe cross-complaint, and decreed that tbe policies were effective according to their terms. This included a determination that Mabaffy should receive back from tbe Company tbe amount of certain premiums (which be bad paid in order to be sure tbe policies were kept alive, after claiming rights under tbe waiver of premium clauses) plus interest, damages, costs and a $1,000 attorneys ’ fee. From this decree the Company appealed.

Tbe evidence indicates that Mabaffy bad started wearing glasses during tbe year' before March, 1942, when be applied for these policies and that on December 11, 1941, be made a short call on Doctor E. J. Calcóte, a Little Eock physician specializing in eye diseases. Mabaffy testified that tbe purpose of tbe visit was “to see about new glasses. ’ ’ Doctor Calcóte in bis private notes on tbe .visit indicated that Mabaffy’s trouble was “prob*894ably retinitis pigmentosa.” This is an incurable disease normally leading to blindness, and is in fact tbe disease from which it was later ascertained that Mahaffy suffers. The doctor, however, did not tell Mahaffy what his diagnosis was, except that he had “gun barrel vision” which he explained as being a narrowing of the field of vision comparable to that which occurs when one looks down the barrel of a gun. The width of the area of Mahaffy’s vision was then about one-third of the normal field. He warned Mahaffy that he ought not to drive a car, at least in heavy traffic, but apparently did not say anything that would warn a layman such as Mahaffy that he was going blind. He did not prescribe new glasses. Mahaffy had no further contact with Doctor Calcóte until 1946 because the doctor went into the Army shortly after the December, 1941, consultation.

Within a few months after the policies were issued, Mahaffy consulted three other doctors about his eyes. These included a specialist at Memphis whose diagnosis was inconclusive, his family physician at Little Rock who undertook no diagnosis, and Mayo’s Clinic at Rochester, Minn., where on August 26, 1942, his condition was definitely diagnosed as retinitis pigmentosa. At Mayo’s he was told that he had this disease and that by reason of it the range of his vision would become narrower and narrower until he was blind. No hope for cure was held out to him.

The “history” given by Mahaffy to each of the physicians consulted by him indicated an awareness on his part for some time past that there was something wrong with his eyesight. There were sharp differences in the testimony as to how far this awareness went.

After the consultation at Mayo’s, Mahaffy returned to Jefferson county where he continued his normal and numerous activities at his store, gin, and plantation, though his failing eyesight made it increasingly difficult for him to do many of the things that he had done freely- before. Late in 1943 his son was discharged from the Army so that he might begin to take over the *895management of the farm, and by 1945 or 1946 Mahaffy’s activities were limited largely to an advisory character. This was the situation when he made his claim for waiver of premiums under the total disability clauses.

The insurance application form which Mahaffy filled out. in March, 1942, which was made a part of the policy, included the following questions and answers:

> “j. Have you had regular or occasional health examinations? Yes. Date of last? Nov. - 41. By Doctor Lowe. Address Pine Bluff, Arkansas.

> “k. Name of any impairments ever found. None.

> “1. When and for what reason did you last consult a physician? Nov. -1941 - check up.

> “m. May any of these physicians be conferred with and disclose facts known to them? (Yes or No) Yes.”

The form also included inquiries concerning several specific parts or areas of the body, not including the eyes or eyesight.

There was evidence that a separate series of questions was orally propounded to Mahaffy by the Company’s medical examiner, though not made part of the policy, including the question: “Is there any impairment of eyesight?” to which the reply was “No.” As to this, Mahaffy testified that he did not remember being asked the question, but “I imagine I said that . . . because I didn’t think it was anything that glasses wouldn’t cure.” Defendant’s examiner testified that he and the Company were not interested in such ordinary impairments of vision as might be corrected by wearing glasses, and that he would “probably not” have made any note of the fact that there was an impairment of vision corrected by wearing glasses. Mahaffy explained his failure to mention the visit to Doctor Calcóte, in his answer to the inquiry concerning “health examinations,” by testifying that he went to Calcóte principally “to see if he could improve on” his glasses, that he attached no particular importance to the reference to “gun barrel vision,” and that no information he had received up to *896that time indicated to him that there was anything really serious the matter with his eyes.

The problem here is primarily one of fact. Appellant and appellee are agreed that this is true, and they are also substantially agreed on how this problem must be stated, in view of the Chancellor’s finding for the insured below.' The question is whether a preponderance of the evidence in the record shows a knowing misrepresentation, or a knowing concealment, by Mahaffy, of the fact of incipient blindness.

‘ ‘ If the applicant states what he honestly believes to be true regarding his physical condition, the fact that it turns out to be not true does not avoid the policy, as it is a representation merely. Of course, if his statements are false and known to him to be false, and are made fraudulently, they have the same effect as warranties. . . . The question will be then were his statements made in good faith, if untrue, or were they made knowing them to be false and for the purpose of defrauding. . . .” Harper v. Bankers Reserve Life Co., 185 Ark. 1082, 1085, 51 S. W. 2d 526, 528. “The questions propounded in the application . . . call for answers founded on the knowledge or belief of the applicant, and in such cases a misrepresentation or omission to answer will not avoid the policy unless willfully or knowingly made with an (intent) to deceive.” Metropolitan Life Insurance Co. v. Johnson, 105 Ark. 101, 106, 150 S. W. 393, 395. ‘ ‘ This court has often held that questions propounded to applicants for insurance with respect to consultation with and treatment by physicians do not contemplate answers with respect to trivial ailments. . . .” Southern National Insurance Co. v. Pillow, 206 Ark. 769, 778, 177 S. W. 2d 763, 767. “The burden is upon (the insurer) to establish the fraud by proving affirmatively the falsity, materiality and bad faith in the representations made by the insured in the application regarding his health.” Old Colony Life Insurance Co. v. Julian, 175 Ark. 359, 365, 299 S. W. 366, 368.

We have analyzed the evidence in this record with great care. Our conclusion is that we are unable to say *897that the finding of the Chancellor, in favor of the insured, on the question properly before him, was contrary to a preponderance of the evidence.

Appellant Company raises a further question under the policy clause which provides: ‘ ‘ That no such policy shall become effective until the first premium upon it is paid during the good health of the insured. . . . ” The contention is that, since insured was in fact suffering from retinitis pigmentosa, whether he knew it or not, the first premium actually was not paid “during the good health of the insured.” This provision does not constitute a warranty of good health at the time specified, but only amounts to a stipulation for apparent good health and good faith in the applicant. Further, the clause is directed primarily to diseases or injuries, seriously affecting the risk, which develop or are discovered by the insured after the application and examination are completed. as distinguished from conditions which are presumably checked on by the insurer’s earlier examination. See Lincoln Reserve Life Insurance Co. v. Smith, 134 Ark. 245, 203 S. W. 698; Appleman, Insurance Law and Practice (1941), § 154; Cooley, Briefs on Insurance (1927) 648. The statement in National Life & Accident Insurance Co. v. Matthews, 198 Ark. 277, 128 S. W. 2d 695, that a somewhat similar clause constituted a warranty is not relevant here, since that case, unlike this one, involved a so-called “non-medical policy,” issued without physical examination by the insurer. See National Life & Accident Insurance Co. v. Young, 200 Ark. 955, 141 S. W. 2d 838.

Appellee has asked this Court to allow a further attorneys ’ fee, in addition to that allowed by the Chancery Court. This we decline to do.

The decree of the Chancery Court is affirmed.