{ "id": 8520617, "name": "IN THE MATTER OF THE APPEAL BY SUE S. McCRARY FROM A DECISION OF THE NORTH CAROLINA INSURANCE UNDERWRITING ASSOCIATION and THE NORTH CAROLINA COMMISSIONER OF INSURANCE", "name_abbreviation": "In re the Appeal by McCrary", "decision_date": "1993-10-05", "docket_number": "No. 9210SC656", "first_page": "161", "last_page": "171", "citations": [ { "type": "official", "cite": "112 N.C. App. 161" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "131 S.E.2d 430", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1963, "pin_cites": [ { "page": "432" }, { "page": "433", "parenthetical": "absent knowledge of vacancy, there can be no waiver of policy provisions relating to vacancy" } ], "opinion_index": 0 }, { "cite": "259 N.C. 582", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8561523 ], "weight": 2, "year": 1963, "pin_cites": [ { "page": "585" }, { "page": "586" } ], "opinion_index": 0, "case_paths": [ "/nc/259/0582-01" ] }, { "cite": "365 S.E.2d 296", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1988, "opinion_index": 0 }, { "cite": "321 N.C. 746", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2566467, 2568453, 2572653, 2570776, 2570206 ], "year": 1988, "opinion_index": 0, "case_paths": [ "/nc/321/0746-01", "/nc/321/0746-04", "/nc/321/0746-05", "/nc/321/0746-02", "/nc/321/0746-03" ] }, { "cite": "362 S.E.2d 294", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1987, "pin_cites": [ { "page": "296" } ], "opinion_index": 0 }, { "cite": "87 N.C. App. 637", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8358977 ], "year": 1987, "pin_cites": [ { "page": "639" } ], "opinion_index": 0, "case_paths": [ "/nc-app/87/0637-01" ] }, { "cite": "72 S.E.2d 915", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1952, "pin_cites": [ { "page": "917" } ], "opinion_index": 0 }, { "cite": "236 N.C. 416", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8626092 ], "year": 1952, "pin_cites": [ { "page": "419" } ], "opinion_index": 0, "case_paths": [ "/nc/236/0416-01" ] }, { "cite": "419 S.E.2d 766", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1992, "pin_cites": [ { "page": "769" } ], "opinion_index": 0 }, { "cite": "332 N.C. 326", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2504386 ], "year": 1992, "pin_cites": [ { "page": "332" } ], "opinion_index": 0, "case_paths": [ "/nc/332/0326-01" ] }, { "cite": "190 S.E. 744", "category": "reporters:state_regional", "reporter": "S.E.", "year": 1937, "pin_cites": [ { "page": "745" } ], "opinion_index": 0 }, { "cite": "211 N.C. 427", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8627268 ], "year": 1937, "pin_cites": [ { "page": "429" } ], "opinion_index": 0, "case_paths": [ "/nc/211/0427-01" ] }, { "cite": "259 S.E.2d 373", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1979, "pin_cites": [ { "page": "376" } ], "opinion_index": 0 }, { "cite": "43 N.C. App. 493", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8552836 ], "year": 1979, "pin_cites": [ { "page": "497-98" } ], "opinion_index": 0, "case_paths": [ "/nc-app/43/0493-01" ] }, { "cite": "406 S.E.2d 613", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1991, "pin_cites": [ { "page": "616" } ], "opinion_index": 0 }, { "cite": "103 N.C. App. 527", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8522023 ], "year": 1991, "pin_cites": [ { "page": "532" } ], "opinion_index": 0, "case_paths": [ "/nc-app/103/0527-01" ] }, { "cite": "293 S.E.2d 171", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1982, "pin_cites": [ { "page": "176" } ], "opinion_index": 0 }, { "cite": "306 N.C. 231", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8568091 ], "year": 1982, "pin_cites": [ { "page": "238" } ], "opinion_index": 0, "case_paths": [ "/nc/306/0231-01" ] }, { "cite": "233 S.E.2d 538", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1977, "pin_cites": [ { "page": "541" } ], "opinion_index": 0 }, { "cite": "292 N.C. 406", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8569880 ], "year": 1977, "pin_cites": [ { "page": "410" } ], "opinion_index": 0, "case_paths": [ "/nc/292/0406-01" ] }, { "cite": "344 S.E.2d 566", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1986, "pin_cites": [ { "page": "568", "parenthetical": "appellate court may only pass upon questions presented and ruled upon by lower courts" }, { "page": "568" } ], "opinion_index": 0 }, { "cite": "81 N.C. App. 474", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8523807 ], "weight": 2, "year": 1986, "pin_cites": [ { "page": "477-78", "parenthetical": "appellate court may only pass upon questions presented and ruled upon by lower courts" }, { "page": "477-78" } ], "opinion_index": 0, "case_paths": [ "/nc-app/81/0474-01" ] }, { "cite": "374 S.E.2d 174", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1988, "pin_cites": [ { "page": "176" } ], "opinion_index": 0 }, { "cite": "92 N.C. App. 218", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8526682 ], "year": 1988, "pin_cites": [ { "page": "220" } ], "opinion_index": 0, "case_paths": [ "/nc-app/92/0218-01" ] }, { "cite": "436 F.Supp. 847", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 3949857 ], "weight": 2, "year": 1977, "pin_cites": [ { "page": "849", "parenthetical": "construing former N.C.G.S. \u00a7 58-30 which is identical to present G.S. \u00a7 58-3-10" } ], "opinion_index": 0, "case_paths": [ "/f-supp/436/0847-01" ] }, { "cite": "282 S.E.2d 568", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "pin_cites": [ { "page": "571" } ], "opinion_index": 0 }, { "cite": "54 N.C. App. 18", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8520105 ], "year": 1981, "pin_cites": [ { "page": "21" } ], "opinion_index": 0, "case_paths": [ "/nc-app/54/0018-01" ] }, { "cite": "413 S.E.2d 3", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1992, "pin_cites": [ { "page": "5" }, { "page": "5" } ], "opinion_index": 0 }, { "cite": "105 N.C. App. 302", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8522749 ], "weight": 2, "year": 1992, "pin_cites": [ { "page": "306" }, { "page": "306" } ], "opinion_index": 0, "case_paths": [ "/nc-app/105/0302-01" ] }, { "cite": "372 S.E.2d 342", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1988, "pin_cites": [ { "page": "345" }, { "page": "345" } ], "opinion_index": 0 }, { "cite": "91 N.C. App. 459", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8525947 ], "weight": 2, "year": 1988, "pin_cites": [ { "page": "464" }, { "page": "464" } ], "opinion_index": 0, "case_paths": [ "/nc-app/91/0459-01" ] }, { "cite": "414 S.E.2d 50", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1992, "pin_cites": [ { "page": "53" }, { "page": "53" } ], "opinion_index": 0 }, { "cite": "105 N.C. App. 526", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8524132 ], "weight": 2, "year": 1992, "pin_cites": [ { "page": "530" }, { "page": "530" } ], "opinion_index": 0, "case_paths": [ "/nc-app/105/0526-01" ] }, { "cite": "377 S.E.2d 225", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1989, "opinion_index": 0 }, { "cite": "323 N.C. 704", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2562862, 2566384, 2561907, 2560377, 2564315 ], "year": 1989, "opinion_index": 0, "case_paths": [ "/nc/323/0704-02", "/nc/323/0704-04", "/nc/323/0704-05", "/nc/323/0704-03", "/nc/323/0704-01" ] }, { "cite": "371 S.E.2d 778", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1988, "pin_cites": [ { "page": "779-80" }, { "page": "780" } ], "opinion_index": 0 }, { "cite": "91 N.C. App. 342", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8525537 ], "weight": 2, "year": 1988, "pin_cites": [ { "page": "344" }, { "page": "344" } ], "opinion_index": 0, "case_paths": [ "/nc-app/91/0342-01" ] }, { "cite": "432 S.E.2d 160", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1993, "pin_cites": [ { "page": "164" } ], "opinion_index": 0 }, { "cite": "111 N.C. App. 157", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8520895 ], "year": 1993, "pin_cites": [ { "page": "162" } ], "opinion_index": 0, "case_paths": [ "/nc-app/111/0157-01" ] }, { "cite": "402 S.E.2d 430", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1991, "pin_cites": [ { "page": "502" } ], "opinion_index": 0 }, { "cite": "328 N.C. 98", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2539448, 2545427, 2542900 ], "weight": 2, "year": 1991, "opinion_index": 0, "case_paths": [ "/nc/328/0098-03", "/nc/328/0098-01", "/nc/328/0098-02" ] }, { "cite": "397 S.E.2d 350", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 5, "year": 1990, "pin_cites": [ { "page": "354" }, { "page": "354" }, { "page": "354" }, { "page": "354" } ], "opinion_index": 0 }, { "cite": "100 N.C. App. 498", "category": "reporters:state", "reporter": "N.C. 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App.", "case_ids": [ 8522439 ], "weight": 2, "year": 1990, "pin_cites": [ { "page": "44" }, { "page": "46" } ], "opinion_index": 0, "case_paths": [ "/nc-app/98/0041-01" ] } ], "analysis": { "cardinality": 919, "char_count": 23720, "ocr_confidence": 0.741, "pagerank": { "raw": 1.1164257101311174e-06, "percentile": 0.9859375971340414 }, "sha256": "4cb0f79a7ee2463fd1fe80f2c8bf141c9eeb27149a212e36c6c912a9a0096cb2", "simhash": "1:8378d4eef5bb2557", "word_count": 3750 }, "last_updated": "2023-07-14T15:48:17.524906+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges WELLS and COZORT concur." ], "parties": [ "IN THE MATTER OF THE APPEAL BY SUE S. McCRARY FROM A DECISION OF THE NORTH CAROLINA INSURANCE UNDERWRITING ASSOCIATION and THE NORTH CAROLINA COMMISSIONER OF INSURANCE" ], "opinions": [ { "text": "JOHN, Judge.\nPetitioner Sue S. McCrary contends the trial court erred by affirming an order of a Deputy Commissioner of Insurance (Commissioner) which voided, ab initio, insurance coverage on her property at Topsail Beach, North Carolina. We disagree.\nOn or about 24 September 1990, Donnie Hamm (Hamm), a licensed State Farm Insurance Agent, was assisting petitioner in obtaining insurance coverage for her beach house at Topsail Beach, North Carolina. Hamm and petitioner submitted an insurance application to the North Carolina Insurance Underwriting Association (Association), which was entitled \u201cSUPPLEMENTAL APPLICATION-PRODUCER\u2019S INSPECTION REPORT.\u201d\nOn this application form were questions addressing occupancy and vacancy of the property. These inquiries and petitioner\u2019s responses thereto were as follows:\n4. OCCUPANCY (SHOW EACH TYPE OF OCCUPANT IN BUILDING) used as seasonal dwelling for single family\nIF HABITATIONAL, SHOW NUMBER OF FAMILIES: 1\nIF VACANT:_ATTACH VACANCY QUESTIONNAIRE\nNo \u201cVacancy Questionnaire\u201d was ever attached to the application or sent to the Association.\nAt the time petitioner submitted the insurance application, the house had not been occupied for at least one year and nine months due to damage from arson on two previous occasions; no electricity or water served the house; the beds, interior panelling, and sheetrock were gone; and the ceilings had been removed. Although petitioner was conducting renovations to the property, it would not have been ready for occupancy until approximately May or June, 1991.\nOn 26 September 1990, the Association accepted petitioner\u2019s property as an insurable risk. The property was subsequently destroyed by fire on or about 30 October 1990. After the fire, petitioner filed a .claim with the Association. On the basis of discrepancies between petitioner\u2019s representations and the actual condition of the house at the time the insurance application was submitted, the Association voided petitioner\u2019s insurance coverage ab initio for false and material representations. Petitioner appealed to the Commissioner of Insurance who upheld the Association\u2019s actions. Petitioner then appealed to the Superior Court which affirmed the Commissioner\u2019s decision.\nI.\nPetitioner initially contends the standard of judicial review to be applied in reviewing the Commissioner\u2019s decision is \u201cde novo\u201d as opposed to the \u201cwhole record\u201d test. Petitioner\u2019s argument is misdirected.\nAs a preliminary matter, since the present case concerns both (1) an appeal to the Superior Court of the Commissioner\u2019s order and (2) the subsequent appeal to this Court, we find it helpful to elaborate upon the pertinent review procedures applicable at each stage of the appeals process.\nThe Department of Insurance is a state agency and as such is subject to the Administrative Procedure Act (APA), N.C.G.S. \u00a7\u00a7 150B-1 to -52 (1991). N.C. Reinsurance Facility v. Long, 98 N.C. App. 41, 44, 390 S.E.2d 176, 178 (1990). The APA provides:\nAny person who is aggrieved by the final decision in a contested case, and who has exhausted all administrative remedies made available to him by statute or agency rule, is entitled to judicial review of the decision under this Article, unless adequate procedure for judicial review is provided by another statute, in which case the review shall be under such other statute.\nG.S. \u00a7 150B-43. While N.C.G.S. \u00a7 58-2-75 (1991) also provides for judicial review of a decision of the Commissioner, this Court has determined G.S. \u00a7 150B-51 of the APA to be controlling. Reinsurance Facility v. Long, 98 N.C. App. at 46, 390 S.E.2d at 179. However, \u201c[t]o the extent that G.S. \u00a7 58-2-75 adds to and is consistent with [the APA], we will proceed by applying the review standards articulated in both statutes.\u201d Id. at 46, 390 S.E.2d at 179.\nThe APA delineates the appropriate scope of judicial review of a final agency decision. A reviewing court may modify or reverse an agency\u2019s decision if the substantial rights of the petitioner may have been prejudiced because the agency\u2019s findings, inferences, conclusions, or decisions are:\n(4) Affected by . . . error of law;\n(5) Unsupported by substantial evidence ... in view of the entire record as submitted; or\n(6) Arbitrary or capricious.\nG.S. \u00a7 150B-51(b).\nThe proper standard of review under this statute depends upon the issues presented on appeal. Walker v. N.C. Department of Human Resources, 100 N.C. App. 498, 502, 397 S.E.2d 350, 354 (1990), disc. review denied, 328 N.C. 98, 402 S.E.2d 430 (1991). If appellant argues the agency\u2019s decision was based on an error of law, then \u201cde novo\u201d review is required. Id. at 502, 397 S.E.2d at 354. If, however, appellant questions (1) whether the agency\u2019s decision was supported by the evidence or (2) whether the decision was arbitrary or capricious, then the reviewing court must apply the \u201cwhole record\u201d test. Id. A reviewing court may even utilize more than one standard of review if the nature of the issues raised so requires. See Ellis v. N.C. Crime Victims Compensation Comm., 111 N.C. App. 157, 162, 432 S.E.2d 160, 164 (1993).\nThe aforementioned principles apply to the initial appeal of the agency\u2019s decision. A subsequent appeal to this Court of a trial court\u2019s order affirming the agency\u2019s decision presents a different question. Under G.S. \u00a7 150B-52, our review of a trial court\u2019s order is the same as in any other civil case \u2014 consideration of whether the court committed any error of law. In re Kozy, 91 N.C. App. 342, 344, 371 S.E.2d 778, 779-80 (1988), disc. review denied, 323 N.C. 704, 377 S.E.2d 225 (1989). Thus, since the questions initially addressed to the trial court are limited by G.S. \u00a7 150B-51(b), our task is to determine whether that court committed any error of law based upon a failure to apply properly the review standards set forth in G.S. \u00a7 150-51(b). Sherrod v. N.C. Department of Human Resources, 105 N.C. App. 526, 530, 414 S.E.2d 50, 53 (1992); In re Kozy, 91 N.C. App. at 344, 371 S.E.2d at 780. However, in instances where the trial court should have utilized de novo review, this Court will directly review the agency\u2019s decision under a de novo review standard. Brooks v. Rebarco, Inc., 91 N.C. App. 459, 464, 372 S.E.2d 342, 345 (1988).\nUnder the aforementioned principles, therefore, the task of this Court is twofold: (1) determine the appropriate standard of review and, when applicable, (2) determine whether the trial court properly applied this standard. See Wiggins v. N.C. Department of Human Resources, 105 N.C. App. 302, 306, 413 S.E.2d 3, 5 (1992).\nII.\nAs previously discussed, the standard of review which should be employed in reviewing an agency decision depends upon the nature of the alleged error. Walker v. N.C. Department of Human Resources, 100 N.C. App. 498, 502, 397 S.E.2d 350, 354 (1990), disc. review denied, 328 N.C. 98, 402 S.E.2d 430 (1991). In the case sub judice, petitioner contends the Commissioner\u2019s decision to deny coverage was both (1) contrary to the law and (2) contrary to the evidence presented.\nA.\nIn arguing the Commissioner\u2019s decision was contrary to law, petitioner advances a single argument; she maintains the Commissioner did not properly interpret the term \u201cfraudulent\u201d as contained in N.C.G.S. \u00a7 58-3-10 (1991). Incorrect statutory interpretation by an agency constitutes an error of law and allows this Court to apply de novo review. Brooks v. Rebarco, Inc., 91 N.C. App. 459, 464, 372 S.E.2d 342, 345 (1988). We are not persuaded by petitioner\u2019s contention.\nG.S. \u00a7 58-3-10 provides:\nAll statements or descriptions in any application for a policy of insurance, or in the policy itself, shall be deemed representations and not warranties, and a representation, unless material or fraudulent, will not prevent a recovery on the policy.\nPetitioner insists this statute requires a showing of fraud, i.e., a false representation of a material fact, reasonably calculated and intentionally made to deceive, which does deceive, causing injury thereby. Shreve v. Combs, 54 N.C. App. 18, 21, 282 S.E.2d 568, 571 (1981). In other words, petitioner argues only a fraudulent misrepresentation can void a policy ab initio, and therefore the Commissioner erred in failing to consider whether her actions were \u201cfraudulent\u201d under the statute.\nPetitioner\u2019s argument misses the mark. Under G.S. \u00a7 58-3-10, an insurer may avoid the policy if the insured makes a representation which is both (1) false and (2) material; the misrepresentation need not be fraudulent. \u201cIf the representation is material and false, it is not necessary for avoidance of the policy that the misrepresentation be intentional.\u201d Tedder v. Union Fidelity Life Ins. Co., 436 F.Supp. 847, 849 (E.D.N.C. 1977) (construing former N.C.G.S. \u00a7 58-30 which is identical to present G.S. \u00a7 58-3-10); see also Cockerham v. Pilot Life Ins. Co., 92 N.C. App. 218, 220, 374 S.E.2d 174, 176 (1988).\nA review of the record reveals the Association, in seeking avoidance of the policy, at all times relied upon the defense of material misrepresentation under G.S. \u00a7 58-3-10. Furthermore, while the Commissioner\u2019s order does not specifically cite the statute, it tracks the language of G.S. \u00a7 58-3-10 and concludes petitioner\u2019s application \u201ccontained a misrepresentation of material fact.\u201d While not necessary, we also note the superior court \u201cexamined . . . the [b]riefs and heard the arguments of counsel,\u201d yet made no reference to fraud in its order, thus suggesting this defense was neither advanced at the trial level nor relied upon by the trial court in affirming the Commissioner\u2019s decision. See Cellu Products Co. v. G.T.E. Products Corp., 81 N.C. App. 474, 477-78, 344 S.E.2d 566, 568 (1986) (appellate court may only pass upon questions presented and ruled upon by lower courts). We thus conclude the Commissioner did not err by failing to apply a \u201cfraud\u201d standard since (1) G.S. \u00a7 58-3-10 does not require a showing of fraud in order for an insurer to avoid a policy; (2) the Association did not rely on the defense of fraud in seeking avoidance; and (3) the Commissioner did not utilize the defense of fraud in determining the Association properly denied coverage.\nB.\nPetitioner also argues the Commissioner\u2019s decision to deny coverage was contrary to the evidence presented. Resolution of this issue must be decided by application of the \u201cwhole record\u201d test. Walker v. N.C. Department of Human Resources, 100 N.C. App. 498, 502, 397 S.E.2d 350, 354 (1990).\nThe \u201cwhole record\u201d test does not allow the reviewing court (here, the superior court) to substitute its judgment for the agency\u2019s as between two reasonably conflicting views, even though the court could justifiably have reached a different result had the matter been before it de novo. Thompson v. Wake County Board of Education, 292 N.C. 406, 410, 233 S.E.2d 538, 541 (1977). However, \u201cit does require the court to take into account both the evidence justifying the agency\u2019s decision and the contradictory evidence from which a different result could be reached.\u201d Lackey v. N.C. Department of Human Resources, 306 N.C. 231, 238, 293 S.E.2d 171, 176 (1982). Pursuant to this standard, all the competent evidence is to be examined for a determination of whether the administrative agency\u2019s decision is supported by substantial evidence. Rector v. N.C. Sheriffs\u2019 Education and Training Standards Commission, 103 N.C. App. 527, 532, 406 S.E.2d 613, 616 (1991). \u201cSubstantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion and is more than a scintilla or a permissible inference.\u201d Wiggins v. N.C. Department of Human Resources, 105 N.C. App. 302, 306, 413 S.E.2d 3, 5 (1992). If, after all the record has been reviewed, substantial evidence supports the agency\u2019s ruling, then the agency\u2019s ruling must stand. Community Savings & Loan Ass\u2019n v. N.C. Savings & Loan Commission, 43 N.C. App. 493, 497-98, 259 S.E.2d 373, 376 (1979).\nWith these principles in mind, we turn to the questions of whether the trial court (1) utilized and (2) properly applied the \u201cwhole record\u201d standard of review. See Sherrod v. N.C. Department of Human Resources, 105 N.C. App. 526, 530, 414 S.E.2d 50, 53 (1992).\n1.\nAs a preliminary matter, we note plaintiff does not contend the trial court failed to apply \u201cwhole record\u201d review; rather her sole argument regarding the applicable standard of review is that this Court should apply \u201cde novo\u201d review to all issues on appeal. Having previously rejected that argument, we also note the Superior Court\u2019s order enumerates it \u201cexamined the transcript and the record in this matter and ... examined the Briefs and heard the arguments of counsel for Petitioner and Respondent,\u201d and specifies it \u201cFinds as a Fact that the . . . Order of the Commissioner ... is supported by substantial evidence . . . .\u201d This indicates the Superior Court utilized the appropriate standard of review, and, there being no allegation to the contrary, we determine it did.\n2.\nWe further conclude the Superior Court properly applied the \u201cwhole record\u201d test in affirming the Commissioner\u2019s order. The Commissioner denied coverage on the basis of petitioner\u2019s misrepresentation of a material fact. Under N.C.G.S. \u00a7 58-3-10, an insurance policy may be avoided if the insured makes a representation which is both (1) false and (2) material. See discussion of Tedder v. Union Fidelity, supra.\nThere is substantial evidence of record to support the Commissioner\u2019s decision that petitioner made a false statement on her application of insurance. Petitioner\u2019s affirmation (on the insurance application) that the beach house was \u201cused as seasonal dwelling for single family\u201d can only be read, in conjunction with her leaving the \u201cvacancy\u201d question blank and failing to prepare and forward a \u201cvacancy questionnaire,\u201d as a declaration the house was inhabited on a regular basis. Yet, by petitioner\u2019s own admission (during the hearing before the Commissioner), the house could not be inhabited in 1990, was unoccupied in 1989 and 1990, and was \u201ccompletely without anybody in it since about 1985 or 1986.\u201d Nonetheless, Hamm testified that when assisting petitioner with the insurance application, he asked her, \u201c[d]o you stay there?\u201d and she responded \u201cyes.\u201d At another point, Hamm testified he asked petitioner, \u201c[d]o you stay down there?\u201d and she replied \u201cyes.\u201d Furthermore, there was no electricity or water serving the house; the beds, interior panel-ling, and sheetrock were gone; and the ceilings removed. A house physically incapable of being occupied cannot be \u201cused as seasonal dwelling for single family\u201d or be \u201chabitational\u201d for one family. Thus, substantial evidence supports the Commissioner\u2019s finding of falsity.\nThere is also substantial evidence of record to support the Commissioner\u2019s finding of a material false statement. The test for materiality is relatively simple. \u201c[E]very fact untruly asserted or wrongfully suppressed must be regarded as material if the knowledge or ignorance of it would naturally influence the judgment of the insurer in making the contract, or in estimating the degree and character of the risk, or in fixing the rate of premium.\u201d Wells v. Jefferson Standard Life Ins. Co., 211 N.C. 427, 429, 190 S.E. 744, 745 (1937). This test is a subjective one. Goodwin v. Investors Life Ins. Co. of North America, 332 N.C. 326, 332, 419 S.E.2d 766, 769 (1992). The determinative question is whether the insured\u2019s false answer would have influenced the insurance company in agreeing to accept the risk. Id. Furthermore, where misrepresentations are made in the form of written answers to written questions, the misrepresentations \u201care deemed to be material.\" Tolbert v. Mutual Benefit Life Ins. Co., 236 N.C. 416, 419, 72 S.E.2d 915, 917 (1952).\nIn the case sub judice, the misrepresentations were made in response to written questions on the insurance application, thereby-satisfying the test for materiality under Tolbert. Testimony before the Commissioner further indicates the materiality of the statements. Corliss Battle, an underwriter, testified had the Association known the condition of the building it would never have agreed to insure the property. Donnie Hamm, petitioner\u2019s own insurance agent, also testified that extended periods of vacancy are critical matters to insurance companies in underwriting insurance. Applying the standards announced in both Tolbert and Goodwin, we conclude substantial evidence supported the Commissioner\u2019s finding of materiality.\nBecause (1) substantial evidence in the record supports the Commissioner\u2019s findings regarding material misrepresentations, and because (2) these findings in turn support the Commissioner\u2019s conclusion affirming the Association\u2019s denial of insurance coverage, we hold the trial court committed no error by affirming the Commissioner\u2019s decision.\nIII.\nPetitioner lastly argues even if the answers to the occupancy and vacancy portions of the application were unanswered or insufficiently answered, the Association has waived the right to full disclosure because it issued the policy without further inquiry. In addition, petitioner insists the Association was put on notice there were periods of time when the property would be vacant because she used the term \u201cseasonal dwelling\u201d, and thus the Association waived any objections it had with respect to the condition of the property. However, these contentions are not properly before this Court, and we therefore decline to address them.\nAppellate review is limited to consideration of those assignments of error set out in the record on appeal. N.C.R. App. P. 10(a); Watson v. N.C. Real Estate Commission, 87 N.C. App. 637, 639, 362 S.E.2d 294, 296 (1987), disc. review denied, 321 N.C. 746, 365 S.E.2d 296 (1988). No assignment of error raises the issue of waiver. Furthermore, upon examination of the record, we find nothing to indicate the question of waiver was raised in the trial court. \u201cAppellate courts can only judicially know what appears of record . . . and we will not pass upon questions not presented and ruled upon by the [lower] court.\u201d Cellu Products Co. v. G.T.E. Products Corp., 81 N.C. App. 474, 477-78, 344 S.E.2d 566, 568 (1986).\nWithout expressly considering petitioner\u2019s waiver contention, we note an insurer waives a policy provision (which would have allowed avoidance of the policy) if at the time the policy is issued, the insurer has knowledge of existing conditions which would otherwise void the policy under the provision\u2019s terms. Winston-Salem Fire Fighters Club, Inc. v. State Farm Fire & Casualty Co., 259 N.C. 582, 585, 131 S.E.2d 430, 432 (1963). Under procedures approved by the Commissioner of Insurance in 1985, a physical inspection of habitational insurance risks is not required; if the producer (here, the insured\u2019s agent) submits a properly completed Producer\u2019s Supplemental Application-Inspection Report, an insurer is permitted to use the form to determine if the property is insurable. In the case sub judice, the petitioner and her agent submitted a Supplemental Application regarding the property in question. Accordingly, since no agent of the Association ever visited petitioner\u2019s beach house, the Association cannot be chargeable with knowledge of the house\u2019s condition and thus did not waive any pertinent clauses. See Firefighters Club, 259 N.C. at 586, 131 S.E.2d at 433 (absent knowledge of vacancy, there can be no waiver of policy provisions relating to vacancy).\nFor the foregoing reasons, the judgment of the lower court is affirmed.\nAffirmed.\nJudges WELLS and COZORT concur.", "type": "majority", "author": "JOHN, Judge." } ], "attorneys": [ "Shipman & Lea, by Gary K. Shipman and Jennifer L. TJmbaugh, for petitioner-appellant.", "Hunton & Williams, by Walton K. Joyner and Christopher G. Browning, ,Jr., for appellee." ], "corrections": "", "head_matter": "IN THE MATTER OF THE APPEAL BY SUE S. McCRARY FROM A DECISION OF THE NORTH CAROLINA INSURANCE UNDERWRITING ASSOCIATION and THE NORTH CAROLINA COMMISSIONER OF INSURANCE\nNo. 9210SC656\n(Filed 5 October 1993)\n1. Administrative Law and Procedure \u00a7 65 (NCI4th)\u2014 review of agency decision \u2014standard of review \u2014questions presented determinative\nThe standard of review which should be employed in reviewing an agency decision depends upon the nature of the alleged error: (1) if appellant argues the agency\u2019s decision was based on an error of law, then de novo review is required; (2) if appellant questions whether the agency\u2019s decision was supported by the evidence or was arbitrary or . capricious, then the reviewing court must apply the whole record test; (3) but on a subsequent appeal to the Court of Appeals of the trial court\u2019s order affirming the agency\u2019s decision, the review is limited to a consideration of whether the court committed any error of law.\nAm Jur 2d, Administrative Law \u00a7 730.\n2. Insurance \u00a7 911 (NCI4th)\u2014 insurance coverage voided ab initio \u2014material misrepresentations in application\nIn voiding, ab initio, insurance coverage on petitioner\u2019s beach property, the Commissioner of Insurance did not err by failing to apply a \u201cfraud\u201d standard since (1) N.C.G.S. \u00a7 58-3-10 does not require a showing of fraud in order for an insurer to avoid a policy but instead requires a false and material misrepresentation; (2) the North Carolina Insurance Underwriting Association did not rely on the defense of fraud in seeking avoidance; and (3) the Commissioner did not utilize the defense of fraud in determining that the Association properly denied coverage.\nAm Jur 2d, Insurance \u00a7\u00a7 1007, 1013, 1014, 1068, 1069.\n3. Administrative Law and Procedure \u00a7 67 (NCI4th)\u2014 Insurance Commissioner\u2019s denial of coverage \u2014application of whole record test by trial court\nThe trial court was required to apply the whole record test in determining whether the Insurance Commissioner\u2019s decision to deny coverage was contrary to the evidence presented, and if, after the record was reviewed, substantial evidence supported the agency\u2019s ruling, then the agency\u2019s ruling must stand.\nAm Jur 2d, Administrative Law \u00a7 730.\n4. Insurance \u00a7 911 (NCI4th)\u2014 order voiding insurance policy ab initio \u2014whole record standard of review properly utilized and applied by trial court\nThe trial court properly utilized and applied the whole record standard of review in affirming the Insurance Commissioner\u2019s order voiding, ab initio, a policy of insurance on petitioner\u2019s beach property where there was substantial evidence in the record that petitioner made a false statement that she resided at her beach house when in fact it was uninhabitable, and the misrepresentations were made in response to written questions on the insurance application.\nAm Jur 2d, Insurance \u00a7\u00a7 1007, 1013, 1014, 1068, 1069.\n5. Insurance \u00a7 911 (NCI4th)\u2014 fire insurance \u2014 beach house \u2014 occupancy questions unanswered or incomplete \u2014 occupancy requirement not waived\nThere was no merit to petitioner\u2019s contention that, even if answers to the vacancy and occupancy portions of her insurance application were unanswered or insufficiently answered, the Underwriting Association waived the right to full disclosure because it issued a policy of insurance on petitioner\u2019s beach house without further inquiry, since under procedures approved by the Commissioner of Insurance, a physical inspection was not required and the insurer could depend on forms submitted by its agent to determine if the property was insurable, and the Association, which never sent an agent to inspect the beach house, could not be chargeable with knowledge of the house\u2019s condition and thus did not waive any pertinent clauses.\nAm Jur 2d, Insurance \u00a7\u00a7 1007, 1013, 1014, 1068, 1069.\nAppeal by petitioner from judgment entered 20 April 1992 by Judge Narley T. Cashwell in Wake County Superior Court. Heard in the Court of Appeals 3 June 1993.\nShipman & Lea, by Gary K. Shipman and Jennifer L. TJmbaugh, for petitioner-appellant.\nHunton & Williams, by Walton K. Joyner and Christopher G. Browning, ,Jr., for appellee." }, "file_name": "0161-01", "first_page_order": 191, "last_page_order": 201 }