{
  "id": 8527503,
  "name": "MARY McCLAIN CHAVIS v. SOUTHERN LIFE INSURANCE COMPANY",
  "name_abbreviation": "Chavis v. Southern Life Insurance Co.",
  "decision_date": "1985-09-03",
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    "judges": [
      "Judges Phillips and Eagles concur."
    ],
    "parties": [
      "MARY McCLAIN CHAVIS v. SOUTHERN LIFE INSURANCE COMPANY"
    ],
    "opinions": [
      {
        "text": "BECTON, Judge.\nPlaintiff, Mary McClain Chavis, instituted this action on 14 October 1982 as the beneficiary of a $17,000 life insurance policy issued to her deceased husband, Leotha Jim Chavis, to recover the proceeds after the defendant insurer, Southern Life Insurance Company (Southern Life), denied her claim.\nMr. Chavis died on 25 July 1981 from burns received in a house fire. In its Answer, filed 21 December 1982, Southern Life raised the defense that Mr. Chavis\u2019 \u201cfalse and misleading . . . material\u201d misrepresentations in a 1980 application for reinstatement of his lapsed life insurance policy voided the reinstatement. Thus, according to Southern Life, Mr. Chavis had no Southern Life insurance coverage at the time of his death. Both parties moved for summary judgment pursuant to Rule 56 of the North Carolina Rules of Civil Procedure. Mrs. Chavis appeals from the denial of her motion and the grant of Southern Life\u2019s motion several months later.\nOn appeal, Mrs. Chavis contends that the trial court erred in denying her motion for summary judgment and in granting Southern Life\u2019s motion. We agree with Mrs. Chavis on both issues. We therefore reverse the trial court\u2019s rulings for the following reasons.\nI\nSummary judgment is appropriate only when the moving party establishes the absence of a genuine issue as to any material fact. Zimmerman v. Hogg & Allen, 286 N.C. 24, 209 S.E. 2d 795 (1974). On a motion for summary judgment, the reviewing court must look at the evidence in the light most favorable to the non-movant. Ballenger v. Crowell, 38 N.C. App. 50, 247 S.E. 2d 287 (1978).\nThe uncontradicted evidence is as follows. Mr. Chavis was illiterate. On 27 March 1975 he met with a general agent for Southern Life, who read to Mr. Chavis the questions on an application for a Southern Life insurance policy and recorded his answers on the form. Mr. Chavis was issued a Southern Life life insurance policy, number 2642, on 19 April 1975. He paid the $19.67 monthly premiums until March 1980 when he had financial problems. The policy then lapsed due to default in payment. Under the terms of the policy, Mr. Chavis was entitled to have the lapsed policy reinstated within five years of the default in payment of any premium \u201cupon evidence of insurability satisfactory to the Company and the payment of the defaulted premiums with interest. . . Mrs. Chavis completed an application for reinstatement of life insurance policy number 2642 in June 1980. Mr. Chavis signed it. The application listed several questions on Mr. Chavis\u2019 health:\nHave you or any person to be insured by this policy had any sickness or injury or been attended by any physician within the past 5 years, or since the issuance of this policy, if later?\nTo the best of your knowledge and belief, are all persons to be insured in sound health?\nMr. Chavis answered the first question \u201cno\u201d and the second question \u201cyes.\u201d Mr. Chavis paid Southern Life the defaulted monthly premiums and the policy was reinstated. Mr. Chavis continued to pay the monthly premiums until his death on 25 July 1981.\nThe following facts are in dispute. Mrs. Chavis stated in her affidavit:\nI answered the questions on the reinstatement application and stated that he had not seen a physician within the past five years because I had simply forgotten that he had seen any doctors during that period of time. . . . When I filled in the blanks on the paper I honestly believed what I wrote down and did not do so with the intention to misrepresent the insurance company or to make a fraudulent statement.\nAccording to Southern Life, the attempted reinstatement was invalid because Mr. Chavis\u2019 statements on the application for reinstatement were \u201cfalse and misleading and constituted a fraud, material misrepresentation, concealment and/or breach.\u201d Under N.C. Gen. Stat. Sec. 58-30 (1982), material or fraudulent misrepresentations in an application for an insurance policy are grounds for avoiding payment on the policy. Southern Life cites Mr. Chavis\u2019 failure to mention in his application for reinstatement: an August 1976 emergency room visit, a seven-day hospitalization in September 1976, and eight office visits to a private physician between 1976 and 1980. We are not persuaded. We hold that Mrs. Chavis is entitled to the proceeds of her husband\u2019s life insurance policy as a matter of law, based on the unambiguous language of the policy.\nII\nAn insurance policy is a contract to be construed under the rules of law applicable to other written contracts. Bailey v. Life Ins. Co. of Virginia, 222 N.C. 716, 24 S.E. 2d 614 (1943). The parties\u2019 intentions are the controlling guide in the interpretation of the policy. Duke v. Mutual Life Ins. Co. of New York, 286 N.C. 244, 210 S.E. 2d 187 (1974). When the language of a contract is plain and unambiguous, its construction is a matter of law for the Court. Martin v. Martin, 26 N.C. App. 506, 216 S.E. 2d 456 (1975). An insurance policy is to be construed as a whole, giving effect to each clause, if possible. Wachovia Bank & Trust Co. v. Westchester Fire Ins. Co., 276 N.C. 348, 172 S.E. 2d 518 (1970).\nWe turn to the pertinent clauses of Mr. Chavis\u2019 insurance policy.\nThe CONTRACT \u2014This policy and the application therefor, a copy of which is attached hereto and made a part hereof, constitute the entire contract. All statements made by the Insured or in his behalf in the application in the absence of fraud shall be deemed representations and not warranties and no statements shall avoid any payment under this policy or be used in defense of any claim hereunder unless it is contained in one of these instruments.\n* * *\nINCONTESTABILITY \u2014 After this policy shall have been in force during the lifetime of the Insured for two full years from the date hereof, it shall be incontestable except for non-payment of premium, and except as to the provisions, if any, granting total and permanent disability insurance, and the provisions, if any, granting additional insurance specifically against death by accidental means.\n* * *\nReinstatement \u2014If this policy shall lapse in consequence of default in payment of any premium it may be reinstated at any time within five years upon evidence of insurability satisfactory to the Company and the payment of the defaulted premiums with interest. . . .\nA copy of the March 1975 application for life insurance was attached to Mr. Chavis\u2019 April 1975 policy. As of 1980, when Mr. Chavis policy lapsed due to default in payment, the two-year contestable period prescribed in the uncontestability clause of the policy had expired. Southern Life contends that the application for reinstatement reactivated the contestable period for an additional two years. Southern Life relies on the strong public policy reasons behind the majority rule discussed in 1A J. & J. Ap-pleman, Insurance Law and Practice Sec. 320 (rev. ed. 1981). The majority rule permits the insurer a second contestable period identical in length to the original contestable period to investigate representations in applications for reinstatement. Id. Significantly, the majority rule derives from the perceived intentions of the parties: \u201cThis conclusion cannot rest upon any precise language in the policy; but it is the reasonable inference as to what the parties intended by reinstating a policy containing [an incontestability] clause. . . .\u201d New York Life Ins. Co. v. Seymour, 45 F. 2d 47, 49 (6th Cir. 1930); see cases cited in Appleman, supra, at Sec. 320 n. 1. See generally Annot. 23 A.L.R. 3d 743 (1969).\nHere, we need not infer the parties\u2019 intentions; the language of the policy expressly precludes Southern Life\u2019s use of material or fraudulent misrepresentations in the reinstatement application as a defense to payment. The parties agreed in the clause entitled \u201cContract\u201d that the application for life insurance attached to the policy and the policy itself constituted the entire contract. No reference is made in that clause to an application for reinstatement of the policy. Equally important, the parties specified that only statements made in the initial application or the policy could be used to avoid payment under the policy. Further, the policy provided that Mr. Chavis had a right to reinstatement of the lapsed policy. Southern Life had the right to investigate the representations in the application for reinstatement and deny reinstatement if the \u201cevidence of insurability [was not] satisfactory to the Company.\u201d However, it is clear from the policy that \u201cevidence of insurability\u201d was a condition precedent to reinstatement, rather than a defense to payment. As stated before, only statements made in the initial application or the policy could be used to avoid payment under the policy. Thus, the incontestability clause was applicable only to the initial application and the policy. Once the contestable period had expired in 1977, the 1980 application for reinstatement did not trigger a second two-year contestable period. Consequently, under the terms of the policy, the truth or falsity of Mr. Chavis\u2019 statements in the application for reinstatement was only contestable before reinstatement of the policy. Accordingly, the alleged falsity of Mr. Chavis\u2019 statements in the application for reinstatement is not a valid defense to this action to recover the proceeds. Instead, the terms of the April 1975 policy entitle Mrs. Chavis to recover the proceeds of her husband\u2019s life insurance policy as a matter of law.\nIll\nSummary judgment in favor of Southern Life is vacated. We hereby remand this case for summary judgment to be granted in favor of Mrs. Chavis.\nVacated and remanded.\nJudges Phillips and Eagles concur.",
        "type": "majority",
        "author": "BECTON, Judge."
      }
    ],
    "attorneys": [
      "Nicholas J. Dombalis, II, for plaintiff appellant.",
      "Poyner, Geraghty, Hartsfield & Townsend, by David W. Long and Susanna K. Gilchrist, for defendant appellee."
    ],
    "corrections": "",
    "head_matter": "MARY McCLAIN CHAVIS v. SOUTHERN LIFE INSURANCE COMPANY\nNo. 8410DC1037\n(Filed 3 September 1985)\nInsurance \u00a7 18\u2014 life insurance \u2014 misrepresentations in application for reinstatement\nUnder the terms of a life insurance policy, the incontestability clause was applicable only to the initial application and policy, and once the contestable period had expired while the policy was in effect, a subsequent application for reinstatement of the policy did not trigger a second two-year contestable period. Furthermore, a requirement of \u201cevidence of insurability\u201d was a condition precedent to reinstatement rather than a defense to payment, and the alleged falsity of the insured\u2019s statements in his application for reinstatement was not a valid defense to an action to recover under the policy.\nAPPEAL by plaintiff from Creech, Judge. Orders entered 27 January and 11 May 1984 in District Court, Wake County. Heard in the Court of Appeals 8 May 1985.\nNicholas J. Dombalis, II, for plaintiff appellant.\nPoyner, Geraghty, Hartsfield & Townsend, by David W. Long and Susanna K. Gilchrist, for defendant appellee."
  },
  "file_name": "0481-01",
  "first_page_order": 515,
  "last_page_order": 520
}
