Opinion
No. 28330.
March 18, 1952. Rehearing Denied April 18, 1952.
APPEAL FROM THE CIRCUIT COURT, CITY OF ST. LOUIS, WM. S. CONNOR, J.
N. Murray Edwards, Ninian M. Edwards, of St. Louis, for appellants.
Silas E. Garner, of St. Louis, for respondent.
This is an action upon two policies of insurance issued by defendant, Atlanta Life Insurance Company, upon the life of one Elvira Jones. The plaintiffs are Robert L. Jones and Mary Jones, the son and daughter of the insured, and the persons designated as beneficiaries in the policies.
The one policy was for the face amount of $400, and the other for the face amount of $21. Each of the policies provided that if death should occur within six calendar months from the date of issue from any of certain enumerated diseases including apoplexy, the company's liability should be limited to one-fourth of the full death benefit.
The insured died within six calendar months, and in fact within two days, after the issuance and delivery of the policies; and the sole defense was that death had been due to apoplexy, and that liability was therefore limited to one-fourth of the face amount of the policies, or, in other words, to the sum of $105.25, which defendant paid into the registry of the court. Plaintiffs, on the other hand, sued for the full face amount of the policies along with the statutory penalty of damages and an attorney's fee for vexatious refusal to pay.
Upon a trial to a jury, a verdict was returned in favor of plaintiffs, and against defendant, for the amount of $1,125.19, comprising the aggregate of the face amount of the policies together with the penalty.
During the trial of the case defendant had sought unavailingly to introduce in evidence two exhibits, the one a report of the coroner's post-mortem examination of the body of the insured, and the other a death-claim report of the Retail Credit Company. In assignments four and six of its motion for a new trial defendant set up the action of the court in excluding such exhibits as grounds for vacating the verdict and awarding it a new trial. The court sustained the motion upon such two assignments, whereupon plaintiffs gave notice of appeal, and by proper successive steps have caused the case to be transferred to this court for our review.
The insured, a woman forty-seven years of age, had resided on the second floor of a building at 1506 South Third Street, in the City of St. Louis. A neighbor, Lucy Watkins, lived on the third floor of an adjoining building.
Shortly before noon on the morning of April 11, 1945, Lucy Watkins, while standing on her porch in a position from which she could look across into the insured's kitchen, observed the insured fall suddenly to the floor. She hastened over to the insured, who was able to say that she had tripped over an iron and had fallen. An electric iron with cord attached was in fact lying on the floor at the insured's feet. An ambulance was called and the insured conveyed to the Homer G. Phillips Hospital, where she died some three hours later from what the authorities at the hospital reported as cerebral hemorrhage.
As a matter of fact, there was no dispute in the case but that the insured did die from cerebral hemorrhage. On the contrary, whatever controversy existed was over the question of whether the hemorrhage had been caused by the fall she sustained in her kitchen, or whether it had been due to hypertension for which she had been under a doctor's care and as a consequence of which she had had a slight stroke two years before. If it was from the latter cause, there was evidence that death was then to be said to have been due to apoplexy, so that having happened within six months of the issuance of the policies, the company's liability would be limited to one-fourth of the face amount of the policies. As a further reason for excluding trauma as a factor in the insured's death, defendant brought out in its examination of witnesses that there had been a complete absence of abrasions or contusions on her head or body.
The whole question on this appeal from the order granting the new trial is whether the court had in fact committed error in sustaining plaintiffs' objections to the introduction of the coroner's post-mortem report and the death-claim report of the Retail Credit Company.
The record indicates that the coroner's post-mortem report was offered in evidence in support of the defense that the insured had died of apoplexy. Plaintiffs themselves, as a part of their case, had introduced a portion of the coroner's report which merely showed the cause of death as cerebral hemorrhage. Defendant then sought to introduce the whole of the report to show that there had been no marks of external violence, or, in other words, no evidence of any injury which might have produced the fatal result, but that instead the examination had revealed arteriosclerotic changes of the cerebral vessels which would indicate that the hemorrhage or rupture of the cerebral vessels had been due to disease.
At the time defendant sought to introduce the report, plaintiffs' counsel objected upon the ground that he had previously offered, without objection, so much of the report as showed "the conclusions", by which he meant the actual cause of death; and that "the conclusions" were all that were material, and not how "the conclusions" had been reached. It was this objection that was sustained. The error in plaintiffs' position is apparent on the very face of the objection. After plaintiffs themselves had offered the portion of the report that served their own purpose, defendant was then entitled to meet the issue by offering the whole of the report, which was explanatory of its recital regarding the cause of death and tended to sustain defendant's theory that death had been due to a cause which reduced its liability. The court, in sustaining the motion for a new trial, properly recognized its error in having excluded defendant's offer of the coroner's post-mortem report.
The death-claim report of the Retail Credit Company was offered solely on the issue of vexatious refusal to pay. It was a report which had been furnished defendant by the Retail Credit Company after the latter had been employed to investigate the claim made by plaintiffs upon the death of the insured; and the evidence showed that in denying the claim defendant had acted, in large part at least, upon the basis of what the report disclosed regarding the previous illness of the insured.
It is now settled that in defending upon the issue of vexatious refusal to pay, an insurance company, in order to show that it acted in good faith and upon reasonable grounds in refusing a claim, may make proof of the facts and circumstances which it had before it and upon which it relied in denying liability. Scott v. Missouri Ins. Co., 361 Mo. 51, 233 S.W.2d 660; Moore v. Metropolitan Life Ins. Co., Mo. App., 237 S.W.2d 210.
Among the causes of death which were listed in the policies as reducing defendant's liability in the event of death within six months of the date of issue were not only paralysis or apoplexy, but also diseases of the heart or blood vessels. In refusing the claim, which was for the full face amount of both policies, defendant had based its refusal upon the ground of a breach of the sound-health provision which each policy contained. But when defendant answered to the action brought by plaintiffs on the policies, it modified its stand and instead of denying liability in toto, set up as its defense that because of the insured's death from apoplexy, it was only liable for one-fourth of the face amount of the policies.
When defendant offered the report of the Retail Credit Company, plaintiffs' counsel objected upon the ground that inasmuch as there was neither an issue in the case of a breach of the sound-health provision of the policies, nor had the premiums been tendered into court, the report was irrelevant and incompetent. Notwithstanding the insistence of defendant's counsel that he was only offering the report upon the issue of vexatious refusal, the court sustained the objection to it.
Plaintiffs argue that so long as defendant had refused to pay before suit was filed upon the ground that the insured had not been in sound health when the policies were issued, it was not to be allowed to escape the penalty for vexatious delay when it elected to defend the action, not upon the previously asserted ground of the total invalidity of the policies, but instead upon the ground of a reduced liability.
In support of their position plaintiffs rely upon the case of Block v. United States Fidelity Guaranty Co., 316 Mo. 278, 290 S.W. 429, which was an action in two counts for separate losses by burglary within the alleged coverage of an insurance policy. Among the questions for decision was that of the company's liability for the penalty on each count of the petition. As for the loss sued for under the second count, the court held that having based its refusal to pay upon the single definite ground that it was not on the risk, the company could not relieve itself of the penalty upon the ground shown at the trial that the plaintiff's claim had been inaccurate or excessive.
The Block case is clearly distinguishable from the one at bar. In it, as the court pointed out, the evidence was practically indisputable upon the question of the lack of any reasonable basis for the company's refusal to pay upon the ground asserted before trial that the loss was not covered by its policy. But in the present case the facts in defendant's possession strongly supported its contention that the insured was not in sound health upon the date of the issuance of the policies, but for as much as two years before had suffered from and had been treated for hypertension, which had caused or contributed to cause the cerebral hemorrhage from which she died. In other words, the jury would have been amply entitled to find that defendant had refused payment in good faith and upon a reasonable ground, even though, when it undertook to defend in court, it modified its stand to the extent of admitting liability for one-fourth of the face amount of the policies. The important thing is that despite the change in its position, defendant still relied upon the same facts, but merely drew from them a different legal conclusion by which plaintiffs were actually benefited. Since the defense was not one of the invalidity of the policies, there was no requirement for a tender back of the premiums as would have been the case if defendant had stood upon a breach of the sound-health provision of the policies.
Plaintiffs' final point is that whatever was shown in the two reports was in any event merely cumulative, so that the exclusion of the reports could not have been prejudicial to the rights of defendant. We cannot agree with this contention. In the first place, while the reports may have tended to establish some of the same facts which defendant knew from other sources, they went far beyond the scope of anything shown to have been in defendant's possession in any other way. Moreover they were particularly relevant to the respective issues upon which they were sought to be introduced, the one being an official report which supported the defense that the insured's death had been due to a disease which served to reduce liability, and the other being a report which showed the character of defendant's investigation upon which it had based its refusal to pay.
Since the report of the Retail Credit Company was competent upon the issue of vexatious refusal, its erroneous exclusion was likewise ground for granting a new trial.
It follows that the order of the circuit court sustaining defendant's motion for a new trial should be affirmed and the cause remanded. It is so ordered.
ANDERSON and RUDDY, JJ., concur.