American Republic Life Insurance v. Presson

Citations: 216 Ark. 771; 227 S.W.2d 969; 1950 Ark. LEXIS 620Docket: 4-9101

Court: Supreme Court of Arkansas; March 6, 1950; Arkansas; State Supreme Court

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Griffin Smith, Chief Justice, addressed the case involving an insurance policy issued by American Republic to Clyde E. Presson, which provided a $1,250 payout for accidental death and monthly benefits for disability due to sickness or injury. The policy required quarterly premiums of $15, payable in advance, with no grace period. Presson was accidentally shot on October 30, 1948, and died from the injury. The insurance company denied liability, claiming the policy lapsed on March 10, 1948, due to non-payment. The appellee, Dovie Presson, argued that unpaid disability claims, of which the company had notice, should have been used to cover the premiums, thus keeping the policy active until his death.

The appeal included several points: (a) a check for $81.48, issued on December 30, 1947, covered disability from October 6 to November 1; (b) there was no proof of claims filed after November 1, and the court erred in allowing testimony about correspondence; (c) endorsing the check created an estoppel preventing the plaintiff from disputing payment; (d) the check constituted full payment; and (e) even if questioned, the plaintiff failed to notify the company of disability within the required ten days.

The appellee contended substantial evidence showed Presson's illness began on July 1, 1947, and continued until November 1. He was hospitalized from October 6 to 14, returned home, but relapsed after light work in early November. The defendant’s motion to exclude evidence of disability before October 6 was upheld due to the plaintiff's failure to request original documentation prior to trial and non-compliance with notice requirements. Dr. E. J. Brown’s certificate confirmed Presson's illness timeline, while claims auditor Elizabeth Pittard indicated that compensation from July 1 to November 1 would have been due if proper notice had been given. The court ruled out claims for periods before November 1, leading to inconsistencies regarding notice and proof of disability, compounded by the death of Dr. Holitik before trial.

On October 10, the Company acknowledged Presson's request for claim blanks but withheld them due to a lack of information regarding the cause of his disability. Four days later, the Company sent claim forms without addressing the previous objection. By November 17, Presson submitted completed claim forms, and the Company acknowledged receipt, noting that incorrect forms had been mailed previously and that additional forms were included for two attending physicians. Evidence indicated that the Company had returned forms for certifying hospital time, and Presson’s doctors completed the necessary paperwork. However, a follow-up request for forms related to a relapse went unanswered. On December 15, the Company confirmed receipt of claim forms and promised further attention post-investigation. During cross-examination, Mrs. Presson affirmed that her husband had requested forms for November and December but received no response. An undated letter from the insured requesting claim forms was found in an envelope postmarked October 9, with the Company's reply dated October 10. The check issued on December 30 lacked clarity on the covered illness period, leading to speculation that it was delayed in processing. Despite continued notices of disability sent through November and December, the Company failed to provide requested forms. The policy stipulates that written notice suffices for claims, and the Company is obligated to furnish proof forms. Consequently, if the notices were sent and forms were not provided, Presson was excused from further delays in his claim process.

Mrs. Presson's testimony, while from an interested party, was accepted by the fact-finders as credible evidence that notice was given regarding her husband's sickness, which justified withholding of compensation amounting to $45 for three quarterly installments. The court noted that any rejection of her testimony would require clear physical contradictions or evidence so implausible that no reasonable person would accept it. While the appellant contended that key documents related to the case had seemingly vanished due to the appellant's actions, the court emphasized its obligation to uphold the jury's acceptance of substantial testimony. 

The appellant also argued against Mrs. Presson's ability to testify about her husband writing and mailing letters in November and December, referencing a prior case (Continental Casualty Company v. Speer) where the insurer was unfairly disadvantaged by the introduction of evidence without prior notice. However, the court distinguished the current case from Speer, noting that Mrs. Presson did not rely on copies of letters nor claimed that primary evidence was lost; rather, her testimony was based on her direct knowledge. 

Under the policy terms, liability required prior notice. The policy's audit revealed an allowance of $81.48 for the illness, but the insurer’s defense did not adequately address the 60-day payment limitation nor the classification of compensable liabilities. Mrs. Pittard, a witness for the company, confirmed that a letter dated October 10 was returned marked with the word "illness," indicating the company's acknowledgment of the insured's condition. The court affirmed the previous decisions based on these findings.