Appeal by defendant from Johnson, Judge. Judgment entered 2 October 1980 in Superior Court, Burke County. Heard in the Court of Appeals 23 September 1981.
Martin (Harry C.), Judge. Judges Martin (Robert M.) and Becton concur.
Defendant first assigns as error the trial court's denial of its motion for directed verdict. Plaintiffs, by proving the execution and delivery of the policy of life insurance, payment of the premium, and death of the insured, established a prima facie case, and the burden shifted to the defendant to prove that the insured made misrepresentations which voided the policy. Tolbert v. Insurance Co., 236 N.C. 416, 72 S.E.2d 915 (1952); Willetts v. Insurance Corp., 45 N.C. App. 424, 263 S.E.2d 300, disc. rev. denied, 300 N.C. 562 (1980). For a directed verdict in favor of the party with the burden of proof to be proper under these circumstances, there must be no conflict in the evidence, or the material facts must be admitted by the adverse party. Hodge v. First Atlantic Corp., 10 N.C. App. 632, 179 S.E.2d 855, cert. denied, 278 N.C.
701 (1971). See also Bank v. Burnette, 297 N.C. 524, 256 S.E.2d 388 (1979).
In dispute was the evidence bearing on issues 1 and 2, which were submitted to the jury without objection. With respect to the first issue, the insurance application which was introduced at trial indicated only that insured, Mrs. Jones, had consulted with Dr. Lang in Morganton in January 1978 and that she had had a normal childbirth under Dr. Wilson in Hickory. However, Ora Buchanan testified that she had informed Bowers of Mrs. Jones's overnight hospitalization after the automobile accident. Bowers's testimony disputed this, and the application contained no reference to the accident. Mrs. Buchanan also testified that she had told Bowers that her daughter was hospitalized and under the care of Dr. Lang in December 1976 for what she believed to be the flu. According to Mrs. Buchanan, Bowers had misunderstood her and had erroneously entered the date as January 1978. Thus Mrs. Buchanan's testimony presented a question of fact as to whether that information had been revealed to defendant through its agent.
In Jones v. Insurance Co., 254 N.C. 407, 119 S.E.2d 215 (1941), it was stated that an insured is not responsible for false answers in an application for insurance if the insured is justifiably ignorant of the untrue answers, has no actual or implied knowledge of their falsity, and has been guilty of no bad faith or fraud. In Jones, a judgment allowing defendant's motion for nonsuit was affirmed based on the insurer's lack of knowledge, actual or constructive, of the falsity of the statements appearing in the application. See also Assurance Society v. Ashby, 215 N.C. 280, 1 S.E.2d 830 (1939); Inman v. woodmen of the World, 211 N.C. 179, 189 S.E. 496 (1937).
We find the present case distinguishable on its facts and more appropriately decided under the law stated in Chavis v. Insurance Co., 251 N.C. 849, 112 S.E.2d 574 (1960). In Chavis, whether responsibility for the false answers was attributable to the insured or to the agent of the company was in dispute. The defendant contended that the insured had concealed from its agent the fact that she was under treatment for a disease (cancer) from which she died within four months of the date of the policy. The Court held that defendant's assignment of error based on the
trial court's refusal to nonsuit could not be sustained. "[T]he credibility of the evidence to support the defendant's defense was a matter for the jury." Id. at 852, 112 S.E.2d at 576. See also Heilig v. Insurance Co., 222 N.C. 231, 22 S.E.2d 429 (1942); Cato v. Hospital Care Association, 220 N.C. 479, 17 S.E.2d 671 (1941).
We turn next to defendant's contention that any knowledge of the agent concerning the falsity of the representations would not be imputed to Nationwide. Inman, supra. Upon this question defendant has misapplied the law. We are not concerned here with knowledge of false representations made by an insured, but knowledge of facts which, if made, would have provided true and complete answers to the questions propounded in the application.
[A]n insurance company cannot avoid liability on a policy issued by it by reason of any facts which were known to it at the time the policy was delivered, and that any knowledge of an agent or representative, while acting in the scope of the powers entrusted to him, will, in the absence of fraud or collusion ...