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Nat'l Blvd. Bank v. Georgetown Life Ins.





Appeal from the Circuit Court of Cook County; the Hon. Jerome Lerner, Judge, presiding.


Rehearing denied January 8, 1985.

The case before us involves a controversy concerning the right of the estate of a life insurance beneficiary to the proceeds of two insurance policies. The original plaintiff, Evelyn Seidler, brought an action against defendant Georgetown Life Insurance Company to recover, as beneficiary, the proceeds of two life insurance policies issued by Georgetown on the life of her deceased brother Jacob Grossman. Seidler subsequently died, and National Boulevard Bank & Trust Company, special administrator of her estate, was substituted as plaintiff. Plaintiff's complaint consisted of two counts — count I pertained to policy No. 9130, while count II concerned policy No. 9283. Trial was held on count I, and the jury found in favor of defendant. Plaintiff appeals from the judgment entered on the jury's verdict and from the denial of its post-trial motion. As to count II, the trial court granted plaintiff's motion for summary judgment, awarding damages of $1,000,000 plus prejudgment interest of $416,000. Defendant's motion to vacate the judgment was denied, and defendant appeals. For the reasons set forth below, we affirm the trial court as to count I, and reverse and remand as to count II.

The record reveals that on March 24, 1973, the decedent Jacob Grossman applied for a $1,000,000 life insurance policy on his life from defendant Georgetown Life Insurance Company. Decedent was assisted in preparation of his application by Harold Gaffney. Defendant's brief describes Gaffney as the insurance agent of the decedent, while plaintiff's brief refers to Gaffney as an agent for Georgetown. Gaffney testified that he works with businessmen and farmers in financial planning, which includes the procurement of life insurance. Gaffney stated that he represented the prospective insured in the procurement of life insurance and also that he had known the decedent since 1968 or 1969.

The decedent's application for insurance policy No. 9130 provided in pertinent part:

"It is agreed: (1) the Company shall incur no liability under this application until it has been received and approved, a policy has been issued and delivered, and the full first premium specified in the policy has been actually paid to and accepted by the Company while health, habits and occupation of the Proposed Insured remain as described in this application * * *."

During the course of the application procedure, the decedent signed two "Statements to the Medical Examiner" forms and underwent physical examinations by two physicians, Drs. Horacio Rivero and Seymour Goldberg. Each physician executed an "Attending Physician's Statement." Decedent's signed application, his signed "Statements to the Medical Examiner" and the "Attending Physician's Statements" were then submitted for evaluation to defendant Georgetown and, in turn, by defendant to Republic National Life Insurance Company (Republic), defendant's re-insurer.

In addition to the signed application and the signed accompanying statements, decedent's various medical records were reviewed by defendant's underwriters for evaluation of the risk of insuring decedent's life. There was no evidence in decedent's medical records, nor revealed by his examinations, which indicated that decedent suffered from any underlying heart disease. However, several factors, including an elevated blood cholesterol level and the death of his mother at age 57 from heart disease, led to a conclusion that the decedent was among a class of people who were susceptible to occlusive vascular disease. Thus, it was determined that he probably had a diminished life expectancy. Therefore, upon the condition that decedent be rated as a higher risk, and thus pay a higher premium, Republic agreed to re-insure defendant, and defendant thereafter issued policy No. 9130 to decedent in the amount of $1,000,000 on June 19, 1973.

The record further discloses that in April 1973, approximately one month after signing the insurance application, the decedent was hospitalized in the intensive care unit of a Billings, Montana, hospital for what the attending physician, Dr. Ross Lemire, diagnosed and told decedent was a heart attack. Dr. Lemire later testified that decedent had suffered an "acute septal myocardial infarction," which is the death of a heart muscle and which results in a shortened life expectancy. Decedent remained hospitalized in Montana from April 27 through May 11, 1973. During this hospitalization, the decedent, in telephone conversations with his Bloomington, Illinois, family doctor, Dr. Edgar Stevenson, requested that the fact of his heart attack not be disclosed. Decedent told Dr. Stevenson that he wanted people to think he was hospitalized because of a skiing accident.

Subsequent to his Montana hospitalization, decedent returned to Bloomington, where he began receiving out-patient treatment for his heart ailment from Dr. Stevenson. This care continued through November 13, 1973, two days before decedent died.

On July 19, 1973, Harold Gaffney delivered insurance policy No. 9130 to decedent. Gaffney testified that at no time did decedent reveal the fact of his April 1973 heart attack and subsequent medical care. When the policy was delivered, decedent signed the receipt which said that the policy had been delivered and fully explained. Gaffney also stated that decedent read the application.

On July 21, 1973, two days after the delivery of policy No. 9130, the decedent, again through Gaffney, applied for a second $1,000,000 life insurance policy from defendant. Gaffney consulted an underwriter for defendant, Sally Bouton, to determine whether additional medical examinations were necessary in view of the short time which had elapsed since the decedent was examined by Drs. Rivero and Goldberg for policy No. 9130. Bouton decided that since the medical examinations decedent underwent for policy No. 9130 were sufficiently recent, no further examinations were necessary. Gaffney then gave decedent an application for policy No. 9283. This application contained several medical questions which were, by the terms of the application, to be answered when no medical examination was required. Gaffney did not ask decedent the questions, and instead he wrote the words "already examined" on the application for the second policy. Decedent then signed the application. Policy No. 9283 was later delivered to decedent with his signed application attached to it. Neither at that time, nor at any time prior to his death, did decedent reveal to Gaffney or to defendant his April 1973 heart attack or subsequent treatment.

The decedent died on November 15, 1973, at age 38. The cause of death was stated as a coronary occlusion and acute heart failure. Subsequently, Evelyn Seidler, decedent's sister, sought recovery from defendant Georgetown as beneficiary under policy Nos. 9130 and 9283. When defendant declined to pay the proceeds of either policy, Seidler filed a two-count complaint. Count I sought recovery under policy No. 9130, and count II sought recovery under policy No. 9283. Defendant, in its amended answer, raised affirmative defenses to both counts, which alleged in pertinent part that decedent had failed to disclose in his application material information concerning his health and that decedent failed to disclose to defendant the deterioration of his health between the time of his application and the delivery of the policies.

Both parties subsequently moved for summary judgment as to each count. The trial court granted summary judgment in defendant's favor as to count I. This ruling, however, was reversed by this court and the cause was remanded for trial on the merits. (Seidler v. Georgetown Life Insurance Co. (1980), 82 Ill. App.3d 361, 402 N.E.2d 666.) Thereafter, the case proceeded to trial on count I, and the jury delivered a verdict in favor of defendant. Plaintiff's motion to set aside the verdict was denied, and plaintiff now appeals the verdict.

With regard to count II, a summary judgment in defendant's favor was subsequently vacated by a successor judge. When the case was called for trial, a third judge granted plaintiff's motion for summary judgment. The court awarded $1,000,000 in damages and $416,000 in prejudgment interest. Defendant's motion to vacate the summary judgment was denied, and defendant now appeals.


• 1 We initially address plaintiff's argument that the jury's verdict on count I in favor of defendant should be reversed and the cause remanded for a new trial or, alternatively, that judgment should be entered for plaintiff on count I. At the trial of count I, defendant raised two affirmative defenses involving (1) decedent's failure to inform defendant of his 1973 heart attack, and (2) decedent's failure to disclose a myocardial infarction or coronary occlusion he suffered in 1962. Plaintiff's argument on appeal pertains primarily to these affirmative defenses. Specifically, plaintiff contends: (a) to the extent that the jury's verdict rested on a finding that decedent's 1973 undisclosed heart attack was a newly-contracted disease, the verdict was against the manifest weight of the evidence; (b) to the extent that the jury's verdict rested on decedent's failure to disclose his 1962 myocardial infarction or coronary occlusion, decedent made no material misrepresentation and there was no reliance by defendant; (c) the trial court erred in giving jury instruction No. 2 and by failing to direct a finding as to the affirmative defenses; and (d) plaintiff was prejudiced by certain comments made by defense counsel in closing argument.


To the extent that the jury's verdict on count I was based on the finding that decedent's 1973 heart attack was a newly-contracted disease, we find sufficient evidence in the record to support the verdict. When count I previously was before this court, we held that if the 1973 heart attack was a newly-contracted disease, as opposed to a maturation of a pre-existing disease, decedent had a legal as well as contractual obligation of disclosure to defendant. (Seidler v. Georgetown Life Insurance Co. (1980), 82 Ill. App.3d 361, 368, 402 N.E.2d 666.) The question of whether decedent's 1973 heart attack was a maturation of a pre-existing heart disease or a newly-contracted disease was a question of fact for the jury. (82 Ill. App.3d 361, 369.) We therefore remanded the cause regarding policy No. 9130 with instructions that further expert testimony on this question be taken. *fn1

Plaintiff argues that there was insufficient evidence to support a finding that the 1973 myocardial infarction was a newly-contracted disease. Plaintiff notes that its two experts, Drs. Joseph Messer and Jean Maurice Pouget, testified that the heart attack was a maturation of a pre-existing coronary artery disease. Messer also testified, however, that the buildup of cholesterol in the coronary arteries begins early in life, even as early as childhood; almost everyone shows some signs of this buildup, i.e., atherosclerosis. Dr. Messer stated that in fact it would not have been unusual for decedent to have had some atherosclerosis when he applied for life insurance. We further note that Dr. Pouget testified that from all the records which were available to the insurance company, there was no convincing and definite medical evidence that decedent had ...

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