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07/22/86 ANNA MARIE BERGER v. MINNESOTA MUTUAL LIFE

July 22, 1986

ANNA MARIE BERGER, PERSONALLY, AND ANNA MARIE BERGER, AS PERSONAL REPRESENTATIVE OF THE ESTATE OF DAVID V. BERGER, DECEASED, AND ANNA MARIE BERGER, AS GUARDIAN AD LITEM OF VALERIE BERGER, JENNIFER BERGER, AND DAVID BERGER, PLAINTIFFS AND APPELLANTS,
v.
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY OF ST. PAUL, MINNESOTA; UTAH MORTGAGE LOAN CORPORATION OF LOGAN, UTAH; AND TRACY J. LEE, PERSONALLY, DEFENDANTS AND RESPONDENTS.



PER CURIAM

Plaintiff Anna Marie Berger appeals from the judgment entered on a jury verdict, that denied her recovery of the proceeds of her husband's credit life insurance policy issued by defendant Minnesota Mutual Life Insurance Co. ("Minnesota Mutual"). Minnesota Mutual, declined coverage under the policy, claiming that plaintiff's deceased husband materially misrepresented his medical condition when he submitted his insurance application form.

In a 1974 preemployment physical examination at Kennecott Copper Corporation, David Berger was diagnosed as afflicted with mild diabetes mellitus. The physician discussed with Berger the diabetes tests given him and any past family history of the disease. Medication was prescribed for Berger, and the doctor noted that the diabetes could be controlled as long as Berger continued with prescribed medication and, dietary restrictions. When Kennecott was advised that Berger's diabetes could be controlled if treated, Berger was hired by the company.

On subsequent occasions between 1975 and 1979, Berger had several contacts with medical clinics and doctors who examined and discussed his diabetic condition and medication. In connection with another employment physical in June 1976, Berger listed his diabetes on his medical history form. There was also evidence that he often ignored the medication and dietary restrictions imposed to control his diabetes, which required more extensive medical treatment for his condition.

In April 1979, Berger applied for and received group credit life insurance from Minnesota Mutual to satisfy his home mortgage in the event of his death. On the insurance application concerning his medical history, he wrote that in the past three years he had only consulted with a physician regarding an earache and sore throat and that he had never been treated for or advised that he had diabetes. The jury found these representations to be false but not fraudulently made.

In February 1981, Berger was admitted to the hospital to bring his diabetes under control. A few weeks after his release, on March 8, 1981, he died of an acute codeine overdose. When a claim was made on the life policy, Minnesota Mutual undertook an independent investigation of the death. Discovering the pre-existing diabetic condition, the insurer refused payment under its policy, claiming that the misrepresentation on the policy application was material to Berger's insurability and that Minnesota Mutual would not have issued the policy had the truth been disclosed at the time the application for insurance was made.

Under our statute enacted in 1963, a misrepresentation, omission, or concealment of facts shall not prevent recovery under an insurance policy unless:

(a) fraudulent; or

(b) material either to the acceptance of the risk, or to the hazard assumed by the insurer; or

(c) the insurer in good faith either would not have issued the policy,... or would not have issued... a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known to the insurer as required either by the application for the policy or contract or otherwise.

U.C.A., 1953, § 31-19-8 (1) (1974 ed.). *fn1 The statutory alternatives are stated in the disjunctive, not the conjunctive. In order to invalidate a policy because of a misrepresentation by the insured, an insurer need prove applicable only one of the above provisions. Cf. Prudential Property & Casualty Insurance Co. v. Mardanlou, 607 P.2d 291 (Utah 1980). *fn2

The court submitted the matter to the jury under instructions setting forth the alternative provisions of section 31-19-8(1). Responding to special interrogatories, the jury found, inter alia, that:

a. David Berger failed to disclose to Minnesota Mutual that he had been treated for and/or advised that he had diabetes;

b. David Berger's diabetic condition was material either to the acceptance of the risk or the hazard assumed by Minnesota Mutual under the policy;

c. Had David Berger disclosed his diabetic treatment, Minnesota Mutual, in good faith, either would not have issued the policy, or would not have issued the policy at the same rate or in as large an amount, or would not have provided ...


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