Mutual Life Ins. Co. of New York v. Picard

McCORD, Circuit Judge. The Mutual Life Insurance Company sued Henry M. Picard and others to determine its liability on certain policies of insurance providing for payment of disability benefits. • The Insurance Company first sought to recover disability insurance which it had paid to Picard from the year 1936. This part of the suit was dismissed with prejudice. The only questions remaining and which are here for decision are the liability of the Insurance Company for disability benefits from April, 1944, and the cross appeal by the insured seeking recovery for statutory penalties and attorney’s fees. Prior to 1931 Picard was secretary of Picard & Geismar, Ltd., a corporation that operated several plantations, a cotton gin, and a mercantile store. Picard had charge of the cotton gin during the ginning season, supervised the plantations, and managed the mercantile store. His duties in connection with the management of the store required him to work long hours, stand on his feet, lift heavy packages and articles, and on occasion serve the customers personally. At the same time Pioard operated a commission agency for Standard Oil Company, handling and selling gasoline, oils and other products, and he was also connected with an insurance company. In March, 1931 Picard became seriously ill and entered the Touro Infirmary, in New Orleans, where he remained from May 4, 1931 to June 16, 1931. His condition was diagnosed at that time as a partial heart block, myocarditis, hypertrophic arthritis and reflex cordio-spasm. He was advised by. his physician to refrain from driving an automobile, to avoid physical exertion or [106] anything requiring nervous stress or strain and to take rest periods. Following this advice the defendant abandoned all of his former activities except his connection with the Standard Oil Company and his insurance business, and he finally gave up work or supervision of the insurance business. On July 16, 1931, Picard filed a claim for disability benefits on the three policies which he carried with the Insurance Company, and on the proof submitted, the Insurance Company approved the claim and began payment of the benefits, which increased from $120 per month in 1931 to $240 a month in 1944. The Insurance Company, however, discontinued payments under the insurance contracts in April, 1944, on the ground that Picard was not totally disabled and had not been since January, 1936. Much testimony was adduced on the trial, and the record is replete with evidence showing the physical condition of Picard from the first payment of disability insurance in 1931 until the day of trial. The evidence further shows that agents and detectives of the Insurance Company had made careful inspection from time to time of the movements of Picard, what he did, how much he rested, how many trips he made in his automobile, and the places he visited. The evidence further shows that Picard still retains his connection with the Standard Oil Company under the name of Gonzales Oil Company; that he has had this business for many years; that he goes out in his car from time to time with some one driving for him, but he does practically no business, and only meets his customers and discusses various questions, much of which does not pertain to business; thait the daily sales of the oil business are made by one ITenry, an employee of the Gonzales Oil Company. Henry drives his truck to the refinery at Baton Rouge, Louisiana, and there loads the gasoline; he thereupon returns to the town of Gonzales and makes deliveries to customers, records the sales; then his daughter, acting for him, places the money collected in the bank to the credit of Gonzales Oil Company. Picard would make trips to Gonzales about twice a week; sometimes on account of his illness he would make only one trip in a month. The books of the company were kept in Baton Rouge at the residence of the defendant by a part time bookkeeper, under the supervision of the defendant or some member of his family. The defendant did not attempt to sell or deliver the products of the Standard Oil Company, and his selling activities consisted of occasional orders sent in or special requests for articles not usually carried on the tank truck by Henry. From a very careful reading of the record evidence, it becomes patent that the mechanics of selling and delivering the gasoline and oil was handled almost entirely by the employee, Henry, and Picard's supervision was neither desirable nor necessary, since Henry had done this same work for approximately twenty-two years and was an efficient and loyal servant. The defendant Picard, usually accompanied by his son, would go to the office of the Standard Oil Company in Baton Rouge, sometime once a month, but ordinarily about twice a week, to settle the company’s accounts. His son usually handled the details of these transactions, and would always drive the car. The evidence further disclosed that the defendant still has occasional fainting and choking spells caused by the failure of food to pass from his mouth to his stomach. This disease has been diagnosed to be yer flex cordio-spasm. Further, that his condition has not shown substantial improvement since 1931, and the same advice given him then and which he has followed, is applicable now. As late as April, 1944 the defendant has had to remain in bed on orders of his physician. Since 1931 he has developed hypertension, or high blood pressure, which further limits the scope of his possible activities. R. L. Dwyer, a field representative of the Standard Oil Company, testified: “I would say that the business could continue regardless of Mr. Picard being ill, because he has a very capable man on the truck, because he has been there probably for years, God knows how long he has been working on the truck. There are all of the dealers down there that have been very loyal, the Standard Oil Company, because we have the business. Very seldom we lose an account in that territory.’’ Jackson, an inspector for the Insurance Company, in a report on the defendant’s activities, and which is in the record, stated that: “ * * * due to the circumstances or the type of business, that his (the defendant’s) income would probably continue even if he did not visit the business at all. His general activities do not seem to indicate [107] that he would be able to engage in any regular activity. He also seems to have adequate medical support in his claim for total disability.” The record is voluminous and many witnesses testified, including four physicians and several inspectqrs. At the conclusion of the trial the jury found a verdict for Henry M. Picard, the defendant, holding that he was totally disabled and unable to work, the judgment being for disability amounts with interest withheld from April, 1944. On the cross appeal which was for penalties and attorney’s fees the jury returned a verdict for the defendant, and refused to allow recovery. The policies each contain the following paragraphs and upon which decision here must turn: “ * * * that he has become totally and permanently disabled by bodily injury or disease, so that he is, and will be permanently, continuously and wholly prevented thereby from performing any work for compensation, gain or profit and from following any gainful occupation.” Sjc * * * * * “ * * * that (if) the Insured is able to perform any work or follow any occupation whatever for compensation, gain or profit, no further premium shall be waived and no further income shall be paid.” The courts of last resort of Louisiana have declared the rule in construing policies of insurance providing for disability benefits to be: “ * * * It may be said, generally speaking, the provisions in life, health and accident insurance policies for indemnity in case the insured becomes totally, permanently or wholly disabled, etc., do not require that he shall be rendered absolutely helpless, but rather, merely requires such disability as renders him unable to perform the substantial and material acts of his business or occupation in the usual and customary way. At least such a rule has been in substance adhered to, where the policies required that he be totally disabled from transacting any and every kind of business. * * * “The rule is stated in 14 R.C.L., Section 491, p. 1315, as follows, viz.: “ ‘The rule prevailing in most jurisdictions is that the total disability contemplated by an accident insurance policy does not mean as its literal construction would require, a state of absolute helplessness which can result only from loss of reason, since as long as one is in full possession of his mental faculties he is capable of transacting some part of his business, whatever it may be although he is incapable of physical action. On the contrary, these courts, giving consideration to the object of the contract, hold that the “total disability” contemplated by the agreement is inability to do substantially all the material acts necessary to the prosecution of the insured’s business or occupation in substantially his customary and usual manner.’ ” Crowe v. Equitable Life Assurance Society of U. S., 179 La. 444, 154 So. 52; Boughton v. Mutual Life Insurance Co. of N. Y., 183 La. 908, 165 So. 140; Manuel v. Metropolitan Life Ins. Co., La.App., 139 So. 548; Phillips v. Mutual Life Ins. Co. of N. Y., La.App., 155 So. 487; Cates v. Jefferson Standard Life Ins. Co., La.App., 159 So. 168. This rule was followed by this court in Mutual Life Ins. Co. v. Daigle, 5 Cir., 142 F.2d 1000; Mutual Life Ins. Co. of N. Y. v. Davis, 5 Cir., 142 F.2d 332. The Louisiana rule was submitted to the jury by the court below, and the charge as given covered fully and fairly every issue in the case. The jury was warranted, we think, in finding that the defendant was receiving an income from the “good will” of the business, and the faithful and efficient work of the employees and the family of defendant, and not from any work which he did. Home Ins. Co. of N. Y. v. Tydal Co., 5 Cir., 152 F.2d 309. From March 1, 1931 through March 1, 1944, the Insurance Company received at its home office in New York, thirteen written and signed statements furnished by defendant. It also received fourteen physicians’ statements as to disability; three reports from insurer’s physicians; five written reports from its own examiner; several electrocardiograms; and nine reports from insurer’s own detectives and investigators. If this were a case of first impression, we would be inclined to grant penalties against plaintiff and charge it with an attorney’s fee. Mutual Life Ins. Co. v. Daigle, 5 Cir., 142 F.2d 1000, 1003. However, a jury after consideration of the evidence before them found that there was “just and reasonable grounds” for refusing to continue payments of disability benefits, [108] and we are, therefore, unwilling to overturn such verdict. We find no reversible error in the record, and the judgments are affirmed.