## Facts

- Lamar and Rose Neill sought homeowners insurance from Nationwide for a mobile home.
- A Nationwide agent asked Lamar Neill questions, entered answers into a computer, printed the application, and presented it for signature.
- Neill signed the printed application without reading it.
- The application stated “NONE” under “PAST LOSSES,” although Neill had experienced three prior fire losses.
- In 1997, the mobile home suffered a fire loss, and Nationwide investigated the claim.
- During the investigation and an examination under oath, Neill disclosed the three prior fire losses.
- Nationwide denied coverage and asserted the policy was void ab initio due to a material misrepresentation in the application.
- Nationwide filed for declaratory relief; the Neills counterclaimed for policy benefits and later added breach of contract and bad faith.
- The trial court granted summary judgment to Nationwide on the ground that the policy was void for misrepresentation; the intermediate appellate court affirmed.
- On review, the Arkansas Supreme Court considered the appeal as though initially filed there.

## Issues

1. Whether the insured was conclusively bound by the application’s false “PAST LOSSES: NONE” entry because he signed the application without reading it.
2. Whether evidence that the insurer’s agent prepared the application created a genuine issue of material fact as to whether the error resulted from the agent’s fraud, negligence, or mistake, precluding summary judgment.

## Decision

- The Arkansas Supreme Court reversed the grant of summary judgment and remanded.
- The court held that, when an insurer’s agent prepares the application and the evidence conflicts on whether the misstatement was caused by the agent’s fraud, negligence, or mistake, a material fact question exists.
- The insured’s signature on an agent-prepared application did not, by itself, entitle the insurer to judgment as a matter of law on a misrepresentation defense.
- Applying summary-judgment standards, the court viewed the record in the light most favorable to the Neills and found disputed facts requiring fact-finding.

## Legal Principles

- Summary judgment is proper only when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law; evidence and inferences are taken in favor of the nonmovant.
- An insurer may rescind a policy for the insured’s fraud or misrepresentation, including rescission operating retroactively.
- As a general contract rule, a signer is ordinarily bound to know a document’s contents after an opportunity to examine it.
- A recognized exception applies where a signature is procured through fraud or other inequitable conduct (including misrepresentation or concealment).
- In insurance transactions, the exception to the “bound by signature” rule is applied more broadly, given agent-driven application practices and the adhesive character of standardized insurance contracts.
- When an agent prepares the application and the record supports competing inferences about the source of an incorrect answer, responsibility for the misstatement is a fact question not suitable for summary disposition.

## Conclusion

The court held that a misstatement in an insurance application signed by the insured does not automatically establish rescission as a matter of law when the application was prepared by the insurer’s agent and the evidence permits a finding that the incorrect entry resulted from the agent’s fraud, negligence, or mistake; such disputes must be resolved through fact-finding on remand.


Neill v. Nationwide Mut. Fire Ins. Co., 139 S.W.3d 484 (Ark. 2003)