Reliance Life Ins. Co. v. Sneed

SOMERVILLE, J. This court has often considered and stated the distinction between warranties which are contractual terms of a policy of insurance, and usually promissory in form, and representations, which are matters of inducement merely, and usually relate to presently existing facts or conditions. Ala. Gold Life Ins. Co. v. Johnston, 80 Ala. 467, 470, 2 So. 125, 128, 59 Am. Rep. 816; Mut. Ben. Life Ins. Co. v. Lehman, 132 Ala. 640, 32 So. 733; Kelly v. Life Ins. Clearing Co., 113 Ala. 453, 21 So. 361; Sov. Camp, W. O. W., v. Hutchinson, 214 Ala. 540, 542, 108 So. 520; Brotherhood, etc., v. Riggins, 214 Ala. 79, 107 So. 44. These cases hold that representations will not be regarded as warranties merely because they are incorporated in the policy, or made a part of it by reference and adoption, and that the form of the statement is not conclusive of its character. It is also held that a condition precedent to the operation of the' policy, such as is set out in pleas 19 and 20 herein, is in legal effect a warranty. Mut. Life Ins. Co. v. Mandelbaum, 207 Ala. 234, 236, 237, 92 So. 440, 29 A. L. R. 649. Tested by these principles, the misrepresentations charged in each of the special pleas, except 19 and 20, were not warranties, and are governed by the rules prescribed for the pleading of misrepresentations as fraudulent inducements to contract: (1) That the representations were false; (2) that they were intrinsically relevant to the subject-matter; and (3) that the other party relied upon them to his prejudice. In general, actual intent to deceive is not, in this state, an element of actionable or defensive fraud. Code, § 8049; Davis v. Betz, 66 Ala. 206, 210; Jordan v. Pickett, 78 Ala. 331, 339; Ala. Gold Life Ins. Co. v. Johnston, supra; Sov. Camp, W. O. W., v. Hutchinson, supra; Empire Life Ins. Co. v. Gee, 171 Ala. 435, 55 So. 166; Greil Bros. v. McLain, 197 Ala. 136, 72 So. 410. When, however, misrepresentations are *673 pleaded in defense to an action on a life insurance policy, it must also be alleged either that they were “made with actual intent to deceive,” or that “the matter misrepresented increased the risjk of loss.” Code, §§ 8364, 8507; Mut. Life Ins. Co. v. Allen, 174 Ala. 511, 56 So. 568; Sov. Camp, W. O. W., v. Hutchinson, supra. Pleas 1 to 18, excepting 14, 16, and 17, are all defective in failing to aver that defendant relied upon the misrepresentation pleaded. Pleas 17 and 21 were not subject to any ground of the demurrer, and the demurrer, as to them, was erroneously sustained. Plea 21 is substantially liire 14 and 16, hut plea 17 is substantially different from any other. With respect to these misrepresentations, it should he observed that they need not be the sole inducement to the contract, nor the chief influence leading to action. It is enough if, as a contributory influence, they operate upon the mind and conduct of the other party to any material extent. Greil Bros. v. McLain, 197 Ala. 136, 72 So. 410; Hafer v. Cole, 176 Ala. 242, 247, 57 So. 757; Jordan v. Pickett, 78 Ala. 331; Sledge v. Scott, 56 Ala. 202, 206. The fact that the other party makes an investigation of his own does not absolve the declarant from speaking the truth, nor lessen the other’s right to rely on his representations. Sledge v. Scott, supra. Plaintiff’s replications 3 and 4 were sustained, against demurrer, as good answers to defendant’s pleas 19 and 20. These pleas set up a condition in the policy that it should ■not take effect unless, upon its delivery to the applicant, he was then in good health; and they aver a breach of this condition in that, at the time of said delivery, the applicant— the insured — was not in good health, but was suffering from a serious disease of the stomach, to wit (in 19), a cancer of the stomach, or (in 20) a cancer or ulcer of the stomach. In both pleas it is expressly averred that this disease increased the risk of loss under the policy. This condition precedent is, as we have noted, in legal effect a warranty. We need not, ,on these pleadings, determine whether, if defendant had knowledge, when it delivered the policy, of the alleged state of the applicant’s health, such delivery would have operated as a waiver of the warranty, and of the right to avoid the policy thereafter for its breach. See, however, 37 Corpus Juris, 526, §§ 260-262; Id. 535, § 267; Triple Link, etc., Ass’n v. Williams, 121 Ala. 138, 145, 26 So. 19, 77 Am. St. Rep. 34. replications aver an investigation of the insured’s health by defendant’s medical examiner, and (in 3) a “report of his conclusions” to defendant, or (in 4) a report that the applicant was “a fit subject for insurance.” Neither of them avers any knowledge on the part of defendant or its medical examiner of the applicant’s diseased condition. They are therefore wholly insufficient to show a waiver or avoidance ,of the warranty or its breach. Triple Link, etc., Ass’n v. Williams, supra; 37 Corpus Juris, 535, § 267. Apt grounds of demurrer pointed out this defect, and the overruling of the demurrers to these replications was prejudicial error. As to the' admissibility in evidence of the report of defendant’s medical examiner upon the condition and insurability of the applicant, the authorities all agree that it is competent evidence either in support or in impeachment of the statements made in the application. 37 Corpus Juris, 625, § 423. And so it has been held by this court. Sov. Camp, W. O. W., v. Gibbs, ante, p. 108, 114 So. 915, 916. It is competent for the parties to stipulate in the policy that the insurance company shall not be constructively charged with its medical examiner’s knowledge of the falsity of the applicant’s statements. Ward v. Met. Life Ins. Co., 66 Conn. 227, 33 A. 902, 50 Am. St. Rep. 80; Globe Mut. Life Insurance Co. v. Wolff, 95 U. S. 326, 332 (24 L. Ed. 387); 37 Corpus Juris, 531. As to general agents of the company, •it is the settled rule in this state, as in most others, that a stipulation in the policy that they have no authority to change its terms or waive any of its conditions or warranties, is without effect. Pope v. Glen Falls Ins. Co., 130 Ala. 356, 30 So. 496; U. S. Life Ins. Co. v. Lesser, 126 Ala. 568, 28 So. 646. On that principle it might seem that the insurer could' not stipulate against the constructive imputation to it of the knowledge acquired by its general agent, or perhaps by any other, intrusted with contractual authority or discretion in the actual making or handling of the contract of insurance. But that question is not before us, and we, of course, do not decide it. Our decision is limited to the case of medical examiners, who are not contracting agents, and as to whom, very clearly, the immunity "stipulated is not contrary to public policy. What has been said will be a sufficient guide to the court on another trial. For the errors noted, the judgment will be reversed, and the cause remanded. Reversed and remanded. ANDERSON, C. J., and THOMAS and BROWN, JJ., concur.