Di Filippi v. Equitable Life Assurance Society of the United States

OPINION OF THE COURT Suozzi, J. In an action to recover the proceeds of a life insurance policy, defendant appeals from a judgment of the Supreme [170] Court, Queens County, entered February 17, 1977, upon a jury verdict in favor of plaintiffs in the sum of $25,000, representing the proceeds of the policy. The judgment should be affirmed. The decedent herein died on June 24, 1973. Plaintiff instituted this action to recover the proceeds of a life insurance policy issued on decedent’s life on June 16, 1972. The defendant insurer, in denying the plaintiffs’ claim for the proceeds of the policy and defending the action, alleged as a defense that the decedent had made a material misrepresentation of fact in his application for the insurance by failing to accurately describe his medical condition therein. The only questions submitted to the jury pertained to the materiality of the misrepresentations. The cause of death was not submitted. The jury found in favor of plaintiffs. In our view, the issue of materiality was, on this record, an issue of fact to be resolved by the jurors and their finding, which is supported by the evidence, should not be disturbed. Section 149 of the Insurance Law provides, in part: "2. No misrepresentation shall avoid any contract of insurance * * * unless such misrepresentation was material. No misrepresentation shall be deemed material unless knowledge by the insurer of the facts misrepresented would have led to a refusal by the insurer to make such contract. "3. In determining the question of materiality, evidence of the practice of the insurer * * * with respect to the acceptance or rejection of similar risks shall be admissible. "4. A misrepresentation that an applicant for life * * * insurance has not had previous medical treatment * * * or care in a hospital * * * shall be deemed, for the purpose of determining its materiality, a misrepresentation that the applicant has not had the disease * * * for which such treatment or care was given” (emphasis supplied). It has been held that a decedent’s medical condition and the materiality of the misrepresentation are "essentially factual issues for the jury to decide” (Orenstein v Metropolitan Life Ins. Co., 18 AD2d 1016), except where the evidence as a whole excludes every reasonable inference but one, then the court may rule on the issue of materiality as a matter of law (Giuliani v Metropolitan Life Ins. Co., 269 App Div 376). It was the defendant insurer’s specific contention that the decedent had not given true and complete answers on his [171] application when he answered "No” to the following questions: "7. Have you ever been treated for or ever had any known indication of * * * f. Sugar, albumin, blood or pus in urine; venereal disease; stone or other disease or disorder of kidney, bladder, prostate or reproductive organs? * * * "10. Other than as stated in answers to questions 6-9, have you within the past 5 years: "a. Consulted or been examined or treated by any physician or practitioner? "b. Had any illness, injury or surgery? "c. Been a patient in a hospital, clinic, sanatorium, or other medical facility?” The insurer further argued that contrary to these answers, the decedent had in fact been hospitalized from April 14, 1972 to April 17, 1972, about one month prior to the making of his application, for bilateral obstructive uropathy (i.e., an obstruction in the genitourinary tract) which was probably caused by retroperitoneal fibrosis and that it would not have issued the policy had it known of this potentially serious condition. Plaintiffs, on the other hand, argued that the obstruction had been caused by a kidney stone which had passed through the decedent’s system prior to the making of the application, thus effectively ending the obstruction. The hospital record itself posed the two alternatives by stating: "Left ureteral colic. Probably passed stone prior to IVP. Bilateral obstructive uropathy, possibly due to retroperitoneal fibrosis.” In support of their case, plaintiffs produced the decedent’s treating physician, who was visited by the decedent four times within a three-week period following his discharge from the hospital. He testified most emphatically, based on these visits and tests conducted on those occasions, that the cause of the obstruction was a kidney stone which had passed and not the rare and more serious condition of retroperitoneal fibrosis, which requires continuous medical treatment. In addition, the autopsy report was silent as to the existence of any fibrosis. Defendant’s medical expert testified that the obstruction was not consistent with a kidney stone. He could not pinpoint the exact cause of the obstruction, however, and only stated that fibrosis was a possibility. Moreover, he conceded that a slight obstruction might, be of little consequence to the defend [172] ant insurer, depending upon the course and degree of the obstruction; the defendant’s own underwriting manual confirmed this testimony. Finally, the defendant failed to produce any applications containing disclosures of bilateral obstructions, or of kidney stones within three years of the making of the applications, which would indicate its current practice with respect to the acceptance or rejection of these risks. Under these circumstances, the nature of the decedent’s condition at the time of the application, and the materiality of any misrepresentation relating thereto, were properly submitted to the jurors for resolution, and their finding in favor of plaintiffs should not be disturbed (see Orenstein v Metropolitan Life Ins. Co., 18 AD2d 1016, supra; Giuliani v Metropolitan Life Ins. Co., 269 App Div 376, supra). Finally, defendant argues that it had the burden of proof in this case by virtue of its affirmative defense of material misrepresentation and, therefore, it had the right to open and close to the jury, a right which the trial court improperly afforded to plaintiffs. In our view, the trial court acted properly in allowing plaintiffs to open and close to the jury. By interposing the affirmative defense of material misrepresentation, defendant effectively denied an essential allegation of plaintiffs’ prima facie case which was specifically pleaded in the complaint, i.e., that all conditions had been performed and that the policy was in full force and effect. Plaintiffs, therefore, had the ultimate burden of establishing that a valid contract existed which was binding on defendant and, accordingly, had the right to open and close to the jury (see Murray v Narwood, 192 NY 172; 4 Weinstein-Korn-Miller, NY Civ Prac, par 4016.06).