Lewis v. New York Life Insurance

Opinion of a majority of tlie Court by Judd, J. The plaintiff’s deceased intestate was insured’ by the defendant by a special policy for ninety days - called a “Binding Receipt,” for $5,000 on the 17th of November, 1879. Question 13, in the application for insurance, is: “Has the party ever been seriously ill; if so, when, with what complaint, and who was the medical attendant; state- his name and residence?” The answer recorded is: “No.” Question- 14 is: “Is the said party now in good health? ” The answer given is: “Yes.” Question 27 isr “Name and residence of person’s usual medical attendant; on what occasions and for' what diseases have you required his-attendance and advice; (if the applicant has required the services of a physician during the last seven years, or for a serious illness before that period, his- certificate must be procured, or the issuing of the policy may be delayed.”) To this question the answer given is, “None.” Question 28 'is, “Have you consulted any other medical man? If so for what, and when?” Answer, “No.” Question 11 required separate answers as- to whether the party has had or been afflicted since childhood with any of the following complaints (naming a large list)., to every one of which the answer “No” is given, as also to the last — “or any serious disease.” There was evidence adduced at the trial that Lewis, some months previous, had suffered from severe pain in his back — 307 — and was so ill in August, 1876, that for several nigbts be bad had watchers; that Nr. O. S. Cummings had attended him. The doctor was unable to diagnosticate the disease to his satisfaction, but says he suspected aneurism, but was unable to locate it, and .there is no evidence that he communicated his suspicions to Lewis. Lewis had been to San Francisco for his health,'and was feeling well at the time he made his application.. On the 29th November he died suddenly by the rupture of an aneurism on the descending aorta below the diaphragm, and caries of the spine had resulted from the pressure. At the trial the jury rendered a verdict for the plaintiff, to which the defendant excepted,' alleging errors of law by the Court in regard to the admission of evidence and in its charge to the jury. I. The first exception is to the Court’s refusal to rule, on a motion for non-suit, that the plaintiff could not recover inasmuch as she had not shown that the statements and representations in the application were true. We understand this to be the correct ruling, for where the contract is proved, the burden shifts to the defendant to prove the facts set up in avoidance of his liability, that is, that the statements and representations were untrue. See Campbell vs. N. E. Mutual Life Insurance Co., 98 Mass., 381. In Piedmont Life Insurance Co. vs. Ewing, 92 U. S. Supreme Court Reports, 379, the Court held that the burden of proving the truth of the answers in the application does not rest upon the plaintiff. The insurance company must'prove their falsity. II. The second exception is to the Court’s admission of the téstimony of Magnin, Testa, and C. O. Berger, the defendant’s special agent, as to conversations between the insured and the said Berger as to the health of the insured, the objection by the defendant to such evidence being that it would tend to vary and contradict the written agreement in the application. It appears that Mr. Berger wrote the answers of the insured in .the application, and there was evidence tending to show — 308 — that tbe applicant made some disclosures in regard to bis health that do not appear in the answers, and that Berger made some representations to the insured as to the character and effect of the statements in the application. This evidence was properly received. In the case of Insurance Co. vs. Wilkinson, 13 Wallace, 232 (U. S. Supreme Court, 1871), the agent of the company, who took down the answers of the applicant and his wife to all the interrogatories, was told by both of them that they knew nothing about the cause of the mother’s death, or her age at the time, the wife being too young to remember it; but the agent inserted the age at death of the mother which was untrue, but which he obtained from a third person, and which he inserted without the assent of the insured. The Court says: “If we suppose the party making the insurance to have been an individual, and to have been present when the application was signed, and soliciting the assured to make the contract of insurance, and that the insurer himself wrote out all these representations, and was told by the plaintiff and his wife that they knew nothing at a.11 of this particular subject of inquiry, and that they refused to make any statement about it, and yet knowing all this, wrote the representa-ron to suit himself, it is equally clear that for the insurer to Insist that the policy is void because it contains this statement would be an act of bad faith and of the grossest injustice and dishonesty. “And the reason for this is that the representation was not 'the statement of the plaintiff, and that the defendant knew it was not when he made the contract; and that it was made by the defendant, who procured the plaintiff’s signature thereto. It is in precisely such cases as this that Courts of law in modern times have introduced the doctrine of equitable estoppels, or, as it is sometimes called, estoppels in pais. The principle is that when one party has by his representation or his conduct induced the other party to a transaction to give — 309 — him an advantage which it would be against equity and good conscience for him to assert, he could not in a Court of justice be permitted to avail himself of that advantage. “This principle does not admit oral testimony to vary or contradict what is in writing, but it goes upon the idea that the writing offered in evidence was not the instrument of the party whose name is signed to it; that it was procured under such circumstances by the other side as estops that side from using it or retying oh its contents; not that it may be contradicted by oral testimony, but that it may be shown by such testimony that it can be lawfully used against the party whose name is signed to it.” It is urged that the defendant is not bound by the acts of the agent in this respect. In the last quoted case the Court say that “an insurance company establishing a local agency must be held responsible to the parties with whom they transact business for the acts and declarations of their agent, within the scope of his employment, as if they proceeded from'the principal.” These principles were affirmed in the same Court in 1874. Insurance Company vs. Malone, 21 Wallace, 152. In this case the Court say: “True answers were in fact made by the applicant, and the agent substituted for them others, now alleged to be untrue, thus misrepresenting the applicant as well as deceiving his own principals. Nor do we think that it makes any difference that the answers as written by the agent were subsequently read to Dillard (the applicant) and signed by him. Having himself answered truly, and Yeiser (the agent) having undertaken to prepare and forward the proposals, Dillard had a right to assume that the answers he did make were accepted as meaning, for the purpose of obtaining a policy, what Yeiser stated them to be. The acts and ctyflferations of Yeiser are to be considered the acts and declarations of the company whose agent he was, and Dillard was justified in so understanding them.” — 310 — IH. The third exception is it® ¿the Court’s refusal to charge .that, “ If any of the statements or representations in the application are shown to be untrue, the jury will give a verdict for the defendant;” and IY. “ If the insured concealed from the defendant any material fact which it was important .that the defendant should know, then the contract of insurance was tainted with fraud on the part of the insured, and the plaintiff cannot recover, but the jury will give a verdict for the defendant.” The application signed by the insured contains the following: “And I do hereby agree that the statements and representations contained in the foregoing application and declaration shall he the basis of -the contract between me and the said company, the truthfulness of which statements and representations, whether written by my own hand or not, I do hereby warrant, and that if the same or any of them are in any .respect untrue the policy which may be issued herein shall be void, etc.” The special policy issued contains the clause that the defendant “ Insured the life of Samuel L. Lewis for ninety days from the .date hereof,” in accordance with the application, and the Court held that the application was the test of the contract. The Court charged the jury that the insured was bound to use the utmost good faith in his answers, but was not bound to represent what he did not know, or did not remember. The question is, whether, considering the plain and unqualified language of the contract which warrants the truth of the statements and representations in the application, the language of the Court in its charge was sufficient. An express warranty is defined to be a “ stipulation inserted in writing on the face of the policy on the literal truth or fulfillment of which the validity of the entire contract depends.” May on iffShrance, S., 156. “ A misrepresentation, whether made intentionally or through mistake, and in good faith, avoids the policy on the ground that, in either case, the injury to the insurer is the same.” May, S. 181. — 311 — In Foot vs. Ætna Insurance Company, 61 N. Y., 671, Foot, the insured, had* answered “No,” in response to the-question: “Has the party ever had any of the following' diseases; if so, how long and to- what extent; * * * spitting of' blood, consumption, * * *■ diseases of the lungs, etc.” ‘Also to the-question, “Has the- party had, during the last seven-years, any severe illness?” he answered “No.” The policy contained a clause that “"any untrue- or fraudulent answers, etc., shall render the policy null and void.” It appealed in- evidence that Foot had had two hemorrhages from the lungs. The lower Court charged the jury “that Foot’s answers- did not vitiate-the policy, unless knowingly untrue.” The Commission- of Appeals, Earle, J., said: “Parties- to insurance contracts have the right to make their own bargains as in other cases. * * * All the representations of the assured contained in the policy by being written therein, or incorporated therein, by reference to the proposal, are- warranties, and must be- substantially true, or the policy will be void. * * * It matters not whether the representatives are material or not. The parties have made them- material by inserting them; and it matters not if the party insured made the true statements innocently, believing them to be true.” In the case of Gach vs. Ingall, 14 M. and W., 95, the assured had answered “No-” to the question as to- whether he had spit blood. The charge to the jury was that it was-fo-r them to say whether at th-e time of making the statement set forth, the assured had had such a spitting of blood and! such an affection of the lungs- and inflammatory cough as would have a tendency to shorten life. The Appellate Cburt held that this was a misdirection, the question must be answered specifically whether he had ever spit blood, so as to put the insurers upon inquiry. In Jeffries vs. Life Insurance Company, 22 Wallace, 47, (1874), the policy contained the clause “that the statements — 312 — and declarations made in the application are in all respects trae." The applicant had answered that he was unmarried, whereas he was a married man. It was claimed that the false answer was not to the injury of the Company, as it presented the applicant’s ease in a less favorable light to himself than if he had answered truly. The Court held that the untrue answer avoided the policy, irrespective of the materiality of the answer given to the risk. The Court says: “The proposition at the foundation of this point is this, that the statements and declarations made in the policy shall be true. This stipulation is not expressed to be made as to important or material statements only, or those supposed to be material, but as to all statements. * * * Nothing can. be more simple. If he makes any declaration in the application, it must be true. A faithful performance of this agreement is made an express condition to the existence- of a liability on the part of the Company.” In the Ætna Life Insurance Company vs. France, 91 U. S. Supreme Court Reports, 510, (1875), the same Court, affirmed this decision. The Court below had left it to the jury to say whether in their opinion a rupture, which the deceased had, materially affected his health, or whether there was, in his answering as he did, any falsehood or willful suppression. This was held erroneous, as the applicant had by his contract bound himself to give true answers to all questions. There is an instructive English case which has been often quoted with approbation by many Courts, that of Duckett vs. Williams in 2 C. and M., 348. It bears a close analogy to the one we are considering. The head note reads:. “By a declaration and statement as to health, etc., signed by the assured previous- to effecting a' policy on a life, it was agreed that if any untrue averment was contained therein, or if the facts required to be set forth in the proposal were not truly stated, the premiums should be — 313 — forfeited and tbe assurance be absolutely null and void. Tbe statement as to tbe bealtb of tbe life was untrue in point of fact, but not to the knowledge of tbe party making it; held, that tbe premium was forfeited and could not be recovered; back.” Lord Lyndkurst, C. B., in this case says: “Tbe point is whether tbe facts stated were not truly stated within the meaning of declaration and agreement. It was contended on tbe part of tbe plaintiffs that tbe words must mean ‘ truly ’ and ‘untruly’ within tbe knowledge of tbe party making the statements, and that if tbe party insuring ignorantly and innocently makes a misstatement, be is not to forfeit tbe premiums-under tbe clause in question. We are of opinion, however, that this is not tbe real meaning of this clause. A statement is not the less untrue because tbe party making it is not apprised of its untruth; and looking at tbe context, we think if clear that tbe parties did not mean to restrict tbe words in the manner contended for. Two consequences are to-follow if tbe statement be untrue — one, that tbe premiums are to be forfeited; tbe other, that the - assurance is to be void. Now, if tbe statements were untrue within tbe knowledge of tbe party making it, tbe assurance would be void without any such stipulation. Tbe knowledge of tbe party is clearly immaterial as to this last consequence, and therefore must be so as to tbe first; for it would be contrary to all tbe rules of construction to bold that it was material as to one consequence and not as to tbe others.” But tbe leading English case on tbe subject of warranties-in life insurance cases is that of Anderson vs. Fitzgerald, which went to the House of Lords (reported in 24 English Laws and Equity Reports, 2). Under a warranty similar to that of tbe case before us tbe House of Lords held that tbe question for tbe jury was not whether tbe statements were false and material, but simply whether tbe statements were false. Tbe opinions of this high Court, numerously attended by Peers — 314 — learned in the law, are entitled to tbe greatest weight. Baron Parke, the Lord Chancellor,, Lords Brougham and St. Leon-ards all delivered opinion to the same efleet. May on Insurance, Section 206, sums the matter up in these words: “Always, however, to be remembered is that class of cases where the insured has bound himself hand and foot by a stipulation that his application contains a just, full and true exposition of all the facts inquired for, or its equivalent in a different form of words, and is to be deemed a warranty. In these, according to the received interpretation, no question of knowledge, good faith, or materiality arises; it is simply a question of the truth and fullness of the answers; and a want of either is fatal. Such policies are practically no security at all. The insured is at the mercy of the insurer, and if the applicant will be so imprudent as to make such a bargain the Courts cannot help him.” This being the state of the law, we are not to consider any question of the harshness of this ruling. The parties have made their contract in which the applicant warrants the absolute truth of the- answers made to the questions. If. he answered “ no ” ■ to the question if he load consulted a physician within the last seven years; and if the truth be that he had, whether he remembered it or not, the law is-settled that, having warranted the truth of his answers-, the policy is void, The defendant was entitled to have- his third instructions prayed for given to the jury; and as it was not given, there must be a new trial, for we cannot say whether the jury may not have found that the answers made by Lewis, though untrue, were made in good faith, and under the instructions given they would be entitled to hold, that they constituted no breach of the warranty. It is quite within the power of an applicant for insurance, where he does not know the facts inquired for, to so state. He is only bound by the answers he makes. The case of In — 315 — surance Company vs. Gridley, 100 U. S., 614 (October, 1879), is in point. The application set forth that if any of the statements or declarations in the application for this policy, and upon the faith of which it is issued, shall be found in any material respect untrue, then * * * this policy shall be null and void. In reply to a question whether any of his relatives had any hereditary disease he answered: “No hereditary taint of any kind in family on either side of house to my knowledge.” The company proved that twenty years before the application was made the applicant’s uncle had been insane for a year, and had died in an insane asylum. The Court say: “The affirmation was restricted and narrowed down to what the applicant personally knew touching the subject. It has this extent; no more. The company might have refused to insure* unless the qualifications were withdrawn. Having failed to do this, such is the contract of the parties. “ To make out the defense sought to be established by the insurers three things were therefore necessary to be shown— that the alleged insanity of the uncle had existed, that it was hereditary, and that both these things were known to the applicant when he answered the question.” There are many cases reported in which insurance companies have incorporated into their policies or applications for insurance language like the following: “If any fraudulent concealment or designedly untrue statement shall be contained therein, then the policy shall be void;” or where the applicant is instructed to “ answer each of the questions on the first page to the best of your knowledge and belief” or where the warranty concludes, “ so far as the same are known to the applicant.” In these cases the Courts have uniformly held that the qualifying language controlled the effect of the warranty, and the parties were held only to statements and representations of facts which were within their knowledge. See National Bank v. Insurance Company, 95 U. S., 673, — 316 — (October 1877). So where words in explanation are used in the policy or application which show that a strict warranty was not intended, the explanations will govern. Fitch vs. American Popular Insurance Company, 59 N. Y., 557, also Hall vs. Insurance Company, 6 Gray, 185. We have diligently examined the application in the case before us and we find no words qualifying the language of the warranty in any respect. But it is urged that the question, “Has the party any serious disease?” is one to which the warranty of absolute truthfulness does not apply. “ Representa* tions,” says May, Section 200, “should not only be true but they should be full. The insurer has a right to know the whole truth, and a lack of fullness if designed, in a respect material to the risk is tantamount to a false representation and is attended by like consequence. This lack of fullness is termed a concealment, which is the designed and intentional withholding of some fact material to the risk which the insured in honesty and good faith ought to communicate to the insurer.” In the next section the learned author remarks: ,“Of course, where the truth and fullness of a statement are warranted, it is no longer a question of concealment, but of the truth and fullness of the statement.” In the case at bar the application contains these words: “I 'do hereby declare that the person above named whose life is ¡proposed for insurance is now in good health, and does ordinarily enjoy good health, and that in the above proposal I have not withheld any material circumstance or information touching the past or present state of health or habits of liffe of said person with which the Trustees of the New York Life Insurance Company ought to be made acquainted,” * * * then follows the warranty which warrants the truthfulness of the statements and representations in the foregoing application and declaration. The “declaration” referred to is that just quoted, wherein the applicant declares that he has withheld nothing touching his past or present health which the — 317 — company ought to know. This is equivalent to a warranty of the fullness of the representations made; and consequently there can be no question as to whether there was concealment of any fact known to the applicant. He has warranted that he has concealed no material fact which the defendant ought to know. This is the contract of the parties, the legal effect of which is that if the defendant can prove that there was a material fact in regard to the state of health of the applicant, which he did not disclose because he was ignorant of it, it is fatal to the plaintiff’s recovery. Castle & Hatch for plaintiff. A. S. Hartwell and B. H. Austin for defendant. Honolulu, September 25, 1880. This is covered by the fourth instruction prayed for, and which was not given to the jury. New trial ordered.