Burruss v. National Life Ass'n

Harrison, J., delivered the opinion of the court. The court is of opinion that sec. 3252 of the Code, which provides that no failure to perform any condition or restrictive provision of a policy shall be a valid defence to an action thereon unless such condition or restrictive provision be printed in type of a specified size, or written with pen and ink in or on the policy, applies alike to the application and the policy issued thereon, where, as in the case under consideration, the application is expressly made a part of the contract of insurance. In such a case the application and the policy issued thereon, taken together, constitute the contract of insurance between the parties. Any other construction would enable the insurer to avoid the statute by putting all such conditions and restrictive provisions in the application alone. In the case at bar it is conceded that the conditions and restrictive provisions, found in the application, the failure to perform which is relied on by the defendant, in part, as its defence to the plaintiff’s motion, are in type smaller than that required by the statute. The clause in the application obnoxious to this provision of the statute must therefore be disre [549] garded, and the case considered as if no conditions or restrictive provisions were embodied in the contract sued on. Not relying on the condition that the answers of the insured to the questions contained in the application should be treated as warranties that the same were complete and true, the defendant company, by its plea, puts in issue the bona jides of the contract, by alleging that the answers made by the insured to certain material questions were absolutely false and untrue, and that they were made for the purpose of misleading, deceiving and defrauding the defendant, and did deceive and mislead it into issuing the policy sued on. Recognizing and giving full force to the rule controlling in case of a demurrer to evidence, this plea is abundantly sustained. The questions and answers involved were most material, and the answers are shown to have been absolutely false, and it clearly appears that insured knew they were false when made. The policy in question was issued for the benefit of a creditor of the insured, who is the plaintiff in error here, and it is contended that the beneficiary is not affected by the false representations of the insured, because the agent of the company who took the application had knowledge of the falsity of such statements at the time they were made, and that the company is, therefore, estopped to rely on the same as avoiding the policy. Independent of the question whether such knowledge, if possessed by the agent, would bind the company, and prevent it from relying on the fraud of the insured, the evidence does not sustain the contention that any such knowledge was brought home to the agent. Great stress is laid on the fact that the agent applied to the beneficiary, and suggested his taking out the policy; that the beneficiary then told the agent he did not think a policy could be written on the life of the insured; that he understood him to be in bad health, and to have been declined by other insurance companies; that, in reply, the agent said that made no difference, that his company took [550] risks declined by other companies. This reply of the agent is fully explained by the fact, perfectly understood by the insured, that the company took first-class risks and second-class, risks, and that the premium was regulated by the class to which the insured belonged, the premium for a second being very much higher than that for the first-class risk. The insured stood his examination for the policy before the medical examiner, and, in his application, answers the questions propounded without any qualification, in such a way as to entitle him to be received as a first class risk. The policy was issued upon his life as a first-class risk, received by the beneficiary as such, and the premium paid, known by him to be only the amount required for a first-class risk. The beneficiary is shown to have been a.man of business experience, carrying a large amount of insurance on his own life. He knew the usual course w'as for the insured to make out and sign an application, and for the company to issue the policy on the faith of the statements therein made, and he does not claim to have understood or supposed that the defendant company pursued any different course in that respect. The statement by the beneficiary to the agent that he understood the insured to be in bad health, and to - have been rejected by other companies, did not establish the fact that those things were true. At most, it could only have put the agent on enquiry. The result of that enquiry was to show, by his applications to other companies, by his o^yn unqualified statements in the application to the defendant company, and by the certificate of the medical examiner, that he was in good health, and had not been rejected by other companies. It would hardly be contended that, if the insured had taken out this policy for his own benefit, his estate could recover it in the face of the gross fraud shown to have been perpetrated by him in procuring it. There is nothing in the circumstances of the case to place the beneficiary in any better position than the insured would have occupied had the policy been for his [551] benefit. Where insurance is effected upon the life of a third person for the benefit of a creditor, and misrepresentations of material matters inducing the contract are made by the party whose life it insured, it will vitiate the policy, although the beneficiary was ignorant of such false representations. For these reasons the judgment complained of must be affirmed. Affirmed.