Supreme Lodge of the Order of Columbian Knights v. McLaughlin

Mr. Presiding Justice Ball delivered the opinion of the court. We find it necessary to consider one phase only of this case. It is clear that the deceased applied for membership in the month of February, 1898, in one of the lodges of appellant, was examined by the medical director of that lodge and also by the chief medical officer of appellant, and was told by each of them that he had incipient consumption, and that his application was rejected. It further appears that each of these physicians reported, in writing, his conclusion to appellant. Six months later the deceased made a second application to another of appellant’s lodges, in which application he made the answers set forth in the statement of facts. By his answer to question No. 4 he intended the appellant to understand that the only consultation he had had with a physician within the five years then last past was with Dr. Hoadley, and that for nothing more serious than a cold. This question and his answer thereto can not be otherwise understood. Thereby he concealed from appellant his examination by Drs. Smith and Harsha, and the results that followed. When asked in question No. 24: A. “ Have you ever before applied for membership in this order ? ” His answer is “ No.” "B. Have you ever been rejected ? ” Again the answer is "No.” In the light of the undisputed evidence in this case, each of these answers was false, and false to the knowledge of the deceased. He is further asked (No. 26): “ Has any physician given an unfavorable opinion upon your life with reference to life insurance, formally or informally, with or without your making an application ? If so. state particulars.” And again the answer is “ No.” This answer is clearly false and fraudulent. He closes this written statement with the words, “ 1 hereby warrant the truthfulness of all the answers given to the above questions,” and signs his name thereto. By his written and signed application for this insurance, by the express language of the certificate issued to him, which he accepts over his own signature, and by the answers he made to the medical examiner, to which he attached his name, these statements and answers are made warranties, upon the truth of which he expressly agrees that all the rights of himself and of his family in and to this insurance shall depend. In cases of this kind a warranty is a part of the contract, evidenced by the certificate, or by some other paper made a part thereof by appropriate reference, whereby the assured agrees that a certain stated fact is true, and that the validity of his insurance shall depend upon the truthfulness of such fact as stated. May on Ins., Sec. 156 (3d Ed.). “ A warranty in a policy of insurance is a condition or a contingency, and unless it be performed there is no contract.” Lord Mansfield in DeHahn v. Hartley, 1 Term Rep. 343. “An affirmative warranty is where the assured undertakes for the truth of some positive allegation; that is, he stipulates that certain facts are true.” Joyce on Ins., Sec. 1946 (Ed. 1897). A warranty by its very terms precludes inquiry into the materiality of the stipulated fact. In the absence of qualifying clauses, the only question to be decided is as to its truth or falsity. This is the contract made by the .parties, from which the court can not depart. “ Where it clearly appears by the express terms of the policy, or from the entire contract, that a warranty was intended, the materiality "of the fact, matter or circumstance warranted is not a subject of inquiry in aid of the assured; for the latter in such case will be held strictly to his contract, however immaterial the matter warranted may be.” Joyce on Ins., Sec. 1962 (Ed. 1897). A representation is not, strictly speaking, a part of the contract of insurance, or of the essence of it, but rather something collateral or preliminary, and in the nature of an inducement to it. Bacon on Ben. Soc., Sec. 206. A representation need not be literally true. It is sufficient if it be substantially true. “ A misrepresentation renders the policy void on the ground of fraud, while non-compliance with a warranty operates as an express breach of the contract.” Ala. G. L. Co. v. Johnston, 80 Ala. 467. These elementary principles are illustrated and enforced in many Illinois cases. In Thomas v. Fame Ins. Co., 108 Ill. 91, the property insured was called “Clothes-pin and Broom-handle Factory.” The applicant answered certain questions “ as descriptive of the premises and forming a part of the contract of insurance, and a warranty on his part.” One of the questions, with its answer, is as follows: “ Q. What is the precise kind of goods made, and of what material?” “A. Clothespins and broom-handles.” A survey accompanied the application. This survey is declared “to be a part and portion of the policy issued thereon, and a warranty ” on the part of the assured. The fact was that in one portion of the premises the owners were manufacturing shingles. This fact was not noted in any answer of the applicant, and the portion of the premises used for that purpose was not truly represented -by the diagram. The trial court instructed the jury that if they found “ that the existence and use of said shingle mill materially affected the risk,” then the plaintiff could not recover. The Supreme Court say: “ The survey and description of the property being thus made an express warranty by the assured, if false, it was wholly unimportant whether they were material to the risk,” citing twelve cases in courts of last resort. Some of the other cases in point in this State are: Hartford Ins. Co. v. Gray, 91 Ill. 159; Continental Ins. Co. v. Rogers, 119 Ill. 474; Nat’l Union v. Arnhorst, 74 Ill. App. 482; Conn. Mut. L. I. Co. v. Young, 77 Ill. App. 440. Appellee relies upon the case of Globe Ins. Co. v. Wagner, 188 Ill. 133. The ground there urged for a reversal was that in the medical examination one of the questions asked was: “How many brothers dead?” A. “Hone;” when the fact was that one of the brothers of the insured died in London, England, more than four years prior to the date of the application, although there is no evidence to show that the insured knew of such death. The court say : “In the absence of explicit, unequivocal stipulations requiring such an interpretation, it should not be inferred that the insured or the appellee took a life policy with the distinct understanding that it should be void if any statements made in the medical examination should be false, whether the insured was conscious of the falsity thereof or not.” Citing Moulor v. Am. Life Ins. Co., 111 U. S. 335, where the word “true,” in a case somewhat similar to the Wagner case, is held to be used as a synonym of “honest, sincere, not fraudulent.” Our Supreme Court further say: “ In that case the untrue statements were held to be representations and not warranties, and we think, on the same reasoning, the answer here in question should be so held, and in the absence of proof by the company of fraud or intentional misstatement on the part, of the insured, the policy was not rendered invalid merely because the answer proved to be false.” The tendency of life insurance companies to exact rigid and technical conditions and to make it exceedingly difficult, if not impossible, for the applicant to truthfully and strictly answer the numerous questions propounded to him, so that when he has gone his family will have an indefeasible policy of insurance, justifies the courts in a broad and liberal interpretation of these contracts in favor of the beneficiaries. In the Wagner case it will be noted it is not specifically provided, as it is here, that the certificate .shall be void in the event of the falsity of any answer; that in that case there is no evidence that the falsity of the answer was known to the insured or to the applicant, while here there is abundant evidence that the deceased not only knew of the falsity of his answers, but declared to one of the witnesses that in his second application “ he did not set that down,” namely, “that he had been fired out of the other lodge,” and that while in the Wagner case the answer-may reasonably be considered immaterial, here the answers to his former applications for membership in this order, whether he had ever been rejected, and whether any physician had ever given an unfavorable opinion upon his life, all, each and every of them went to the very foundations of the contract. The words of an opinion are to be read in the light of the facts of the particular case in which they are uttered. After a careful study of the Wagner case we are of the opinion that the Supreme Court will confine its force to like cases, and will not apply it to such a case as is here shown. For us to interpret it otherwise would be to go against the current of authority in this and in other states and in other final tribunals, and also to deny the teachings of the text writers upon life insurance. Holding this view of the case, we are compelled to reverse this case without remanding it„