Otte v. Hartford Life Insurance

ROVELY, J. Action on a life insurance policy issued to William Otte, since deceased. His widow is the beneficiary. The cause was tried to the court and a jury. There was a verdict for plaintiff. A motion for judgment, or a new trial in the alternative, was overruled. From this order defendant appeals. The insured was a farmer living near Randolph, in this state. One E. L. Hills was acting as a canvasser for defendant. Late in November, 1900, he went to the home of Otte, and requested Mm to apply to defendant for a policy on his life. As a result of Hills’" solicitations, he was authorized to make out' Otte’s application, for a policy in defendant’s company for $1,500. The application contained questions relative to Otte’s health. The answers were written therein by Hills. It was signed by Otte, and forwarded by Hills to the general manager of the company for Minnesota,, located at Minneapolis, who then sent it to the general office, at Hartford. In due time the risk was accepted, and a policy issued, — 427 — which was delivered to the insured, who paid the premium. In the application were the following questions and answers: “Q. Are you now in sound physical and mental health, so far as you know? A. Yes. Q. How much time have you lost by sickness during the last three years, for which you were attended by or consulted a physician? A. None. Q. When did you last consult a physician? A. Never. Q. For what disease? How long were you sick? Fully recovered? A. None. Q. What are the names and addresses of every physician consulted in the last three years ? A. None. Q. Have you now, or have you ever had any of the following diseases? If so, give the dates and full particulars. If not, answer ‘No.’ Asthma, difficulty in breathing, pleurisy, pneumonia, consumption, chronic or persistent cough, spitting of blood, or any lung disease? A. No. Q. Diseases of the liver, kidneys, bladder, enlargement of the prostate gland, renal or hepatic colic from stone or gravel? A. No.” There was attached to the application a certificate for the physician of the company, Dr. Woodward, of Cannon Falls, who was required to examine the applicant and certify to his state of health; but Hills, who was a physician, inserted the answers therein, and carried it to Dr. Woodward, who, at such request, approved and signed the same, relying upon the statements of Hills, instead of an examination by himself, as required by the regulation of the company, which regulation was not known to Otte. The legal relation of Hills to the insurer and insured is an important subject of contention in determining the liability of defendant. But the facts are not in dispute. Previous to the application, defendant had appointed Samuel Johnson its general manager for Minnesota, to reside in Minneapolis. The manager was authorized to take applications for life insurance, and forward the same to the home office, in Hartford, for action. He was not, however, the only person soliciting insurance for defendant in his territory, for he was authorized by the company to appoint solicitors to canvass for applications, under terms of compensation to be paid by him. Upon this authority, Johnson appointed Hills to solicit insurance for defendant, and furnished him with blank applications for that purpose. Hills entered upon and continued in such employment for over two months, with the approval — 428 — of tlie general officers of the company, and it was during this time that Otte was insured. On the application the name of Hills appeared as a witness, which was recognized by defendant’s secretary at the home office as evidence of the fact that he was a solicitor acting under authority derived from Johnson. Hills’ name as agent was also indorsed on the back of the policy, though it may have been placed there by the manager or by Hills himself. While it is conceded that insured had consulted several physicians within three years previous to the application, and was informed by each of them that he was afflicted with diabetes,— a dangerous malady, affecting his health and insurable capacity,— there was evidence, whose weight was for the jury, tending to show that, at the time Hills was making out the application, he was informed of these material facts. In reply the solicitor continued to persuade Otte to make the application, and substantially told him that he was a good risk, and that diabetes would not prevent him from obtaining insurance. The evidence is such in respect to the questions and answers quoted that the jury were justified in finding that none of them, as to the previous information from the physicians he had consulted, was misrepresented, or that he knew he was suffering from a dangerous disease that would interfere with his obtaining a policy. In these respects the insured relied wholly upon the agent, and signed the application without reading it or with knowledge of its contents, believing that the true facts conveyed to the solicitor were either set forth therein, or were not required to be stated. Five months after the delivery of the policy to the insured, he died; and the evidence is such as to leave no doubt that at the time the application was made, and the policy written, he was afflicted with diabetes, which disease was the efficient cause of his death. It is strenuously insisted for defendant that Hills, in writing the application, was not the agent of the company, but merely an insurance broker, and that, in the legal sense in which this term is understood, he was the agent of the insured, as in Gude v. Exchange Fire Ins. Co., 53 Minn. 220, 54 N. W. 1117; hence that his acts could not bind the defendant. But upon the facts as above summarized, we arc of the opinion that it was within the — 429 — authority of Hills to take applications, and to do that which is usual and customary among insurance solicitors receiving their authority directly from the company they represent. The defendant could not transfer its authority to receive applications to a general manager, with power to appoint solicitors, and thereby absolve itself from the necessary consequence which follows, or from the acts of the latter within his apparent authority. The general agent at Minneapolis having the power to appoint Hills to canvass, he might, according to the usual custom among those engaged in the business of canvassing for insurance, write out the application and the answers to questions put to the applicant; and, though his appointment did not come directly from the company, this could make no difference, since it did come from the defendant through the delegated authority conferred upon the Minnesota manager to appoint the subagent who was clothed with the necessary and essential power to do that in taking the application which the manager might have clone had the latter been present and written the application himself. Swain v. Agricultural Ins. Co., 37 Minn. 390, 34 N. W. 738. And this brings us to the question whether the incorrect and untruthful statements made by the solicitor, Hills, bound the company. We have already held that agents of an insurance company, authorized to procure applications for insurance, and forward them for acceptance, must be deemed the agents of the insurer in all that they do in preparing the application, or in any representations they may make in the material statements therein contained. Kausal v. Minnesota F. M. F. Ins. Assn., 31 Minn. 17, 16 N. W. 430; Wilson v. Minnesota F. M. F. Ins. Assn., 36 Minn. 112, 30 N. W. 401; Whitney v. National M. A. Assn., 57 Minn. 472, 59 N. W. 943. The admission of. verbal testimony to show that the application was filled in by the solicitor, and that the relevant and material facts affecting the risk in this case were correctly stated, but, without knowledge or any fraud of the insured, misstated in the application, was relevant and proper, and cannot be attributed to the insured, under the rule adopted in Kausal v. Minnesota F. M. F. Ins. Assn., supra, where the reasons for this rule are fully discussed, and the general doctrine above announced — 430 — applied. There is a conflict upon this question in the courts of this country, but we are not now inclined to depart from the rule we have already adopted, which we regard as salutary and wholesome, since we are satisfied with the reasons given in the above-cited cases. We think the weight of authority approves our views in this respect. The policy, when received by the insured, had attached to it a copy of the application; and it is insisted that, with a provision therein to the effect that the answers to all questions shall be taken as warranties, the retention of the application by the insured bars recovery. We do not deem it necessary to go further in dealing with this claim than to say that, since the insured is to be treated as having dealt directly with the company when he signed the application, the insurer took it upon itself to make out the application and to answer the questions truthfully; hence it cannot transfer the results of its own misconduct to the innocent victim of its deception, who parted with his money in the belief, induced by defendant, that he was obtaining indemnity; nor can we hold that the insured was bound to suspect a dishonest purpose on the part of the insurer contrary to the dictates of good faith, and all rules of legal presumption, and hence required to institute an inspection of the policy upon its receipt to ascertain if he had been deceived. We have therefore reached the conclusion that, in construing the effect of the provisions referred to, the warranties of the insured must be treated as having been waived. Renier v. Dwelling House, 74 Wis. 89, 42 N. W. 208; Garrett v. Burlington, 70 Iowa, 697, 29 N. W. 395. In the instructions to the jury, the court said that, if Otte died of consumption not produced by diabetes, then diabetes had nothing to do with his death. It is urged that this instruction was prejudicial, inasmuch as one of the proofs of death indicated that deceased died of tuberculosis (consumption). It was clear from the evidence that at the time of the application the insured did not have consumption or any disease of the lungs, and with reference to this testimony the court further said, among other things, that if consumption was the sole cause of the death of the insured, and it was not produced or caused by diabetes, then the verdict — 431 — would be for tlie plaintiff, unless the jury found that Otte informed the agent of the company that he had diabetes, notwithstanding that disease might have run into consumption or caused consumption, but that if death was caused by diabetes, and the agent of the company was not informed by Otte that he had •diabetes, then the plaintiff could not recover. We think a fair and reasonable construction of the charge in fheSe respects does not go further than that, if insured’s death resulted from causes that were falsely represented to the defendant, plaintiff could not recover, but that if his death resulted from diabetes, and this information was given to the defendant by the insured, there might be a recovery if the latter correctly stated the facts to the solicitor, which is in accordance with the legal rights of the parties, as we have already held. Order affirmed.