American Life Insurance v. Mahone

Simrall, C. J., delivered the opinion of the court. This suit was begun by attachment against the American Life Insurance Company, a foreign corporation, which, as alleged in the affidavit, has ceased to do business in this State, and has no agent authorized to acknowledge service of process. The defendant, by plea in abatement, traversed the grounds of the affidavit, and averred that, at the time the writ was sued out, Charles Handy, of Canton, was the agent of the defendant, on whom process could have been effectively served. This — 187 — issue was found by the court for the plaintiff (a jury having been waived), and on the refusal of the court to award a new trial on the issue, a bill of exceptions was signed. The substance of Charles Handy’s testimony was, that in August, 1878, there was filed in the auditor’s office a power of attorney to him, among other things, to accept service of process for the defendant; that he had been agent for defendant from 1869 until September, 1875, when a transfer of the policies issued by the defendant, then in force and held in this State, was made to the Mobile Life Insurance Company. After the discontinuance of business, except for liquidation, Handy continued to represent the defendant, except that he could not receive premiums. He continued to represent the defendant in winding up business, and his letter of attorney continued in force in that respect. Since September, 1875, the auditor has issued to him no certificate, as provided in sect. 2442 of Code, nor did he make any statement to the auditor, etc. W. C. D. Mahone deposed that he was informed, in October, 1876, by William Handy, a brother of Charles Handy, that the defendant had no agent in this State to acknowledge service of process ; that before this suit was brought, he went to the auditor’s office to see whether there was on file such appointment, and one of the clerks, after examination, reported that there was not. A circular letter from the home office of defendant, at Philadelphia, dated 15th September, 1875, addressed to the policy-holders in Mississippi, came to the notice of one of the plaintiffs. That circular stated that all the risks taken by the defendant in Mississippi had been reinsured in the Mobile Life Insurance Company. Those who continue their policies with defendant must remit premiums direct to the home office, at Philadelphia. The defendant’s policies can be surrendered, and the policies of the Mobile company taken in exchange. It then adds: “ Charles Handy, Esq., of Canton, Mississippi, now represents — 188 — the Mobile Life Insurance Company, and will attend to exchange of policies ; the American has now no agents in Mississippi.” When William Handy made the statement above, he was acting for the Mobile company, endeavoring to persuade the witness to exchange for a policy in the Mobile company. Handy denies making the statement. There was a good deal more testimony on both sides. The finding of the circuit judge was warranted by the testimony. The holders of policies could put, fairly, the construction on the circular letter of 15th September, 1875, that the American Life Insurance Company had ceased to continue business in Mississippi. It required those who would not surrender policies and insure in the Mobile company to pay their premiums in Philadelphia. It had no use longer for agents. It gave notice that Charles Handy, through whom it had done its business as general agent, was now agent for the Mobile company, and that it had now no agents in Mississippi. If a policy-holder acted upon the fair and reasonable construction of this paper, the defendant ought not to be allowed to plead, in avoidance of such act, that Charles Handy was still its agent after 15th September, 1875, competent to be served with process. It is assigned for error that the court did not exclude the proof of Dillard’s death. The objection was, that the cause of death was not shown, as required by a condition of the policy. There was also evidence tending to waive fuller proof. After all the testimony was before the jury on the point, the defendant moved to exclude the proofs of the death, because no waiver had been shown, which was overruled. The proofs did not meet the requirement of the condition,— it did not contain the physician’s certificate, nor that of a friend. Was the waiver shown, and was the testimony of waiver admissible on the pleadings ? If the plaintiffs put this part of their case on the ground of waiver, the question was not one — 189 — purely of law, — whether the evidence of waiver, in the opinion of the court, amounted to full proof of the fact, — but was there any evidence offered tending to prove it, and of value sufficient to be considered by the jury. On November 28, 1870, Mahone forwarded the proofs of death. Nothing was heard in reply for some time. Mahone stated that nothing was ever said by the company, or its agent, as to defective proof in this particular, at all. He denies that notice of the requirement of fuller próof was ever given. Charles Handy says that he gave notice ; Mahone says that he did not. The testimony was conflicting, and it was entirely proper to refer the matter to the jury, whose finding would be conclusive. This would be so, unless the other question made by the defendant was tenable, — that is, that the testimony was not relevant under the pleadings. Good faith is of the essence of the contract. It was incumbent on the insurance company, when the proofs of death were received, to have promptly given notice, indicating the defect and what must be supplied ; a failure to do so will be a waiver of the defect. Home Ins. Co. v. Cohen, 20 Gratt. 325; McMasters & Brown v. Insurance Co., 25 Wend. 382; 16 Wend. 410; 10 Pet. 510. Defective proofs may be accepted by the company. This may arise from the failure to object, or by placing the refusal to pay on other grounds. Spratly v. Hartford Ins. Co., 1 Dill. 392; Transportation Co. v. Insurance C Go., 6 Blatchf. 249; Planters' Ins. Co. v. Comfort, 50 Miss. 662. Acts which amount to an acceptance or a waiver may be proved, under the averments of the plaintiffs’ declaration. Kennon v. McRea, 6 Port. 175; Taunton Bank v. Richardson, 5 Pick. 436. Whether there has been an acceptance of defective proof or a waiver of fuller proof may be left to the jury. Cases above cited. The substance of the tenth plea is, that Dillard wilfully and fraudulently concealed from the defendant, in his answer to the fifteenth question in his proposal for insurance, that he had — 190 — made a proposal for insurance to the Equitable Life Insurance Company, which proposal had been refused. The replication is, in effect, that he answered that he had been insured in the Equitable Life Insurance Company, but that his policy was forfeited ; but that Yeiser, the defendant’s agent, wrote the answer, “Insured in Equitable, $5,000;” that Yeiser, with full knowledge of all the facts, wrote the answer; that the answer so made was accepted by Yeiser as full, and was so considered by Dillard; that Yeiser delivered the proposal, including the answer to question 15, to the defendant, who, knowing the scope of the answer, and without requiring further answer, issued the policy. The eleventh plea set up a wilful and fraudulent concealment of a proposal for insurance to the Continental company. The replication alleges that Yeiser, the agent, wrote the answers ; and continues, in effect, as the replication to the tenth plea, except that it omits the averment of Yeiser’s knowledge of the facts, or his being agent for this company. The fifteenth interrogatory contained two inquiries : first, as to proposals ; and, second, as to insurance in other, companies. It was the duty of Dillard to have made truthful and full answers to both inquiries. The company esteemed the information sought, to be valuable. It was as much entitled to a disclosure as to proposals, as to insurance effected. We will consider whether the replications obviate the pleas, as one question, keeping in view, so far as may be necessary, that portion of the replication to the tenth which is not contained iirthe answer to the eleventh plea. The general question is, whether the allegation that Yeiser accepted the answer, as made and as written by him, to be full and complete, and the transmission of the application, with the question thus answered, and the issuance of the policy, are a waiver of the non-disclosure or concealment complained of. The defence arises on one of the stipulations in the policy, viz. : “ That if the proposals, answers, and declarations, etc., upon — 191 — the full faith of which this policy is issued, shall be found to be fraudulent, or untrue in any respect, or that there is any wilful misrepresentations or concealments in said declarations, * * * answers, etc., then this policy shall be void.” It is necessary to comprehend what is such a concealment, in the sense of this stipulation, as will avoid the policy. We must exact of both parties good faith in their preliminary negotiations and in their contract. The insurance company proposes to take risks on lives, on certain conditions. These are set forth in printed papers, partly in blank, with which their agents are supplied. Applicants must conform to these conditions. The insurers, in effect, make known to the public that they are igno-i rant of the habits, employments, and bodily and mental condition of those who may desire to take out policies ; that they may determine whether they will take the risks offered at all, or, if taken, at what rate of premium, they must be furnished in each case with full information of all that is necessary to be known, as suggested by a series of questions. If, however, there shall be misrepresentation or wilful concealment, they will not be bound by the policy. The insurance company consummates the cbntract on the basis of the responses to the questions. If the agent has fuller information, not written in the answers, it would be his duty to communicate it to his principal. The applicant must be understood as making his overture to the companj^ on the faith of the disclosures in his application. If the company is misled by an agent, who takes the preparation of the paper into his own hands and makes mistakes or omissions, as in Planters' Insurance Company v. Myers, 55 Miss. 479, the company is estopped, because the fault is not with the insured. Yeiser took charge of filling up the application with the answers, and, therefore, as held when this case was in the Supreme Court of the United States, the answer to the fifteenth question, as made by Dillard to the agent, must be considered as if it had been written down in full, and had been in that form laid before the company for its action. The company must either accept the proposition — 192 — as thus presented, or reject it; or it may return it for a fuller answer. If the applicant has omitted to answer any of the questions, the insurance company knows, before it malees the contract, that the information on which it usually acts is wanting, and it would be absurd to plead misrepresentation or concealment of the matters involved in the questions. In no sense could it be affirmed that the policy was issued on the basis of a misrepresentation or concealment. If the applicant omits or refuses to answer one question, and the risk is taken, it cannot be alleged as true, in law or morals, that the company has been misled, deceived, or imposed upon. With its eyes open, and with full knowledge, it has agreed with the applicant to insure his life, without any information on the subject suggested by the unanswered question. There has been no misrepresentation, for that cannot be predicated of silence. There has been no fraudulent or wilful concealment, with intent to deceive, for the insurer is advised beforehand that the other contracting party has declined altogether to answer. It does not at all differ from a negotiation in person between the insurer and insured, where the officers of the corporation, authorized to contract, put the question directly to the insured, “ Sir, have you made application to any other company for insurance on your life? ” and the reply is, “I decline to answer that question.” In such case, it would not be seriously argued that the policy could be avoided by the allegation and proof that application had been made to the American Company, and the risk refused. The inclusion of two or more inquiries in the same question is the same as putting each in separate interrogatories. The concealment which vitiates the policy must be such as misleads, or deceives: such as a partial disclosure, omitting matter's of importance, which, if disclosed, would make the answer full; as if the answer to a question about former sickness detail a slight illness, concealing a much more serious and recent sickness ; as if the question be, whether the appli — 193 — cant has ever been seriously hurt by an accident, and the answer be that an arm was broken ten years ago, when the truth was that a serious internal injury was received by a fall from a carriage. In Mrs. Leflore’s case, the matter concealed was an alleged serious injury on a railroad train. In these and other illustrations that might be readily given, the deceit consists in withholding from the insurer matters pertinent to the question, which the insurer ought to know, — matters without the statement of which the answer would not be full. If, in answer to the fifteenth question, Dillard had said he had “ made an application to the Continental company, which he had withdrawn,” when the truth was, he had also made application to two other companies, which had been rejected, it would be a case of concealment which would avoid the policy, because the answer suggests that there was no objection to the risk, whereas two companies had declined to take it. The answer to this question is valuable to the insurer, as it opens the avenue to further inquiry, if the company desires to pursue the investigation. We are of opinion that the omission to answer one branch of the fifteenth question is not a “fraudulent” and wilful concealment of the matter inquired about, in such sense as that thereby the policy is avoided. The difference is between a declension to answer altogether and a partial answer, which discloses in part, but withholds material and important matters which affect the question of whether the risk shall be taken at all, or may be an element in fixing the rate of the premium. We have not been referred by counsel to any authority directly on the point, but we think that the conclusion reached is just and reasonable. The exception taken to the four jurors is not tenable. Qualification is prescribed by sect. 724 of the Code. It is not shown that these persons did not have these qualifications. The statute does not erect a standard of education or learning.' — 194 — The court instructed, for the plaintiffs, that notice of insufficient proof of death ought to have been given to Mrs. Mahone. But the defendant procured a charge, that if the notice was given to her husband, acting for her, with her consent, it would be good. The case was fairly presented to the jury by the court, on all the controverted issues. There was conflicting testimony on most of them, especially as to whether Dillard had impaired his health by excessive use of ardent spirits, and whether he had made a true answer to the question as to his occupation. The whole case, the rulings of the court, the relevancy and sufficiency of the testimony to support the verdict, were presented on the motion for a new trial; most of these points we have already considered. The testimony was often conflicting ; in such cases this courtis bound by the finding of the jury, unless it is against the great preponderance of the evidence.