Monahan v. Mutual Life Insurance

Owen, J. It is conceded that the medical examiner of appellant issued a certificate of health declaring the applicant a fit subject for insurance and so reported to the company. Appellant defends this action on the ground that the insured was not in proper health and was not a fit subject for insurance either at the time of the application or at the time of the issuance and delivery of the policy. By the provisions of sec. 209.07, Stats., the appellant is estopped “from setting up in defense of an action on such policy or certificate that the insured was not in the condition of health required by the policy at the time of the issue or delivery thereof, unless the same was procured by or through the fraud or deceit of the insured.” In order to maintain the defense upon which appellant relies, it is incumbent upon the appellant to first establish that the certificate of the medical examiner was procured through “the fraud or deceit of the insured.” It is conceded that the answer returned by the jury to question 1 of the special verdict is equivalent to a finding that it was Bessie, the insured, and not Kitty, her sister, who consulted Dr. Pember on June 13th. While this finding of the jury is assailed by the respondent as being contrary to the great weight of the evidence, it is not contended that the verdict finds no support in the evidence. As a matter of fact there is an abundance of evidence to support the answer returned by the jury to question 1, and the verdict in this respect must be regarded as a verity. From this it follows, [107] necessarily, that the answers of the insured made to the questions set forth in the statement of facts were false. But this fact alone does not establish the defense relied upon. Mere false statements do not always constitute fraud or deceit. While false statements constitute an -element of fraud growing out of misrepresentations, other elements must concur. Ordinarily the false statements must be material, and they must be relied upon in order to constitute fraud. “ ‘False’ may mean untrue, or it may mean designedly untrue, implying an intention to deceive, as when it is applied to the representations of one inducing an act to another’s injury.” 12 Ruling Case Law, 230. Sec. 209.06, Stats., provides that— “No oral or written statement, representation, or warranty made by the insured or in his behalf in the negotiation of a contract of insurance shall be deemed material or defeat or avoid the policy, or prevent its attaching unless such statement, representation, or warranty was false and made with actual intent to deceive or unless the matter misrepresented or made a warranty, increased the risk or contributed to the loss.” This section applies to all oral or written statements made in the negotiation of a contract of insurance. While sec. 209.07 deals specifically with the certificate of health and es-tops the company from going back of that certificate unless the same was procured by or through the fraud or deceit of the insured, we cannot ignore the provisions of sec. 209.06 in determining what constitutes such fraud and deceit. By the latter section it is not sufficient to prove that the statements were merely false. It must appear that the false statements were made with actual intent to deceive. The jury found that the report of the medical examiner for the company that the insured was a fit subject for insurance was not procured by or through fraud or deceit on the part of the insured. If this finding is supported by the evidence it defeats the defense that the insured was not in the condition [108] of health required by the policy at the time of the issuance or delivery thereof. Appellant assails this finding of the jury and contends that it is not only unsupported by any evidence but that the contrary appears as a matter of law. In submitting the first question of the special verdict, which inquired whether “the insured in her answer to the medical examiner, Dr. Farnsworth, on the 8th day of July, 1924, falsely stated that the only illness, disease, injury, and surgical operation which she had since childhood was tonsillectomy,” the court instructed the jury as follows: “In connection with this question, and also questions 2 and 3, which I shall read in a moment, you are instructed that the word ‘falsely’ as used in each of these questions is used in the sense of ‘not true,’ if at the time the insured made the untrue statements she knew them to be untrue.” The jury could not have answered questions 1, 2, and 3 as they did unless they found that at the time the insured made the false statements which the jury found she did make the insured knew that such false statements were untrue. It appears, therefore, that the insured not only made false statements to the medical examiner concerning the condition of her health, but that she made them knowing them to be false. The insured was a school teacher, a person of at least ordinary intelligence, and she undoubtedly knew that to reveal the fact that she was ailing with or threatened by appendicitis or any similar or allied disease, or any trouble which a reputable physician had diagnosed as appendicitis, would greatly endanger her prospects of securing an insurance policy upon her life, and the only sensible reason that can be assigned for her deliberate false answers was to keep her condition of health from the knowledge of the insurance company. If the circumstances of this case do not prove beyond doubt an actual intent to deceive, it is difficult to understand how such an intent may be proved in such cases. The insured is dead. She cannot be questioned. Her intent must be inferred from what she did under all the circumstances. [109] We can conceive of no inference consistent with an innocent purpose on the part of the insured that can be drawn from these facts and circumstances. It is impossible to indulge the thought that her suppression of the damaging facts was due to a lack of memory or mere inadvertence. Her illness was so recent, and the advice which she received from Dr. Pember concerning, her health was of so grave a nature, that it must have given her more than passing concern and left an impression upon her mind and memory that could not have faded within a period of three weeks. We hold that the evidence discloses as a matter of law an actual intent on her part to deceive the defendant company. Respondent contends that the medical examiner for the appellant did not rely upon her statements, but relied entirely upon his own examination, and that therefore her statements are not material. This contention cannot be sustained. It is well known that insurance companies, in determining whether an applicant is a fit subject for insurance, rely not 'only upon a physical examination, but upon the history of the applicant so far as it has relation to the applicant’s health. In McGowan v. Supreme Court of Independent Order of Foresters, 104 Wis. 173, 183, 80 N. W. 603, speaking of similar státements made by an applicant for insurance, this court said: “All of the questions as to the health or death, or age at death, of the ancestors or brothers and sisters of the deceased, were material to the risk as matter of law, and the court should have so declared.” The jury found that the ailment from which the insured was actually suffering, tubercular peritonitis, did increase the risk or contributed to produce her death. True, this question had reference to tubercular peritonitis. She did not know that she had tubercular peritonitis. She did know, however, that she had a severe ailment, which had been diagnosed as appendicitis. It does not require either expert testimony or the verdict of a jury to establish the fact that her ailment as [110] diagnosed increased the risk. This is a matter of common knowledge. Furthermore, the testimony of three physicians, through whose hands applications for insurance in the appellant company generally pass, testified without contradiction that the disclosure of the facts within the knowledge of the insured would have resulted in a rejection of her application. We therefore conclude that the false statements made by the insured were made with actual intent to deceive, that they increased the risk and contributed to the loss. The respondent has urged upon our attention the case of Roe v. National Life Ins. Asso. 137 Iowa, 696, 115 N. W. 500, and quotes language from the opinion to the effect that such false statements made by an applicant for insurance may not be relied upon as a defense to an action to recover upon the policy under statutes similar to the statutes of this state herein referred to. A reading of that case convinces us that the Iowa court would come to the same conclusion here reached under the same circumstances. In that case the insured made no representations to the medical examiner. It appears that “the defendant’s agent prepared the application from information obtained from another application the insured had made to another company some time previous, and, by representing to him that the application was prepared according to the association’s requirements, induced him to sign it. The application was prepared in connection with many others, and the manner of doing so was with the consent of the secretary of the defendant association.” Furthermore, the court emphasizes the fact that the examining physician testified that he would not have been influenced in his action on the application even though the statements made by the insured had been truthful. That case is in no respect similar to this. By the Court. — Judgment reversed, and cause remanded with instructions to dismiss the complaint.