Salts v. Prudential Insurance

GOODE, J. (after stating the facts).- — The contention is put forward by defendant that the entire evidence showed beyond inference to the contrary, the insured was not in sound health, but had tuberculosis of the lungs when the policy was granted, and showed further, the statements made by her in her application for the policy and warranted to be true, were not true. We will dismiss this contention by saying the record teems with evidence to prove the insured was not afflicted with tuberculosis, but died from excessive use of morphine, or a congested condition of the liver due to that habit. The doctor who attended her in her last illness so testified, and there is much other testimony to the same effect. There was also abundant evidence from which the jury might have found that when deceased applied for insurance and also when the policy was issued, she was not suffering from any disease, spit — 150 — ting of blood, cough, physical .defect or infirmity, and never had been seriously sick-. In other words, might have found the statements in the application were true. It is worthy of note in this connection, not as constituting a waiver of any right of the company, but as an item of evidence, that defendant’s agent solicited deceased to take out a policy and defendant’s regular examining physician, who had examined risks, for years, passed her as a good average risk, specifically stating her lungs were not diseased in the report of his examination sent to the company. We overrule the assignment of error based on the supposed conclusive proof the insured was not in sound health, but had consumption, when the policy was written, or similar proof the statements in her application were false, citing as an opposite authority Kelly v. Insurance Co., 198 Mo. 440. 2. We do not understand counsel for defendant to contest the proposition that even though there was a misrepresentation by the insured in the application regarding the state of her health, this fact would not preclude recovery unless the matter misrepresented caused or contributed to her death. Whatever representations were made were part of the policy, according to the terms of both the application and the policy itself. The former said the statements made in it were true, should form the basis of the contract of insurance, the policy should be subject to the agreements and conditions contained in it, and no obligation should arise against the company on account of the application and payment of premiums, until the policy had been issued and delivered. One clause of the latter instrument said it should become void if any representations on which it was obtained were not true, thus referring to the application in a way to show the intention was to embrace it as part of the contract. [Angell, Insurance, sec. 141; Kerr, Insurance, p. 826; 1 May, Insurance, secs. 158, et seq.] The statements in the application were warranties. A warranty in the law of insurance is not mat — 151 — ter collateral to tbe contract, stated as an inducement to tbe other party to enter into tbe agreement, as a representation is. It is parcel of tbe contract, and, in tbe absence of a statute to tbe contrary, invalidates tbe obligation if not strictly true; and this tbougb tbe thing warranted does not affect tbe risk. [Aloe v. Insurance Co., 147 Mo. 561; Angell, Insurance, sec. 140; Bliss, Life Ins. (2 Ed.), sec. 34; Bacon, Ben. Soc. (3 Ed.), sec. 194; 1 May, Insurance (4th Ed.), sec. 156.] “The effect of untrue warranties is now controlled in this State by tbe statute which declares no misrepresentation made to obtain and secure a policy of life insurance shall be deemed material or render tbe policy void unless tbe matter misrepresented shall bare actually contributed to tbe contingency or event on which tbe policy is to become due and payable; whether it so contributes in a case shall be a question for tbe jury.” [R. S. 1899, sec. 7890.] Tbe word “misrepresentation” used in tbe statute, has been construed to embrace statements in tbe nature of a warranty, which are introduced into the policy as part of it. [Jacobs v. Assn., 146 Mo. 523; Jenkins v. Insurance Co., 171 Mo. 375; Keller v. Id., 198 Mo. 440.] One question propounded to tbe insured in tbe blank application related to tbe present state of her health, and she answered it was good. Tbe question and answer became a term of tbe contract of insurance, and were a warranty that she was in good or sound health at tbe time. That is to say, they were equivalent to tbe clause of tbe policy requiring her to be in “sound health” at the date of it. While counsel for defendant concede that if tbe warranty regarding tbe state of deceased’s health when she made the application was false, and she was not then in good health, the misrepresentation would have no effect on tbe contract, unless tbe state of her health at said time caused or contributed to her death seven months afterwards, they contend, nevertheless, if she was not in sound health on June 17th, when the policy was delivered, there can be — 152 — no recovery; and this though her health at said date had nothing to do with her death, and even though she was unaware her health was impaired. They contend the statute takes effect only on misrepresentations made in the application for insurance and not on conditions and stipulations contained in the policy. This cannot be true in full measure, because when the contract is worded like the one at bar, statements in the application are as much part of the policy after the latter is executed as any other condition of the instrument. The distinction really attempted is between a warranty and a condition precedent. The argument is this: The provision of the policy that no claim would he paid unless the insured was alive and in sound health when delivered is a condition precedent, and if she was not then in sound health, the policy never took effect as a contract. Before going into this supposed distinction between conditions precedent and warranties, we will scrutinize the language of the clause relied on to see if, in truth, it purports to be a condition precedent to the taking effect of the policy. The language did not say the contract shall not take effect unless she was in sound health, but merely said no claim would be paid by the company if she was not; whereas other clauses of the policy provided expressly it should be void if certain things ivere not done. It is Avorthy of note too that one clause declared if the insured died in one or more years after its date, Avith all premiums paid, the policy should be incontestable. How can that clause be construed harmoniously with the one invoked by defendant, if the latter prevented the policy from taking effect unless the insured was in sound health at the date of it? If it never took effect, Iioav could it become incontestable in any contingency? The idea that a contract not in existence should become incontestable, is elusive. In truth the clause relied on by defendant is no condition precedent in the strict sense of that term, and such is the sense to be attached Avhen a forfeiture is invoked. — 153 — “A condition precedent calls for the performance of some act or the happening of some event, after the terms of the contract have been agreed upon, before the contract shall take effect; that is, the contract is made in form, but does not become operative as a contract until some future act is performed or some subsequent event occurs.” [4 Ency. Law, p. 627.; Redman v. Insurance Co., 49 Wis. 439.] This is the technical definition, but tiie terms “warranty” and “condition precedent” are used interchangeably in insurance law, and in many instances an insurance warranty is nothing more or less than a condition precedent to the taking effect of the contract; as when the insured warrants the premium will be paid by the date of the policy. The frequent identity of the two terms for all purposes of determining liability on a policy in a given case is assumed in numerous treatises and decisions; the assumption sometimes being tacitly applied, and at other times a warranty is spoken of as a condition precedent .or vice versa. [Angell, Insurance, sec. 142; 1 May, Insurance, sec. 156; Bliss, Life Insurance (2 Ed.), see. 34; 1 Bacon, Ben. Soc. (3 Ed.), sec. 194; Mers v. Insurance Co., 68 Mo. 127; Aloe v. Insurance Co., supra; Robertson v. French, 4 East. 135; Vose v. Insurance Co., 6 Cush. 47; Nat. Bank v. Id., 95 U. S. 678; Jefferson Ins. Co. v. Cotheal, 7 Wend. 72; also see numerous decisions cited in note 1, p. 408, 1 Bacon, Ben. Soc.] In the Mers and Aloe cases, it was said: “Where a warranty is part of a contract it must be strictly complied with. ‘It is in the nature of a condition precedent, and no inquiry is allowed into the materiality or immateriality of the fact warranted.’ ” It would be subtle to the last degree to distinguish between clauses originally inserted in a policy to make certain facts conditions precedent (e. g. payment of premium by a given day or the sound health of the insured at the date of the policy) and warranties of those facts in the application which were absorbed in the policy as part of the contract. Such — 154 — a distinction could have no solid foundation in reason or justice. Counsel for defendant Lave cited us in their brief to these cases as sustaining the distinction: Packard v. Insurance Co., 77 N. H. 1; Carmichael v. Id., 101 N. Y. Supp. 602; Insurance Co. v. Betts (Texas), 99 S. W. 1140; Stringham v. Insurance Co., 44 Ore. 447; Langstaff v. Id., 69 N. J. L. 54; Murphy v. Id., 205 Pa. 444; Thomas v. Id., 13 N. D. 444; McAndiless v. Id., 45 Mo. App. 584; Met. Life Ins. Co. v. Howle, 62 Ohio St. 204; Barker v. Insurance Co., 188 Mass. 542. All of those authorities, except the last three, were decided without reference to a statute like ours, and this is enough to discriminate them from the present case; but a critical study of them will reveal that in some, if not all, of the opinions the proposition that a warranty and a condition precedent in a policy has identical legal consequences was taken for granted. Indeed, in several of the cases the matter treated as a condition precedent was contained only in the application and not in the policy itself, except in so far as it was drawn into the latter by the application being declared part of it; Avhereas in other cases the matter appeared in both instruments. [Carmichael v. Insurance Co., Langstaff v. Insurance Co., Insurance Co. v. Betts, supra.] Our essential inquiry is not whether, in the absence of a statute, an unfulfilled warranty of the existence of a certain fact or condition precedent, at the date of the policy, Avould avoid the contract or prevent it from taking effect; but whether if the insured warranted the existence of a fact (e. g. sound health at the date of the policy) and the policy also said no claim would be paid unless the insured was in sound health at said date, it is an accurate interpretation of our statute on the subject to say it will allow recovery notwithstanding the warranty was untrue, if the fact misrepresented did not contribute to the loss, but Añil not allow recovery if the policy elsewhere provided against liability if the fact did not exist, even though its non-existence had nothing — 155 — to do with the loss. To our minds this construction of the statute is not called for by the language in which it is framed and would go far toward defeating its purpose and destroying its usefulness. The case of McAndiless v. Insurance Co., supra, does not help defendant, because it conclusively appeared the insured had consumption at the date of the policy and of the warranty and died with it. Hence the court had no occasion to go into the question of the supposed difference in effect of a breach of conditions written in the policy itself and a breach of those introduced into it by making the application part of it. The decisions in Insurance Co. v. Howie and Barker v. Insurance Co., supra, lend some support to defendant’s proposition and are impressive because pronounced by eminent courts. But the statutes dealt with differ in phraseology from ours. The Massachusetts statute provided no misrepresentation or warranty “made in the negotiation of the contract or policy of insurance,” shall be deemed material or avoid the policy, unless made with the intent to deceive, or unless it increases the risk. [2 Mass. Rev. Laws, p. 1128, sec. 21.] Said statute relates to misrepresentations or warranties made in negotiating for the policy. The Ohio statute says no answer to an interrogatory by a,n applicant in his or her application for the policy shall bar the right to recover on a policy issued on the application, unless falsely and fraudulently made and material, etc. [R. S. Ohio, sec. 8625.] Said statute relates to answers to interrogatories in the application. In view of the language used, the courts of the respective states held the statutes did not relate to clauses of the contract itself, but to negotiations anterior to the contract. Our statute simply says no misrepresentation made in obtaining or securing a policy of insurance, etc. These words less clearly import that the statute has reference only to what was represented prior to the date of the contract, and not to the contents of the policy itself. It is not onr task to criticise the interpre — 156 — tation of their statutes by the courts, of those states. What we decide is that the same interpretation cannot rationally be given to our statute; for thereby we would sanction the very mischief the Legislature intended to obviate — i.e. avoidance of liability because of immaterial errors in representations and warranties. Such defenses based on warranties as the statute aims to exclude would be introduced into the policy as conditions precedent. Perhaps we would have been intimidated by the authority of those courts were we not supported by the judgment of a tribunal of equal eminence, a judgment given, too, in passing on our own statute. In Insurance Company v. Riggs, 203 U. S. 243, the action was on two policies of life insurance issued in this State and containing the following provision: “This policy shall not be in force until the first premium is paid, and the policy delivered to and accepted by the insured while in good health. At any time when this policy has been continuously in force for more than one year, it shall be incontestable except for fraud and nonpayment of premium herein, if the age of the insured has been correctly stated in the application.” The application was made part of the policy, its statements were warranted to be true, and it contained a stipulation that no obligation should arise under it until the policy was issued and delivered, the applicant being at the time in good health and the first premium paid. Every answer was warranted to be material to the risk. The application also warranted the insured was not affected with any disease or disorder. It will be perceived that contract was not materially different from the one at bar. The company denied liability on the ground the answers in the application were untrue and known to be by the applicant. The United States Supreme Court held the Missouri statute governed the case, was not unconstitutional, the company could not escape liability by reason of the representations of the insured unless the jury found the matters misrepresented con — 157 — tributed to the loss. The opinion did not discuss the supposed distinction between warranties and conditions precedent in the policy. Nevertheless, it was ruled the circuit court rightly refused to grant an instruction that the plaintiff could not recover unless the policies were not delivered and accepted while the insured was in good health. That judgment, together with those of the Missouri Supreme Court first cited supra, justify us in holding this defendant cannot evade payment of the policy by virtue of the clause that it would pay no claim unless on the date of the contract, the insured was in sound health, if it did not appear the unsound state of her health at the time contributed to or caused her death — a question for the jury. The effect to be given to the clause relied on by defendant, so as to bring it into unison with the rest of the contract and the law is to hold it extends the statement in the application regarding the good health of the applicant, to the date of the contract, and takes away the right to indemnity if, on said date, she was ill and her illness caused or contributed to her death. 3. The insured died February 21, 1908. Some time in March or April, 1907, prior to the date of the policy, a physician had treated her professionally. This physician was called as a witness by defendant and was asked to state, independently of any examination he had then made and solely from his observation of the insured in the street and other places, whether she was in sound health in June, 1907. The answer to this question was excluded because the witness had treated the insured professionally and he could not separate or distinguish his opinion formed in treating her from his opinion derived solely from observing her on the street and non-prófessionally. The certificate of this doctor as to the cause of her death was also offered by defendant and excluded. It is insisted plaintiff had waived the incompetency of the witness, and particularly of his certificate of death. One ground of waiver — 158 — is that in the proof of loss plaintiff bad written: “See Dr. ctf.” Three other certificates to which that notation referred, were made ont by as many physicians, and the plaintiff had nothing to do with getting- the excluded certificate, which was incompetent against him because it would have been hearsay evidence. It was not one of the certificates referred to in the proof of loss. As to the refusal to permit said witness to tell his opinion, not formed in the course of professional treatment, of the health of deceased, suffice to say no statement was made or tendered of what was proposed to be proved by the witness. [Bank v. Wills, 79 Mo. 275; Bank v. Aull’s Admr., 80 Mo. 199.] The judgment is affirmed. All concur.