Chadwick v. Beneficial Life Ins.

CORFMAN, C. J. Plaintiff brought this action in the district court of Weber county to recover a judgment against the defendant on a life insurance policy issued by the defendant upon the life of her husband, J. Charles Chadwick, wherein she was named as the beneficiary. The policy was issued June 1, 1916, and attached thereto and expressly made a part thereof was a copy of the signed application of the insured, J. Charles Chadwick, dated May 29, 1916, containing the purported questions propounded by the defendant’s .medical examiner to, and the answers made by, the applicant. In compliance with Comp. Laws Utah 1917, section 1154, subd. 3, the policy contained the provision that “all statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties, and no such statement shall avoid or be used in defense under the policy unless it is contained in the written and printed application and a copy of such application is indorsed on the policy issued.” In so far as may become material for a proper consideration of the issues involved in this case the signed application indorsed or attached to and made a part of the policy contains these express agreements on the part of the insured: “I hereby declare and agree that I am now * * * in good health, and ordinarily have good health, and that in my statements and answers in this application, and to the medical examiners, no information has been or will he withheld touching my past and present state of health * * * with which the Beneficial Life Insurance Company should he made acquainted; and that the statements and answers to the printed questions above, together with this declaration, as well as those made by the company’s medical examiner, shall constitute the application and be the basis of this contract.” Also: “I hereby agree that the foregoing statements made to the company’s medical examiner are a part of my application for insurance, are declared to be true, and offered to the company as a consideration for the contract.” — 483 — Tbe insured, J. Charles Chadwick, died August 13, 1916, and thereupon, after refusal of the defendant company to pay the death loss under the policy,’ the beneficiary commenced this action in the usual form. The case has been twice tried before a jury in the district court, and this is the second appeal to this court. The first appeal was by the plaintiff from a judgment entered upon a directed verdict in defendant’s favor. We reversed that judgment, and ordered that the plaintiff be granted a new trial. Chadwick v. Beneficial Life Ins. Co., 54 Utah 443, 181 Pac. 448. A new trial being granted, the defendant applied for and was granted permission to amend its answer, which as -amended, after admitting the issuance and delivery of the policy, the death of the insured, and its refusal to make payment, sets up the following defenses: “(1) That the said policy of insurance was issued by this defendant and accepted by said Chadwick in the following express condition and agreement contained in said policy and made part of said contract of insurance, to wit: That the statements and answers contained in the application for insurance and in answer to the medical examiner of the defendant company, and on the faith of which said policy was issued, were in all respects true, and that no information had been withheld touching the past or present state of health of the applicant with which the defendant company should have been acquainted; and upon the further consideration, to wit, that the answers and statements so made in said application and to the medical examiner, together with the declaration contained in the said application form, should constitute the application, and be the basis of the contract between said Chadwick and the defendant company. “(2) That the said Chadwick violated the conditions contained in said application form, and on faith of which the said policy of insurance was issued, in that he stated therein that he was in good health at the time of making application for insurance to the defendant company; and that, further, the said Chadwick in answer to said question No. 11 of the questions submitted to him as aforesaid by the medical examiner of the defendant company, to wit, ‘Are you in good health so far as you know or believe?’ answered, ‘Yes;’ whereas, the said Chadwick at the time was, and for some time prior to applying for insurance to the defendant company had been, suffering with a disease which tended to prejudicially influence his health and impair his longevity, and from which disease — 484 — the said Chadwick in fact died on or about the 13th day of August, 1916; and that at the time that the said Chadwick made his aforesaid application for insurance and answered the said question No. 11 submitted to him by the defendant’s medical examiner as aforesaid the said Chadwick knew, or had reason to believe, that he was not in good health, and was afflicted with a disease which tended to prejudicially influence his health and impair his longevity. "(3) That the said Chadwick further violated the conditions contained in said contract of insurance in that in the answer made to question No. 6 contained in the statement made t,o the medical examiner of the defendant company as aforesaid, which question reads as follows, to wit: ‘Give name and address of physician last consulted,’ the said Chad.wick answered, ‘None;’ whereas, in fact, within the space of a few weeks prior thereto, .he had consulted doctors at Afton, Wyoming, and at Ogden, Utah, in regard to the disease with which he was at such time afflicted and from which he died. “(4) That the said Chadwick further violated the conditions contained in said contract of insurance in that in the answer made to R of question No. 5 contained in the statement made to the medical examiner of the defendant company as aforesaid, which question reads as follows, to wit, ‘Have you ever had any of the following diseases? Of each illness state date, number of attacks, duration, severity, complications, and result, thus avoiding correspondence and delay. R. Rheumatism or gout’ — the said Chadwick answered, ‘No;’ whereas, in fact, the said Chadwick was at such time suffering with a disease which he believed, or had reason to believe, tended to prejudicially influence his health and impair his longevity, and which, as the result of the opinion expressed to him by his physician, the said Chadwick then believed to be rheumatism.” Upon submission of the case to the jury on the second trial the defendant again moved the district court for a directed verdict in its favor, which was denied. The jury then returned a verdict in plaintiff’s favor, and judgment was entered thereon against the defendant for the amount of the policy, interest and costs. Motion for new trial was made and denied. Defendant appeals, and assigns as errors: (1) The denial of defendant’s motion for a-directed verdict; (2) the refusal to charge the jury as requested by defendant; (3) denial of motion for new trial; (4) that the evidence was insufficient to support the verdict, and that the judgment is contrary to law. Briefly stated, the testimony shows that the insured had — 485 — been a rancher by occupation, strong and vigorous until on about February 1, 1916, when be became afflicted with some malady causing him pains in the back. He then resided at Afton, "Wyo., where be consulted a physician, one Dr. Reese, who diagnosed the ease and treated and advised with him about twice a week from February 1st until about the middle of March for what was supposed to be rheumatism. The malady did not yield to the treatment of Dr.. Reese, and the health of insured became so seriously impaired that he could not perform his customary labors without resulting pain and distress. About the latter part of March the insured went to Ogden, Utah, and did not return to Afton until about July 1st. While at Ogden he was attended by Dr. Rich, who treated him and placed him in a plaster cast, which he was wearing on his return to Wyoming in July. He continued to grow worse, and finally died August 13th. After death an autopsy was performed on the body by Dr. Reese, who found and testified that the insured had died of tuberculosis of the spine. On the 29th day of May the insured made application for a life insurance policy to the defendant, in which application he expressly agreed and declared: “I am now in good health, and that in my statements and answers in this application and to the medical examiner no information has been or will he withheld touching my past and present state of health * * * with which the Beneficial Life Insurance Company should be made acquainted.” As appears from the application, among other questions asked of the insured by the medifal examiner were the following : “Q. Have you ever had any of the following diseases? * * * R. Rheumatism or gout? A. No. Q. Give name and address of physician last consulted. A. None. Q. Are you in good health, so far as you know or believe A. Yes.” The physician, Joseph R. Morrell, who conducted the medical examination, testified that the foregoing questions were propounded to the insured, and that the answers made were recorded in the application as given to him by the insured. The same witness testified that the usual physical examination was given the applicant, from which it was not apparent — 486 — that the applicant was suffering with or had any symptoms of the disease tuberculosis of the spine. The witness also testified that, had the applicant answered the questions propounded to him in the medical examination truthfully, the information he would have* obtained, if there was a presence of tuberculosis of the spine, would elict something that would make him suspicious of such a condition. The same physician, Dr. Morrell, the testimony shows, made a confidential report to the defendant company that he was satisfied that everything had been fully stated as to applicant’s physical condition in the application, and that he recommended the applicant for insurance without reservation. The witness Dr. Morrell further testified that he would not have made the recommendation he did make of the applicant had he given him the information that' he had consulted physician Reese in February and March before, concerning pains in the back which became more intense and severe after performing hard labor; and that he would have used such information had he obtained it in the medical examination as a basis for finding out the ailment for which the applicant had been under treatment. Three other physicians, together with Dr. Morrell, in answer to hypothetical questions propounded to them by the defendant, in which the ailment causing the death of the insured and its symptoms were described, testified that the applicant would know, or have reason to believe, he was suffering with some disease, even if he did not know what it was, of a serious nature. Junius Romney, a witness in behalf of the defendant, testified that he was superintendent of agencies for the defendant company, and that after the death of the insured he visited the plaintiff beneficiary at Afton to investigate plaintiff’s claims under the policy and that plaintiff then stated that — ■ “Her husband had been a strong, vigorous man, doing outdoor work, up until that same year in the month of March, when she said he began to complain of pains in his hack and of being unable to do his work as usual, as had been his custom; that they had gone to consult the Drs. Reese, the local physicians there, who had first diagnosed his case as rheumatism, and treated him for that, — 487 — but that tbe malady did not yield to tbe treatments they gave, and as a result they stated they thought it was tuberculosis of the spine, and advised him to go to the state of Utah and consult specialists in regard to his case. She said he came to Ogden for that purpose, and consulted Dr. Rich and others; that she later joined him in Ogden, and after treatment here he returned to Afton, his home, with a plaster of Paris cast, and that he later died.” Carl Cook, a witness on behalf of the defendant, testified that in the spring of 1916 he was acting as clerk of thp district court at Kemmerer, Wyo., and as such clerk he issued a summons for the insured to be in attendance upon said court as a juror May 1, 1916; that the insured did not attend, but about a week or ten days before the opening of the court he received a letter from the insured stating in substance and to the effect that he was in Ogden under the constant care of a doctor; that he was in a serious condition, and unable to leave Ogden to attend court, and asked the witness to take steps to have him excused for the term. Maude Chadwick, the plaintiff testified that the insured had been a strong and vigorous man, doing his customary farm labor and logging in the canyon, until the early months of 1916, when he commenced complaining of pains in his back; that he consulted the family physician, Dr. Eeese, before going to Ogden in March; that she and'the insured did not consult together as to his making the trip to Ogden to see a physician, and that “practically the only reason” for the trip to Ogden was for the purpose of a visit to friends and family relatives; that she had no personal knowledge that he consulted a physician at Ogden, but that he did consult a chiropractor, one Dr. F. J. Freenor; that she and the insured had talked over the advisability of his having chiropractic treatments for some ailment causing pain in the back which they had thought to be rheumatism; that when insured returned from Ogden in July he was wearing a plaster cast and was a very sick man. The witness further testified: “Q. Do you remember making the statement that Dr. Reese had advised you prior to the time of your husband’s coming down to Ogden that your husband was suffering from tuberculosis of the spine? A. I did not.” — 488 — Some eight witnesses, neighbors of deceased, testified to the effect that they had been acquainted with the insured prior to June 1, 1916, and that. they did not know of his being sick or confined to his bed prior to that time. Counsel for defendant admits on this appeal that in so far as this jurisdiction is concerned the law applicable to this class of cases has been fully and decisively declared by the former opinion of this' court. However, counsel calls our attention to the defendant’s amended answer, and the additional testimony offered and received at the second trial of the case, and then proceeds to very vigorously and earnestly contend that the defendant on the present appeal has met every requirement, both as matter of law and fact, that may be found necessary for a reversal of the judgment of the district court and to have the issues finally determined in its favor. The plaintiff meets us at the very threshold, and contends that there are no new issues presented under the pleadings as amended by defendant, and insists that the testimony is practically the same as on the former appeal; that no new testimony was offered and received in the retrial of the case before the district court, except such as would give rise to a disputed question of fact; and therefore there is nothing left for us to do but affirm the orders and judgment the defendant has appealed from. By reason of the extremely divergent views of counsel as to the result that should be readily arrived at by this court, and in order to make clear the issues involved in the second trial, we have heretofore made a more comprehensive statement of the case, both as to the pleadings and testimony, than we otherwise would have done upon the present appeal.- However, it will be kept in mind that as to the law. applicable to the case our former opinion is controlling on all questions then raised and passed upon. 1 The defendant very strenuously contends that the insurance policy in question was procured by fraud practiced upon it by the insured. The fraud relied upon by the defendant as invalidating the policy was, first, the declara — 489 — tion and express agreement made by the insured in his application that “I am * * * now in good health, and ordinarily have good health, and that in my statements and answers in this application and to the medical examiners no information has been or will be withheld touching my past and present health * * * with which the Beneficial Life Insurance Company should be made acquainted,” etc.; second., that the insured made false and fraudulent representations as to material matters contained in his application, and untrue answers to defendant’s medical examiner concerning the state of his health, when he knew, or should have known, them to be untrue. Bearing on these questions much has been said, and authorities cited, in the former opinion of this case written by Mr. Justice THURMAN, 54 Utah, 443, 181 Pac. 448. In so far as the findings and rulings made by this court on the former appeal may have any bearing on the additional facts disclosed by the record and the questions now involved it was then held: (1) “If there was any testimony which the jury as a matter of law should have considered in order to determine the question of liability, the court had no right to direct a verdict.” (2) “The burden was on the defendant to void the policy by proving that it was procured by fraud. It was not sufficient merely to prove that the deceased made false answers to questions propounded by the medical examiner. It was incumbent upon defendant to prove that the answers were not only untrue, but that the deceased knew, or should have known, them to be untrue.” (3) “The question of good faith on the part of the insured by the defendant’s answer is made the very gist of the controversy. As a matter of pleading it is made the essential element of the defense. * * * In view of our statute (section 1154, C. D. 1917), * * * ,in a case of this kind, where an insurance company relies upon false statements and answers of the insured as a defense against an action on the policy, it must not only allege, as the defendant has done in this case, that the statements and answers are untrue, but also that the insured knew, or should have known, them to be untrue at the time he made them. Not only this, but as a necessary corollary in judicial proceeding the truth of such allegations should be substantially established at the trial.” (4) “Under the issues made and the authorities referred to, assuming the deceased made the statements and answers relied on — 490 — by respondent, the controlling question is, did the deceased in good faith believe he was afflicted with only a temporary ailment, or did he, on the other hand, know, or have reason to believe, that he was afflicted with a disease which tended to prejudicially influence his health and impair his longevity? If the former, the statement, even if untrue, would not, as a matter of law, void the policy; if the latter, it would.” “The same rule must be applied in considering the negative answer of deceased as to the name and address of the physician last consulted.” “As the plaintiff is the beneficiary of the policy and entitled to the exclusive enjoyment of the benefits that may be derived therefrom, any admissions made by her as to the health of her husband and his consultation with physicians, under the issues presented, were clearly admissible.” The foregoing expressions made by this court in its former opinion become the law of the case. However, a retrial was had, new features were introduced by way of amendments to the defendant’s answer, and additional testimony has been received not only in support of the amended pleadings, but also for the purpose of strengthening the contentions made by the defendant oh the former trial. It therefore becomes our duty to again pass upon the ease and review the record with conscientious consideration. It is undisputed that the policy was applied for and that it was issued. It was brought out, however, in the testimony, that the insured, after receiving the policy, made the statement to his wife, the plaintiff, that he had not been asked the following questions contained in the application, “Give name and address of physician last consulted; ” to which the answer is recorded, “None.” “Are you now in good health so far as you know?” to which the answer is recorded, “Yes.” The plaintiff contends that this testimony gave rise to questions of fact for the jury to pass upon, notwithstanding the record shows that the medical examiner, who did not testify at the first trial, gave positive testimony upon the second hearing of the case that the foregoing questions were actually propounded to, and answers made by, the insured precisely as he recorded them and as they now appear in the application. With respect to this testimony the contention of counsel for the plaintiff is right. It was for the jury alone, and not for the court, to determine the fact under — 491 — this conflicting testimony. However, there are other phases of the testimony bearing on the question of alleged false and fraudulent representations of the insured in the procurement of the policy that present much greater difficulties. It appears from the application offered and received, in evidence that it was expressly declared and agreed on the part of the insured that he was at the time of making his application "in good health and ordinarily have good health, and that in my statements and answers in this application and to the medical examiners no information has been or will be withheld touching my past or present state of health with which the Beneficial Life Insurance Company should be made acquainted ; and that the statements and answers to the printed questions above, together with this declaration, as well as those made to the company’s medical examiner, shall constitute the application and the basis of this contract [policy].” (Italics ours.) It was further provided in the signed application of the insured that his statements to the medical examiner were true and offered to the company as a "consideration for the contract.” In view of these express statements which are printed in'the application, and the unquestioned fact that the insured signed the application, and no question being raised that he did not read the application before signing, it must be considered as fully established that the insured made the foregoing statements last above mentioned attributed to him. The question arises, were they material, and, if so, were they false and fraudulent, or, in other words, did the insured know or have reason to believe they were untrue? It certainly cannot be successfully contended that they were not material, for they were made the very basis of the contract. They were offered to the defendant as a consideration for the policy. That these statements were absolutely untrue the testimony in the record before us conclusively establishes beyond the possibility of a doubt. These statements were made at the very time, May 29th, when the insured was suffering with that which is generally regarded as an incurable disease, tuberculosis of the spine. It had attacked him months be — 492 — fore, and thenceforth continued its ravages upon him unabated until death ensued. Touching on the question of good faith of the insured, or his not having knowledge or good reason to believe that he was suffering with an ailment that was seriously affecting, or would seriously affect, his health and impair his longevity, much of the testimony was in conflict. The plaintiff testified that she and the insured thought, up to the time .insured went to Ogden, that he was suffering with rheumatism, and that the pains, in his back were occasioned by a rheumatic condition. Eight of the insured’s close neighbors testified in effect that they in daily association with him, did not know that he was afflicted or was other than a strong and vigorous man up to the time of his leaving home and going to Ogden in March. We remark, however, that this negative testimony is of no value, and that it can have no probative force in determining whether the insured knew, or had good reason to believe, his health to be impaired after he arrived at Ogden in March; for it is very certain these Wyoming neighbors had no opportunity of observing insured while at Ogden at the time when and where the policy was applied for. The same would be true and may be said as to the testimony of the plaintiff; for according to her testimony, she was not with the insured at Ogden except for a very limited time before his return to Wyoming. In conflict with the statements made by the. plaintiff as to what was considered the nature of the insured’s ailment prior to his trip to Ogden is the testimony of the witness Booth that the plaintiff had made the statement to him after death of insured that they (the insured and herself) had consulted with Drs. Reese, and they thought the malady to be tuberculosis of the spine, and had advised the insured to go to Ogden and consult with specialists; that insured came to Ogden for that purpose, and consulted Dr. Rich and others, and later she joined her husband there, and after treatment returned with him to Wyoming, when he was encased in a plaster of Paris cast. This testimony was not before us for consideration on the former appeal. Again, it appears from the uncontradicted — 493 — testimony on this appeal that some time during the latter part of April, before the application for the policy was made, the insured expressly stated in writing to Clerk Cook of the Wyoming court at Kemmerer, after he had been summoned as a juror, that his health was in a serious condition and that he was under the constant care of a doctor. Again, bearing on the question of the good faith of the insured in mak-ing application for the policy, several physicians, some of them specialists in tuberculosis and kindred ailments, gave testimony in the second trial and for the first time in the case, after hypothetical questions had been propounded to them in which the symptoms, duration, and the effect of the insured’s ailment upon him were detailed, that a person so affected would know and have reason to believe that he was afflicted with some disease which would seriously affect his health and prejudicially impair his longevity, although he might not know just what the disease was. Under the issues, as reframed by the pleadings upon the second trial, the defendant alleged and proved that the insured, in answer to the question found in the application, “Have you any of the following diseases? Of each illness state date, number of attacks, duration, severity, complications, and result, thus avoiding correspondence and delay. R. Rheumatism or gout,” stated “No.” It is not denied in the record that the foregoing question was propounded to the insured, nor is it denied that he made the answer “No” recorded 1, 2 in the application. It is contended by the defendant that this too sheds light on the question of good faith of the insured when he applied for the policy. In view of the uncontradicted testimony of the examining physician, ,who testified that had the answer been given in the affirmative (which, according to the contention of plaintiff, the insured believed) he would, as an examiner, have made further investigation by reason of the suspicion that an affirmative answer would have aroused in his mind, we think there is much force in defendant’s contention; that had the answer been made in the affirmative the medical examiner would have made further inquiry, which, in all probability, would — 494 — bave led to a discovery that the insured was then suffering with tuberculosis of the spine. As heretofore remarked, upon the former appeal the principles of law applicable to the facts then presented were fully discussed, and the law governing in this class of cases laid down for the future guidance of the trial courts within this jurisdiction. That we then endeavored to promulgate and follow such rules of law as would tend to a most liberal construction of the insurance policy, so that unless false and fraudulent practices were resorted to on the part of the applicant and clearly proven by the insurer the validity of the policy might not be successfully questioned, a mere cursory reading of the opinion will convince. However, in the light of the additional testimony that appears upon the record of this, the second, appeal, we are of the opinion that the verdict of the jury in the plaintiff’s favor, when tested by all the rules of law applicable thereto, and as formerly announced by this court, should not be permittéd to stand. 54 Utah 443, 181 Pac. 448, supra. Aside from what appears to us to be the overwhelming weight of the other testimony that the insured had good reason to believe that his health was seriously affected by some disease that would prejudi-cially impair his longevity at the very time he made application for the policy in question, the case now comes to us with the uncontradieted testimony in the record that he himself stated, shortly before he made the application, that he was under the constant care of a doctor and that he was in a serious condition. Legally speaking, testimony of such great import in this class of cases cannot and should not be permitted to be successfully ignored by either court or jury. That the insured made the statement attributed to him stands in the record uncontradicted. That in itself ought to have ended this controversy. If the insured at the time of making his application for a policy has knowledge or good reason to know that he is afflicted with a disease that renders his condition serious, and that thereby his longevity will be prejudicially 4 impaired, his statements and representations to — 495 — the contrary in reply to specific inquiries constitute a fraud practiced upon the insurer, and which, when successfully proven, invalidates the policy. For the reasons stated, we think the district court erred in not granting defendant’s request for a directed verdict in its favor. . The question next arising is 5 whether the case should be remanded to the district court with directions to dismiss the action or to order a new trial. In view of the fact that there have already been two trials followed by appeals to this court, and it does not now appear but that the plaintiff has had ample opportunity to present all of the testimony that may be produced in her favor, the writer of this opinion has a very strong conviction that the ends of justice would be better subserved in a dismissal of the action. Had the district court, upon defendant’s request, directed a verdict in its favor, that would have been, under the ruling of this court in Smalley v. Railroad, 34 Utah, 423, 98 Pac. 311, a submission of the case for determination on the merits. The defendant was entitled to a directed verdict, and had it been given by the district court that would have ended the ease. Nothing being apparent at this time from the record before us which would suggest the propriety of a new trial or further proceedings by way of amendment to the pleadings, or that the introduction of new or additional evidence might establish the validity of the policy sued upon by the plaintiff, this court might well exercise a lawful discretion by terminating the litigation between the parties. However, my esteemed Associates, those concurring as well as those dissenting in the reversal of the judgment, are of one mind, that in remanding the case the order should be to grant a new trial. It is only in deference to their opinions that I yield my assent that such shall be the order. It is therefore ordered that the judgment of the district court entered on verdict be reversed, and that the case be remanded, with direction to grant a new trial. Defendant to recover costs.