Fidelity Mut. Life Ass'n v. Jeffords

SHELBY, Circuit Judge (after stating the facts as above). 1. The failure of the court to give the three charges requested by the plaintiff in error, and the giving of the first eight against: its objection, all of which we have set out in full, raised practically the same question. The distinguished counsel for the plaintiff in error contend that the application for insurance was made the foundation of the policy, and that its statements are covenanted to be trae, and that if — 408 — they are not true the policy is void; that is, it is void whether the untruth he intentional or not. They assert that under the Georgia law .the application for insurance in this case warrants every material statement to be true, and that the question of good faith is not involved. The charge of the court ivas upon the theory that the applicant for insurance in this case did not warrant the truth of every material statement in his application, and that an honest mistake, even as to a material fact, would not void the policy. On the one hand, it is contended that if the insured was afflicted with “incipient tuberculosis” at the date of liis application,, although he believed he was free from disease, that the policy would -he void. On the contrary, it was held by the court below that, even if he had such disease, if he was entirely ignorant of the fact, and answered the inquiry in reference to his condition in good faith, the policy would be valid. Again, it is contended that if the insured answered that lie had been examined only by certain physicians within the last 10 years preceding his application, failing to name other physicians wlio had examined him, this omission would be fatal to the policy, although he answered in good faith, having failed to remember his examination by other physicians. On the contrary, it was held that an honest omission to name all the physicians who had examined him, if he answered in good faith, giving his best recollection and making no willful misrepresentation or fraudulent concealment, would not void the policy. These are the conflicting contentions raised by the refusal to give the charges asked and by the giving of the charges to which exceptions were taken. The contract of insurance was made and delivered, and the premiums paid, in the state of Georgia, where the insured resided. It is therefore a Georgia contract, and is governed by the laws of that state. Society v. Pettus, 140 U. S. 226, 11. Sup. Ct. 822, 35 L. Ed. 497. The following are sections of the Code of Georgia of 1895: “See. 2097. Application, Good. Faith. Every application for insurance must be made in the utmost good faith, and the representations contained in such application are considered as covenanted to be true by. the applicant. Any variation by which the nature, or extent, or character of the risk is changed, will void the policy.”, “Sec. 2099. Concealment. A failure to state a material fact, if not done fraudulently, does not void; but the willful concealment of such a fac-t, which would enhance the risk, will void the policy.” “Sec. 2101. Willful misrepresentation by the assured, or his agent, as to the . interest of the assured, or as to other insurance, or as to any other material inquiry made, will void the policy.” These sections are made applicable to both life and fire insurance. Code Ga. §2117.. It may he stated as a general rule that answers to questions propounded to insured in an application for insurance, unless they are clearly shown by the form of the contract to have been intended by both parties to he warranties to be strictly and literally complied with, are to he construed as representations and not as warranties. Insurance Co. v. Raddin, 120 U. S. 183, 7 Sup. Ct. 500, 30 L. Ed. 644. One of the statements that the insured was required to make to obtain the insurance was that he was “free from any and all diseases,” — 409 — except as stated. Placing the construction upon the application which the plaintiff in error contends for, the policy would be made void if the insured had a disease material to the risk, although he was entirely ignorant of the fact. It might he a disease so undeveloped Lhat’it could not be discovered by an expert physician, and yet if it afterwards developed, and it could he shown that the germs of thet disease were active in the insured at the date of his application, the' policy would be made void. We cannot believe that: this contract is fairly susceptible to such construction. Such a construction ought: to be avoided unless clearly demanded by legal rules. .In the absence of explicit and unequivocal words requiring such interpretation, the court should not conclude that the insured took a life policy with tlie distinct. understanding' that it should be void, and all premiums paid for feited, if at. tlie time of bis application he had a disease of which he was entirely unconscious. Moulor v. Insurance Co., 111 U. S. 335, 4 Sup. Ct. 466, 28 L, Ed. 447. We do not think that it was the purpose of the insurers to exact from the insured, as a condition precedent to a valid contract of insurance, a guaranty against the existence of diseases of which he had no knowledge, and which even a skillful specialist, on careful examination, would be unable to detect. 'We are not: unmindful of the fact that the insured distinctly certifies that the statements in his application are true, and that: he agrees that, if any concealment or untrue statement or answer he made, the policy of insurance shall be void. Referring to the Georgia statute, and probably without the statute, concealment; means "willful concealment.” By that statute it is only the willful misrepresentations and willful concealments that affect the policy. And when the insured agrees that the policy shall be void if it contains any untrue statements, what, does he mean? He surely means "untrue,” in the sense of the law which governs the contract. He means, to quote the Georgia statute, that there is no willful concealment and no willful misrepresentation, and that his statements are made in the utmost good faith. 'Construing a life policy, Mr. Justice Harlan asked what was meant by true and untrue answers, and be answered the question, saying: “In one sense, that only is true which is conformable to the actual state of tilings. In that sense, a statement is untrue which does not express things exactly as they are. But, in another and broader sense, the word ‘true’ is often used as a synonym of ‘honest,’ ‘sincere,’ ‘not fraudulent.’ Looking at all the clauses of tlie application, in connection with the policy, it is reasonably clear — certainly the contrary cannot be confidently asserted — that what tlie company required of the applicant, as a condition precedent to any binding contract, was that lie would observe the utmost good faith towards it. and make full, direct, and honest answers to all questions, without evasion or fraud, and without suppression, misrepresentation, or concealment of facts with which the company ought to lie made acquainted, and that by so doing, and only by so doing, would he be deemed to have made ‘fair and true answers.’ ” Moulor v. Insurance Co., 111 U. S. 335, 345, 4 Sup. Ct. 466, 28 L. Ed. 447. The application in the case at bar does not contain the word “warrant ed.” It purports to be a declaration or statement., and not a warranty. In Moulor v. Insurance Co., supra, the word “warranted” was used in the application which was part of the contract sued on. — 410 — The language in the application for insurance in that case was: ‘ “It is hereby declared and warranted that the above are fair and true answers to the foregoing questions.” Notwithstanding this language, the court held that there was not a warranty in the strict sense that would make the contract void if there was a statement not literally true made in answer to the questions. The court held that, in the absence of intentional misstatement or fraudulent misrepresentation, the contract of insurance was valid. Recently, the supreme court of Georgia has had occasion to construe section 2099 of the Georgia Code. In the court below the request had been made for a charge that the policy would be made void if the applicant failed to give the names of other insurance companies to which he had applied for insurance. He had given the name of one, when he had applied to several. A charge was also asked that the policy would be made void'because he had given the name of only one physician who had attended him during the last 10 years, when, in fact, during that time he had been attended by several others. The trial court refused to give these charges, and the refusal was assigned as error in the supreme court. It was held, Fish, J., delivering the opinion of the court and all the justices concurring, that the court did not err in refusing to give the charges. “It will be seen,” said the learned justice, “that, if the instruction requested correctly stated the law, a policy would be avoided because of a mere omission upon the part of the assured to state a material fact, without reference to the motive by which he was influenced in omitting to make such statement. An omission to state is the equivalent of a failure to state, and by our Civil Code (section 2099) it is expressly provided as follows: ‘A failure to state a material fact, if not done fraudulently, does not void; but the willful concealment of such a fact, which would enhance the risk, will void the policy.’ The request under consideration was not adjusted to the section of the Code we have just quoted, because if the failure to state the fact was the result of an oversight or other cause, and was not done fraudulently, it would not avoid the policy. The omission from the request of the word ‘fraudulently’ put it in direct opposition to the Code provision above referred to, and it was therefore properly refused by the court.” Association v. Farley, 102 Ga. 720, 744, 29 S. E. 615. 2. Martin A. Jeffords applied for and obtained the policy on his own life. He is conclusively presumed to have an insurable interest in his own life. Bliss, Ins. § 17. He directed who should be the beneficiaries. His wife was to receive $3,000, and his brother, Thomas C. Jeffords, $10,000. This latter sum, by agreement between the parties, was “to protect his child or children.” He had one child to survive him. The first premium was paid out of the-money of Martin A. Jeffords. The other premiums were paid by Thomas C. Jeffords for his brother. The insurance company receipted for the money as paid by Martin A. Jeffords. The fact that Thomas C. Jeffords paid the premiums did not invalidate the policy. On the facts stated, it was not a wager policy. A man may take out a policy of insurance upon his life for the benefit of his brother, and it is immaterial what arrangement is made between them for the payment — 411 — of the premiums. Insurance Co. v. France, 94 U. S. 561, 24 L. Ed. 287; Union Fraternal League v. Walton, 109 Ga. 4, 34 S. E. 317, 44 L. R. A. 424. It follows that the court did not err in giving charge numbered 9. 3. The court charged the jury that they should closely scan evidence prepared by William E. Gary and E. C. Milliken, inspectors of the defendant in error. Gary obtained a written statement of Mrs. Jeffords, the widow of the insured, and Milliken obtained a written statement from Dr. Hall. These statements were offered in evidence, and tended to contradict the evidence of Mrs. Jeffords and Dr. Hall given on the trial. The charge referred to is numbered 10, and is set out in full in the sta tement of the case. The giving of this charge is assigned as error. William E. Gary, one of the inspectors, sought and had two interviews with Mrs. Jeffords, — one in Georgia and one at her home in Florida. Gary, on cross-examination, stated that he informed her of the “result” of some suit recently brought against an insurance company where the defense of fraud and conspiracy was made, and he told her “that if the company refused to pay her she could not recover * * * unless the courts reversed themselves. I cited cases, no doubt.” He denied making any threats, saying: “I have been in this business twenty years, and I never make any threat in any case, sir.” An important question in the case was whether Dr. Hinman had examined the insured after the policy was issued, or in 1894, before it was issued. Gary testified that Mrs. Jeffords said “it was in 1894.” Mrs. Jeffords testified,as to the interviews. She said that “Mr. Gary seemed very sympathetic”; that the paper she signed was written in his presence, .and partly from his dictation; that Gary assured her that her claim would be paid in full; and that she was very much agitated when she wrote the paper. The statement signed by Dr. Hall, which was offered in evidence, was obtained by the other inspector, E. O. Milliken. Dr. Hall’s evidence tended to show that the statement was not entirely correct. Milliken approached Hall, and asked him to sign the paper. Dr. Hall testified: “Q. Under what circumstances did they get that statement from you? A. He [Milliken] was going over there. Seemed to be gathering up proofs for his side of the cuse. He was wanting to write them up and outline the manner in which they might not be mistaken, and that my interrogatories might corroborate such statement as I made to him. And at that time I told him, when he drew up those papers, that some things are not fresh in my mind at the moment, and T told him at the time, if I recollected things more clearly, I should correct them. Q. You reserved the right to make corrections? A. Yes, sir.” Dr. Hall’s evidence tended to show that the statement prepared by Milliken and signed by him wras materially inaccurate. In this state of the evidence, we think the court was amply justified in giving the instructions. These inspectors were the agents of the plaintiff in error. They were engaged in preparing a defense in this case. An insurance company can only act through its agents. It is, as the learned trial judge said, a legitimate business to investigate the facts of a cáse that will probably be litigated. Still, the fact that agents so employed are likely to be partial to their prinei — 412 — pals is well' known'. And, if the mode of obtaining admissions indicates that a skilled and experienced person has unduly influenced or unfairly induced admissions, such facts should be closely scanned by the jury, and should greatly affect the weight to be given to the admissions. The position of these inspectors or agents preparing a case is analogous to that of an attorney performing the same service. If an attorney becomes a witness in á case he is trying, it is perfectly proper for the jury, in weighing his evidence, to consider his relation to the case, and his conduct in procuring evidence. In common-law courts it was formerly doubted whether a lawyer retained in a cause, and who was taking part in the trial, was a competent witness (1 Wharf. Ey. § 420); and in the civil law the advocate or procureur of a party was not received as a witness. “Their testimony,” says Pothier, “would be liable to the suspicion of partiality, if they were witnesses in favor of their parties, and there would be an indecency in admitting them as witnesses against them.” 1 Poth. Obi. (Evans) 405. Eeferring to the proof of admissions proved by an attorney in the cause as made to him by the opposing party, Sanford, J., speaking for the court, said: “Moreover, testimony by an attorney of such admissions, made to him by the opposite party, affecting a really doubtful or litigated point, are always regarded with extreme suspicion and distrust by both courts and juries.” Little v. McKeon, 1 Sandf. 607, 609. The parties themselves, and, of course, their agents and attorneys also, are now competent witnesses. Their evidence goes to the jury as that of any other witnesses. The rules that once excluded them as witnesses have long ceased to be rules, but their evidence goes to the jury to be considered by them in view of the witness’ relation to the case. The question of credibility of every witness is for the jury. As the jury should consider such relation, there can be no error in the court’s properly calling it to their attention. The court, we think, did not err in giving this charge. The judgment is affirmed.