Stillman v. Ætna Life Ins.

REED, District Judge (after stating the facts as above). The principal defense relied upon by the defendant is that the alleged failure of the plaintiff to answer the questions in the schedule of warranties Nos. 11, 13, and 19, indorsed upon the policies, except as indicated in such answers, invalidates all claims under each of the policies. [1] There is no dispute that plaintiff on April 14, 1915, while both policies, if valid, were in force, suffered an injury, whereby through — 466 — •external, violent, and accidental means which alone totally destroyed the sight of his left eye, and unless he is barred by some provision of the policy he is entitled to recover from the defendant the sum specified therefor in each of the' policies with interest thereon. Certain provisions of the Iowa statute have a material bearing upon this question. In 1880, the Legislature of Iowa passed what are now sections 1741 and 1750 of the Code of Iowa (1897), which, read in this way: “Sec. 1741. All insurance companies or associations sliall, upon tlie issue or renewal of any policy, attach, to such policy, or indorse thereon, a true copy of any application or representation of, the assured which, by the terms of such policy, a.re made a part thereof, or of the contract of insurance, or referred to therein, or which- may in any manner affect the validity of such policy. The omission so to do- shall not render the policy invalid, but if any ■company or association neglects to comply with the requirements of this section it shall forever be precluded from pleading, alleging or proving any such application or representations, or any part thereof, or falsity thereof, or any parts thereof, in any action upon such policy, and the plaintiff in any such action shall not be required, in order to recover against such company or association, either to plead or prove such application or representation, but may do so at Ms option.” “Sec. 1750. The term ‘agent’ used in the foregoing sections of this chapter shall include any other person who shall in any manner directly or indirectly transact the insurance business for any insurance company complying with the, la.ws of this state. Any officer, agent or representative of an insurance company doing business in this state who may solicit insurance, procure applications, issue policies, adjust losses or transact the business generally of such companies, shall be held to be the agent of such insurance company with authority to transact all business within the scope of bis employment, anything in the application, policy, contract, by-laws or articles of incorporation of such company to the contrary notwithstanding.” The stipulated facts show that J. W. Bell, a district^ agent of the defendant company at Council Bluffs, Iowa, solicited from the plain: tiff both of the policies in- suit, received from him the first annual premiums thereon, which policies were renewed by the payment to Bell of a second and third year’s premium upon Exhibit A, and a second year’s premium upon Exhibit B, for which proper receipts of the company were delivered by him to the plaintiff renewing said policies respectively for said years; but no copy of the applications was indorsed upon either of the policies for such renewals. , Under section 1741 of the Code above set out, unless the insurance company upon the issuance of these policies, or the renewals thereof, attached to said policies or renewals, or indorsed thereon, a true copy of the application or representations of the assured, the insurance company is forever precluded from claiming or proving any such warranties or representations to be untrue or false in an action upon such policies. As before stated, what purports to be a copy of the “schedule of warranties” is indorsed upon- each policy; but there is nothing to indicate that the application was ever signed by the plaintiff; nor is there anything to indicate by whom the alleged answers were made to such i of the interrogatories as appear to be answered. Is this a compliance with section 1741 of the Code? In Seiler v. Life Ass’n, 105 Iowa, 87, 74 N. W. 941, 43 L. R. A. 537, which was a suit upon life policies of insurance issued in Iowa after the passage of the above stat — 467 — ute, as here, what purported to be a copy of the application was set out or indorsed upon the policy, but the signature of the insured thereto was omittéd from such copy, and the trial court refused to permit the introduction in evidence of the application when offered by the defendant because not a compliance with section 1741 of the Iowa Code. There was a recovery by the plaintiff of the full amount of the policy, and this ruling was made the basis of an appeal. The Supreme Court of Iowa said of section 1741 of the Code: “This section has been often construed. For a quite recent exposition of its meaning we refer to Goodwin v. [Provident Sav. Life Assur. Ass’n], 97 Iowa, 226 [66 N. W. 157, 32 L. R. A. 473, 59 Am. St. Rep. 411]. It is urged on behalf of the appellant that all of the statements and'representations made by the assured were in the copy that was attached to the policy, and that he could not have been prejudiced by the omission of his signature, for he must have known that he signed the original. But it seems to us that the very purpose of the statute was to avoid, so far as possible, any dispute as to the assured’s knowledge of the contract. The requirement is that a copy of the application shall be attached. We do not understand this to call for a fac simile, but it certainly demands at least a substantial reproduction of thé instrument. The signature is an essential part of the application, and all that is essential in the original should appear in thd copy. It will be noted that in the alleged copy it is not stated by whom the original is signed. ⅜ * * ‘We are 0f the opinion that the copy of the application attached to the policy, not having the copy of the name of the applicant appended thereto, cannot be said to be a copy of such application, within the meaning of the statute. The signature is the thing which gives force to the application, and, when signed with knowledge of its contents, is conclusive on the insured. We think that the signature of the party to an instrument which receives its vitality solely from such signature is such a substantial part of it that a copy of it must contain such signature.’ * * * The trial court was right in holding that the application in this case was no part of the contract, that the statements therein could not he given in evidence.” The court cites with approval Dunbar v. Insurance Co., 72 Wis. 492, 40 N. W. 386, which arose under a statute of Wisconsin, the counterpart of section 1741, and where the signature of the assured was omitted from the copy attached to the policy. In Continental Ins. Co. v. Chamberlain, 132 U. S. 304, 309, 10 Sup. Ct. 87, 33 L. Ed. 341, this construction of section 1741 of the Code of Iowa was approved; and it was also held that under section 1750 of that Code the agent who procured the insurance must be held to be the agent of the company, and the company chargeable with knowledge of such facts pertaining to the insurance that came to the knowledge of the agent when soliciting the same; Cook v. Federal Life Ass’n, 74 Iowa, 746, 748, 35 N. W. 500; Goodwin v. Assurance Ass’n, 97 Iowa, 226, 235, 66 N. W. 157, 32 L. R. A. 473, 59 Am. St. Rep. 411, above; Liquid Acid Co. v. Phœnix Ins. Co., 126 Iowa, 225, 229, 230, 101 N. W. 749. [2] Notwithstanding the Iowa statute and the décisions of its Supreme Court construing it, it is the contention of the defendant that it may still show a breach by the plaintiff of such conditions of the policy as are incorporated therein to defeat recovery thereon, though the application or “schedule of warranties” is not indorsed upon the policy or attached thereto. But the trouble with this contention (admitting without deciding that it correctly states the law) is that there — 468 — are no conditions of the policy, except “the statements in the schedule of warranties indorsed thereon, which statements the insured makes by accepting this policy and warrants to be true.” Section 1741 of the Iowa statute was in force when these policies were written, and it is not within the rightful authority of the insurance company to evade the provisions of the statute by a statement in the policy, “which statements the insured makes by accepting this policy and warrants to be true.” The statute imposes upon the insurance company the duty of attaching to such policy, or indorsing thereon, a true copy of any application or representations of the insured, which by the terms of the policy are made a part thereof and of the contract of insurance, or referred to therein, or which may in any manner affect the validity of such policy; and the omission of the company to do so shall “forever preclude it from alleging or proving any such application or representation, or their falsity in any action upon such policy.” No amount of discussion can make this provision of the statute plainer or obscure its meaning. The “schedule of ' warranties” indorsed upon the policy Exhibit A is not therefore admissible in evidence, nor is any evidence that they are untrue or false in any particular. [3] The application for the policy Exhibit B was made'by the plaintiff by letter dated February 14, 1914, to Agent Bell at Council Bluffs, which reads as follows: “Anthon, Ia., Feb. 14, 1914. “Mr. Bell — Dear Sir: Will you send me the terms upon an accident policy in the ¿Etna which costs say $1(1.00 a month. My policy expires the1 first few days in March and X am inclined to concentrate my various accident policies into a first-class company. Either let me hear from you in this matter as soon as convenient, or if you should be up in this part of the country come in and see me. “Yours truly, W. L. Stillman, Anthon, Iowa.” To this letter Agent Bell answered February 17, 1914, as follows: “I am in receipt of your hind favor concerning the accident insurance proposition, and certainly thank you very much for thinking of me in this connection. I can assure you too, you would make no mistake in confining your insurance entirely to the iEtna, in fact there is no other company in the United States that treats professional and business men as well as the ¿Etna does. A man does not need to be so badly injured that he can’t see, hear or talk to get total (disability with us. Then too, as you know, our policy covers septic blood poisoning due to an accident, as well as contact with poisonous substances. You may have noticed that some of the physicians’ societies have taken' action against some of the companies for not covering blood poisoning due to contact with poisonous substances. They only cover septic blood poisoning due to an accident, that is, if you pricked yourself, or cut yourself, then they would cover you, but would not cover you if you happened to have a hangnail and become innoculated. You have a $60.00 policy with me now. You could double it for $120.00 which would be just $10.00 a month. That would, cover you for $20,000 and $100 a week, if disabled. I would be very glad to fix you up a policy of this kind. X don’t believe you would make any mistake in cutting “out all your insurance and placing it that way in one company. You will have it with an agent who gives his personal attention a,nd best judgment to handling claims of this kind, and our methods are prompt and up-to-date. If you wish to do this I will be glad to send you an additional policy, or put it all in one policy for you, which would probably be better, but in sending you a new policy for the total amount X would, of course, save the accumulations on your policy for this year. As you know, the — 469 — policy that you took last year will ha.ve 10 per cent, accumulations on it this year. I would add that, of course, to your new policy. If you paid $120 a year this would give you $20,000 and $100 a week for the ordinary accidents and would he just twice as large as the policy you have with me now. Then the policy would of course have the double-up feature and cover your wife, etc., the same as the policy you have. I am sure you will not make any mistake in doing this, doctor, and trust that you can see your way clear to do this. Trusting I may hear further from you concerning the matter and thanking you in advance with best wishes, I remain, “Yours truly, J. W. Bell.” February 24, 1914, the plaintiff again wrote to Agent Bell as follows : “Anthon, Iowa, Feb. 24, 1914. “J. W. Bell, Council Bluffs, Iowa: Inclosed find check for $120. Be so kind as to renew policy B-250446 and issue another of like sort dated even date with this note. “Yours truly, W. L. Stillman, M. D., Anthon, Iowa.” On February 25th, Agent Bell replied to plaintiff’s letter of the 24th as follows: “Council Bluffs, la., Feb. 25, 1914. “Dr. W. L. Stillman, Anthon, Iowa — Dear Doctor: I am in receipt of your favor inclosing check for the premium on your policy, also in payment of a like amount of additional insurance, and certainly thank you very much. I am taking it for granted you are lapsing your other insurance and putting it all in one good company, the iEtna. I am mailing the same to the home office for approval, and as soon as the policy is returned, I will mail it to you. I am dating this policy Feb. 24th, in compliance with your wishes as expressed in your letter. I certainly think too, you show your good judgment in increasing your insurance with us, as I am sure you will not make any mistake in doing this. Thanking you very much for the favor and any good you can do, with best wishes, I, remain, “Yours truly, J. W. Bell, Agt.” On February 25, 1914 (the same day), Agent Bell wrote a letter to J. M. Parker, Jr., secretary of the defendant company, which is as follows: “Council Bluffs, Iowa, February 25, 1914. “Mr. J. M. Parker, Jr., Secy., Hartford, Conn. — Dear'Sir: Inclosed herewith I hand you policy B-261682, Dr. W. L. Stillman, together with application; for approval. The doctor is concentrating all his accident insurance in one company a.nd is increasing it to the usual amount he carries, lapsing his other insurance in other companies. The policy he is taking now is to replace one on the F. & C. Company. If there are any amendments to make in the policy, kindly make the same and return immédiately, together with return of the application, so I can have the application signed when the policy is delivered, and greatly oblige, “Yours truly, J. W. Bell.” The application for the policy Exhibit B bears the following in-dorsement : “Accident and Liability Department. “/Etna Life Insurance Company of Hartford, Conn. “Those portions of policies Nos. B-250446 and B-261682, issued to Fcm/tos L. Stillman, limiting the total amount of insurance under Accident policies of this Company, are hereby modified to extend said limit to an amount not — 470 — exceeding twenty thousand dollars, with one hundred dollars per week for weekly indemnity, except as such sums shall be increased under the provisions of the double indemnity clause, the surgical operation clause, the accumulative clause, the hospital indemnity.clause and/or under the provisions of beneficiary supplements Nos. 98192 and 111/180. “This extension of limit shall remain in force only so long as ‘the insurance under each of said policies is continued in force. Dated at Hartford, Conn., this the 28th day of 'February, 191b. Countersigned A. G. Powers, Policy Writer; J. M. Parker, Jr., Secretary.” The words of this indorsement italicized are typewritten, the rest are in print. This indorsement or slip appears to have been attached to the application at the home office of the company at Hartford, Conn., on receipt of the letter of Agent Bell addressed to the secretary of the company on February 25, 1914. ' On February 5, 1915, the plaintiff again wrote to1 Agent Bell as follows: “Anthon, Iowa, Feb. 5th, 1915. “J. W. Bell, Council Bluffs: I find to-day upon my tickler a. reminder that the .¿Etna policies are nearly due again. I have taken out in addition something like $25,000.00 in other companies. Mostly of cheaper grade, so want fact to appear in the new policies when you issue them. Send me the notice when due and I will forward cheek. “Very truly yours, W. L. Stillman.” On February 8, 1915, Agent Bell replied to said letter of February 5th as follows: “Dr. W. L. Stillman, Anthon, Iowa — Dear Doctor: I am in receipt of your favor advising me you had taken additional accident insurance, and in reply beg to advise this will make no difference to the ¿Etna, especially if you are not bverinsured. Your premium is due the 24th of this month, could increase your insurance with this company if you wished to do so. We write up to $25,000 and of course if you wished me to do so, could raise your insurance accordingly. With best wishes I beg to remain, “Yours truly, J. W. Bell.” From this correspondence and the additional stipulation of facts it appears that the second policy in suit, Exhibit B, was procured by defendant’s agent Bell upon an application by letter from the plaintiff to him dated February 14, 1914, in response to which Agent Bell prepared an application for the policy which he (Bell) signed and forwarded to the company, and which the plaintiff never saw and never signed, though what purports to be a copy is indorsed upon the policy; and it was the duty of the defendant, under section 1741 of the Iowa statute, to attach to, the policy, or indorse thereon when it was issued, a true copy of such representations or warranties, and the omission to do so forever precludes the defendant from showing such statements or warranties, if any, to be untrue, to defeat an action upon the policy. Besides, under section 1750 of the Iowa Code, the agent •Bell who prepared the application for this policy collected the premium thereon and procured the policy for the plaintiff and knew from the letter of plaintiff the insurance carried by him, and defendant is chargeable with such knowledge as the agent acquired in the transaction leading to the issuance of that policy, notwithstanding anything in the policy to the contrary, and is now estopped from denying the — 471 — knowledge so acquired by its agent .Bell in the transaction; leading to the issuance of the policy Exhibit B, its renewal, and the renewal of the policy Exhibit A in February and March, 1915. St. Paul Fire & Marine Ins. Co. v. Sharer, 76 Iowa, 282, 41 N. W. 19; Key v. Des Moines Ins, Co., 77 Iowa, 174-177, 41 N. W. 614; Liquid Acid Co. v. Phœnix Ins. Co., 126 Iowa, 225, 229, 230, 101 N. W. 749; Kirkpatrick v. London Guarantee Co., 139 Iowa, 370, 115 N. W. 1107, 19 L. R. A. (N. S.) 102; Wilson v. Insurance Co., 143 Iowa, 458, 462, 122 N. W. 157; Continental Ins. Co. v. Chamberlain, 132 U. S. 304, 10 Sup. Ct. 87, 33 L. Ed. 341. In Continental Ins. Co. v. Chamberlain, 132 U. S. 304, 310, 10 Sup. Ct. 87, 89 (33 L. Ed. 341), above, a suit upqn a life insurance policy issued in Iowa, the Supreme Court of the United States said of sections 1741 and 1750 of the Iowa statute: “Tlie object of tbis legislation is manifest. But if any doubt on tbe subject existed, it is removed by tbe case of St. Paul Fire & Marine Ins. Co. v. Sbarer, 76 Iowa, 282, 286 [41 N. W. 19, 29], in wbicb it was said: ‘Tbe purpose of tbe statute was to settle, as between tbe parties to tbe contract of insurance, tbe relation of tbe agents through whom tbe negotiations were conducted-Many insurance companies provided in their applications and policies that tbe agent by whom tbe application was procured should be regarded as tbe agent of tbe assured. Under that provision they were able to avail themselves, in many cases of loss, of defenses wbicb would not have been available if tbe solicitor bad been regarded as their agent, and many cases of apparent hardship and injustice arose under its enforcement, and that is tbe evil wbicb was intended to be remedied by the statute, and it ought to be so interpreted as to accomplish that result.’ Tbis statute was in force at tbe time tbe application for the policy in suit was taken, and therefore governs tbe present case. It dispenses with any inquiry as to whether tbe application or tbe policy, either expressly or by necessary implication, made Boak tbe agent of tbe assured in taking such application. By force of tbe statute, be was tbe agent of tbe company in soliciting and procuring tbe application. He could not, by any act of bis, shake off tbe character of agent for tbe company. Nor could tbe company by any provision in tbe application or policy convert him into an agent of tbe assured. If it could, then tbe object of the statute would be defeated. In his capacity as agent of tbe insurance company be filled up tbe application — something that be was not bound to do, but wbicb service, if be chose to render it, was within tbe scope of his authority as agent. * * * His act in writing tbe answer, wbicb is alleged to be untrue, was, under the circumstances, tbe act of-the company; * * * and, by force of tbe law of tbe state where such negotiations take place, is tbe agent of tbe company, and not, in any sense, an agent of tbe applicant.” This rule is followed in McMaster v. New York Life Ins. Co., 183 U. S. 25, 38, 22 Sup. Ct. 10, 46 L. Ed. 64, decided at the same term that Northern Assurance Co. v. Grand View Building Ass’n, 183 U. S. 308, 22 Sup. Ct. 133, 46 L. Ed. 213, hereinafter referred to, was decided. There seems to be no doubt, therefore, that Bell was the agent of the defendant company in procuring the policy of February 24, 1914, Exhibit B, and that defendant is ’ chargeable with all the knowledge acquired by him from the plaintiff in that transaction. In so holding there is nothing that violates tihe rule forbidding parol evidence to change the terms of a written contract — a question quite apart from any involved in this controversy. — 472 — [4] However, the rider attached to both policies under the head of “Warranties” provides: “All of the statements made by the insured in the schedule of warranties or copy of application indorsed on the policy shall be deemed representations, and no representation, unless material or fraudulent, shall invalidate any claim under this policy.” This provision is later and inconsistent with the provisions of clause E of part 13 of the policy, which provides, “Any breach of warranty in the schedule of warranties indorsed hereon, or a failure to comply with any of the requirements, contained herein, shall invalidate all claim under this policy,” and abrogates that clause, and the burden therefore is upon the defendant to prove the materiality of representations and their falsity, if material and false, of which there is no competent proof in this case; the “schedule of warranties” attached to the policy Exhibit B, not having been made or signed' by the plaintiff, are not admissible in evidence, nor is any evidence or proof of their materiality or falsity admissible. [5] The facts stipulated also show that at the time of the accident, April 14, 1915, the plaintiff was carrying other insurance than the two policies in tire defendant company. But there is no issue that the policies were avoided by the carrying of other insurance, and only that they were avoided because the “schedule of warranties” did not show the other insurance carried. Nor does either policy by any of its provisions forbid the carrying of other insurance, and it is only alleged to be avoided by the failure to answer the questions in the “schedule of warranties,” or a false statement therein. The stipulation as to the carrying of additional insurance by the plaintiff is therefore deemed quite immaterial. [6] Counsel for the defendant cite numerous authorities which it claims support its contention that the knowledge by its agent Bell of the insurance carried by the plaintiff, and not shown in the “schedule of warranties,” is not binding ujoon it'under the terms of clause E of part 13 of the policy. Principal among these is the case of Northern Assurance Co. v. Grand View Building Ass’n, 183 U. S. 308, 22 Sup. Ct. 133, 46 L. Ed. 213, above. That case, however, arose in Nebraska, and was not influenced by any statute such as that in Iowa above set out. It may be conceded that in the absence of a controlling statute it is competent for an insurance company to relieve itself from all obligations to pay its losses, by stipulations printed in its policies that it shall not be bound by any act of its agents in issuing the same unless such stipulations are indorsed thereon and signed by tíre president, secretary, or other chief officer of the company, and if such a case shall arise in this court it will be its duty to follow the decision of the Supreme Court in Northern Assurance Co. v. Grand View Building Ass’n, above. That case and the cases following it are therefore inapplicable to the questions involved in this case and need not be further noticed. [7] The defendant further urges that the utmost tire plaintiff is entitled to recover, if entitled to recover a.t all, would be some pro rata share of his actual weekly earnings proportionate to the weekly indemnity provided for in the policies. I am unable to perceive that the — 473 — weekly indemnity provision of the policy has anything to do with this case, for the total loss of the sight of an eye resulting solely from external, violent, and accidental means, as specified in each of the policies, is a fixed amount.under each that the defendant shall pay for such injury, and the last clause of subsection B of part 13 of the policy, which reads, “When liability is created under the provisions of part, 1 hereof, all insurance hereunder shall immediately cease,” eliminates that question in all cases where a total loss arises under the policy. A weekly indemnity is recoverable under the policies only when the insured is wholly or partly disabled because of the accident from pursuing his ordinary occupation, when the insured may recover the stipulated weekly indemnity for such disability. There is no claim for such disability to pursue an occupation in this case, but a single claim for the specified indemnity provided for the total loss of the sight of an eye in each policy. If defendant is not liable upon these policies, then seemingly the principal purpose of an insurance policy in Iowa is to enable the company to collect and retain the premiums it charges for insurance ; but, in case a loss arises under the policy, to avoid the payment thereof if it shall deem it advisable to do so. Under the issues, the terms of the policies, and the facts as stipulated, I can reach no other conclusion than that plaintiff is entitled to recover upon each of the policies in suit that part of the principal sum as increased by the accumulations specified in each for the loss of plaintiff’s eye, the aggregate amount of which is $11,500, with interest at 6 per cent, from the date the amount was payable after the proofs were given to the defendant, and judgment is ordered therefor; to which judgment and order the defendant excepts, and is given 30 days from the filing of this opinion to settle and file a bill of exceptions. It is ordered accordingly.