Dimick v. Metropolitan Life Insurance

51 A. 692, 67 N.J.L. 367, 1902 N.J. Sup. Ct. LEXIS 147

Opinion

The opinion of the court was delivered by

Collins, J.

It appears from the foregoing recitals that this cause was submitted to the jury on the theory that it was necessary, under the pleadings, in order to defeat recovery, that the defendant should establish by a preponderance of evidence, that the alleged misstatements inducing the contract of insurance were fraudulent. One of the reasons assigned for a new trial is that on the question of fraud 'the verdict was against the clear weight of the evidence. ’ This reason has-not been sustained. The only subject as to which a plausible contention of fraud can be made is that of the plaintiff’shaving had rheumatism previous to the application for the- insurance. His statements, under"oath, in his'applications for pension; that he had that disease, if evidential of the fact, were not conclusive. ' There was no proof that he had really ever had it;-Although'his family 'doctor ánd another physician who' had knbwh him many years were called as witnesses for the defendant. The jury was' properly directed that 'their verdict should not be controlled by a belief that either the government or-the insurance company — one or the other — had been' defrauded. Their sole inquiry was whether fraud had been' practiced on the company. In view of' the self-evident fact, which also was proved, that a man may erroneously suppose that.he has rheumatism, and the presumption against fraud' that must' always be indulged, it is within the bounds of probability that the insured in 1896 may have thought he had that disease'and b'y 1899 have ascertained that' such was-not the ease. '

The other reasons assigned attack the ruling of the trial judge-that, under the pleadings, non-fraudulent misrepresentations were not available in defencé although the answers and statements contained in the application for the policy were thereby made warranties.

The statute on which the refusal to nonsuit the plaintiff or to direct a verdict in favor of the defendant was based, is section 126 of the Practice act (Gen. Stat., p. 2554), which reads as follows: “The plaintiff or defendant in any action may aver performance of conditions precedent generally; and the-opposite party shall not deny such averment generally, but shall specify in his pleading 'the condition precedent, the performance of which he intends to contest.”

It is first contended for ,the defendant that warranties are-not conditions. There is Sometimes a distinction'signified by the usé of one or the other 'of those' terms, for a warranty is-often a merely collateral contract; but there is no such distinction within the purview of this statute as applied to policies of insurance. In American Popular Life Insurance Co.v. Day, 10 Vroom 89, in our court of last resort, warranties and conditions in such instruments are treated as synonymous terms, as indeed they are. In Sonneborn v. Manufacturers’ Insur ance Go., 15 Id. 220, 222, it was declared in the same- court that a promissory warranty, had the nature of a condition precedent. That every inducing statement, made a warranty by a policy of life insurance, shall be true is plainly a condition precedent to the insurer’s liability under such policy. In Eddy St. Iron Foundry v. Hampden, &c., Insurance Co., 8 Fed. Cas. 300, Mr. Justice Clifford said that in the law of insurance “a warranty is a-stipulation forming a part of the contract, and is construed as a condition,” and in Hearn v. Equitable Safety Insurance Co., 11 Id. 965, he reaffirmed that doctrine. In National Bank v. Insurance Co., 95 U. S. 673, in the United States Supreme Court, Mr. Justice Harlan said that when warranted, the exact truth of statements in an application for insurance became a “condition precedent to any binding contract,” and he repeated the expression in the case of Moulor v. American Life Insurance Co., 111 Id. 335. The only case I have found denying that such a warranty is a condition precedent is Redman v. Aetna Insurance Co., 49 Wis. 431, where considerable erudition is displayed, leading only to a misconception of the nature of the subject; but that case is only helpful to either party in the present controversy for its correct decision that under any system of pleading and in any style of action a breach of warranty must be averred and proved by him who relies on such a breach. In the policy in suit, moreover, the warranties were in express terms made conditions.

It is next-contended that cases like that before us are not within the statute, because it is performance by some one other than the plaintiff — that is, by the insured — that is involved. It is assumed that, in the case of Vreeland v. Beekman, 7 Vroom 1, the effect-of the statute is limited to conditions to be performed by a party. The Chief Justice did say: “The object of this provision seems to be to facilitate the pleading by relieving the plaintiff from the burthen of a circumstantial statement of his performance of conditions precedent,” &c.; but the case then in hand happened to be' one where the condition was for the plaintiff himself to perform, and the expression was addressed to that case. That a definite interpretation was not undertaken is evident from the fact that the statute includes defendants in the relation in which the Chief Justice mentions only a plaintiff. The mischief remedied by the act inhered in all cases where performance by any person of the condition precedent to a party’s right was essential, and the language adopted to effectuate this remedy was comprehensive in the highest degree.

It is next contended that the. statute does not apply in actions of assumpsit. We have recently held that the privilege conferred does so apply. Vail v. Pennsylvania Fire Insurance Co., ante p. 66, and the earlier case of Hecht v. Taubel, 26 Vroom 421, is inferentially to the same effect. The restriction is equally applicable. It was- observed in Vail v. Pennsylvania Fire Insurance Co., ubi supra, that the statute not only dispenses with former rigor in declaring a right, but also imposes a burden on him who disputes its assertion. As was said in Vreeland v. Beekman, ubi supra, “a new rule,'with respect to this subject, has been established,” and the words employed embrace all forms of action. In Supreme Assembly v. McDonald, 30 Id. 248, and in Ottawa Tribe, &c., v. Munter, 31 Id. 459, the Court of Errors and Appeals assumed the applicability of the restriction in actions that inspection of the records will show were framed in assumpsit. The reports of those decisions, however, do not disclose the form of action, and I can well understand how a ease cited to us as authority for the defendant’s contention may have led the pleader to the belief that the general issue would embrace the strict defence attempted to be made in this case. The case so cited is Dewees v. Manhattan Fire Insurance Co., 5 Id. 244. It arose on a motion to strike out certain special pleas to a declaration on a fire insurance policy, the averments of which are not stated in the report. The pleas were sustained, but, incidentally, it was said (at p. 253) that the policy not being under seal, and the action being an action of assumpsit, the defendant might, under the general issue, have availed itself of all the defences-made by the pleas. The statute now sub judice, then already in force, was not adverted to. Whether this was because it was not then in mind, or because the plaintiff had not, by his declaration, invoked it, is immaterial. Where the statute is invoked, by the general averment permitted, the dictum referred to is not correct.

It is suggested that even if performance of condition precedent be averred generally, and the opposite party fail to specify in his pleading the condition performance of which he intends to contest, still, if it in fact appears in evidence that such a condition has not been performed, the non-performance must be given effect. We- cannot assent to this view. In such a case it is not needful to meet or explain any testimony on the subject except where it may properly be admissible on some issue within the pleadings; as, in the trial under review, the issue of fraudulent misrepresentation, not required to be specially pleaded. Non-performance will not be effectual, per se, to defeat the right asserted. In the Munter case, above cited, non-performance did in fact appear, but was given no effect.

The statute clearly applies to the pleadings in this case, and it was rightly held that under them the defendant could not defend upon a non-fraudulent misstatement inducing the contract. Franklin Fire Insurance Co. v. Martin, 11 Vroom 568, 573; Vivar v. Knights of Pythias, 23 Id. 455, 467. My brethren, however, are of opinion that, because of the declaration on the subject of pleading made in Dewees v. Manhattan Fire Insurance Co., ubi supra, relief should be awarded by permitting the amendment denied at the trial, and affording a new trial on the issue that the defendant unquestionably meant to raise by its plea, and such will be the order of the court.

In the preface to this opinion are recited four matters as to which misstatements are alleged. Two of them were in the paper marked “A,” signed by both applicants for the insurance, and two of them in the paper marked “B,” which was the medical examination of the person proposed to be ihsured. In this court it must be ruled that such a medical examination may be so referred to in an application for insurance as to become a part of it. Glutting v. Metropolitan Insurance Co., 21 Vroom 287; Finn v. Metropolitan Insurance Co., ante p. 17. We will not prejudge the question of whether or not in this case a reference effectual for that purpose was made, nor must it be assumed that, as to any or either of the four matters suggested, there was misstatement.

1. As to pension. We incline to think that the defendant must be bound by the copy of the application annexed to the policy it issued. In that the question as to pension has no answer. If we take the application as in evidence and assume that the answer now appearing was written before the document was signed^ we find the answer incomplete. No act of congress authorizes a pension for “long services in the Civil war.” Both parties to the contract must be presumed to have known the law. It is plain that Mr. Dimick was not stating the cause, but the occasion of his pepsion. It is impossible that anyone representing the insurer could have supposed that he was using the exact language of the pension papers. If a fuller answer was required it should have been demanded. In case of an omission to answer, or of an imperfect answer to a direct question put to an applicant for insurance, the issue of a policy is a waiver of an answer or of imperfection therein. Phœnix Life Insurance Co. v. Raddin, 120 U. S. 183; Carson v. Jersey City Insurance Co., 14 Vroom 300; affirmed, 15 Id. 210. It is a fair presumption that the defendant could have procured the information, if desired, from the pension office, for it had no difficulty in producing the original papers at the trial.

2. As to other insurance “carried” or “in force.” The two forms of expression indicate a distinction in the mind of the inquirer. As the learned trial justice suggested to the jury, we carry burdens not benefits. No one can say that because Mr. Dimick had a paid-up policy that he was carrying other insurance. Perhaps the paid-up policy, though strictly a fixed obligation, payable according to its terms, without conditions, might fairly be called “insurance in force,” but that question, •also, we will not prejudge.

3. As to rheumatism. Nothing need be added to what has been said on this subject, except that, even if the answer to the medical examiner is to be considered as within the applica lion for insurance, and, therefore, as a warranty, to he tested by fact and not merely by intent, the burden of proof of falsity is on the defendant, and the plaintiff will not be concluded by inconsistent statements of the insured.

4. As to hospital inmacy. Whether the challenged answer was Or was not warranted, the inquiry will be as to the meaning of the question. The word “hospital” itself is ambiguous, .and not every stay in any hospital would be within the scope •of the interrogation. Resort to context and circumstances will be necessary in order to enable a jury to pass upon any issue that may be framed on this point.

The rule to show cause will be made absolute, and an order may be entered permitting the defendant to file a plea tha,t •shall specify the condition, precedent performance of which 'it intends to contest; but limited to the four subjects above mentioned as to which untrue answers or misstatements are •claimed to have been made in the application for insurance.