Lueders' Ex'r v. Hartford Life & Annuity Ins.

12 F. 465, 4 McCrary's Cir. Ct. Rpts 149, 1882 U.S. App. LEXIS 2528

• Court: U.S. Circuit Court for the District of Eastern Missouri
• Decided: May 5, 1882
• Status: Published

Opinion

Treat, D. J.,

(charging ¡jwry orally.) This case differs in some respects from the cases ordinarily submitted to juries concerning life-insurance policies. If you should find for the plaintiff, as there are five of these so-called certificates or policies, you will necessarily find for* her in the sum of $5,000, with interest at the rate of 6 per cent, per annum from December 15,1881; that is, 90 days after the proof of death.

Now, shall the plaintiff recover ? The primary contest is that the deceased made a false statement concerning a disease which he then had and which contributed to his death, to-wit, the so-called liver complaint. The answer to the question, as recorded in the application, is: “Had liver complaint six weeks ago; am well now.” If he had not recovered from the liver complaint, and if he actually made that answer, and died of that disease within the short period named, the plaintiff here has no right to recover; in other words, your verdict should be for the defendant. But did he make such an answer ? And there the strain of the case comes. You have heard the testimony of the widow, and of the doctor who examined Mr. Lueders. When questioned by the medical examiner of this company concerning ibis supposed liver complaint, if be did make the answers as stated by Mr. Wagner and by the doctor, and they were written down in pencil on this paper, and the paper was put across the table for him to sign, and he signed it under the hurry and circumstances developed before you, he had a right to suppose that his answers were recorded as he gave them. If that statement is correct, then this paper is a subterfuge, because he did not tell them what is written down there, but told them that he not only had liver complaint and enlargement of the liver, but that he believed he still had it, and told them who his doctor was that treated him for it; and if this medical examiner of the company wrote down merely his own conclusions with regard to it, and not the answers of the applicant, then the plaintiff is not bound by this application. In other words, every one is bound in these matters, whether the company be a mutual or any other sort of company, to deal truthfully and honestly with the company, because on the faith of the statement of the applicant the company must determine whether it will assume the risk; therefore if the applicant, with regard to any of the questions which are material to the risk, answers falsely, there can be no recovery on the policy. That principle, as a matter of common honesty, ought to obtain with regard to all transactions between man and man.

I presume it will hardly be questioned by you, in the light of the testimony, that the deceased died of the disease called cirrhosis of the liver, or, inordinary language, liver complaint. When he underwent examination and was called upon to answer questions, what did he answer ? Did he answer that he had liver complaint merely and was now well ? Or did he answer that he had enlargement of the liver ? Do you believe that he gave this answer and saw the medical examiner write it down, or is it the conclusion of the medical examiner not only from the statements made by the party applying for the insurance, but also from the result of his own medical investigation? If the answers are not written down as the applicant gave them he is not responsibleior what anybody else wrote. Ho had a right to suppose, in common honesty, that when he signed the paper which was written in pencil his answers were correctly recorded, more especially wdien an officer of the company was recording them. If the officer of the company wrote down, not the answers made by the applicant, but his conclusions gathered from the statements of the applicant and his reference to his medical attendant, Dr. Holland, and also from bis own examination, and these, are answers that the applicant never made, he is not bound by them.

So that, to sum it up in a few words, if the deceased made a false statement in regard to a matter which is material to the risk, to-wit, concerning this li e complaint, from which he died, there can be no recovery by the plaintiff; but if, on the other hand, despite his signature to this paper, which seems originally to have been written in pencil, even supposing it was correctly transcribed into ink afterwards, these are not the answers the applicant made to the questions, but what the doctor chose to write down as his conclusions from the answers made to the questions and his examination, then the plaintiff is entitled to recover. In other words, the applicant is only bound by the answers he makes, and is not bound by the conclusions of the examining doctor from the statements of the applicant, or by the opinion of the doctor with regard to them. You understand me, gentlemen, in regard to it. You have heard the testimony of two witnesses as to what occurred at the time the application was signed, the questions that were put, the circumstances under which they were put, how they were noted down, and who noted them down. They were not written in the handwriting of the deceased. They were written by the medical examiner of the company under the circumstances which he has disclosed. Now, these answers, in, the light of the testimony of the widow of the deceased, would appear to be (and that is for you to decide) rather the result of an opinion formed by the medical examiner as to what ought to be the answers, and not what the answers really were. In other words, if, as the doctor testifies, the answer was, “I have had an enlargement of the liver,” and went through the process of disrobing in order that the doctor might determine the matter, and the doctor, reaching his conclusions, chose to write down this answer without the knowledge of the deceased, it is not the answer of the deceased, and he is not responsible therefor.

The defendant excepted to the giving of the following portion of said charge, to-wit:

“ Now, shall the plaintiff recover ? The primary contest is that the deceased made a false statement concerning a disease which he then had, and which contributed to his death, to-wit, his so-called liver complaint. The answer to this question, as recorded in the application, is: ‘Had liver complaint six weeks ago; am well now.’ If he had not recovered from the liver complaint, and if lie actually made tliat answer and died of tliat disease within the short period named, the plaintiff here has no right to recover. * * *

“ So that, to sum it all up in a few words, if the deceased made a false statement in 'regard to a matter which is material to the risk, to-wit, concerning the liver complaint from which he died, there can be no recovery by the plaintiff. * * *

“ Therefore, if the applicant, with regard to any of the questious which are material to the risk, answered falsely, there can be no recovery on tho policy.”

Under the instructions of the court the jury found for the plaintiff.

The judgment, after reciting the verdict, etc., proceeds:

“ It is therefore considered by the court that the plaintiff, Caroline Lueders, executrix under the will of J. H. Lueders, deceased, have and recover of the defendant, tho Hartford Life & Annuity Insurance Company, of Hartford, Connecticut, as well the said sum of @5,096.66, (five thousand and ninety-six dollars and sixty-six cents,) the damages as aforesaid by the jury assessed, as also the costs herein expended, and that execution issue therefor.”

The defendant moved the court to set aside the verdict and judgment entered in the cause for the following reasons:

“ (1) The verdict of the jury is against the evidence presented at the trial. (2) The verdict was against the weight of the evidence. (3) Tho verdict is against the law as declared in the charge by tho court to the jury. (4) Beams e the court erred in refusing to charge the jury as asked for in the instructions offered hv the defendant. (5) That the court erred by its charge to the jury in submitting to said jury the materiality of the alleged warranties and misrepresentations of J. H. Lueders contained in his application for insurance.”

Tho following opinion was delivered upon the motion:

Theat, D. J. Under the insurance statutes of Missouri the defendant established an agency in this slate, subject, of course, to the provisions of said statutes.. It is contended that the contract sued on does not permit recovery of any sum, when loss occurs, except to the extent of assessments to be made upon the number of issued certificates ; consequently tho plaintiff must aver and prove the number of such outstanding certificates, the judgment to be limited thereby, notwithstanding the amount insured. The case referred to in Connecticut reports (Curtis v. Mutual Benefit Life Ins. Co. 1880) goes very far in that direction; indeed, is directly in point.

It is not proposed to analyze the various cases in England and the United States which seemingly hear on like policies. The contract sued on is somewhat anomalous. It is presumed that it contemplated some available measure of indemnity. When a loss occurs under it, and satisfactory proofs thereof are made to the president and secretary, their duty to make the required assessment ensues, according to its express terms,. If they fail to perform such duty shall the other party be remediless ? As to what legal proceedings might then prevail it is not necessary now to discuss.- This suit is to establish plaintiff’s rights in a case where the company denies that he has any rights whatever. The contract contemplates on its face that final judgment may have to be made; and whether it did or not, the parties aggrieved would have their legal remedy in the proper courts.

It is necessary for the plaintiff to prove a valid loss, the amount to be recovered therefrom after judgment being dependent, possibly, on subsequent events, viz., how much may be collected on the required assessments. Shall the suit at law be based, as to damages, on the number of outstanding certificates, irrespective of what may be collected from assessments thereon within 90 days? Enough appears to show that more than 22,000 certificates of the class named have been issued — scattered, it may be, over many states. It is best known to the company who and where are the certificate-holders, and, if plaintiff’s rights to a judgment on a disputed loss are to be limited by the number, etc., of outstanding certificates, it would seem that defendant should set up the limit as to the number, etc., lapsed or otherwise.

There are many strange provisions in the contract. It is made by a corporation which, it is contended, has subdivided itself into departments for the conduct of distinct branches of business, on some of which it is directly and positively liable, and on others only contingently liable, and on .others liable, as in this case, only in such a way as to become a mere agent to collect from its policy-holders what assessments they may be liable to for losses occurring. Possibly such may be the true construction of its differing contracts and of its corporate obligations; but this court is not prepared so to hold. There must be some one answerable at law for the contracts it makes, •and judgments on such contracts must be against the corporation; but why, if merely an agent ? In the absence of any proof to the contrary, the sum recoverable should be against the corporation for the maximum insured. Any other rule would' make this insurance scheme a mere delusion and snare.

It may often happen that the corporation disputes all liability, and hence refuses to make any assessment, as in this case. When such a dispute is submitted to a court of law, and the judgment is against the corporation, who shall respond to that judgment ? If the loss had been admitted originally, and assessment made on the certificate-holders, and the amount collected paid over within 90 days, as the contract contemplates, no great difficulty might have occurred. Surely the commencement of this suit did not so fix the obligation of other certificate-holders as if, by a lien, that they, and they alone, would be answerable, and only for the result of this judgment. The scheme, if it he as contended, is vague and indeterminate — First, as to the amount of loss recoverable; and, second, in the event of litigation, against whom and to what extent judgment shall be enforced. If judgment is to be against the corporation, for what amount shall it be rendered, and how shall the amount ho ascertained? If the assessment is to he made only on certificate-holders existing at the time of loss happening, how is it as to those who fail to pay ? Who shall collect from the delinquents, and when ? What becomes of a judgment for a certain amount? If the judgment has to he for an amount equal to the number of certificate-holders, how about payment within 90 days, when assessments are to be collected equally and solely from certificate-holders scattered all over the country ?

If the defendant’s theory as to the true construction of the contract, when the corporation compels a suit, is to obtain, then a policy like the present is of little worth. True, if a person, sui juris, ehoosos to make a foolish contract, he must abide by its terms; but should not the contract bo so construed as to make its contemplated benefits available ?

Despite some decisions to the contrary, this court cannot hold otherwise than that when suit has to he brought the recovery should he for thé maximum insured, unless the defendant shows by pleadings and proof that said sum should be reduced. Even then the strange result would follow that as to each outstanding certificate-holder and his responsibility a controversy might arise. The further the inquiry is pursued, the greater the legal difficulties presented.

The motion for new trial must ho overruled.