New York Life Ins. v. Smith

91 So. 456, 129 Miss. 544

Opinion

Andekson, J.,

delivered the opinion of the court.

Appellee, Mrs. Susie B. Smith, as administratrix of the estate of her deceased husband, J. B. Smith, sued the appellant, the New York Life Insurance Company, in the circuit court of Perry county, on a life insurance policy issued by the appellant to said decedent during his lifetime, payable to liis estate, and recovered judgment for the face amount of 'said policy, with interest and costs, from which judgment appellant prosecutes this appeal.

Appellant defended the suit on the ground that the policy in question had not taken effect at the death of the insured, because, as provided in the contract of insurance, he had not paid the first premium thereon, and it had not been delivered to and received by him while living and in good health, and on the further ground that said contract was void because it was procured by false and fraudulent representations made by the insured to the appellant in his application therefor, in this, that he represented in his said application that he Avas at the time of the making thereof in good health, and Avas not suffering from any ailment of the kidneys, bladder, or other internal organs, when in truth and in fact he Avas at that time, and kneAV the fact himself, suffering Avith internal cancer or other serious disease of the internal organs, and that, on' the faith of Avhich representations so falsely and fraudulently made, appellant issued the policy in question. The policy Avas applied fpr on the 14th of April, 1917, and Avas issued on the 20th of April, 1917, and the insured died on the 22d of June of the same year. Insured’s application contains a stipulation that all his ansAvers therein are material to the risk; but. the policy issued thereon expressly provides in the following language that all statements made by the insured in his application, in the absence of fraud, shall be treated as representations, and not Avar-ranties:

“The policy and the application therefor, copy of Avhich is attached hereto, constitute the entire contract. All statements made by the insured shall, in absence, of fraud, be deemed representations and not Avarranties, and no such statement shall avoid the policy or be used in defense to a claim under it, unless it be contained in the written application and a copy of the application is indorsed upon or attached to this policy when issued.”

We will consider first the assignments of error which depend on the question of law, whether the knowledge acquired by a medical examiner for a life insurance company in the examination of an insured for the purpose of ascertaining his condition of health is imputable to the insurance company. The question arose in the present case in this manner. Appellant gave notice under the general issue that it would prove by way of defense that- the policy in question was procured through the fraud of the insured, as stated above. At the term of the court at which the cause was tried, and just before entering upon the trial, appellee filed a replication to this notice, in which she averred that, if it were true, as set up in said notice, that the insured was suffering from some serious internal disease at the time of making his application, Dr. Mounger, appellant’s medical examiner, who examined the insured and wrote- down his answers to the questions propounded to him touching his condition of health, knew of such disease, and that such knowledge was imputable to the appellant. Thereupon appellant moved the court to strike from the files such averment contained in appellant’s said replication, which motion Avas by the court overruled. Appellant then moved the court for a continuance of the cause on the ground of surprise, on account of the matter so set up in the replication, in order that appellant might prepare its defense thereto, Avhich motion for a continuance the court overruled. On the trial appellant’s medical examiner, Dr. Mounger, Avho examined the insured and Avrote down his ansAvers as to the condition of his health, testified on behalf of appellee that, notwithstanding his report of said medical examination Avhich. he turned over to appellant’s soliciting agent, D. B. Holmes, through Avhom said application for insurance Avas made, .shoAved that he found said insured free from any disease of the internal organs; that in truth and fact he found on such examination that there was a slight trace of albumen in tin* urine of the said insured, and some inflammation of his liver (Avhich condition he said did not necessarily mean ill liealth), of which he made a private report to appellant’s medical director in writing, which was customary under the circumstances; that he had been a medical examiner for appellant for about ten years, and such a practice was not unusual. Appellant objected to this testimony on the ground of surprise — that it ivas not prepared to meet such evidence Avith counter proof — and for the further reason that, if such a report had been made to the appellant by Dr. Mounger, the best evidence of it was the report itself. These objections the court overruled.

It is contended for the appellant that under section 2615, Code of 1906 (section 5078, Hemingway’s Code), knowledge acquired by a medical examiner for a life insurance company of the physical condition of the insured while making such examination is imputable to the insurance company. That statute is a part of chapter 69, Code of 1906 (chapter 125, Hemingway’s Code), AA’hich deals with both life and lire1 insurance, as Avell as other kinds of insurance. Said section does not refer in express terms to medical examiners for life insurance companies, and it is so involved in its terms that there is some difficulty in determining whether its provisions Avere intended to apply to such medical examiners. It is unnecessary to decide the question, because if it does so apply it is only declaratory of the common laAV. A medical exahiiner for a life insurance company is the agent of the insurer in making-examination of an applicant for life insurance and in taking doAvn and recording his answers, and his knowledge thus acquired is the knowledge of, and is imputable to. the insurer, who is estopped from taking any advantage thereof. Franklin Life Insurance Co. v. Galligan, 71 Ark. 295, 78 S. W. 102, 100 Am. St. Rep. 73, and note, in which the authorities are collected; 14 R. C. L. 1161. It follows, therefore, that it is AAdiolly immaterial Avhether or not appellant’s medical examiner, Dr. Mounger, communicated the knoAvledge so acquired of the insured’s condition of health to appellant, although, if done, it may be true that appellant would not have issued the policy in question. Appellant is chargeable with any dereliction oí its medical examiner in that respect, and not the insured, tor the latter was without fault; and therefore it was not error in the trial court in refusing to rule out the evidence of said medical examiner in question. And it also follows, for the same reason, that the court committed no error in refusing to strike out appellee’s said averment in her reply to appellant’s said notice under the general issue, and in refusing appellant’s application to continue the cause on the ground of surprise. And furthermore, if it were true that under the law appellant had the right to show in evidence by its medical director that he had received no such communication from Dr. Mounger, still the action of the court complained of would be harmless, because appellant introduced in evidence, without objection on the part of ap-pellee, a letter from said medical director in which he stated that he had received no such information from Dr. Mounger. But we hold that it is entii'ely immaterial whether Dr. Mounger communicated his knowledge of insured’s condition of health to appellant, for his knowledge was appellant’s.

The appellant assigns as grounds for reversal the refusal by the trial court of three instructions requested on its behalf, addressed to the question of the delivery of the policy involved in this cause. Insured’s application provided, among other things, that the policy applied for should not take effect until the first premium was paid and the policy delivered to and received by the insured during his lifetime while in good health.

Stating the evidence on the question of delivery most strongly for appellant, it showed, in substance, that appellant had two soliciting agents at Hattiesburg. D. B. Holmes and N. 11. McCullough. They were not partners, and had no connection with each as such agents, except that in some instances they would divide commissions; and in most cases all policies issued by the appellant on applications forwarded by either- of said agents were sent to McCullough for delivery. The insured made application for the policy in question through said Holmes, wlio took him to Dr. Mounger, appellant’s said medical examiner at Hattiesburg, and had him examined, and forwarded his application to appellant. The application ivas dated the 14th of March, 1917, and the policy was issued 6n the 20th of April thereafter, and forwarded to said McCullough, one of the agents of the appellant, for delivery. Soon after its receipt McCullough informed Holmes that he had received the policy from appellant, and that he had met the insured, Smith, on the street in Hattiesburg shortly before this conversation, and suggested to Holmes that he see Smith and deliver the policy. Accordingly Holmes after-wards did see the insured, and told him the policy was there ready for delivery, and the insured for some reason told him to hold the policy for him, and he would get it later, which Holmes agreed to do. The first premium on the policy was paid before insured’s death. On the 22d of June1,1917, the insured died without the policy ever having been in his manual possession. It was still in the office of.McCullough. The insured was taken violently ill, and lived only a few days. Upon hearing of his death McCullough returned the policy to the Jackson office of the appellant, from which office it had been forwarded to him.

By the first refused instruction for appellant it was sought to inform the jury that, if the policy in question had not been actually delivered into the manual possession of the insured during his lifetime, while in good health, either by the appellant or its agent, the jury should find for the appellant. By the second refused instruction it was sought to inform the jury that, if substantially the facts above stated with reference to the delivery of the policy were true, then there was no delivery and they should find a verdict for appellant. And by the third refused instruction it was sought to inform the jury that said Holmes could not act as agent of appellant for the delivery of the policy, and at the same time act as agent for the insured, unless such dual capacity had been consented to by the appellant.

It is settled by many authorities that, in order to constitute delivery of a life insurance policy, it is not necessary that the actual manual possession of the policy be with the insured. It is the intention of the parties that governs, and not the manual possession of the policy. Where there is an intention on the part of the insurer to part with the control of the policy, and to place it in the control of the insured or some person acting for him, that is sufficient to constitute delivery. And the delivery of the policy by the insurer to its agent, with unconditional instructions to deliver to the insured, amounts to delivery. 14 R. C. L. 898, 899. It was held in Alabama Life Ins. Co. v. Herron, 56 Miss. 643, that, where there was no condition in the contract to the contrary, the mere acceptance of an application for insurance by the insurer amounts to a completion of the contract when the applicant therefor is notified of that.fact; and the same principle was reaffirmed in Mutual Life Ins. Co. v. Shoemake, 126 Miss. 497, 89 So. 154.

The contract of insurance involved in Fidelity Mutual Life Ins. Co. v. Elmore, 111 Miss. 137, 71 So. 305, provided, as the contract does in the present case, that the policy should not take effect until the payment of the first premium, and delivery to the insured in his lifetime while in good health. In passing on the meaning of the term “good health” as used in the application in that case the court said :

“First, as to the contention that the policy never had any validity, because it was admitted that the insured was not in good health at the time the policy was delivered, we think the statement in the application to this effect merely means that the defendant’s health had not undergone any change betAveen the date of the application for and the delivery of the policy. In other words, if at the time the policy was delivered the insured’s health had changed, and the insured Avas aAvare of the fact, it would have been his bounden duty to have disclosed the fact; but if neither the insured nor the company knew- of this changed condition of insured's health when the policy Avas delivered, the ‘continued good health' clause in the application is saved by the terms of the policy itself, and the company will not be permitted to contest the payment of the policy, unless it can show that the insured fraudulently concealed the fact, that he was not in good health when he received the policy.

“The phrase ‘continued good health’ can mean only that the insured having stated that he was in good health when he applied for the insurance, the company would not be bound to deliver the policy, if the state of good health had changed to a state of bad health, even though the application had been approved the policy signed by the officers of the company and delivered to its agents for delivery to the insured. ‘Continued good health’ is a relative term and manifestly relates to the insured’s statement of his condition when he signed the application. This is the letter of the document prepared by the insurance company, and its own carefully prepared documents will be construed most strongly against it. The phrase in question refers alone to the reserved right of the company to withhold delivery of the policy, and has no reference to the validity of the policy after its delivery to the insured. The only difference in the essential facts of this case and the facts of Life Ins. Co. v. Swords, 68 So. 920, is that in the present case the applicant said he was aAvare that his answers were ‘material to the risk.’ ”

The principle of laAV declared in that case was embodied in appellee’s first instruction given by the court, wherein the jury were instructed that, if they believed from the evidence there Avas no change in the condition of the in sured’s health between the time of his application and the delivery of the policy, then such delivery did not violate said “good health” stipulation in his application. We con elude therefore that, under the principles of laAV above stated, and in vieAV of the giving of said first instruction for the appellee, the. court commited no error in refusing said first and second instructions asked by the appellant.

Nor was there any error in refusing the third instruction asked by the appellant, which sought to inform the jury that appellant’s soliciting agent could not act as agent of both parties in the delivery of the policy without the consent of appellant. The evidence showed without conflict that, when appellant’s soliciting agent notified the insured that he had the policy for delivery, and the latter requested such agent to hold it for him until he called for it, which the agent agreed to do, the first premium had been paid by the insured. Therefore the only condition left upon which delivery depended, according to the contract, was whether the insured at that time was in the same state of health he was when he made his application; and this issue of fact was properly submitted to the jury, and found in favor of appellee. Under such facts, and the authorities above referred to in this opinion, delivery to the agent of appellant was delivery to the insured. Neither the policy nor application required the insured to sign any statement or certificate as to his condition of health, his occupation, or other matter as a condition upon which the policy should be delivered to him. It will be seen at a glance that this is a very, different question from that involved in Mutual Life Ins. Co. v. Shoemake, supra. It follows from these views that said third refused instruction had no application to the facts of the case, and it Avas not error to refuse it.

There was ample testimony to go to the jury on the question whether the policy involved was procured by fraud. The evidence for appellant tended strongly to establish the fact that, when insured made application for the policy, as Avell as Avhen it Avas received for delivery, he Avas suffering from internal cancer, and must therefore have known that, while the evidence for appellee tended quite as strongly to show that the insured Avas in perfect health at and beyond those dates, and up to a few days before his death. Clearly that was an issue for the jury.

Affirmed.