Pelican v. Mutual Life Insurance

119 P. 778, 44 Mont. 277, 1911 Mont. LEXIS 91

• Court: Montana Supreme Court
• Decided: December 8, 1911
• Docket: No. 3,029
• Status: Published

Opinion

MR. CHIEF JUSTICE BRANTLY

delivered the opinion of the court.

1. Plaintiff, being sworn, testified that she was the surviving wife of Henry Pelican, the beneficiary named in the policy, and that no part of the sum stipulated for therein had been paid. Her counsel then introduced the policy and rested. Thereupon counsel for defendant moved for a nonsuit on the ground that plaintiff had failed to show that Pelican was in good health at the time the policy was delivered. The motion was overruled. Defendant assigns error. Counsel argue that, since in the application Pelican agreed that the contract should not become effective unless the first premium was paid and the policy was issued during his “continuance in good health,” it had not become a binding contract in the absence of evidence showing that he was in good health at the date of its issuance. The ruling was proper. It stood admitted by the answer that the [1] first premium had been paid and retained by the defendant. Under this condition of the case, the plaintiff was entitled to judgment, in the absence of evidence tending to establish the fraud upon which alone the defendant relied to avoid the contract. Therefore the burden was upon the defendant. (Revised Codes, sec. 7972.) Furthermore, if any evidence had been necessary to make out a prima facie ease, the application, a copy of which was attached to the policy, recites that the binding receipt had been given by the solicitor of the defendant upon a completion of the medical examination.

2. During the cross-examination of the plaintiff, counsel for defendant had her identify the papers containing the proof of death furnished by her to defendant, and then offered them in evidence for the purpose of showing the cause of the death. They were excluded. There was no issue in the pleadings as to the cause of death. If material for any purpose, the evidence tended to show that, at the time the application was signed, Pelican was probably suffering from tuberculosis, and therefore that his statement that he was in good health was not true. [2] The inquiry in this regard appertained to defendant’s affirmative defense, and, since the plaintiff had not given testimony on this subject, it was not within the right of counsel to cross-examine her with reference to it. (Borden v. Lynch, 34 Mont. 503, 87 Pac. 609.)

3. The next contention is that the court erred in overruling defendant’s motion for a directed verdict. Counsel’s theory of the case is that the statements contained in the application touching the condition of Pelican’s health were warranties, and that, since they were conclusively shown to be untrue, the result was that the policy was avoided. The assumption by counsel is erroneous.

The general rule is that a warranty must be a part and parcel of the contract — made so by express agreement of the parties [3] upon the face of the policy. It is in the nature of a condition precedent and must be strictly complied with or literally fulfilled, to entitle the assured to recover on the policy. It need not be actually material to the risk; its falsity will bar recovery because by the express stipulation the statement is warranted .to be true, and thus is made material. (Alabama Gold Life Ins. Co. v. Johnston, 80 Ala. 467, 59 Am. Rep. 816, 2 South. 125; Collins v. Metropolitan Life Ins. Co., 32 Mont. 329, 108 Am. St. Rep. 578, 80 Pac. 609, 1092.) “A representation is not, strictly speaking, a part of the contract of insurance, or of the essence of it, but rather something collateral or preliminary, and in the nature of an inducement to it. A false [4] representation, unlike a false warranty, will not operate to vitiate the contract, or avoid the policy, unless it relates to a fact actually material, or clearly intended to be made material by the agreement of the parties. It is sufficient if representations be substantially true. They need not be strictly or literally so. A misrepresentation renders the policy void on the ground of fraud, while a noncompliance with a warranty operates as an express breach of the contract.” (Alabama Gold Life Ins. Co. v. Johnston, supra.) When, therefore, the statements are mere representations, the transaction becomes a matter of fair dealing on the part of the insured; and, if it appears from the application that the questions put to the applieant call for information founded upon his knowledge or belief, a misstatement or omission to answer will not avoid the [5] . policy, unless the answer is made knowingly and willfully with intent to deceive. (Globe Mutual Life Ins. Assn. v. March, 118 Ill. App. 261; Globe Mutual Life Ins. Assn. v. Wagner, 188 Ill. 133, 80 Am. St. Rep. 169, 58 N. E. 970, 52 L. R. A. 649; Moulor v. American Life Ins. Co., 111 U. S. 335, 4 Sup. Ct. 466, 28 L. Ed. 447; Ames v. Manhattan Life Ins. Co., 40 App. Div. 465, 58 N. Y. Supp. 244; Horn v. Amicable M. Life Ins. Co., 64 Barb. (N. Y.) 81; Equitable Life Assur. Soc. v. McElroy, 83 Fed. 631, 28 C. C. A. 365; Caruthers v. Kansas Life Ins. Co. (C. C.), 108 Fed. 487; Kenn v. Metropolitan Life Ins. Co., 67 N. J. L. 310, 51 Atl. 689; 25 Cyc. 800; 3 Cooley’s Briefs on the Law of Insurance, 1956.)

It is true that in the application there is found the statement that the answers made to the medical examiner were true and were made to the company “as an inducement to issue the proposed policy.” Yet it appears, from the condition quoted above from the policy itself, .that in the absence of fraud these statements were to be “deemed as representations and not warranties.” Of course, if they were warranties, they would bring this case within the rule stated in Collins v. Metropolitan Life Ins. Co. and Alabama Gold Life Ins. Co. v. Johnston, supra, [6] which is recognized by the courts generally. Here the policy was prepared by the defendant. The language contained in it is its language. The rule of construction applicable is that if, after resort to all other rules, there still remains any uncertainty as to the intention of the parties, the language of the contract must be interpreted most strongly against the party who caused the uncertainty to exist. (Rev. Codes, sec. 5043; Bickford v. Kirwin, 30 Mont. 1, 75 Pac. 518; Blankenship v. Decker, 34 Mont. 292, 85 Pac. 1035.) In this class of cases, the defendant, being the promisor, is presumed to be such party. While, under the provision of the policy referred to, we think it is clear that the intention was that the statements of Pelican were to be taken as representations and not warranties, yet, so far as this intention may be considered as involved in any uncertainty, the doubt must be resolved in favor of the plaintiff.

Under the rule deducible from the authorities cited supra, the recital in the application in this case, in view of the condition stated in. the policy, means nothing more than this: That upon the payment of the first premium it became a contract binding upon the defendant, unless the latter could show that it was induced to issue -it by actual fraud practiced upon it by Pelican, in failing to answer fully and fairly each question propounded to him, according to his best information and belief. That this was the character of answers required is apparent from the nature of the questions propounded, dealing, as they did, so far as the condition of his health then was and theretofore had been, with matters about which a layman is not presumed to be acquainted. This being so, the burden was upon defendant to show, not only that the representations were untrue, but were made with the intent to conceal the condition of Pelican’s health, .and that defendant would not have issued the policy but for the fraud thus practiced upon it. “Bach party to a contract of insurance must communicate to the other, in good faith, all the facts within his knowledge which are, or which he believes to be, material to the contract, and which the other has not the means of ascertaining, and as to which he makes no warranty.” (Rev. Codes, sec. 5570.) Therefore, if the insured intentionally conceals facts which are material, or makes false representations with reference to them, intending to mislead the insurer, he is guilty of actual fraud, which, at the option of the latter, avoids the policy. Such a fraud, [7] however, is always a question of fact for the jury (Rev. Codes, sec. 4980), and, unless the condition of the evidence is such that only one inference may be drawn from it, the court may not direct a verdict. The inquiry is: First, as to the truth of the representations; second, if untrue, whether they were intended to mislead; third, whether the adverse party accepted them as true and acted upon them; and, fourth, was he prejudiced? (Power & Bro. v. Turner, 37 Mont. 521, 97 Pac. .) The concealment of the material fact is equivalent to a false representation that it does not exist. (Id.)

The evidence tends to show that Pelican died of pulmonary tuberculosis, attended by chronic pleurisy and chronic pleuropericarditis. Two physicians, Drs. Horst and Anderson, who performed an autopsy upon the body, testified that the condition of the lungs and pleura bore evidence that the disease had been of long standing, and that they were of the opinion that such had been the case. Both, however, stated that a person may contract tuberculosis and die of it within a few weeks, but expressed the opinion that in such case the disease would be acute in form and not attended by the chronic pleuritic condition found in the body of Pelican. Dr. Matthews testified that he had been called to attend Pelican and visited him on the 10th, 11th and 12th of September, 1908, and perhaps on other occasions immediately prior to these days, but of which fact he had no record. Pelican was then, according to his statement, in an emaciated condition, suffering from pulmonary tubercular pleurisy. The witness was of the opinion at that time that Pelican would not thereafter be able to work at his occupation, that of a miner. On September 12, the witness aspirated Pelican’s chest, removing therefrom about two quarts of fluid. The witness stated that this was a minor surgical operation. Though he deemed the patient’s condition serious, he did not disclose it to him or his family, further than to tell the plaintiff that he was a very sick man. Subsequent to September 12, and prior to October 9, 1908, he treated the patient at his office and saw him in the office of another physician. At this time he was emaciated, short of breath, and coughed badly. Dr. Hammond, the defendant’s examining physician, who had acted in that capacity for twenty-five years, stated that on the date of the application he made the examination of Pelican particularly with the purpose of ascertaining whether there were any indications of pulmonary tuberculosis, and found no trace of it whatsoever. Dr. Sullivan testified that he visited Pelican once in the spring of 1909; that he made a thorough subjective and objective examination and found him suffering from influenza; that, though he made examination of Pelican’s chest, he found none of the conditions, testified to by Dr. Matthews as present in September, 1908; but that such conditions might have existed without the knowledge either of the attending physician or of the patient himself. The mother and sister of Pelican were present when Dr. Matthews aspirated Pelican’s chest on September 12. Both stated that in reply to an inquiry by the plaintiff, as to the illness from which her husband was suffering, made in the hearing of her husband, Dr. Matthews informed her that it was influenza, but “did not amount to anything.” The witness Snow, who accompanied the doctor on that visit, stated that Dr. Matthews fully informed Pelican as to the character of the-disease. Dr. Matthews himself said, however, that he did not make any statement either to Pelican or to plaintiff as to the nature of the disease, and did not remember whether he told the plaintiff that it was influenza. He stated to plaintiff, he said, that the condition was serious, and that Pelican would probably not be able to work again. As to the treatment given by Dr. Matthews, Dr. Sullivan stated that he did not consider the use of the aspirating instrument a surgical operation, and that any physician could use it, its use requiring no special skill. The evidence as to the loss of weight by Pelican is very meager. He began to work in one of the mines in Butte in the spring of 1908. He ceased work on August 26 because of the illness for which he was treated by Dr. Matthews. He returned to work on October 5 and continued until October 22, when he again quit because he was not feeling well. The superintendent stated that he was not, upon his return to work in October, looking as stout as when he had quit in August, but that he did full work thereafter until he finally quit toward the end of the month. This statement, together with the testimony of Drs. Matthews and Hammond as to the prior and subsequent condition of his health, is all the evidence reflecting in any way upon the truth of his answer to the inquiry on this subject.

It will be observed from this summary that the evidence left in doubt the truth of the answers of Pelican to the several questions, as well as his good faith in making them. If he was [8] suffering from tuberculosis on September 12,1908, and died in an advanced stage of the disease in July, 1909, the ordinary layman might suspect that he was afflicted with it at the date of his application. Yet the testimony of Dr. Hammond tends to show that he was entirely free from it at that time, and, the fact that the doctor found him insurable indicates that he was then in good health. Therefore the truth or falsity of his answers to questions 3 (a), 3 (b), 4, 6 (a), 12 (a), and 19 (a), which all reflected upon the condition of his health, depended upon the proper inferences to be drawn from the evidence.. There was evidence tending to show that, when Dr. Matthews visited him, he informed him that he was suffering from influenza. Even though he was then suffering from pleuritic tuberculosis, nevertheless, being a layman, he could not himself be expected to have a better knowledge of diseases or of the condition of his health, than had Dr. Hammond who about a month later made a careful examination to ascertain if the disease was present. Hence, also, the inference of his good or bad faith in making these several answers was to be drawn from conflicting evidence. Whether he had in fact gained or lost weight during the past year depended upon the statement of the mine superintendent, which might or might not, in view of the condition of his health shown by the evidence of Dr. Hammond, on October 9, four days after he had returned to his usual employment, furnish a basis for the inference that his answer on this point was untrue. With reference to the treatment given him by Dr. Matthews on September 12, since the doctors who testified differed as to whether it was a surgical operation, it is not surprising that he answered as he did. We shall refer to this feature of the case again, when we come to consider the instructions. At this time it is sufficient to say that, though the treatment may be conceded to have been a minor surgical operation, as stated by Dr. Matthews, the bad faith of Pelican in answering as he did was not, in view of the fact that he was a layman, a necessary inference. It was peculiarly within the province of the jury to determine whether, upon the whole of the evidence as to any of his answers, Pelican was'guilty of fraud within the rule stated above. The apparent haste with which he proceeded to have his life insured after his illness in 1908, the short time that he was at work thereafter, and the condition of his body as described by the physicians who performed the autopsy, some nine months later, might well be regarded as sufficient to create a suspicion that his statements were intentionally untrue. Nevertheless, the court properly refused to take the' case from the jury. (Globe Insurance Co. v. Wagner, supra; Moulor v. Insurance Co., 101 U. S. 708, 25 L. Ed. 1077; Smith v. Metropolitan Life Ins. Co., 183 Pa. 504, 38 Atl. 1038; Alabama Gold Life Ins. Co. v. Johnston, supra; Henn v. Metropolitan Life Ins. Co., supra.)

4. Error is assigned upon the refusal of the court to give several instructions requested by the defendant. Each of them was formulated upon the theory of counsel for defendant that the answers of Pelican quoted in the statement were warranties, and that the verdict should be for the defendant, if any of them were found to be untrue. Concerning the instructions given, it may be observed that some of them were formulated in accordance with the theory of counsel for defendant, while others proceeded upon the opposing theory. They were conflicting and inharmonious. The case was therefore not submitted to the jury upon any definite theory. No complaint is made of this fault. The instructions refused would, if,, given, have emphasized the conflicting theories embodied in the charge, and, since they were not correct statements of the law applicable to the issues presented by the pleadings and the evidence, they were properly refused.

Counsel for defendant requested the following instruction, which was refused: “You are further instructed that, in his said application for the policy of insurance sued on herein, said Pelican answered ‘No’ to the question, ‘Have you undergone any surgical operation?’ A ‘surgical operation,’ within the meaning of that term as used in said application of said Henry Pelican, is such an operation by means of the hands or use of instruments having for its object the cure of a local disease; so if you believe from the evidence that a surgical operation as above defined was had upon the body of the said Henry Pelican to relieve him. from the effects and to cure him of pleurisy, and that such operation was had within the period of one year before the ninth day of October, 1908, the date of said application, then your verdict should be for the defendant.” The court, however, did give the following: “(11) You are further instructed that, in his said application for the policy of insurance sued on herein, said Henry Pelican answered ‘No’ to the question ‘Have you undergone any surgical operation?’ If you find from a preponderance of the evidence that the deceased underwent a surgical operation before making said application for insurance, then your verdict should be for the defendant.” The expression “surgical operation” is not mentioned elsewhere in the instructions.

At the time of settlement, counsel for defendant reserved their exception to the refusal of their request, on the ground that, “there being a conflict in the evidence, as to the term ‘surgical operation,’ the court should have defined the term in its instructions to the jury.” Error is assigned in this behalf. For present purposes it may be assumed that the definition embodied in the instruction was correct; yet, the instruction being as a whole erroneous, in that it assumed that the answers of Pelican were warranties and not representations, it was properly refused. The view of counsel evidently was that it was within the province of the jury to determine from the evidence as to what was done at the time and the opinions of Drs. Matthews and Sullivan, whether Dr. Matthews’ treatment was a surgical operation within the recognized meaning of that expression, and that therefore a definition of it, as used in the application, should have been submitted. This view may have been correct upon the theory upon which the trial was had; but, even so, [9] counsel are not in position to complain, because they failed to prepare and submit an instruction embodying the definition and at the same time otherwise correct in point of law. In the instruction given, the court submitted the question to the jury as one of fact, without defining the meaning of the expression; but counsel did not object to it as given, and therefore cannot now complain of the omission. Though the instruction is erroneous because it also omits any direction to the jury to find on the question of good faith on the part of Pelican in answering the particular question involved, and authorized a verdict for [10] defendant if the answer was found to be untrue, this is an infirmity from which the defendant suffered no prejudice because the error was in its favor.

5. The contention is made that the verdict is against law. As we have already pointed out, the instructions were inharmonious, in that some of them — as is true of instruction 11, supra — were not appropriate to the issues presented by the pleadings. Nevertheless, upon either theory of the case there was a conflict in [11] the evidence, and since the jury might have resolved the issues either way, the verdict is not contrary to the instructions, and is therefore not against law.

The opinions of the physicians upon the character of the treatment given Pelican by Dr. Matthews were not competent. [12] The witnesses should have been permitted to state the facts only as to what was done. And, since there was no controversy in the evidence in this connection, the court should have told the jury, as a matter of law, that the treatment was a surgical operation, and left it to them to determine Pelican’s good faith. The theory of counsel for defendant was that these [13] opinions were competent evidence. This being so, and the case having been submitted to the jury upon counsel’s own theory as to this feature of it, the defendant is not in position to complain.

The judgment and order are affirmed.

Affirmed.

Me. Justice Smith and Me. Justice Holloway concur.