Perkins v. Nationwide Life Insurance

324 N.E.2d 724, 41 Ohio St. 2d 213, 70 Ohio Op. 2d 398, 1975 Ohio LEXIS 448

• Court: Ohio Supreme Court
• Decided: March 19, 1975
• Docket: No. 74-257
• Status: Published

Opinions

Herbert, J.

The principal question presented herein is whether B. C. 3911.04 precludes appellant from introducing evidence which disputes the truth of statements made by appellee’s decedent in his application for the supplemental life insurance benefits.

B. C. 3911.04 provides, in pertinent part:

“Every life insurance company doing business in this state shall return with, and as part of any policy issued by it, to any person taking such policy, a complete copy of each application or other document held by it which is intended in any manner to affect the force or validity of such policy. A company which neglects to do so is estopped from denying the truth of any such application or other document, so long as it is in default for such copy. ¹

Appellant argues that the General Assembly did not intend that B. C. 3911.04 should control group life insurance policies. In support of its position, appellant points to the last paragraph of B. C. 3917.06, which states: “Except as provided in [S]ections 3917.01 to 3917.06, inclusive, of the Bevised Code, no contract of life insurance shall be made covering a group in this state.” Appellant contends that this language requires us to hold that only B. C. Chapter 3917 has any application to group, as opposed to individual, life insurance policies in this state, thereby rendering B. C. 3911.04 inapplicable to the facts at bar. We disagree. Although it is obvious that the above-quoted language of B. C. 3917.06 places control over group life insurance policies within R. C. Chapter 3917, it is equally apparent that such language refers to the contract itself and was not meant to exclude all other statutes governing matters which may concern the area of group insurance.²

Appellant also relies upon Woelfling v. Great-West Life Assurance Co. (1972), 30 Ohio App. 2d 211, 218, 285 N. E. 2d 61, wherein the opinion states that the “sanction provided in R. C. 3911.04 is not applicable to group insurance * * *. ’ ’ However, that court did not consider this observation of sufficient pertinence to the case to place it in the syllabus. We do not consider Woelfling persuasive upon the issue now at hand.

R. C. 3911.04 is specifically directed at “ [e]very life insurance company doing business in this state,” and makes no exception for group policies. In the case at bar, appellant failed to provide a copy of the application to the policyholder, the Ohio National Guard,³ to be available for inspection with the policy as required by R. C. 3917.06.⁴ In determining whether that section is to be read in pari ma-teria with R. 0. 3911.04, it is significant that the two statutes do not conflict; they are consistent with the legislative policy of giving the insured, or a beneficiary, the opportunity to see and correct any inaccurate statements in the application. Furthermore, the fact that Cl. O. 9389 (the predecessor of R. C. 3911.04) was enacted at a time when group life policies were not specifically referred to by statute in Ohio does not prevent the statutes from being read together. As stated in the second paragraph of the syllabus in State, ex rel. Pratt, v. Weygandt (1956), 164 Ohio St. 463, 132 N. E. 2d 191, “ [s]tatutes relating to the same matter or subject, although passed at different times and making no reference to each other, are in pari materia and should be read, together to ascertain and effectuate if possible the legislative intent. ’ ’ Additionally, it should not be overlooked that the broad language in R. C. 3911.04, referring to “ [e]very life insurance company doing business in this state,” was not changed when Chapter 3917 was enacted.

It is our conclusion that where a company writes a group life insurance policy, it must, before the death of the insured, provide a copy of any application in connection therewith to the policyholder-employer, or be prevented by R. C. 3911.04 from contesting the truth of statements contained in the application.

We are acutely aware of the apparent misstatements made by the instant decedent in his application to appellant for group life insurance. However, the General Assembly undoubtedly considered such an eventuality when it enacted the statutes now before us.⁵ In balancing the onerousness of possible fraud by an insured or an insurer, that body made a policy decision in favor of the former. Such policy decisions can result in so-called hard cases, but judicial wincing is not new and does not ordinarly justify the disregarding of clear legislative pronouncement.

The judgment of the Court of Appeals is affirmed.

Judgment affirmed.

O’Neill, C. J., Celbbrezze and W. BeowN, JJ., concur. CORRIGAN, SterN and P. BeowN, JJ., dissent.

1 An insurer that neglects to return such application during the lifetime of the insured has failed to comply with this section. Acacia Mutual Life Ins. Co. v. Weissman (1955), 164 Ohio St. 82, 128 N. E. 2d 34; Pannunzio v. Monumental Life Ins. Co. (1958), 168 Ohio St. 95, 151 N. E. 2d 545.

2 For example, R. C. 3911.19 (prohibiting discrimination among premiums charged to individuals of the same class) and R. C. 3911.23 (prohibiting misrepresentation of terms in a policy) are not contained in R. C. Chapter 3917. However, we are unconvinced that the General Assembly intended to deny those protections to holders of group life policies.

3 R. C. 3917.03 provides that “[i]n every group policy issued by a domestic life insurance company the employer * * * is the policyholder for all purposes under [S]eetions 3917.01 and 3917.06 of the Revised Code. * * *”

4 R. C. 3917.06, in pertinent part, states: “* * * The group life insurance policy together with any application in connection therewith shall be available for inspection during regular business hours at the office of the policyholder where such policy is on file, by any beneficiary thereunder or by an authorized representative of such beneficiary.”

5 It is the opinion of the minority that where the trial court finds that fraud has been committed in the making of an application, the insurer is not prevented by R. C. 3911.04 from defending upon the basis of such fraud. Were such a comfortable solution feasible, it could represent an attractive result for this case. However, as a matter, of practical procedure, the minority would render meaningless the legislative effort represented by R. C. 3911.04 and 3917.06.

Under the position taken by the minority, the trial court would he required to receive evidence to determine the truthfulness of an application, before the court could decide whether the estoppel prevailed. We fail to see what would be accomplished by a statutory bar to a particular- defense, if the court was required to take full evidence upon that very defense before deciding to invoke or reject the bar.

The General Assembly has unequivocally stated that these application copies must be made available to insureds. To enforce compliance ■with that requirement, a stern legislative sanction was fashioned. While the minority, because of the difficult facts in this case, would eviscerate that sanction on other than constitutional grounds, the majority is constrained to uphold the statutes as a proper exercise of the legislative prerogative.

Our past cases, and common sense, tell us that once an insured has died, the estoppel-triggering default enunciated in R. C. 3911.04 cannot be cured. The minority would permit an insurer to violate the statute, wait until the insured has died, and then introduce evidence of misstatements in the application. This is precisely the undesirable and inequitable situation sought to be foreclosed by the General Assembly through its enactment of R. C. 3911,04 and R. C, 3917.06.