Phoenix Mut Life Ins Co v. Raddin

Decision Date31 January 1887
Citation120 U.S. 183,30 L.Ed. 644,7 S.Ct. 500
PartiesPHOENIX MUT. LIFE INS. CO. v. RADDIN, Sp. Adm'r, etc
CourtU.S. Supreme Court

[Syllabus from pages 183-184 intentionally omitted] M. F. Dickinson, Jr., for plaintiff in error.

[Argument of Counsel from pages 184-185 intentionally omitted] R. M. Morse, Jr., and Wm M. Richardson, for defendant in error.

[Argument of Counsel from pages 185-186 intentionally omitted]

GRAY, J.

This was an action brought by Sewell Raddin, and prosecuted by his administrator, upon a policy of life insurance dated April 25, 1872, the material parts of which were as follows: 'This policy of assurance witnesseth that the Phoenix Mutual Life Insurance Company of Hartford, Conn., in consideration of the representations made to them in the application for this policy, and of the sum of one hundred and fifty-two dollars and ten cents to them duly paid by Sewell Raddin, father, and of the semi-annual payment f a like amount on or before the twenty-fifth day of April and October in every year during the continuance of this policy, do assure the life of Charles E. Raddin, of Lynn, in the county of Essex, state of Massachusetts, in the amount of ten thousand dollars, for the term of his natural life. This policy is issued and accepted by the assured upon the following express conditions and agreements,' namely, among others, that 'if any of the declarations or statements made in the application for this policy, upon the faith of which this policy is issued, shall be found in any respect untrue, this policy shall be null and void.' The application was signed by Sewell Raddin, both for his son and for himself, and contained 29 printed 'questions to be answered by the person whose life is proposed to be insured, and which form the basis of the contract,' three of which, with the written answers to them, and the concluding paragraph of the application, were as follows:

'(10) Is the party addicted to the habitual use of spirituous liquors or opium?

No.

'(28) Has any application been made to this or any other company for assurance on the life of the party? If so, with what result? What amounts are now assured on the life of the party, and in what companies? If already assured in this company, state the No. of policy.

$10,000, Equitable Life Assurance Society.

'(29) Is the party and the applicant aware that any untrue or fraudulent answers to the above queries, or any suppression of facts in regard to the health, habits, or circumstances of the party to be assured, will vitiate the policy, and forfeit all payments thereon?

Yes.

'It is hereby declared that the above are fair and true answers to the foregoing questions, and it is acknowledged and agreed by the undersigned that this application shall form the basis of the contract for insurance, which contract shall be completed only by delivery of policy, and that any untrue, or fraudulent answers, any suppression of facts, or should the applicant become as to habits, so far different from condition now represented to be in as to make the risk more than ordinarily hazardous, or neglect to pay the premium on or before the day it becomes due, shall and will render the policy null and void, and forfeit all payments made thereon.'

It was admitted at the trial that all premiums were paid as they fell due; that Charles E. Raddin died July 18 1881; and that at the date of this policy he had an endowment policy in the Equitable Life Insurance Society for $10,000, which was afterwards paid to him.

One of the defenses relied on at the trial was that the answer to question 28 in the application was untrue, and that there was a fraudulent suppression of facts material to the insurance, because the plaintiff, by his answer to that question, '$10,000, Equitable Life Assurance Society,' intended to have the defendant understand that the only application which had been made to any other company for assurance upon the life of his son was one made to the Equitable Life Assurance Society, upon which that society had issued a policy of $10,000, whereas in fact the plaintiff, within three weeks before the application for the policy in suit, had made applications to that society, and to the New York Life Insurance Company, for additional insurance upon the son's life, each of which had been declined. The defendant offered to prove that the two other applications were made and declined as alleged, and that the facts as to the making and the rejection of both those applications were known to the plaintiff, and intentionally concealed by him, at the time of his application to the defendant; and upon these offers of proof asked the court to rule that the answer to question 28 was untrue, and therefore no recovery could be had on this policy; second, that there was a suppression of facts by the plaintiff, and therefore he could not recover; and, third, 'that the answer to question 28 must be construed to be an answer to all the clauses of that question, and as such was misleading, and amounted to a concealment of facts which the defendant was entitled to know, and the plaintiff was bound to communicate.' But the court excluded all the evidence so offered, declined to give any of the rulings asked for, and ruled 'that, if the answer to one of the interrogatories of question 28 was true, there would be no breach of the warranty; that the failure to answer the other interrogatories of question 28 was no breach of the contract; and that, if the company took the defective application, it would be a waiver on their part of the answers to the other interrogatories of that question.' The jury having returned a verdict for the plaintiff in the full amount of the policy, the defendant's exceptions to the refusal to rule as requested, and to the rulings aforesaid, present the principal question in the case.

The rules of law which govern the decision of this question are well settled, and the only difficulty is in applying those rules to the facts before us. Answers to questions propounded by the insurers in an application for insurance, unless they are clearly shown by the form of the contract to have been intended by both parties to be warranties, to be strictly and literally complied with, are to be construed as representations, as to which substantial truth in everything material to the risk is all that is required of the applicant. Moulor v. American Ins. Co., 111 U. S. 335; S. C. 4 Sup. Ct. Rep. 466; Campbell v. New England Ins. Co., 98 Mass. 381; Thomson v. Weems, 9 App. Cas. 671.

The misrepresentation or concealment by the assured of any material fact entitles the insurers to avoid the policy. But the parties may by their contract make material a fact that would otherwise be immaterial, or make immaterial a fact that would otherwise be material. Whether there is other insurance on the same subject, and whether such insurance has been applied for and refused, and material facts, at least when statements regarding them are required by the insurers as part of the basis of the contract. Carpenter v. Providence Washington Ins. Co., 16 Pet. 495; Jeffries v. Life Ins. Co., 22 Wall. 47; Anderson v. Fitzgerald, 4 H. L. Cas. 484; Macdonald v. Law Union Ins. Co., L. R. 9 Q. B. 328; Edington v. AEtna Life Ins. Co., 77 N. Y. 564; S. C. 100 N. Y. 536, and 3 N. E. Rep. 315.

Where an answer of the applicant to a direct question of the insurers purports to be a complete answer to the question, any substantial misstatement or omission in the answer avoids a policy issued on the faith of the application. Cazenove v. British Equitable Assurance Co., 29 Law J. C. P. (N. S.) 160, affirming S. C. 6 C. B. (N. S.) 437. But where upon the face of the application, a question appears to be not answered at all, or to be imperfectly answered, and the insurers issue a policy without further inquiry, they waive the want or imperfection in the answer, and render the omission to answer more fully immaterial. Connecticut Ins. Co. v. Luchs, 108 U. S. 498; S. C. 2 Sup. Ct. Rep. 949; Hall v. People's Ins. Co., 6 Gray, 185; Lorillard Ins. Co. v. McCulloch, 21 Ohio St. 176; American Ins. Co. v. Mahone, 56 Miss. 180; Carson v. Jersey City Ins. Co., 43 N. J. Law, 300; S. C. 44 N. J. Law, 210; Lebanon Ins. Co. v. Kepler, 106 Pa. St. 28.

The distinction between an answer apparently complete, but in fact incomplete, and therefore untrue, and an answer manifestly incomplete, and as such accepted by the insurers, may be illustrated by two cases of fire insurance, which are governed by the same rules in this respect as cases of life insurance. If one applying for insurance upon a building against fire is asked whether the property is incumbered, and for what amount, and in his answer discloses one mortgage, when in fact there are two, the policy issued thereon is avoided. Towne v. Fitchburg Ins. Co., 7 Allen, 51. But if to the same question he merely answers that the property is incumbered without stating the amount of incumbrances, the issue of the policy without further inquiry is a waiver of the omission to state the amount. Nichols v. Fayette Ins. Co., 1 Allen, 63.

In the contract before us the answers in the application are nowhere called warranties, or made part of the contract. In the policy those answers and the concluding paragraph of the application are referred to only as 'the declarations or statements upon the faith of which this policy is issued;' and in the concluding paragraph of the application the answers are declared to be 'fair and true answers to the foregoing questions.' and to 'form the basis of the contract for insurance.' They must therefore be considered, not as warranties which are part of the contract, but as representations collateral to the contract, and on which it is based.

The twenty-eighth printed question in the application consists of four successive interrogatories, as follows: 'Has any application been made to this or any other company for assurance on the life of the party? If so,...

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