Prudential Ins. Co. v. Saxe

• Decision Date: 25 January 1943
• Docket Number: No. 7824,7825.,7824
• Citation: 134 F.2d 16,77 US App. DC 144
• Parties: PRUDENTIAL INS. CO. OF AMERICA v. SAXE. SAXE v. SAME.
• Court: U.S. Court of Appeals — District of Columbia Circuit

77 US App. DC 144, 134 F.2d 16 (1943)

PRUDENTIAL INS. CO. OF AMERICA v. SAXE.

SAXE v. SAME.

Nos. 7824, 7825.

United States Court of Appeals for the District of Columbia.

Decided January 25, 1943.

Writ of Certiorari Denied May 3, 1943.

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Mr. Arthur P. Drury, with whom Messrs. Benjamin S. Minor, John M. Lynham, and John E. Powell, all of Washington, D. C., were on the brief, for appellant in No. 7824.

Mr. Maurice Friedman, with whom Mr. Harry Friedman, both of Washington, D. C., was on the brief, for appellant in No. 7825.

Mr. Sidney V. Smith, of Washington, D. C., for appellee in each case.

Before STEPHENS, EDGERTON, and RUTLEDGE, Associate Justices.

Writ of Certiorari Denied May 3, 1943. See 63 S.Ct. 1033, 87 L.Ed. ___.

RUTLEDGE, Associate Justice.

This is a three-cornered contest on a policy of life insurance, involving the insurer, the mother and the wife of the insured, Alexander T. Saxe. His wife Jane Saxe, now Mrs. Ross, was the original beneficiary and recovered judgment on the policy after a jury trial. She remarried about a year and a half after Saxe's death. His mother, Gertrude T. Saxe, intervened, claiming the proceeds, or half of them, by virtue of alleged changes, shortly before her son's death, making her beneficiary. The insurance company hereafter called Prudential or the insurer, contests liability to either claimant. It and the mother appeal.

Apart from whether the attempted changes of beneficiary were effective, the principal issues arise on the insurer's contentions that (1) the policy never took effect for failure to comply with "conditions precedent"; (2) if it did, it was avoided by claimed misrepresentations in the application; and (3) there was no waiver of any right to avoid it by acceptance of premiums, as the claimants assert, after having notice of the grounds for avoidance. Prudential also relies upon asserted procedural errors, including admission and exclusion of evidence, consolidation of this cause for trial with its own previous suit in equity to cancel the policy, and the court's refusal to try the so-called equitable issues relating to cancellation separately before submitting the case for trial at law by a jury. For reasons to be stated, there was no error in consolidating the causes or in refusing to try the equitable issues first. We turn therefore to the substantive issues affecting the insurer's liability, first stating the evidence relating to them.

I. The insured came to Washington in the fall of 1934. Previously he had resided with his mother in New York City, where he was an architect and a teacher in Columbia University. His firm also did some work in Boston. He lived in Washington from 1934 until his death on January 30, 1938, at the age of thirty-nine. He married Jane Saxe in May, 1936. He was not then employed, though previously and later he worked for the Government. For some months his wife's earnings supported them. Partly for this reason he applied for the policy in November, 1936. It was issued the following December. His wife was the sole beneficiary. She paid the premiums until his death.

The examining physician found him in excellent health. Both before the policy was issued and afterward, until the fall of 1937, he led a very active life and, for one of his age, had an unusual interest in athletics. In the baseball seasons of 1935 and 1936 he pitched, on an average, two games a week for Government teams. There was evidence that for years he "had thorough examinations and had always been told he was in splendid condition." In March, 1937, he began to have severe occipital headaches, and the following September consulted a physician who advised him to stop playing baseball because of high blood pressure. He contracted influenza in October, went to Florida for a few weeks during which his abdomen became swollen, and on returning to Washington entered Garfield Hospital because of this condition. Dr. Pope, the resident physician who testified to these facts from the patient's history, stated he was then in a dying condition.

However, he lived for more than a month. He was visited by both his wife and his mother, but at separate times. The latter had come to Washington from New York to visit them in November. She remained here until her son's death. She had opposed his marriage, and frequently upbraided him for it, even while in his home. On January 19, against physicians' advice and only after being required to sign a waiver of responsibility, the mother removed the insured from the hospital to an apartment, where he died eleven days later. During that period she excluded his wife from the apartment. Before taking him from the hospital she secured his signature to a paper purporting to make her beneficiary of half the insurance. After the removal and within a day or two of his death, he signed another making her sole beneficiary. Neither change was endorsed on the policy, which remained in the wife's possession.

The record presents conflicting evidence as to the cause of death. The official death certificate gives it as chronic nephritis, a kidney disease, of ten years' duration. Dr. Hulburt, who signed it, attended the insured during the last eleven days of his illness. He also signed a "physician's statement," as part of the mother's proofs of loss, stating the immediate cause as chronic glomerulonephritis of "at least 10 years" existence, with acute pericarditis of three weeks' duration as a contributing cause. Dr. Pope, resident physician at Garfield Hospital while the insured was there, testified he was "a desperately ill man during the entire time," suffering in the witness' opinion from malignant hypertension. This he described as "a serious condition in which the blood pressure is very high * * * usually a fatal condition * * *, accompanied by degeneration of the arteries, * * * heart, kidney or brain failure * * * a progressive proposition and becomes worse and worse very rapidly."

With a pathologist from the hospital, Dr. Pope performed an autopsy with the findings, in brief, a heart with pericarditis; liver with moderate fatty and granular degeneration with congestion diagnosed as hepatitis; splenitis; kidney diagnosed as having nephrosclerosis with marked interstitial fibrosis (hardening with malignant hypertension). From his observation of the patient, autopsy findings, and general experience, Dr. Pope's opinion was that the insured died of "malignant hypertension, or nephrosclerosis, with uremic poisoning, and that connected to the pericarditis * * *." In his best judgment the condition had existed for "a year, or possibly less." Because of its importance, later to be shown, we mention now that Dr. Pope found no evidence of duodenal ulcer in the illness or the results of the autopsy, nor so far as appears was evidence of such an affliction found by Dr. Hulburt.

II. The foregoing statement of facts is made as background for setting forth the more crucial and controverted ones relating directly to the issues affecting the alleged misrepresentations. These consisted in answers to questions in the application. They fall generally in two groups, (1) denials of having consulted physicians for three years and of having ever been in a hospital for observation, diagnosis, rest or treatment; (2) denials of having or of having had certain diseases or afflictions, specifically including abnormal blood pressure, dizziness, kidney disease, duodenal ulcer, etc. The questions, with the answers, are set forth in the margin.¹

The insurer assigns each of these answers separately as ground for relief, contending they were false and for that reason the policy did not attach, or were both false and material to the risk or its acceptance, so as to avoid the insurance. The evidence concerning the answers differs somewhat, but in the main they may be treated together, since the alleged falsity of the statements, both as to the existence of disease and as to hospitalization and consultation, grows out of a single episode the insured failed to mention. This was that he spent fifteen days, January 15-30, 1934, in Beth Israel Hospital in Boston. Appellee correctly says this was "the focal point of the misrepresentations alleged by the insurer." That is true because the only evidence the insured consulted physicians within the crucial period or had had the diseases denied is derived from the Beth Israel incident, with the single exception that Dr. Hulburt assigned the cause of death as kidney disease of ten years' duration.

It remains to state the leading facts concerning this incident, the failure of the insured to disclose it, the manner in which it was brought to light, and the communication of the facts to the insurer. There is no dispute that the insured was "in" the hospital for the two weeks. But there is a square clash on the reason and purpose of his being there and their consequences for the insurer's liability. The evidence, and the conflict, are crucial both for the issues concerning the alleged misrepresentations and their effects and also for the claimed waiver.

On the one hand is Prudential's evidence that the insured entered the hospital and remained there two weeks. It presented the hospital's records showing the history on admission, the report of the physical examination, a progress report, the results of X-ray films, a discharge note, and a diagnosis of duodenal ulcer.

The history mentions chronic stomach trouble following meals for eighteen years, relieved at once by bicarbonate of soda; two episodes of dizziness, faintness, and vomiting of black material, in the later case streaked with blood and followed by black stools. One of these occurred six years, the other one week before admission. Neither attack prevented the insured from "continuing with his activities."

Without giving details the report of the physical examination confirms its general conclusion: "P. E. is...