172 A. 669 (Pa. 1934), 8, New York Life Insurance Company v. Brandwene

• Judge: Before FRAZER, C.J., SIMPSON, KEPHART, SCHAFFER, MAXEY, DREW and LINN, JJ.
• Parties: New York Life Insurance Company v. Brandwene et ux., Appellants
• Date: 21 May 1934
• Docket Number: 8
• Court: Pennsylvania Supreme Court
• Citation: 172 A. 669,316 Pa. 218

Page 669

172 A. 669 (Pa. 1934)

316 Pa. 218

New York Life Insurance Company

v.

Brandwene et ux., Appellants

No. 8

Supreme Court of Pennsylvania

May 21, 1934

Argued: April 10, 1934

Appeal, No. 8, Jan. T., 1934, by defendants, from decree of C.P. Lackawanna Co., Sept. T., 1931, No. 8, in equity, in case of New York Life Insurance Company v. Harry R. Brandwene et ux. Decree affirmed.

Bill for rescission of insurance contract. Before LEACH, J.

The opinion of the Supreme Court states the facts.

Decree entered providing for conditional cancellation of policy. Defendants appealed.

Error assigned, inter alia, was decree, quoting record.

The decree of the court below is affirmed; costs to be paid by appellants.

R. L. Levy, with him J. Julius Levy, for appellants. -- A plaintiff seeking to rescind a contract of life insurance upon the ground of fraud is held to the same measure of proof as is any litigant who seeks to avoid a contract of any character for this reason: Phipps v. Buckman, 30 Pa. 401; Sulkin v. Gilbert, 218 Pa. 255; Wilson v. Oil Co., 275 Pa. 359.

Concealment on a material point is not enough to overthrow the contract unless the further fact is established that the concealment was the means which caused the company to enter into the contract: Lakeside Forge Co. v. Oil Co., 265 Pa. 528; Kuhns v. Ins. Co., 297 Pa. 418; Sulkin v. Gilbert, 218 Pa. 255.

Representations as distinguished from warranties which are untruthful cannot avoid a policy unless the false representations are both material and made with intent to defraud: Livingood v. Ins. Co., 287 Pa. 128.

Clarence Balentine, of Kelly, Balentine, Fitzgerald & Kelly, for appellee. -- (Hon. D. M. LARRABEE appeared for appellee until elected to be the judge of C. P. Lycoming County.) It was not necessary for plaintiff to call a witness to prove that it would not have issued the contract of insurance if it had known the facts proved in this case: Arnold v. Ins. Co., 20 Pa.Super. 61; Baldi v. Ins. Co., 24 Pa.Super. 275; U. B. Mutual Aid Society v. O'Hara, 120 Pa. 256; Lutz v. Ins. Co., 186 Pa. 527; Rigby v. Ins. Co., 240 Pa. 332; Timlin v. American Patriots, 249 Pa. 465; McEntee v. Ins. Co., 79 Pa.Super. 457.

Before FRAZER, C.J., SIMPSON, KEPHART, SCHAFFER, MAXEY, DREW and LINN, JJ.

OPINION

Page 670

[316 Pa. 220] MR. JUSTICE DREW:

The plaintiff insurance company seeks by this bill in equity to rescind a contract of life insurance with disability benefits, entered into between it and the defendant Harry Brandwene, under which the defendant Rose Brandwene, wife of the insured, is beneficiary. The bill alleges that the policy was procured by fraud and misrepresentation on the part of the insured, and prays that the policy be declared void and that the defendants be ordered to deliver it to the plaintiff for cancellation upon receipt of the amount of premiums paid, with interest. After a hearing, the learned chancellor entered a decree nisi in accordance with the prayers of the bill, which decree the court below later made absolute. Defendants appealed.

Fraud is, of course, a familiar source of equity jurisdiction, ^[*] and it is well settled that one who has been induced [316 Pa. 221] to enter into a formal contract by the fraud of the other party may in a proper case secure the assistance of a court of equity, which will order the fraudulent party to surrender for cancellation the instrument evidencing the contract: Sutton v. Morgan, 158 Pa. 204; Am. Union Life Ins. Co. v. Judge, 191 Pa. 484; Wagner v. Fehr, 211 Pa. 435; DeCosta v. Scandret, 2 P. Wms. 170; Phoenix Ins. Co. v. Bailey, 13 Wall. (U.S.) 616; see Black, Rescission and Cancellation (2d edition), sections 476, 643. Thus, where the execution of a contract of insurance has been induced by fraudulent misrepresentations of the insured, the insurer may secure its cancellation: Am. Union Life Ins. Co. v. Judge, supra; DeCosta v. Scandret, supra; Mut. Life Ins. Co. of N.Y. v. Rose, 294 F. 122; Jefferson Standard Life Ins. Co. v. McIntyre, 294 F. 886; N.Y. Life Ins. Co. v. Sisson, 19 F. (2d) 410 (W.D. Pa.); Metropolitan Life Ins. Co. v. Freedman, 159 Mich. 114, 32 L.R.A. (N.S.) 298; Pac. Mut. Life Ins. Co. v. Glaser, 245 Mo. 377, 45 L.R.A. (N.S.) 222; Travelers Ins. Co. v. Pomerantz, 246 N.Y. 63; Home Life Ins. Co. v. Zuribowitz, 87 A. (R.I.) 25; see Phoenix Ins. Co. v. Bailey, supra; Am. Trust Co. v. Life Ins. Co. of Va., 173 N.C. 558; Couch, Insurance, section 1412. The burden of proving the fraud is, of course, upon the party who alleges it (Livingood v. N.Y. Life Ins. Co., 287 Pa. 128; Kuhns v. N.Y. Life Ins. Co., 297 Pa. 418; Campdon v. Continental Assurance Co., 305 Pa. 253), and it must be established by clear and satisfactory evidence: Suravitz v. Prudential Ins. Co., 261 Pa. 390; Pusic v. Salak, 261 Pa. 512; Campdon v. Continental Assurance Co., supra; ...