Mailhoit v. Metro. Life Ins. Co.

Decision Date08 April 1895
Citation32 A. 989,87 Me. 374
PartiesMAILHOIT v. METROPOLITAN LIFE INS. CO.
CourtMaine Supreme Court

(Official.)

Agreed statement from supreme judicial court, Androscoggin county.

Action by Adolphus Mailhoit against the Metropolitan Life Insurance Company. Heard on agreed statement of facts. Judgment for defendant.

In addition to the facts stated in the opinion, the parties also agreed that with said policy there was delivered to the plaintiff a book, called "premium receipt book," for recording the weekly premiums paid on said policy, which book contained, among other printed matter, "Extracts from the rules, regulations, &c. of said company," among which was the following:

"Under no circumstances can an application be written upon the life of a husband for the benefit of his wife, or upon a wife for her husband, or (a legal insurable interest existing) upon the life of any person for another's benefit (children excepted), unless the life on which the policy is applied for fully understands and consents to the insurance, is examined by a physician of the company, if the amount is over two hundred dollars, or by an agent, if under that sum, and unless the proposed insured personally signs the examination form on the back of the application, after the answers in said application are all recorded, and not otherwise. Any policy obtained in violation of these rules will be null and void. Adult applications must be signed on their face (directly under the warranty) by the applicant personally, and on the back (at the foot of the examination form) by the life proposed for insurance."

it was agreed that the plaintiff first learned the contents of said extracts November 21 1892, and that the plaintiff will testify, If admissible, that his attention was first called to said extract by a report that said defendant company had refused to pay its policies issued under like circumstances as the policy in this case.

The plaintiff thereupon refused to make further payments of premiums after said November 21, 1892, and demanded of the agent of said defendant company the return of the premiums paid by him on said policy, upon the claim that the said representations of the agent of defendant company, at the time said plaintiff agreed to take said policy, were false; that he was induced to take said policy upon said representations; and that, by said rules and regulations, said policy was void.

It was further agreed that, if admissible, defendant can show that on the 26th day of December, 1892, said policy was entered on the books of the company at the home office, in New York, as lapsed for the nonpayment of premiums.

P. M. Drew and L. G. Roberts, for plaintiff.

J. H. Drummond and J. H. Drummond, Jr., for defendant.

FOSTER, J. The plaintiff seeks to recover the amount paid in premiums on a policy of insurance on the life of his wife.

The case comes before this court upon an agreed statement, and the facts, briefly stated, are these: On September 6, 1890, plaintiff was induced by defendant's agent to take a policy of insurance, on the life of his wife, in the defendant company, payable, at her death, to himself, upon the representations that the wife need not sign any application therefor, or know or consent to the same; that she need not be examined by a physician of the company; and that the company permitted applications to be made in such way, and issued policies thereon.

Upon these representations, the plaintiff consented to take a policy in the defendant company on the life of his wife, without her knowledge or consent. Thereupon the defendant's agent filled out the application, and affixed her signature to the same. The plaintiff then paid the agent the advance premium of 31 cents. The wife was not examined by a physician of the company, although what purports to be a certificate of medical examination of the wife, signed by a physician of the company, is attached to the application; the alleged certificate having been filled out and signed by the defendant's physician without any examination or the knowledge or consent of the wife.

September 15, 1890, on this application and examination, the company issued its policy for $500 on the life of the wife, payable to the plaintiff at her death. The wife had no knowledge that an application for insurance on her life had been made until about four weeks afterwards, all the negotiations having been carried on with the plaintiff by defendant's agent. Neither he nor his wife is able to read or write in the English language, and all negotiations were carried on in the French language.

Pursuant to the conditions of the policy, plaintiff continued to pay the weekly premiums of 31 cents thereon (amounting, in all, to $36.27) until November 21, 1892, when he refused to make further payments of premiums, and demanded of the agent of the company a return of the premiums paid by him, upon the ground that the representations of the agent, at the time the plaintiff agreed to take the policy, were false; that he was induced to take the policy by these representations; and that he had learned that, by the rules and regulations of the company, the policy was void.

Upon the foregoing facts, the plaintiff claims that the policy was void, and that he is entitled to recover in this action the amount paid in premiums on the policy.

The liability of an insurance company for a return of premiums is by no means absolute, but depends upon the question whether the policy has ever become a binding contract between the parties. If it has, and the risk has once commenced, then there can be no apportionment, nor will an action lie for the recovery of the premiums paid.

This principle is thus laid down by the text writers: "Where the contract has once taken effect, there is ordinarily no rule of law to sustain the recovery back of premiums paid, even though the insurer attempted to declare a forfeiture. On the other hand, where the contract has never taken effect, the premiums may be recovered back, in accordance with the general rules governing the recovery back of money paid." Cooke, Life Ins. 193, 194; Bliss, Ins. § 423; Leonard v. Washburn, 100 Mass. 251.

Applying these principles to the case at bar, we must ascertain whether this policy had ever become effectual as a contract, and the risk had ever commenced. If so, this action cannot be maintained.

The application was in the usual form, regular upon its face, and came into the defendant's possession through the regular channels, and in the usual course of its business. The fraud relied upon by the plaintiff was the fraud of the defendant's agent, and the company, relying upon what purported to be the application of plaintiff's wife for a policy upon her life, for the benefit of her husband, issued its policy in accordance with the proposals contained in that application. The plaintiff received a policy which insured the life of his wife, for his benefit, in the exact terms, and under the precise conditions, which he applied for, provided the policy was valid and binding upon the company. He makes no complaint that this is not true. But the gist of his complaint is that his policy is not binding upon the company, but is void because of the acts of its agent.

But the fraud which was committed was not a fraud upon the plaintiff. He was in no wise injured or damaged by it. It was a fraud upon the defendant, and nobody but the defendant could be injured or damaged by it.

The fraudulent acts consisted in sending an application and certificate of medical examination, fraudulent in whole or in part, to the defendant, upon which it would act in issuing its policy. The application and medical examination were solely for the purpose of giving the defendant an opportunity to decide whether to issue its policy on the life of the plaintiff's wife or not. All the provisions of the application, policy, and rules of the company which were violated by the defendant's agent and physician were provisions for the sole benefit of the defendant. They were not for the benefit of the plaintiff or his wife. The purpose of these provisions was to satisfy the defendant that it was safe in issuing the policy. They furnished the information upon which the defendant acted in issuing the policy, and, so far as the plaintiff was concerned, it mattered not to him whether there was an actual application and medical examination or not, so long as the policy issued was, in its terms and conditions, such as he wanted. There is no pretense that it was not. He complains concerning the fraud committed upon the defendant. If that fraud did not render the policy absolutely void, then he has no cause for complaint.

If the risk commenced to run, the policy was not void.

The application and medical examination, being preliminaries for the protection of the defendant in issuing its policy, and solely for its benefit and advantage, could have been entirely dispensed with, if the defendant had seen fit so to do. The defendant could have waived them entirely, and issued a policy which would have been valid and binding upon it. North Berwick Co. v. New England f. & M. Ins. Co., 52 Me. 336, 341; Allen v. Insurance Co., 12 Vt. 366.

This case does not present to the court the question of fraud upon the insured, or a fraud in relation to provisions of the policy that were for his benefit, and of which he could take advantage; but the sole question is whether the fraud upon the defendant, committed by its own agents, rendered the policy absolutely void, so that no risk was ever assumed under it.

The application in form was regular in every respect, and, so far as the plaintiff was concerned, it stated the exact terms and conditions of the insurance he desired. There is no pretense that the plaintiff's wife was not a proper subject of insurance, nor that, so far as her health was concerned, she was not a good risk, nor that the answers and statements in the...

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