United Benefit Life Ins. Co. v. Knapp

• Citation: 175 Okla. 25,51 P.2d 963,1935 OK 1177
• Decision Date: 26 November 1935
• Docket Number: Case Number: 25074
• Parties: UNITED BENEFIT LIFE INS. CO. v. KNAPP (FIRST STATE BANK OF TALIHINA, Intervener)
• Court: Supreme Court of Oklahoma

1935 OK 1177

51 P.2d 963

175 Okla. 25

UNITED BENEFIT LIFE INS. CO. v. KNAPP (FIRST STATE BANK OF TALIHINA, Intervener)

Case Number: 25074

Supreme Court of Oklahoma

Decided: November 26, 1935

Syllabus

¶0 1. Insurance--False Representations by Applicant Rendering Contract Voidable--Representations Amounting Only to Opinion or Belief.

False representations render a contract of insurance voidable, provided they are material and relied on by the insurance company in making the contract. But representations as to things not susceptible of present actual knowledge amount only to statements of opinion or belief, and as to such representations the good faith of the insured furnishes the criterion of truth, for they can be false only when the opinion or belief, as stated, is not honestly entertained.

2. Same--Statement of Applicant That He Is in Good Health as Honest Expression of Opinion.

The statement of an applicant for insurance that he is in good health is an expression of opinion and will not avoid the contract if honestly made without knowledge of latent diseases that may actually exist.

3. Same--Representations not Required to Be Literally True--"Good Health."

Representations are not required to be literally true as are warranties, but substantial truth only is necessary, and the statement of an applicant for insurance that he is in good health does not mean that he is in perfect health, but that he is not aware of any disease of such a serious nature as to impair his health permanently.

4. Same--Insurance Contract lint Avoided by Honest Reputation of "Good Health" Though Applicant Had Latent Serious Disease.

A provision in the application for insurance that there would be no liability on the part of the insurance company until the policy was delivered while the applicant was in good health is not a condition precedent, and the statement by the applicant that he received the policy while he was in good health is not a warranty, but only a representation of opinion which will not avoid the contract unless fraudulently made, even though the applicant suffered from a latent serious disease.

5. Appeal and Error--Review--Sufficiency of Conflicting Evidence to Support Verdict.

In an action at law, where a general verdict has been returned and judgment rendered on the verdict, and the evidence is conflicting, this court will not weigh the evidence, but will sustain the verdict of the jury, if there is any competent evidence to support it.

Appeal from District Court, Oklahoma County; Lucius Babcock, Judge.

Action by Hattie Knapp against the United Benefit Life Insurance Company; the First State Bank of Talihina intervening. Judgment for plaintiff, and defendant appeals. Affirmed.

Dudley, Hyde, Duvall & Dudley, for plaintiff in error.

Carmon C. Harris and Darrough & Foster, for defendant in error and intervener, respectively.

BUSBY, J.

¶1 This is an appeal from a judgment of the district court of Oklahoma county, Okla., wherein defendant in error recovered judgment in the sum of $ 1,000 with interest from September 25, 1931. The interests of the defendant in error and intervener are identical so far as this appeal is concerned, and the parties will be referred to as they appeared in the court below.

¶2 This action is based upon a policy of life insurance issued by the defendant company upon the life of one Elmo Knapp, who was the son of plaintiff. It appears that on July 6, 1931, Elmo Knapp made application with un agent of defendant company for a $ 1,000 life insurance policy, naming plaintiff as beneficiary. The application was upon a "nonmedical' form and contained numerous questions as to condition of health, in lieu of medical examination. In answering these questions applicant stated that he was in good health at that time. He also agreed in the application that "there shall be no liability hereunder until a policy shall be issued, and delivered to me in good health."

¶3 The agent carried the application around with him for several days, and upon payment of the initial premium, mailed it to the company, changing the date from July 6th to July 16, 1931. Five days later, on July 21, 1931, Elmo Knapp went to the hospital, where it was ascertained that he was suffering from lymphatic leukemia, and was in a very serious condition. He was given treatment and several blood transfusions, but died from this disease on September 14, 1931. The evidence is contradictory as to when the policy was delivered, but there was introduced in evidence a receipt, not dated, but signed by Elmo Knapp with the statement thereon that "I certify that at this date I am in good health." The plaintiff contended that the policy was delivered by the soliciting agent of the company to Elmo Knapp on the street before he went to the hospital on July 21, 1931, and that he was never aware of any serious disease until after he had received it. On the other hand. the defendant contended that the policy was not mailed from the home office until August 3, 1931. which was about two weeks after he entered the hospital, and that he had known for six weeks prior thereto that he was ill.

¶4 The jury rendered a verdict for plaintiff, and the defendant seeks reversal upon two grounds' First, that the insured procured the policy by fraud in that he misrepresented the condition of his health in the application; and, second, that the insured was not in good health at the time he received the policy, and, under the terms of the contract, no liability ever existed.

¶5 We will consider these propositions in the order named. In making a contract of insurance it is the duty of the person applying for insurance, upon a risk of whatever kind, to give to the insurance company all of the necessary information concerning the risk as will be of use in estimating its character and in determining whether or not to assume it. This duty is the natural outgrowth of the nature of the insurance business. Thus arises the rule that the Untruth of any material representation relied on by the Insurance company in making the contract will avoid the contract, wholly irrespective of the intent, whether innocent or fraudulent, with which such misrepresentation was made. Vance, Insurance (2d Ed.) pp. 359-360, and cases cited therein. But it is important to note that this rule applies only to representations of previous and present conditions and past events, which are susceptible of exact knowledge and correct statement. For convenience these representations are often termed "objective representations.', The courts have reached a different result in the application of this general rule to the other type of representations, commonly called "subjective representations." These are statements not susceptible of present actual knowledge, but amount only to statements of intention, opinion or belief. As to subjective representations, the good faith of the insured furnishes the criterion of truth, for they can be false only when the intention, opinion or belief, as stated, is not honestly entertained. Statements as to the condition of the health of the applicant are of this latter type. The subject of the opinion in the case at bar was the exact state of health of the applicant, but the subject of the representation was the opinion of the applicant. Therefore, if he was of the honest opinion that he was in good health at the time he made the application, irrespective of his actual state of health, the representation would not be false, and, consequently, this contract would not be voidable...