Penn Mut. Life Ins. Co. v. Mechanics' Sav. Bank & Trust Co.

Citation73 F. 653
Decision Date14 April 1896
Docket Number343.
PartiesPENN MUT. LIFE INS. CO. v. MECHANICS' SAVINGS BANK & TRUST CO.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

F. C Maury and J. B. Daniel, for plaintiff in error.

Before TAFT and LURTON, Circuit Judge, and HAMMOND, J.

TAFT Circuit Judge.

This is a petition for rehearing by the plaintiff in error. The action below was on a policy of life insurance, and resulted in a verdict and judgment against the defendant, the insurance company. In the opinion heretofore filed in the case we reversed the judgment of the court below for an error in excluding evidence, and for the guidance of the court below in a new trial we considered other questions upon the record. The Pennsylvania statute which controlled the construction of the policy provided, in effect, that no misrepresentation in the application should avoid the policy unless it was either made in bad faith or was material to the risk. It appeared upon the trial that in answering a question as to other life insurance upon his life the insured had stated three policies aggregating $16,000, but had omitted one which he had for $5,000. The court below refused to charge the jury that this misrepresentation avoided the policy because necessarily made in bad faith, even if it was not material to the risk. In this we held there was no error and we are pressed by the petition for a rehearing to examine the correctness of our holding. The argument of learned counsel is that a misrepresentation in bad faith, within the meaning of the statute, is an untrue statement made under such circumstances that it would, if resulting in injury, support a recovery in an action for deceit at common law; that in such an action, if the fact misrepresented is one concerning defendant's own affairs, of which he must at some time have had personal knowledge, he is held to a knowledge and recollection of it at the time of the statement, and cannot be heard in defense to say that inadvertently and through forgetfulness he made the statement in the honest belief of its truth. Therefore it is said that in this case the court below should have told the jury that as the insured must have known of the omitted policy when he took it, he is conclusively presumed to have known it when he signed his application, and so to have made the statement concerning his other insurance in bad faith. The argument is unsound. We have here to deal with the statutory meaning of the phrase 'misrepresentation in bad faith.' 'In bad faith' is not a technical term used only in actions for deceit. It is an ordinary expression, the meaning of which is not doubtful. It means 'with actual intent to mislead or deceive another. ' It refers to a real and actual state of mind capable of both direct and circumstantial proof. A man may testify directly to his knowledge and intention if they are in issue, and they may also be inferred from circumstances. If a man makes a statement in the honest belief that it is true, he does not make that statement in bad faith, even if his honest ignorance of the truth is the result of the grossest carelessness. The fact that he could only be ignorant through gross carelessness may be evidence to show that he was not ignorant, and therefore spoke in bad faith; but, grant his honest belief in his...

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33 cases
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    • United States
    • United States State Supreme Court of Delaware
    • January 22, 1913
    ... ... In ... Priestly v. Sav. Co. (C. C.) 112 F. 271, where an ... applicant ... Life Association, 151 Pa. 17, 24 A. 1064 ... case of Insurance Co. v. Mechanics' Savings ... Bank, 72 F. 413, 418, 19 C. C. A ... v. Mechanics' Savings Bank & Trust Co., supra ... In the ... case of ... Mengel v. Northwestern Life Ins. Co., 176 Pa. 280, ... 35 A. 197 (1896), the ... ...
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    ...676;Hilgenberg v. Northup, 134 Ind. 92, 94, 33 N.E. 786. It was said by Taft, J., in Penn Mutual Life Ins. Co. v. Mechanics' Savings Bank & Trust Co., 19 C.C.A. 316, 317,73 F. 653, 654, 38 L.R.A. 70: ‘'In bad faith’ is not a technical term used only in actions for deceit. It is an ordinary ......
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