Aloe v. Fidelity Mut. Life Ass'n

• Decision Date: 05 December 1899
• Citation: Aloe v. Fidelity Mut. Life Ass'n, 55 S.W. 993, 164 Mo. 675 (Mo. 1899)
• Court: Missouri Supreme Court
• Parties: ALOE v. FIDELITY MUT. LIFE ASS'N.

55 S.W. 993

164 Mo. 675

ALOE v.FIDELITY MUT. LIFE ASS'N.

Supreme Court of Missouri.

December 5, 1899.

INSURANCE — OLD-LINE COMPANIES — INSURANCE LAWS—EXCEPTIONS—STATUTES — CONSTRUCTION—POLICY — FRAUDULENT REPRESENTATIONS—INCREASE OF RISK—FAILURE TO TENDER AMOUNT OF PREMIUMS PAID— EFFECT.

1. Sess. Acts 1887, p. 199 et seq., authorizes the creation of assessment insurance companies; and section 10 declares that nothing therein contained shall subject any corporation doing business under such act to any other provisions or requirements of the general insurance laws of this state, except as distinctly set forth therein. Held, that assessment companies, domestic and foreign, were exempt from the operation of any other provisions or requirements of the general insurance laws of the state, and that section 10 was not limited to laws relating to the insurance department.

2. Where an insurance company issued a policy for a fixed sum in consideration that assured should pay annually a certain sum into the mortality fund, another sum into the equation fund, and another sum into the expense fund, and the mortality premium could be increased according to the experience of life insurance companies, etc., such company was not an assessment company, and hence, not having offered to return the premiums and interest paid on a policy into court, as required by Rev. St. 1889, § 5849, was not entitled to defend an action thereon by reason of false representations of assured, made in answer to questions whether he had been previously rejected by any other company, and whether no unfavorable opinions had been given on his life, in connection with life insurance, by physicians, which were not material to the risk.

In banc. Appeal from St. Louis circuit court; P. R. Flitcraft, Judge.

Action by Isabella Aloe against the Fidelity Mutual Life Association.From a judgment in favor of plaintiff, defendant appeals.Affirmed.

The following is the opinion in department 1 (VALLIANT, J.):

"This is a suit on a life insurance policy issued by defendant on the life of plaintiff's husband.The issues made by the pleadings are thus stated in appellant's brief: `The petition alleged the issuance of the policy to Albert S. Aloe, the performance of all the conditions incumbent on insured, the insured's death, the presentment of proofs of death, and defendant's refusal to pay, and prayed for judgment.The answer admitted the plaintiff's case, and then pleaded affirmatively that Aloe made false answers in the application for the insurance; that said false answers constituted a breach of warranty, a material misrepresentation, a concealment, and a fraud upon defendant, inducing the issue of the certificate.The false answers set up by defendant related to prior rejections of insured for life insurance, unfavorable opinions of physicians in connection therewith, medical advice and consultation and attendance by physicians within ten years prior to the application to defendant, and other insurance not disclosed by Aloe in his application.Plaintiff's reply denied the new matter in defendant's answer, and specially set up that Aloe's answers were made in good faith and were not material to the risk; that the contract was controlled by the laws of Pennsylvania; and that by the statutes of that state the answers pleaded by defendant were misrepresentations, as contradistinguished from warranties, and did not, by reason of the statute, avoid the policy, unless the answers were material to the risk or were made in bad faith.'The defendant moved the court to strike out that part of the reply which set up the laws of Pennsylvania as controlling the contract, which motion was overruled, and defendant excepted.The case came on for trial before the court and jury.Defendant assumed the burden of proof, and was accorded the opening and closing of the case.

"The testimony on the part of defendant tended to show that defendant was chartered under the laws of Pennsylvania to do life insurance business on the assessment plan, and was duly licensed by the insurance department of Missouri to do a life insurance business in this state on the assessment plan; that, in his application for the policy, Aloe agreed that every statement therein was material to the risk, and warranted every statement and answer `to be full, complete, and true,' and that, if found to be in any respect untrue, the policy issued upon it was to be null and void.The policy referred to the application as a part of the consideration for the contract, and made it a part of itself.The testimony for defendant also tended to show that in several particulars mentioned in the answer, as above epitomized, the answers to questions in the application were untrue.There was no averment in defendant's answer, nor was there any proof tending to show, that the alleged false answers in the application related to anything that caused, or contributed to cause, the death of the insured.The position of the defendant at the trial was, and now here is, that the statements and answers to questions in the application were agreed to be material and warranted to be true, and the policy issued on the faith of the warranty; that in point of fact it turns out they were not true, the warranty fails, and the policy is void.To quote the language of defendant's counsel in a colloquy during the trial, he`expressly disclaims that he has shown or attempted to show that albumen in the urine was an incurable disease.The defenses in this case are simply false answers in the application.No question is raised as to the physical condition of Mr. Aloe at the time.'The learned counsel relied on the letter of the contract, and on a construction of the proviso to section 5869, Rev. St. 1889, exempting corporations doing a life insurance business on the assessment plan from the requirements of the general insurance laws of the state, which construction would render the provisions of sections 5849and5850 inapplicable to the policy in question.Counsel for plaintiff make, in their brief, a forcible argument to show that, notwithstanding the defendant was an assessment company, yet the policy in question was not on the assessment plan.But the view we take of the law will render it unnecessary for us to follow that argument.It will also be unnecessary for us to decide any of the questions arising out of the conduct of the trial, since, in this view, the case must be adjudged on the face of the pleadings.

"The petition and answer agree that the application was made and the policy delivered in Missouri.It is therefore a Missouri contract, and governed by our laws.Section 5849, Rev. St. 1889: `No misrepresentations made in obtaining or securing a policy of insurance on the life or lives of any person or persons shall be deemed material, or render the policy void, unless the matter misrepresented shall have actually contributed to the contingency or event on which the policy is to become due and payable, and whether it so contributed in any case shall be a question for the jury.'The event on which this policy was to become due was the death of the plaintiff's husband.Therefore, if the provisions of that statute are to govern, no misrepresentation, of whatsoever character, made in obtaining the policy, is to be deemed material, or render the policy void, unless the matter misrepresented actually contributed to cause the death of plaintiff's husband.There was no averment or proof to that effect.On the contrary, any intention on the part of defendant to do so was actually disclaimed.And, even if there had been any such purpose, such defense would not have been heard, if this statute is to govern, because section 5850 requires, as a condition precedent to that defense, that the defendant deposit in court for the benefit of the plaintiff the premiums received on the policy.In Hanford v. Association, 122 Mo. 50, 26 S. W. 680, this court, per Black, J., protesting, `We are at a loss to see any good reason why the two sections concerning misrepresentations should be applied to what are denominated "old-line companies," and not to these assessment plan companies,' nevertheless felt constrained to hold that the proviso to section 5869 did exempt policies issued on the assessment plan from the operation of the two sections in question.And in Haynie v. Indemnity Co., 139 Mo. 416, 41 S. W. 461, that ruling was followed; still protesting that there was no reason for it, except the letter of the statute.In Jacobs v. Association, 142 Mo. 49, 43 S. W. 375, the Hanford and Haynie decisions were followed without comment.And, very recently, in Aloe v. Association(Mo. Sup.)49 S. W. 553, these three decisions were cited and followed.Nevertheless, after a careful study of the statute, we are forced to the conclusion that the construction placed on the proviso in question in Hanford v. Association, supra, was erroneous, and gave it an effect which the lawmakers never intended, and, although we have followed it three times, yet we ought not to follow it again.That proviso relates only to the extent to which the corporation itself shall be held subject to the supervision of the superintendent of insurance, and to the general provisions of the law governing the conduct of insurance companies in this state.That this is the correct construction of the proviso appears not only from the context in which we find it, but from the history of our statutes on the subject, and the manifest intention of the legislature in enacting the statute regarding misrepresentations in applications for life insurance.The section in which the proviso occurs (section 5869) treats of but one subject, and is in form but one complete sentence, from beginning to end, the proviso included.The subject is the supervision the superintendent of insurance is to have over the corporation which that act authorized to be formed, and the submission of the corporation to...