Antonia Pellon v. Connecticut General Life Insurance Company (Two Cases)

• Decision Date: 03 October 1933
• Parties: ANTONIA PELLON ET AL. v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY (two cases)
• Court: Vermont Supreme Court

168 A. 701

105 Vt. 508

ANTONIA PELLON ET AL. v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY (two cases)

Supreme Court of Vermont

October 3, 1933

May Term, 1933.

Question Not Raised Below---Parol Evidence To Show Written Contract Never Had Existence Because of Fraud---Life Insurance---Insufficiency of Evidence To Show Application Signed Through Fraud of Medical Examiner---Estoppel by Insurer To Assert Fraud in Application for Insurance---Application of Rule When Insured Illiterate---Necessity of Perfect Good Faith by Insured---Sufficiency of Evidence To Show Bad Faith of Insured in Making Application, Thereby Not Precluding Insurer as Matter of Law from Asserting Fraud---Presumption as to Intent To Deceive from Facts Shown---Sufficiency of Evidence To Show Life Insurance Policies Void for False Representations unless Waived by Insurer---Corporations---Knowledge of Clerk as Imputable to Corporation---Imputed Knowledge Concerning Insured's Health by Reason of Card Relating Thereto in Insurer's Files---Jury Question as to Whether Insurer Made Reasonable Inquiry as to Health of Insured and What Such Inquiry Would Have Shown---When Insurer Is Put upon Inquiry as to Insured's Health, Facts with Which Insurer Is Chargeable---Waiver of Right of Forfeiture by Insurer---Waiver or Estoppel of Insurer as Jury Questions under Facts---Instructions of Court---Reversal Where Verdict Might Have Been Based on Finding of No Fraud, as to Which Insurer was Entitled to Binding Instructions, Rather Than on Issue of Estoppel.

1. Question as to estoppel not being available to defendant because not pleaded, which was not raised below, is not for consideration of Supreme Court on review.

2. Parol evidence is admissible to show that written contract never had any binding force because induced by fraud.

3. In ACTION OF CONTRACT on life insurance policy, evidence held not to justify inference that insured was induced to sign written application through any fraud of medical examiner.

4. Where insured, in good faith, makes truthful answers to questions contained in application for insurance, but his answers, owing to fraud, mistake, or negligence of agent filling out application, are incorrectly transcribed, company is estopped to assert their falsity as defense to policy.

5. Rule estopping insurance company from asserting falsity of answers in application, truthfully answered, but incorrectly transcribed by insurer's agent, is to be applied liberally with reference to illiterate applicant.

6. As prerequisite to application of foregoing rule, there must be perfect good faith on part of applicant.

7. Where conduct of insured, in failing to reveal facts known to him concerning his health and physical condition and in giving answers well calculated to deceive medical examiner and which apparently had that effect, was incompatible with good faith, held that plaintiffs, seeking to recover on policy on his life, had failed, as matter of law, to establish estoppel against defendant from asserting fraud based upon false answers in written application.

8. Where insured, at time he signed application for insurance had tuberculosis, and knew it, and made material misrepresentations therein concerning such fact, which induced contract, law infers intent to deceive.

9. Life insurance policies held rendered voidable by false representations of insured, justifying granting of defendant's motion for directed verdict, unless defendant was estopped from relying upon them, by reason of its knowledge, express or implied, of their falsity.

10. Knowledge of clerk of corporation is imputable to corporation, if he stands in such relation to it or to fact communicated that it was his duty to communicate facts to his superiors.

11. In ACTION OF CONTRACT on life insurance policy held that defendant could not escape imputation of knowledge concerning insured's health, shown by card sent it from service to which it subscribed, by showing that clerk was negligent in communicating information, or in not noting it where defendant's underwriters would most likely see it since card from its receipt was kept in defendant's files, and this itself was notice to defendant.

12. Where insurer, by reason of information as to insured's health contained on card sent it by service to which it subscribed, had knowledge that representations of insured in written application were not complete or true, so as to put it upon inquiry, it was for jury to say what would constitute reasonable inquiry, and what facts would have been disclosed to insurer by reasonable diligence in prosecuting its inquiry.

13. Where insurer had such notice respecting health of applicant for insurance as to put it upon inquiry, insurer is chargeable with all such facts as reasonable diligence in prosecuting its inquiry in proper direction would have brought to its knowledge.

14. Where insurer with full knowledge elects not to take advantage of forfeiture, he waives it, and cannot assert it in defense, though insured was not misled to his prejudice, and such waiver may be express or implied, before or after forefeiture.

15. Insurer waiving forfeiture is bound to treat contract of insurance as though no forfeiture had occurred.

16. Where insurer with knowledge of facts entitling it to avoid or forfeit policy, accepts and retains premium, it recognizes continuing existence of policy and is precluded from asserting forfeiture; and such rule applies where insurer has information which, if pursued with reasonable diligence, would lead to discovery of true facts asserted as grounds of forfeiture.

17. Insurer having full knowledge of facts, either actual or imputed, justifying forfeiture, could not treat policies as in force during lifetime of insured for purpose of collecting premiums, and after his death treat them as invalid for purpose of avoiding payment of loss.

18. In ACTION OF CONTRACT on life insurance policy, issue of waiver or estoppel of insurer to assert forfeiture because of insured's misrepresentations in application for policy, held for jury.

19. Where verdict against insurer was general, and might have been based on finding by jury that there was no fraud in obtaining insurance, and without consideration of issue whether insurer was estopped from asserting fraud, failure of trial court to give binding instructions as to issue of fraud to which defendant was entitled was harmful error requiring reversal.

ACTIONS OF CONTRACT on life insurance policies. Plea in each case, fraud on part of deceased in procuring policies in question. Trial by jury at the March Term, 1932, Washington County, Sherman, J., presiding. Verdict and judgment for the plaintiffs. The defendant excepted. The opinion states the case.

Judgment reversed, and cause remanded.

J. Ward Carver and Charles H. Voorhees (of Hartford, Connecticut) and George B. Young (of counsel) for the defendant.

Theriault & Hunt for the plaintiff.

Present: POWERS, C. J., SLACK, MOULTON, THOMPSON, and GRAHAM, JJ.

OPINION

GRAHAM

These actions were brought by and on behalf of the beneficiaries to recover the amount of two life insurance policies on the life of Venerando Paz, who died in the city of Barre on February 13, 1931. The policies are identical, except the amount of insurance and the beneficiaries therein named. Both policies were issued on a single application, and were for $ 10,000 and $ 5,000, respectively. The cases have been heard together by agreement. There was a trial by jury resulting in a verdict and judgment for the plaintiffs, and the cases are brought to this Court on defendant's exceptions. The defense pleaded and relied upon was fraud on the part of the insured in procuring the policies. The plaintiffs denied the charge of fraud, and they alleged and claimed a waiver by defendant of any forfeiture. This review involves a consideration of those questions.

The written application for the insurance consists of two part: It was signed by the insured, copies were attached to the policies when issued, and, by the terms of the policies, it is expressly made a part of the contract. The insured signed a statement, which was contained in part 2 of the application, that all his answers to questions therein were complete and true, and that they should form a part of the insurance applied for. The policies contained this provision: "The consideration for this insurance is the application, a copy of which is attached hereto and made a part of this contract, and the payment in advance of the annual premium." It is also expressly provided in the policies that they should not take effect until the first premium was actually paid, and that the policies and the application therefor constituted the entire contract between the parties and all statements made in the application should, in the absence of fraud, be deemed representations and not warranties.

The application (part 2) was signed by the insured on October 7, 1929. The policies were dated October 14, 1929, and they were delivered to the insured two or three days thereafter. The first premium was paid by the insured on December 14, 1929, the last day the policies could be placed in force.

The charge of fraud alleged against insured and relied upon in defense is based upon the following questions and answers of part 2 of the application:

"7. Have you at any time had or been told you had (b) asthma, tuberculosis of any organ, spitting of blood, chronic bronchitis, chronic cough or expectoration, pleurisy, pneumonia, palpitation or any disease of the heart, lungs or throat?" Answer: "No."

"8. (a) Have you had medical advice during the last five years? If so, for what ailments, duration and approximate dates? Give names and addresses of all physicians consulted." Answe...