Bockes v. Union Mut. Cas. Co.

• Decision Date: 05 April 1929
• Docket Number: No. 39446.,39446.
• Citation: 224 N.W. 771
• Parties: BOCKES v. UNION MUT. CASUALTY CO.
• Court: Iowa Supreme Court

224 N.W. 771

BOCKES

v.UNION MUT. CASUALTY CO.

No. 39446.^a1

Supreme Court of Iowa.

April 5, 1929.

Appeal from District Court, Grundy County; George W. Wood, Judge.

Action at law to recover damages on the alleged ground of fraud and deceit in effecting a compromise settlement under an accident insurance policy. Upon the conclusion of the plaintiff's testimony a motion by defendant for a directed verdict was made, and it was sustained by the trial court. Under an instruction of the court a directed verdict was entered by the jury for the defendant. Judgment was entered accordingly. Thereafter plaintiff filed a motion for a new trial, which was overruled. The plaintiff appeals. Reversed.

Evans, J., dissenting.Raymond N. Klass and Floyd Philbrick, both of Cedar Rapids, and Rogers & Ruppelt, of Grundy Center, for appellant.

Harold S. Thomas and J. L. Parrish, both of Des Moines, for appellee.

DE GRAFF, J.

[1] The plaintiff (appellant) prior to the commencement of this action was a policyholder in the defendant insurance company, legally organized and licensed to do an accident and health insurance business in Iowa. The primary claim of the plaintiff is that the company, through its president, defrauded the plaintiff of $4,000 by inducing him to discharge the company from a valid and legal liability of $5,000, to which we will presently refer. The defendant in answer alleges fraud on the part of the plaintiff in securing said policy by reason of statements and representations in the application. The defendant insurance company is in no position under this record to plead or prove fraudulent representations on the part of the plaintiff based on his answers made in the application for the policy in question. Section 1741, Code 1897, provides that all insurance companies and associations shall upon the issuance of any policy attach to such policy or indorse thereon a true copy of any application or representations of the insured, which, by the terms of said policy, are made a part thereof, or of the contract of insurance, or referred to therein, or which may in any manner effect the validity of such policy. The omission so to do shall not render the policy invalid, but if any company or association neglects to comply with the requirements of this section it shall forever be precluded from pleading, alleging, or proving any such application or representation, or any part thereof, or any falsity thereof, or any parts thereof, in any action upon such policy. That section applies to the instant insurance company. See Corson v. Iowa Mutual Fire Ins. Ass'n, 115 Iowa, 485, 88 N. W. 1086.

[2] The plaintiff contends that a true copy of his application was not attached to the policy issued by the appellee company to him. The policy issued to the plaintiff was surrendered by plaintiff at the time of the alleged compromise of settlement between the president of the insurance company and the insured. At the time of the trial, therefore, the plaintiff could not himself tender the policy as an item of evidence in the case, nor was he legally required to do so. The court did order that the policy then in the hands of the defendant company be produced. The company, in response to the order of court, filed a specimen copy in an attempt to comply with the order. It was a blank policy, but, as claimed by the defendant company, a specimen policy that contained the same provisions as the policy issued to Bert E. Bockes, the insured herein. It is strangely significant that such an important instrument would not be produced by the then possessor, as we may assume that an insurance company through its officers would exercise the greatest care in the keeping of such an instrument. The original policy or the application thereto attached was never produced. An examination of the exhibit, known as Exhibit E does not show that a true copy of Bockes' application, nor in fact that a copy of any application was attached thereto or indorsed thereon. This omission is fatal in view of the provision of section 1741, Code 1897, to which reference has heretofore been made. Under such a situation, the defendant insurance company is precluded, under the law, from pleading fraud or misrepresentation on the part of the insured. In the instant case, the appellee insurance company pleaded that the plaintiff made misrepresentation; but under the statutes and the instant record the appellee is not so privileged. See Salzman v. Machinery Mutual Ins. Ass'n, 142 Iowa, 99, 120 N. W. 697.

II. The plaintiff in his petition alleges that on or about January 3, 1922, while the policy was in full force and effect, he accidentally fell under a railroad train and thereby suffered the loss of both feet; that he performed all of the terms and conditions of said policy in making claim thereunder; that while he was suffering from pain and shock, nervous and mental depression, the president of the defendant insurance company willfully, and maliciously defrauded him of $4,000 by inducing him to accept $1,000 in full settlement, release, and discharge of a valid claim for $5,000, which was the principal sum promised by said policy for the loss of both feet; that the president of said insurance company upon meeting the plaintiff (insured) stated and represented that the company felt sorry for and sympathized with the plaintiff, and out of kindness would give him $1,000. This action was tried on the theory of fraud and deceit practiced on the plaintiff by the defendant company. The primary question on this appeal is whether or not the plaintiff made out a prima facie case entitling him to go to a jury. Should his motion for a new trial have been sustained? It is undisputed that the plaintiff lost both feet through an accidental bodily injury. The record does not show that the defendant company questioned the matter of the accident or the loss, nor did it deny liability on account of the manner in which the accident or loss occurred. The plaintiff made his proofs of loss, and no question arises as to the time, manner, or form in which such proofs were submitted to the insurance company.

[3] It appears that on March 9, 1922, Wm. Schulz, of Des Moines, the president of the defendant company, voluntarily visited the plaintiff at his home at Conrad, ostensibly for the purpose of making some sort of settlement with the plaintiff. There was no basisfor a compromise settlement, as there was no dispute between the parties, and had it not been for the representations made by the president of the defendant insurance company the plaintiff testified that he would not have signed the papers requested to be signed by Schulz. What were the representations that were made to the plaintiff that induced him to release and discharge the defendant company on the policy in suit? It must be remembered that an experienced insurance man of some 20 years in the insurance business approached a young farmer of no insurance experience whatever, and with quite a limited education, and at such time the president, acting on behalf of his insurance company, told the plaintiff that the policy was void; that the plaintiff had no claim against the defendant insurance company; that he was not entitled to anything; that he could not recover anything; and that there was no liability under said policy. Coming from the source it did, the plaintiff believed what was told him, and what was said to him were material facts. It must be conceded that such statements under the circumstances were false--at least presented a question for the jury to determine. Scienter is chargeable to the president.

Through the...