Byrnes v. Mutual Life Insurance Company of New York

• Decision Date: 10 January 1955
• Docket Number: No. 13769.,13769.
• Citation: 217 F.2d 497
• Parties: Ronald M. BYRNES, Appellant, v. The MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, a Corporation, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

217 F.2d 497 (1954)

Ronald M. BYRNES, Appellant, v. The MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, a Corporation, Appellee.

No. 13769.

United States Court of Appeals Ninth Circuit.

December 6, 1954.

Rehearing Denied January 10, 1955.

Kramer, Morrison, Roche & Perry, Phoenix, Ariz., John Alan Appleman, Urbana, Ill., for appellant.

Evans, Hull, Kitchel & Jenckes, Norman S. Hull, John E. Madden, Phoenix, Ariz., Haughton Bell, New York City, for appellee.

Before BONE and POPE, Circuit Judges, and YANKWICH, District Judge.

YANKWICH, District Judge.

On July 1, 1947, the Mutual Life Insurance Company of New York, in response to an application of one Albert Francis Morairty, issued two $50,000.00 life insurance policies on the life of Albert Francis Morairty upon the payment of a premium of $1,484.00 each. Each policy was for one year. In one policy, Morairty's wife, Ruth M. Morairty, was the beneficiary. The other policy which is attached to the complaint filed in this case, states that the beneficiary is the insured's partner, Ronald M. Byrnes.

The policy year was to be reckoned from July 16, 1947. The yearly provision was to be followed by a life paid up policy at the age of 85 years. In the Complaint filed in the District Court of the United States for the District of Arizona, Byrnes sought to recover on the policy. He alleged that Morairty died on the 29th day of January, 1948, that Byrnes as beneficiary had demanded the payment of the sum of $50,000.00, which was refused.

The Answer of the defendants admitted the issuance of the policy, the payments of the premium, notice of proof of death and refusal of payment. It denied that any amount was due.

A second defense alleged that the policy wherein Byrnes was named beneficiary never took effect because of certain misrepresentations made by the deceased to the medical examiner.

In this respect the application which was signed by Morairty contained the following clause:

"All the statements and answers in this application including those made to the Medical Examiner are made to induce the Company to issue the policy and are true. The policy shall not take effect unless and until it is delivered to the insured and the first premium is paid during the insured\'s good health; except as may be otherwise provided in any conditional receipt issued. No agent or other person except the President, Vice President or a Secretary of the Company has authority to accept any representation or information not contained in this application or to modify or to enlarge, any contract of insurance or waive any requirement in the application or in the contract of insurance."

After setting forth the answers given to specific inquiries about health, medical treatment, hospitalization, the defendant alleged that the answers were false in that

"* * * he had had X-rays, blood tests and other special laboratory tests and his health was then impaired, and he had had illnesses other than hay fever, and had suffered from bowel hemorrhages, stomach trouble, duodenal ulcer, anemia, and other illnesses, since childhood, both before and after the six-year period then last past, and he had not been free from gas or other gastro-intestinal symptoms, or from dietary restrictions, and he had, within the period of five years then last past consulted other practitioners, and for illnesses other than infected wisdom tooth and an acute cold, and he had been in a hospital for observation, treatment and other medical purposes, both before and after the six-year period then last past, and for illnesses other than acute cold, being such illnesses as have been mentioned hereinbefore."

The Answer then alleged that the answers given by the insured were of such nature that the information called for was presumably within the personal knowledge of applicant and he knew the answers to be false; that the insurer relied on the representations, did not know they were false, but believed them to be true and would not have issued the policy had they known them to be false. They did not discover their falsity until after the death of Morairty. Thereafter, on April 5, 1948, they rescinded the life insurance policy and tendered to plaintiff at Phoenix, Arizona, the sum of $1,552.09, for the amount paid for the premium with interest to date of tender. Plaintiff refused to accept the tender which has been kept open.

As a third defense it was alleged that the policy never took effect as a contract because Morairty was not in good health when the same was delivered to him and it was especially agreed in the contract that the policy would not take effect until it was delivered to the insured and the first premium paid during his good health.

On September 17, 1950, the appellee moved for summary judgment. Rule 56, Federal Rules of Civil Procedure, 28 U.S.C.A. In conjunction with the motion, the depositions of Doctors Thomas W. Woodman, Robert S. Flynn and F. T. Fahlen were filed by the appellee and answers to requests for admissions as to the existence of certain documents. The Court, on December 5, 1952, granted summary judgment and on December 29, 1952, formal judgment that appellant take nothing by the action was entered.

This is an appeal from the judgment.

The only question presented is whether upon the facts presented by the pleadings and affidavits, there remained a "genuine issue as to any material fact". Rule 56(c), Federal Rules of Civil Procedure.

In the background of the case is the decision of this court in Mutual Life Insurance Company of New York v. Morairty, 9 Cir., 1949, 178 F.2d 470. That case had been instituted by the widow on the policy made payable to her. On a trial before a jury, a verdict was rendered in her favor in the United States District Court of Arizona and a judgment entered upon the verdict. On appeal this court sustained the position of the insurance company that because of the misrepresentations which accompanied Morairty's application, the court should have directed a verdict in their favor. And having failed to do so, it should have granted a motion for judgment notwithstanding the verdict. The judgment was reversed with direction to the lower court to enter a judgment for the insurance company upon payment to the widow of the amount of the premium paid on the policy, plus interest thereon.

In view of the discussion to follow, it it well to give the summary of Judge Bone's opinion as to the misrepresentation:

"Therefore, even assuming the hemorrhages were caused solely by the diverticuli (and this is giving appellee the benefit of doubtful evidence for if they were caused by some other illness or infirmity there could be no conceivable excuse for failing to reveal the hemorrhages and treatment) we are convinced that despite Morairty\'s disclosure of the existence of the diverticuli, (1) his failure to disclose the serious hemorrhages which he may have believed were caused by diverticulitis, (2) coupled with his affirmative declaration that he had been free from gastro-intestinal symptoms for the past six years, and (3) his non-disclosure of the hospitalization and treatment by Dr. Flynn in 1944, constituted a concealment or misrepresentation of material facts which were presumably within the knowledge of the insured, and, under the Arizona authorities discussed above, this amounted to legal fraud sufficient to invalidate the policy." Mutual Life Ins. Co. v. Morairty, supra, 178 F.2d at page 475. ¹

We are to determine whether, in view of this finding by the Court of Appeals, based on the uncontradicted testimony in the record which was also made a part of this record, the trial court was correct in determining that there was no genuine issue of fact to be tried and in granting summary judgment against Byrnes.

I The Nature of Summary Judgment

The object of the procedure for summary judgment is not to determine an issue, but whether there is an issue to be tried. Dulansky v. Iowa-Illinois Gas & Electric Co., 8 Cir., 1951, 191 F.2d 881, 883.

Against the summary disposition of an issue stands the fundamental right to trial in open court by adversary proceedings, and through testimony adduced therein on the issues tendered. The late Judge Cardozo has stated in simple, yet classic language, the condition which justifies a departure, under summary judgment, from this principle:

"To justify a departure from that course and the award of summary relief, the court must be convinced that the issue is not genuine, but feigned, and that there is in truth nothing to be tried." Curry v. Mackenzie, 1925, 239 N.Y. 267, 270, 146 N.E. 375, 376.

And the Supreme Court of the United States, in interpreting this rule, has stated that it

"* * * authorizes summary judgment only where the moving party is entitled to judgment as a matter of law, where it is quite clear what the truth is, that no genuine issue remains for trial, and that the purpose of the rule is not to cut litigants off from their right of trial by jury if they really have issues to try." Sartor v. Arkansas Natural Gas Corp., 1944, 321 U.S. 620, 64 S.Ct. 724, 728, 88 L.Ed. 967.

In determining the matter, resort is had to extrinsic facts through affidavits, admissions and the like in order to find out if there is a real issue. This implies that such a finding will be made despite the fact that the pleadings as they stand present such issue. Fletcher v. Krise, 1941, 73 App.D.C. 266, 120 F.2d 809, 812; Miller v. Miller, 1941, 74 App.D.C. 216, 122 F.2d 209, 212; Koepke v. Fontecchio, 9 Cir., 1949, 177 F.2d, 125, 127; Dewey v. Clark, 1950, 86 U.S. App.D.C. 137, 180 F.2d 766, 770-772.

This and other Courts of Appeals have had occasion to apply the principle readily. They have generally held that if the pleadings and affidavits show that there is no issue as to any fact material to the determination of the question, summary judgment should be granted. Gifford v. Travelers Protective Ass'n, 9 Cir., 1946, 153 F.2d 209, 211; Leishman...