The
United States Life Insurance Company in the City of New York
filed its bill in equity against Alice A. Cable
administratrix of the estate of Herman D. Cable, deceased
for the cancellation upon the ground of fraud of a policy
written by the company upon the life of the defendant's
intestate. A demurrer to the bill was sustained, and upon
appeal to this court the judgment of the court below was
reversed, and the demurrer directed to be overruled.
Insurance Co. v. Cable, 39 C.C.A. 264, 98 F. 761, to
which reference is made for a statement of the allegations of
the bill. Upon the filing of the mandate in the court below,
an answer was filed to the bill admitting the fact of the
application and of the policy as stated in the bill, but
denying the fraud, and containing the following admissions
and allegations: 'Defendant, further answering, admits
that said policy on the life of said Herman D. Cable was,
after its execution, sent to the city of Chicago, but to
which particular agent of the complainant in said city this
defendant is not advised, except as she is informed by the
bill of complaint filed herein; and defendant further admits
that on or about the 21st day of February, 1899, said policy
was tendered by the said James F. McCabe, as agent of the
complainant, to said Herman D. Cable, and that at this
particular time said Cable declined to take up the matter of
said policy with said McCabe and pay the premium thereon, for
the reason that he was then
too busy to examine the policy, and see whether it was the
same in its terms and conditions as represented when his
application was taken, and for the further reason that he
desired to confer with his close and intimate friend, Mr.
George S. Lord, who had made an application for insurance
through the same agent in the same company. Defendant,
further answering, says that said Lord and said Cable were
connected together by the closest ties of friendship, and
were also interested together in various business
enterprises, and were in almost daily communication with each
other, and had been such friends and so interested in various
business enterprises for many years prior to February, 1899,
and that each was in the habit of acting for the other in
matters in which they were mutually interested. Defendant,
further answering, admits that upon the evening of the 24th
day of February, 1899, said Cable became ill, and that upon
the following day his illness was diagnosed as a slight
attack of pneumonia, but denies that upon the 26th day of
February the life of said Cable was despaired of by his
physicians and family, or that any such report was in
circulation, but says, on the contrary, that on the 26th and
on the 27th days of February, 1899, his illness was not
considered as at all dangerous, but a speedy recovery of said
Cable was confidently expected by his said family and said
Lord, and that no danger of death from said illness was at
all apprehended by them or either of them. Defendant, further
answering, admits that the said Lord was in daily
communication with said Cable and his family during said
illness, as had been his custom for many years prior thereto,
but denies that he was informed that said Cable was in
serious physical condition, and that his death was expected
from the disease which he then had, but says that, on the
contrary, said Lord believed and was informed by the family
of said Cable that he was not considered to be in a dangerous
condition. Defendant, further answering, admits that on the
27th day of February, 1899, said McCabe went to the office of
said Lord for the purpose of ascertaining whether said Lord
and said Cable would take said policies, and that he was then
informed by said Lord that he, said Lord, was willing to take
both of the policies, but that said Cable was then ill at his
home in Evanston, and if said McCabe, with knowledge of this
fact, desired to deliver said policies he would receive and
pay for the same; that said McCabe then went from said
office, and shortly after returned with the policy issued in
favor of said Cable, and delivered the same to said lord,
well knowing and being informed of the true condition of said
Cable, and that with such knowledge he received from said
Lord the premiums upon both of said policies for the first
year of the life of the same,-- that is, from the 6th day of
February, 1899, until the 6th day of February, 1900.
Defendant further expressly denies that the illness of said
Cable was not made known to the complainant, but was
purposely and willfully concealed form it, but, on the other
hand, defendant alleges that the true condition of said Cable
was fully told and made known to the complainant prior to the
delivery of said policy and the payment of the premiums
thereon. Defendant further denies that said Lord was not
authorized by said Cable to accept said policy and pay the
premiums thereon, but, on the contrary, alleges that he was
requested by the said Cable to so receive said policy and pay
the first premium thereon when he, the said Lord, should take
his policy. Defendant, further answering, admits that the
said Cable died on Thursday, March 2, 1899, depart this life,
but denies that such death was occasioned by pneumonia, but
was occasioned by heart failure, the result of sudden
complications which arose a few hours before his said death,
and which were not expected or apprehended by his family or
physicians until a short time before they occurred.'
On
March 21, 1900, an order was entered that the cause he
referred to a master 'to take the evidence in said cause
and report the same to this court. ' The master on
October 5, 1900, filed his report, returning the evidence
adduced before him, and reported 15 findings of fact,
reference being here made to the following:
'(1)
That the complainant is a corporation, duly organized under
the laws of the state of New York, and a citizen of the
state of New York, and has been for many years last past,
and is now, engaged in the business of insuring
lives throughout the United States, and has been for many
years, and is now, lawfully engaged in carrying on said
business in the state of Illinois, under proper license,
and that the defendant Alice A. Cable is a citizen of the
state of Illinois, residing in the Northern district
thereof. The business of the complainant in Chicago is in
charge of a general manager for the states of Illinois and
Wisconsin, who has supervision of the company's
business, procuring applications, or seeing that they are
procured, collecting premiums, attending to the detail
work, looking after disbursements, looking after losses and
furnishing proofs, and who is the supreme authority in the
state of Illinois in said company's business in all
cases in the agency work, and is hereinafter called
'general agent.'
'(2)
That on or about the 16th day of January, 1899, Herman D.
Cable, then a resident of Evanston, in the state of
Illinois, made application in writing to the complainant,
through one James F. McCabe, for insurance upon his life in
the sum of fifty thousand dollars, which application was
forwarded to the New York office of the complainant, and in
consideration thereof the complainant, on or about the 6th
day of February, 1899, executed its policy, numbered
94,082, upon the life of the said Herman D. Cable, which
policy agreed, in further consideration of the sum of
$848.50, to be paid on the delivery thereof, and a like sum
to be paid on the 6th day of February in each and every
year thereafter, until ten (10) years' premiums should
have been paid, and upon the acceptance of satisfactory
proofs of the death of said Herman D. Cable within ten (10)
years ending on the 6th day of February, 1909, that the
complainant would pay fifty thousand dollars ($50,000) in
thirty (30) consecutive annual installments, of one
thousand six hundred sixty-six hundredths dollars
($1,666.66) each, to the estate of said Herman D. Cable.
The written application for the said policy was by the
terms of the policy made a part of the policy itself, and
was signed by the said Herman D. Cable, and one of the
provisions of the said application was as follows, viz.:
'It is hereby declared and agreed * * * that the policy
to be issued hereon shall take effect only upon payment of
the first premium and delivery of the policy during my
lifetime, sound health, and insurable condition;' and
another provision thereof was as follows, viz.' '
That only the president, together with the secretary or the
actuary, shall have the power to alter or waive the policy
or any condition thereof.'
'(3)
At the same time when Cable applied for the above policy, a
similar application was made to the complainant for a
similar $50,000 policy by George S. Lord, who was a
neighbor and intimate friend of Cable, and interested with
him in numerous business transactions, both being directors
of the Bankers' National Bank and members of the
Evanston school board. Both of the said policies were
issued at about the same time, and both were forwarded from
the New York office of the complainant to its Chicago
office, and were received at the latter office on or before
the 20th day of February, 1899, and on the last named day
they were turned over by the complainant's general
agent at Chicago to one T. J. Finney.
'(4)
The said T. J. Finney was a life insurance broker, who was
not regularly employed by the complainant or by any other
company, but who had done business with the complainant
through the said general
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