Ebner v. Ohio State Life Insurance Company

• Decision Date: 18 December 1918
• Docket Number: 10,074
• Citation: 121 N.E. 315,69 Ind.App. 32
• Parties: EBNER, ADMINISTRATOR, v. OHIO STATE LIFE INSURANCE COMPANY
• Court: Indiana Appellate Court

121 N.E. 315

69 Ind.App. 32

EBNER, ADMINISTRATOR, v. OHIO STATE LIFE INSURANCE COMPANY

No. 10,074

Court of Appeals of Indiana

December 18, 1918

From Pike Circuit Court; John L. Bretz, Judge.

Action by the Ohio State Life Insurance Company against Lawrence A Ebner, administrator of the estate of Jacob L. Ebner deceased. From a judgment for plaintiff, the defendant appeals.

Affirmed.

L. E Ritchey, Gardiner, Tharp & Gardiner and Richardson & Taylor, for appellant.

U. S. Brandt, Orr & Clark, W. H. Hill and W. D. Curll, for appellee.

OPINION

CALDWELL, J.

The special finding of facts is in part to the following effect: On May 20, 1914, Joseph L. Ebner, appellant's decedent, of Vincennes, Indiana, executed to appellee his written application for a life insurance policy on his own life in the sum of $ 5,000. On May 29, appellee issued such a policy on the application, and delivered it to decedent on June 1, 1914. Attached to the policy there was a copy of the application. The former provided that it and the latter should constitute the entire contract between the parties. The application was in two parts. The first part contained certain statements and agreements on the part of decedent and certain information imparted by means of answers to questions contained in the application. Such statements and agreements were in part to the following effect: "That the policy shall not be binding on the company unless it has been delivered to me during my good health;" that all statements and answers contained in the entire application were declared to be true and complete; that no material facts had been suppressed, and that such statements and answers were offered to the company as a consideration for issuing the policy. The information imparted in answering questions contained in the first part of the application was in part substantially as follows: That no physician within ten years prior to the signing of the application had, to decedent's knowledge, expressed an unfavorable opinion concerning his health.

Part two of the application consisted of questions propounded by appellee's medical examiner and decedent's answers thereto, the information thus imparted being in part to the following effect: That decedent had never made an application to any company for insurance on his life, on which a policy of the exact kind applied for had not been issued, and that there was no such application then pending; that decedent did not at the time have, and that he had not ever had, any one of certain diseases, among them diseases of the heart and kidneys; that decedent did not have any regular physician. This part of the application contained also decedent's declaration that to the best of his knowledge and belief "I am in sound physical condition and a proper subject for life insurance."

The policy, under the heading "Incontestability," contained the following provision:

"1. After one year this policy shall be incontestable except for nonpayment of premiums * * *. All statements made by the insured in the application shall, in the absence of fraud, be deemed representations and not warranties."

On May 2, 1914, decedent applied in writing to the Michigan Mutual Life Insurance Company for a $ 20,000 policy on his own life. On May 12, 1914, an examination having disclosed the presence of albumen and granular and hyaline casts in his urine, that company rejected his application and refused to issue and did not issue a policy thereon. At the time of making application in the case at bar decedent knew that no policy had been issued on his application to the Michigan company, and from information imparted to him by the agent of such company a day or two before May 20, 1914, he knew that there was some trouble connected with such application, and that there was difficulty in getting it accepted. On May 20, 1914, Dr. Beard of Vincennes was, and for more than six months prior thereto had been, decedent's medical attendant. Between November 2, 1913, and May 20, 1914, decedent consulted Dr. Beard many times at intervals varying from twice a week to twice a month, by reason of shortness of breath on exertion and the existence of a disease of the heart known as mitral regurgitation or a leaky heart valve, with which he was affected and afflicted. On November 6, 1913, he consulted Dr. Jameson of Indianapolis. In November, 1913, decedent was informed that Drs. Board and Jameson had discovered that he was affected with a disease of the heart and that he had a leaky valve of the heart. Dr. Beard informed him of the existence of such disease on several occasions, and at all times after November 5, 1913, he knew that he was affected with a disease of the heart. On November 2, 1913, such heart disease had permanently impaired decedent's health and had developed to the extent that it was incurable, and from and after such time and until his death Dr. Beard treated and prescribed for decedent for such disease of the heart. Decedent never recovered from such disease of the heart or from shortness of breath on exertion. He died on November 23, 1914. His death was caused by said disease of the heart known as mitral regurgitation or a leaky heart valve. At the time of the delivery of said policy to decedent he was not in good health; at that time his health was permanently impaired by said disease and to the extent that he was incurable and his longevity shortened.

Appellee had no knowledge of or information concerning decedent at the time of the delivery of the policy to him other than as disclosed by the application. Decedent's statements contained in the application were made for the purpose of inducing appellee to issue to him the policy applied for, and in issuing such policy appellee relied on such statements, and, so relying, issued it in consideration of such statements and the annual premium provided for by the policy. Appellee had no notice or knowledge prior to the filing of proofs of death that decedent had consulted physicians as above set out, or of any fact connected therewith, or that decedent had had shortness of breath or that he was afflicted with any disease of the heart, or that his probable longevity was shortened by any ailment. Had appellee known the facts as to decedent's diseased condition or respecting his medical consultations and treatment, it would not have issued the policy.

Appellant filed proper proofs of death on January 2, 1915. Thereupon appellee instituted an investigation based on facts revealed by such proofs, which investigation was completed on January 15, 1915. The facts as found respecting decedent's physical condition, etc., were discovered by appellee as a result of such investigation, and not until the completion thereof. Thereupon, by reason of decedent's false statements contained in his application and because it was determined that decedent was not in good health when the policy was delivered, appellee elected to rescind it, and thereupon on January 16, 1915, notified appellant of such election, made a proper tender of the amount of premium that had been paid, with interest, totaling $ 255.81, and demanded the cancellation of the policy. Appellant refused to accept the money tendered or to permit the policy to be canceled. Proper steps were taken to keep the tender good. On May 18, 1915, appellee filed its complaint in the Knox Circuit Court against appellant, seeking the cancellation of the policy.

On the finding the court stated conclusions of law in appellee's favor, but that the sum so tendered, held by the clerk of court, should be paid to appellant.

There are further facts disclosed by the record, in substance, as follows: Appellee's complaint to cancel was in four paragraphs. By its allegations the right to procure the cancellation of the policy was grounded on the false statements and concealments as indicated by the finding. Each paragraph embodied the stipulation that "after one year this policy shall be incontestable," and contained allegations to the effect that it was appellant's intention to delay action on the policy until more than one year from its date, his purpose being to deprive appellee of its defense by appealing to such incontestability clause. On September 16, 1915, appellant filed a demurrer to the complaint and filed also a cross-complaint on the policy. On October 8, 1915, the demurrer to the complaint was sustained. On November 2, 1915, appellee answered the cross-complaint in eight paragraphs, the first being a general denial, the others special paragraphs, very similar in allegation to the respective paragraphs of the complaint, being based on the false statements and concealments as found, together with the provisions of the policy thereby invoked and alleged to have been violated. There were proper allegations also on the subject of rescission and tendering the amount of the premium collected. Demurrers to the answers having been overruled, appellant replied by a general denial. The venue having been changed to the Pike Circuit Court, a trial was had on the issues joined on the cross-complaint, resulting as above indicated.

Error is assigned to the overruling of the demurrers filed to the answers to the cross-complaint, and also on exceptions reversed to each conclusion of law stated on the finding.

Proceeding to a consideration of the case in its general features, we are first required to construe the incontestability provision of the policy, which for purposes of this case is as follows: "After one year this policy shall be incontestable * * *." There were certain exceptions which need not be further noticed, as they are not applicable here.

It is appellee's contention that this provision should be construed to mean that a policy containing it is...