Everson v. Gen. Fire & Life Assur. Corp.

• Decision Date: 21 May 1909
• Citation: 88 N.E. 658,202 Mass. 169
• Parties: EVERSON v. GENERAL FIRE & LIFE ASSUR. CORP., LIMITED, OF PERTH, SCOTLAND.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

202 Mass. 169

88 N.E. 658

EVERSON

v.GENERAL FIRE & LIFE ASSUR. CORP., LIMITED, OF PERTH, SCOTLAND.

Supreme Judicial Court of Massachusetts, Middlesex.

May 21, 1909.

Exceptions from Superior Court, Middlesex County; Lloyd E. White, Judge.

Action by John Everson against the General Fire & Life Assurance Corporation, Limited, of Perth, Scotland, on an accident policy. There was verdict for plaintiff, and defendant excepts. Exceptions overruled.

Arthur H. Russell, for plaintiff.

Joseph F. Bassity, for defendant.

RUGG, J.

1. The first contention of the defendant is that the trial court erred in refusing to direct a verdict in its favor because of the plaintiff's breach of warranty that his weekly income exceeded the gross amount of weekly indemnity under all policies carried by him. This statement respecting income appears in a rider pasted on the third page of the contract of insurance, the heading of which is ‘Schedule of Warranties Made by the Insured on the Acceptance of This Policy.’ The defendant claims that the statements contained in this schedule, being expressed to be a part of the consideration of the policy, are in substance conditions precedent, compliance with which must be proved affirmatively by the plaintiff. Without discussing whether it is possible to convert what are essentially in the nature of things warranties or representations into conditions by describing them as such, it is enough for the purpose of this case to say that the policy in suit manifests no such design. The statement in question occurs under a general heading ‘Warranties.’ Although not signed by the plaintiff, the series of statements, of which it forms one, is in the first person and relates to those matters respecting which information would be needed by an insurer in order to determine whether to take the risk and for what amount and at what rate. The heading names it, and its general character stamps it as a warranty, and there is no reason why it should be treated as anything else. St. 1907, p. 854, c. 576, § 21, provides that ‘no * * * warranty made in the negotiation of a contract or policy of insurance by the assured * * * shall be deemed material or defeat or avoid the policy * * * unless made with actual intent to deceive or unless the matter * * * made a warranty increased the risk of loss.’ The defendant claims that this statute does not apply to warranties inserted in the policy itself, but only to those made in the discussion preliminary to the issuance of the policy. The soundness of this contention depends upon the interpretation of the word ‘negotiation’ in the statute. Negotiation means the entire transaction of applying for and finally issuing the completed contract of insurance. Its significance as given by lexicographers as well as by courts in substance is to traffic or conclude by bargain or agreement. Palmer v. Ferry, 6 Gray, 420-423. Its use in the law of negotiable instruments illustrates this definition. Its application to those preliminary steps, which precede the final execution of a contract or treaty, is a secondary and by no means exclusive signification. ‘Negotiation’ as employed in this statute comprehends all warranties, whether made in the policy itself or in separate or subordinate or inducing instruments or agreements. Its collocation with ‘warranty’ necessarily implies this, because a warranty is a stipulation of the contract itself, often distinct from and collateral to the chief purpose of the contract, sometimes expressed in point of time before the main obligations are phrased, yet, whether made previouslyor contemporaneously, none the less a term of the contract, and supported by or becoming a part of its consideration. The distinction between a warranty and a condition precedent, though sometimes narrow, is nevertheless plain. Such a condition is one without the performance of which the contract, although in form executed by the parties and delivered, does not spring in life. A warranty does not suspend or defeat the operation of the contract, but a breach affords either the remedy expressly provided in the contract or those furnished by the law. This distinction between warranty and condition is accentuated by the statute now under consideration. It prohibits the parties to an insurance contract from attaching to a breach of a warranty the effect of defeating all rights of the insured under the policy, unless in good conscience it ought to have this result, either as increasing the risk or made with intent to deceive. The harshness of the clause formerly common in contracts of insurance, that warranties, if found in any respect untrue, should avoid the policy, is thus mitigated. Under such a provision the conclusion was inevitable that there could be no recovery, if the truth of a statement, although in fact immaterial and not affecting the risk, was made the basis of the contract and it turned out to be false. Cobb v. Covenant Mutual Benefit Ass'n, 153 Mass. 176, 26 N. E. 230,10 L. R. A. 666, 25 Am. St. Rep. 619;Miles v. Conn. Mutual Life Ins. Co., 3 Gray, 580. Being remedial legislation the statute must be liberally construed. It follows that the statements in the ‘schedule of warranties' were made in the negotiation of the insurance contract. There is nothing inconsistent with this result in Barker v. Metropolitan Life Ins. Co., 188 Mass. 542, 74 N. E. 945, Id.,198 Mass. 375, 84 N. E. 490. The distinction between a condition precedent inserted in the body of the policy as to a subject apart from the common field of warranties or representations, on the one side, and warranties, which are statements as to the physical, material or ancestral condition of the insured, having relation to his desirability as a risk, on the other, was there adverted to and made the basis of the decision. In the present case the amount of the plaintiff's income was left somewhat uncertain on the evidence. Properly the questions as to the falsity of the plaintiff's statement respecting it and his intent to mislead were left to the jury to determine whether the statement as to weekly income, if false, increased the risk. The inquiries as to the plaintiff's indebtedness were not sufficiently connected with his income to show that they were not rightly excluded in the discretion of the trial court.

2. The policy required that, in case of accident, written notice thereof should be sent to the defendant ‘as soon as may be possible.’ There is no substantial difference in the meaning of these words and ‘forthwith’ or ‘immediate’ which, as used in similar contracts, have been often before the courts. They mean in such connection that due diligence shall be used to send the notice with reasonable promptness. Smith v. Scottish Union, etc., Ins. Co., 200 Mass. 50, 85 N. E. 841, and cases cited. Bennett v. AEtna Ins. Co., 88 N. E. 335;Cady v. Fidelity & Casualty Co. of N. Y. (1907) 134 Wis. 322, 113 N. W. 967,17 L. R. A. (N. S.) 260;Edgefield Mfg. Co. v. Maryland Casualty Co., 78 S. C. 73-79, 58 S. E. 969. The plaintiff was injured at a lonely camp in New Brunswick, on the early morning of November 18th, by such severe burning of one hand as to require its amputation two days later. He was far from home and kindred. The notice was sent on the fourth day thereafter. It was sufficiently favorable to the defendant to leave it to the jury to say, in view of these...