Fidelity Mut. Life Ass'n of Philadelphia, Pa., v. Miller

• Decision Date: 07 February 1899
• Docket Number: 288.
• Citation: 92 F. 63
• Parties: FIDELITY MUT. LIFE ASS'N OF PHILADELPHIA, PA., v. MILLER et al.
• Court: U.S. Court of Appeals — Fourth Circuit

92 F. 63

FIDELITY MUT. LIFE ASS'N OF PHILADELPHIA, PA., v. MILLER et al.

No. 288.

United States Court of Appeals, Fourth Circuit.

February 7, 1899

This was an action by David P. Miller and Ann E. Percy, executors of William R. Percy, deceased, against the Fidelity Mutual Life Association of Philadelphia, Pa., on a policy of life insurance. There was judgment for plaintiffs on the verdict of a jury, and defendant brings error.

The defendants in error on the 27th day of December, 1897 brought their suit against the plaintiff in error on a policy of insurance insuring the life of William R. Percy for $25,000, payable to his legal representatives within 90 days after satisfactory proof of death, and of the just and lawful claim, both as to the rights and interest of the beneficiary thereunder, as well as to the justness of the claim. The application was attached to and made part of the policy. The policy was issued on the 5th of August, 1896. The death of the insured, W. R. Percy, occurred on the night of the 26th of May, 1897, by drowning in the Chesapeake & Ohio Canal about 12 miles below Cumberland, Md., the horse upon which he was riding along the towpath suddenly plunging into the canal with him. The defendants in error were duly appointed executors of his last will and testament.

The suit was originally instituted in the circuit court of Allegany county, in the state of Maryland, but subsequently on the 23d of March, 1898, on petition of the plaintiff in error, was removed into the circuit court of the United States for the district of Maryland. Ten pleas were filed by the plaintiff in error, and replication and issues followed in regular course of pleading. The defenses set up were: (1) False answers by insured as to his previous condition of health. (2) False answers as to the physicians whom he had consulted. (3) Concealment that he had been previously rejected by the Royal Arcanum. (4) That the policy was obtained by fraud, and that the application had been made with fraudulent intent at a time when he was hopelessly insolvent, indebted to trust estates, and unable to meet his indebtedness, and made for the purpose of protecting his beneficiaries when he had a deliberate purpose of taking his life, with the intent to liquidate his debts with money derived from the policies of insurance. (5) That the company, in any event, could only be liable for moneys paid to it as premiums, as he had died by his own hand within three years from the issue of the policy.

The clauses of the application for insurance, so far as material to the questions at issue, are as follows:

'(5) That I have never had or been afflicted with any sickness, disease, ailment, injury, or complaint, except as here stated. Nothing serious. A. B. Price, M.D.

'Give full particulars as to the nature thereof, date and duration, whether trivial or otherwise. If rheumatism, state whether muscular, sciatic, or inflammatory.

'Dyspepsia about twenty years ago. Ankle broken in 1847.

'(6) That the last physician I consulted, or who prescribed for me, was Dr. A. B. Price, of Frostburg, about Oct., '95, for the sickness here stated: Hurt from riding horseback; irritation of bladder; slight colic several times.

'Give nature and duration of illness, and, if complete recovery, say so.

'(7) That I have not consulted or been prescribed for by any other physician or medical man during the last ten years, except as here stated.

'Give date, nature of illness, and name of every physician for last ten years.

'None but John Porter, dead; after that, family doctor, A. B. Price.

'(8) That I have never made application for insurance on my life to any company, association, or society, upon which application no policy was or has yet been issued to or received by me for the full amount and kind, and at the rate applied for, and that no physician has ever given an unfavorable opinion upon my life with reference to life insurance, except as here stated. No.

'Give name of each company, date of application, kind of policy, and amount applied for.

'I hereby agree and bind myself as follows: That the truthfulness of the statements above made or contained, by whomsoever written, are material to the risk, and are the sole basis of the contract with the said association. * * * And all provisions of law in conflict with or varying the terms of this agreement and policy applied for are hereby expressly waived. * * * And that, if any concealment or untrue statement or answer be made or contained therein, then the policy of insurance issued thereon, and this contract, shall be, ipso facto, null and void, and all moneys paid hereon shall be forfeited to said association: provided, always, that, if the necessary payments be made to keep said policy in force, it shall, in the event of my death, be incontestable for the sum payable thereunder after three years, except as therein set forth.'

The defendants in error and the plaintiff in error respectively asked certain prayers or instructions of the court,-- the defendants in error, six in number; and the plaintiff in error, five. The court granted the first, third, and sixth prayers of the defendants in error, amending, however, the first and sixth, and granted in lieu of the fourth a separate instruction of its own. It rejected the first, second, third, and fourth prayers of the plaintiff in error, and gave its fifth prayer, with an amendment by it, and treated the court's instruction granted in lieu of defendants in error's fourth instruction as one covering the second and third offered by plaintiff in error.

The instructions or prayers granted by the court are as follows:

'First (being the first prayer of defendant in error as amended). If the jury find that the plaintiffs are the executors of the late William R. Percy, and that the defendant corporation executed the policy of insurance offered in evidence and delivered the same to said Percy in his lifetime, and that said Percy paid the defendant all premiums payable thereon at the time of said delivery, and paid all further premiums due thereon up to the time of his death, and complied with all the undertakings stipulated to be performed on his part in said policy, and that he died on the 26th day of May, 1897, and that the plaintiffs exhibited and delivered to the defendant the proofs of death and justice of claim offered in evidence on or about the 21st day of June, 1897, and more than 90 days before this suit was brought, then the plaintiffs are entitled to recover in this suit, unless the jury shall find from the evidence that the application for the policy on the part of the said William R. Percy, deceased, contained some misrepresentation or untrue statement of fact made not in good faith by said applicant, or unless they shall find said application contained some misrepresentation or untrue statement or some material matter to the risk, or unless the jury find that said policy of insurance was obtained by said Percy from the defendant by fraud of him, said Percy, or that the said Percy destroyed himself. This prayer I grant, in connection with such other prayers as I shall grant, and such instructions as I shall give to the jury. The law of Maryland, passed in 1894, declares that a misrepresentation or untrue statement by an applicant for life insurance, made in good faith, shall not work a forfeiture, or be a ground of defense in a suit on a policy of life insurance, unless the misrepresentation or untrue statement relates to a matter material to the risk. This law renders it now impossible for the insurer and the insured any longer to agree that a statement shall be taken to be material; and the plaintiffs' counsel contend that the court of appeals of Maryland, by its opinion in the case of this Same Defendant v. Ficklin, 74 Md. 172, 21 A. 680, and 23 A. 197, has decided that the question of materiality, as well as the question of good faith, is always to be left to the jury. However this may be, there are statements required in nearly all applications for life insurance which it would be the duty of the court, if requested, to instruct the jury are material to the risk, and as to which it would be the duty of the jury to act upon the instruction of the court. In my judgment, it amounts to this: that now, under the act of 1894, the untrue statement must relate to some matter material to the risk; and the materiality no longer depends upon the agreement of the parties that it shall be so considered, but upon the actual fact that it is so. If the materiality is obvious and legally indisputable, it is within the province of the court to instruct the jury that the statement is material; but if it is not obvious, or depends upon disputed facts, it is the duty of the court to have the jury decide whether it is material or not.

'Second (third prayer of defendants in error). That the defendant has offered no legally sufficient evidence to sustain the seventh plea pleaded by it in this cause.

'Third (court's prayer in lieu of defendants in error's fourth). The plaintiffs' fourth prayer has reference to the matter of the Royal Arcanum, is derived from the application made by Percy, and the witnesses who have spoken of it. It appears to be a secret order of a beneficial character, membership in which is attended with some benefit payable in case of death. I hold that, so far as the nature of this order appears, it is not within the terms of the eighth clause of the application to the defendant company. This ruling is supported by several decided cases. I refuse plaintiffs' fourth prayer, and give instead the following instruction: The jury are instructed that the evidence in this case does not justify them in finding that the statement made by Percy in...