Fox v. Bankers Life & Cas. Co.

• Decision Date: 14 March 1963
• Docket Number: No. 36518,36518
• Citation: 61 Wn.2d 636,379 P.2d 724
• Court: Washington Supreme Court
• Parties: Arnold W. FOX and Mary Fox, his wife, Respondents, v. BANKERS LIFE & CASUALTY CO., a corporation, Appellant.

Page 636

61 Wn.2d 636

379 P.2d 724

Arnold W. FOX and Mary Fox, his wife, Respondents, v. BANKERS LIFE & CASUALTY CO., a corporation, Appellant.

No. 36518.

Supreme Court of Washington, Department 1.

March 14, 1963.

McGregor, Halstead & Sheeran, Prosser, for appellant.

Horton & Wilkins, Kennewick, for respondents.

ROSELLINI, Judge.

In this action, the plaintiffs sought recovery of certain medical, surgical, and hospital expenses under the terms of insurance policies issued to them by the defendant. Their suit was resisted on the grounds that the insurance policies had been obtained through false representations and that the policies had been rescinded by agreement of the parties.

The jury found in favor of the plaintiffs on the first ground, and the court ruled that there had been no rescission. Judgment for the plaintiffs was entered accordingly.

On appeal, the defendant has set forth a number of assignments of error, but they are not argued separately, and some are not supported by legal arguments of any kind. We will deal only with the contentions which are supported by arguments in the brief.

The first of these is, in substance, that the court should have ruled, as a matter of law, that the contracts of insurance were rendered void by the fact that the plaintiff Arnold Fox, in making application for them, misrepresented his past medical history. The application forms showed that the plaintiff has suffered an accident (termed on one form a 'minor' accident) in 1958, in the course of his work as a construction man, had been hospitalized seven days, and had been operated upon by Dr. Stevenson of Yakima. At the trial, his medical history was introduced and showed that he had suffered previous back trouble and that the operation was for a herniated disc. The testimony of the defendant's agent was that, if the nature of the operation had been revealed, a rider would have been attached to the policy excluding spinal troubles.

According to the testimony of Arnold Fox, he had told the agent the nature of his injuries, that he had been put in traction, and that the operation was performed upon his back. In the application, the company was authorized to secure his medical history from Dr. Stevenson. This was not done until after Mr. Fox suffered another accident in the course of his employment, was hospitalized and underwent another spinal operation, and filed a claim for reimbursement for his expenses.

RCW 48.18.090(2) provides:

'In any application for life or disability insurance made in writing by the insured, all statements therein made by the insured shall, in the absence of fraud, be deemed representations and not warranties. The falsity of any such statement shall not bar the right to recovery under the contract unless such false statement was made with actual intent to deceive or unless it materially affected either the acceptance of the risk or the hazard assumed by the insurer.'

The defendant contends that even though the plaintiffs may have demonstrated to the jury that there was no actual intent to deceive, their right to recover is barred because the falsity of statements made materially affected both the acceptance of the risk and the hazard assumed by the defendant.

However in a case of this kind, it is the settled rule, recently reaffirmed in American Fidelity and Cas. Co. v. Backstrom, 47 Wash.2d 77, 287 P.2d 124, that a warranty clause in a policy of insurance will not be held breached for a cause known to the agent before the application was signed. The underlying principle in cases of this sort is that the knowledge of the agent is the knowledge of the principal, without regard to whether the agent communicates the facts to it.

As the rule is stated in the leading case of Turner v. American Cas. Co., 69 Wash. 154, 124 P. 486, a policy will not be held void, nor will a warranty clause in a policy be held to have been breached, for a cause known to the agent before the application for the policy was signed, where the insured fully and truthfully related the...