Friedman v. John Hancock Mut. Life Ins. Co.

• Decision Date: 02 March 1943
• Docket Number: No. 26209.,26209.
• Parties: FRIEDMAN v. JOHN HANCOCK MUT. LIFE INS. CO.
• Court: Missouri Court of Appeals

168 S.W.2d 956

FRIEDMAN v. JOHN HANCOCK MUT. LIFE INS. CO.

No. 26209.

St. Louis Court of Appeals. Missouri.

March 2, 1943.

Appeal from St. Louis Circuit Court; Edward M. Ruddy, Judge.

"Not to be reported in State Reports."

Action by Esther Friedman against the John Hancock Mutual Life Insurance Company to recover on two industrial policies on the life of Aaron Friedman, plaintiff's son, originally commenced in a justice's court, and appealed to the circuit court. From a judgment for plaintiff, defendant appeals.

Reversed and remanded.

Leahy, Walther & Hecker and Herbert E. Barnard, both of St. Louis, for appellant.

Blumenfeld & Abrams, of St. Louis, for respondent.

BENNICK, Commissioner.

This is an action upon two policies of insurance issued by defendant, John Hancock Mutual Life Insurance Company, upon the life of one Aaron Friedman, who died on February 11, 1940. Both policies were nonmedical industrial policies, and each was written in the amount of $250. Plaintiff, Esther Friedman, the mother of the insured, was designated as beneficiary in both of the policies, and brings this action in that capacity.

Originating in a justice's court, the case went on appeal to the circuit court, wherein upon a trial to a jury, a verdict was returned in favor of plaintiff, and against defendant, for the aggregate amount of $535, comprising the principal amount sued for with interest of $35. Judgment was entered in accordance with the verdict; and defendant's appeal to this court has followed in the usual course.

Both policies were dated October 11, 1939, and were issued upon an application dated September 27, 1939. As already pointed out, the death of the insured occurred on February 11, 1940, four months to the day after the issuance of the policies.

Each policy contained a sound health provision making the same void if, on its date of issue, the insured was not in sound health; or if, prior to said date, the insured had been rejected for insurance, or had had any one of certain specified diseases, including heart disease; or if, within two years prior to said date, the insured had been attended or treated by any physician for any serious disease or complaint.

It is an undisputed fact that at the time of the issuance of the two policies in question, the insured was suffering from a serious heart condition (bacterial endocarditis) for which he had been treated at intervals for several years, and from which he died but a short time after the issuance of the policies. As a matter of fact, on the occasion of his last preceding entry into the hospital, he had been discharged for less than a month when he made the single application upon which the two policies were based. However, in the application, which concededly bore his signature, he purported to represent that he was then in sound health; that he did not then have, and had never had, any of certain specified diseases, including heart disease; and that he had never been treated for any ailment or disease by a physician or in any hospital. And not only did the insured's own application so recite, but in the soliciting agent's inspection report which accompanied the application, it was certified by the agent that he did not know, and had no reason to suspect, that the insured then had, or within five years had had, any disease or illness, or had received medical treatment of any kind; that he did not know, and had no reason to believe, that the insured had ever been rejected for insurance; and that the insured appeared to be in sound health, and to be a fit subject for the acceptance of his application without reservation.

There was evidence to show that defendant's agent, one Gray, had frequently solicited both the insured and his brother Ralph for insurance, and that on previous occasions, as well as on the occasion when the insured's application was finally given, Gray was informed (despite his report to the contrary) that the insured had heart trouble for which he had been confined in the hospital. It was further shown that at the time the application was taken, Gray obtained certain information from the insured which he wrote down on a piece of paper; and that when the application form itself was presented to the insured for his signature, it was entirely blank except for the printed matter which appeared thereon. Inferentially, the answers to the questions on the application were later filled in by Gray himself before submitting the application to defendant; and regardless of any other aspects of the transaction, we do not understand that there is any contention that the insured himself ever saw the completed application.

While there were not the usual pleadings filed because of the origin of the case in the justice's court, the record none the less discloses the respective theories of the parties as developed at the trial in the circuit court.

Briefly stated, it was plaintiff's position that with Gray informed of the insured's heart condition and of the treatment he had received therefor, Gray's knowledge was imputable to defendant in the absence of fraud and collusion between him and the insured, with the consequence that defendant's issuance of the policies, while possessing such knowledge of the insured's heart condition, amounted to a waiver of the sound health provision. Defendant's position, on the other hand, was that if Gray had such knowledge, his concealment of it (as the evidence showed) was to be attributed to collusion between him and the insured, in which event his knowledge was not to be imputed to defendant so as to have supplied the basis for plaintiff's claim of waiver.

Thus the whole matter of plaintiff's right to recover finally turns upon the question of whether there was evidence to show fraud and collusion between Gray and the insured, with defendant contending, in the first instance, that such disclosure appeared in the case as a matter of law, and if not as a matter of law, at least as a question of issuable fact to be submitted to the jury.

Assuming the truth of plaintiff's evidence that the application blank had not been filled out when the insured was asked to sign it and that Gray had been previously informed about the true state of the insured's health, then it obviously follows, regardless of what is to be said either for or against the insured, that Gray at least, in subsequently making the misrepresentations he did both in the application and in his own inspection report, was guilty of perpetrating a fraud upon defendant. The only question is whether the insured was himself a party to the scheme in that he had consented to the plan and knew that Gray would use his application to obtain the issuance of the policies without the disclosure of material facts.

If the insured himself was innocent in the matter, the disclosure of the true state of his health to Gray would indeed, for the purposes of this case, have constituted constructive notice to defendant irrespective of the fact that Gray did subsequently misrepresent the matter to the company, so that in issuing the policies charged with knowledge of the insured's ill health, defendant would be regarded as having waived the sound health provision which would otherwise have avoided both the policies. Colegrove v. John...