Government Employees Insurance Company v. Cain, Civ. A. No. 14010.

• Decision Date: 20 February 1964
• Docket Number: Civ. A. No. 14010.
• Citation: 226 F. Supp. 589
• Parties: GOVERNMENT EMPLOYEES INSURANCE COMPANY, a body corporate, v. Moses A. CAIN, Katherine Cain, Monroe Thompson, Joseph Washington, individually and as father and next friend of Silas Washington, an infant, Silas Washington, an infant, The Equitable Trust Company, a body corporate, and Unsatisfied Claim and Judgment Fund.
• Court: U.S. District Court — District of Maryland

226 F. Supp. 589

GOVERNMENT EMPLOYEES INSURANCE COMPANY, a body corporate, v. Moses A. CAIN, Katherine Cain, Monroe Thompson, Joseph Washington, individually and as father and next friend of Silas Washington, an infant, Silas Washington, an infant, The Equitable Trust Company, a body corporate, and Unsatisfied Claim and Judgment Fund.

Civ. A. No. 14010.

United States District Court D. Maryland.

February 20, 1964.

Frederick J. Green, Jr., and William J. Evans, Baltimore, Md., for plaintiff.

George Washington, pro se.

Moses A. Cain and Katherine Cain, pro se.

Hyman C. Ullman, Baltimore, Md., for Monroe Thompson.

Walter R. Tabler, Baltimore, Md., for The Equitable Trust Co.

Thomas B. Finan, Atty. Gen., of Md., and Gerard Wm. Wittstadt, Asst. Atty. Gen., of Md., for Unsatisfied Claim and Judgment Fund.

WINTER, District Judge:

Plaintiff, Government Employees Insurance Company (hereafter "Insurer"), seeks a declaratory judgment that it validly rescinded a Family Automobile Policy of insurance issued to defendant Moses A. Cain with regard to his 1957 Pontiac Catalina automobile. Joined as defendants with the named insured are his wife, Katherine Cain, certain persons making claim for personal injury and property damage as a result of an automobile accident had by Katherine Cain, and the Unsatisfied Claim and Judgment Fund, to which the tort claimants will be relegated, if judgments are obtained by them and a valid rescission of the policy is declared.

Mr. Cain, the named insured, applied for a policy of insurance in North Carolina, on or about September 14, 1961. At that time he was covered by an automobile liability insurance policy by another insurer, affording public liability coverage. This policy did not expire until March 13, 1962, therefore, the Insurer issued only a collision and comprehensive policy for the period September 15, 1961 to September 15, 1962. On March 13, 1962, having returned to Baltimore City, the named insured asked to have his policy amended to include coverage for public liability to replace the policy issued by the other insurer. No new application was executed. The policy issued for the period September 15, 1961 to September 15, 1962 was cancelled, and a new policy, including coverage for public liability, issued in its place. The effective date of the new policy was March 13, 1962, and it was to remain in effect until March 13, 1963.

On June 7, 1962, Mrs. Cain had an epileptic seizure and lost control of the insured automobile, while driving it south on Liberty Street, in Baltimore City. The automobile left the roadway and traveled to the west, across the sidewalk, allegedly injuring two pedestrians. It came to a stop by crashing into a building of The Equitable Trust Company. Both pedestrians have sued Mrs. Cain, and The Equitable Trust Company has made claim on Mr. and Mrs. Cain.

The essence of this litigation concerns the application for automobile insurance executed by Mr. Cain on September 14, 1961. The essential portion of the form of application follows:

"Application For Automobile Insurance With The GOVERNMENT EMPLOYEES INSURANCE COMPANY

* * * * * *

"I (we) declare that the answers to the questions listed below are true and hereby request the Company in reliance thereon to issue the policy of insurance applied for herein and any renewal thereof.

"* I understand and agree that if the answers to questions 7, 8, 9 or 10, or any of them, are other than "No", the insurance requested will not be effective until approved by the Company. This application and the policy of insurance when issued will constitute the entire agreement between the applicant and the Company.

"The Company agrees that if the applicant is eligible under Item 1 below, if all questions are answered, if the required combination of coverage is requested, if the application is signed, if the required remittance is enclosed and if the true answers to questions 7, 8, 9 and 10 are "No", the insurance applied for will be effective as of:

" time and date of acceptance by Company Representative, or " as of 12:01 A.M. on ____ 19___, but in no event prior to acceptance by Company's Representative.

"IMPORTANT! ISSUANCE OF A VALID POLICY IS DEPENDENT UPON YOUR TRUE ANSWERS.

* * * * * *

"*9. Are you or any operator of the automobile physically or mentally impaired? (One eye, leg, arm, paralysis, etc.) ___________

If `yes', see above * (Give full information on separate sheet)"

In response to question 9, Mr. Cain answered "NO."

It is this answer which serves as the basis for claim for declaratory relief because after the accident the Insurer learned of the fact that Mrs. Cain, whom the named insured had described as the only operator of the car in addition to himself, suffered from epilepsy and that the accident occurred as a result of an epileptic seizure. As a consequence, on July 19, 1962, the Insurer gave Mr. Cain written notice that it was rescinding the policy of insurance, and tendered to him its check for $98.17 in full refund of the premium paid.

From the medical testimony that was presented, I find that epilepsy is a physical (as distinguished from mental) impairment, and that Mrs. Cain who, at the time of the accident was approximately twenty-seven years old, had suffered from epilepsy since she was approximately twelve years old. Mrs. Cain unquestionably knew she had epilepsy; Mrs. Cain had had at least two such seizures during the time that the parties were married, each in connection with the birth of a child; and during her married life Mrs. Cain received constant medication to control her seizures. In view of these facts, I find that Mr. Cain, a college graduate and captain in the United States Army, was aware of his wife's malady at the time he completed the application, despite his testimony to the contrary.

There is no question that the accident had by Mrs. Cain resulted from one of these seizures. Likewise, there is no question that the fact of Mrs. Cain's epilepsy materially increased Insurer's risk, or that, had it known such fact, Insurer would not have issued the policy. It is clear that Insurer relied on the application and the answers thereto in issuing the policy.

Since the policy sought to be avoided was issued to Mr. Cain in Maryland, pursuant to his request to a Maryland representative of Insurer at a time when Mr. Cain...