Greber v. Equitable Life Assurance Society of the United States, a Corp., Civil 3345

• Decision Date: 22 January 1934
• Docket Number: Civil 3345
• Citation: 43 Ariz. 1,28 P.2d 817
• Parties: DAVID GREBER, Appellant, v. THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, a Corporation, Appellee
• Court: Arizona Supreme Court

28 P.2d 817

43 Ariz. 1

DAVID GREBER, Appellant, v. THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, a Corporation, Appellee

Civil No. 3345

Supreme Court of Arizona

January 22, 1934

APPEAL from a judgment of the Superior Court of the County of Pima. Fred W. Fickett, Judge. Judgment affirmed.

Mr Francis M. Hartman, for Appellant.

Messrs Armstrong, Kramer, Morrison & Roche, for Appellee.

OPINION

McALISTER, J.

This action was brought to recover disability benefits under three policies of insurance and resulted in a judgment for the defendant. Following an order overruling his motion for a new trial the plaintiff appealed.

On November 14, 1928, a life insurance policy for $10,000 carrying disability benefits of $100 a month was delivered to the plaintiff, David Greber, by the defendant, The Equitable Life Assurance Society of the United States, and the first annual premium of $385.60 paid thereon. On December 4th following two other life policies of $5,000 each carrying disability benefits, were also delivered to him by the same company and the first annual premium of $385.60 on them paid. For the three succeeding years the premium on these three policies, totaling $771.50 annually, eighty-eight of which covered the disability and double indemnity provisions, was paid by the insured.

In February, 1932, the plaintiff became ill with pneumonia and in June following, due to the fact that through continued illness he had been unable to perform any work, presented to the defendant his claim and proofs for disability benefits for $200 a month under the policies.The defendant, however instead of paying it, notified him by letter dated July 15, 1932, that inasmuch as it had learned that certain material statements and answers made by him in connection with his applications for insurance, which resulted in the issuance to him of three policies containing disability and double indemnity provisions, were untrue, the contracts as to these provisions were not binding and were, therefore, rescinded, the Society denying and declining to assume any liability thereunder. It then offered to return and tendered to him the premiums paid under the disability and double indemnity provisions of the policies with interest, but refused to accept these and within a few weeks thereafter brought this action to recover $1,400, the amount alleged to be due up to that time in disability benefits.

The applications for the policies which he signed contain the following statements:

"All of the foregoing answers and all those made to the Society's Medical Examiner, which are contained in Part 2 hereof, are true and are offered to the Society as an inducement to issue the policy for which application is hereby made.

"I agree that the foregoing answers shall be part of my application which shall consist of Parts 1 and 2 taken together, and that the foregoing answers shall also become part of any policy contract that may be issued on the strength hereof."

In the policies themselves appears this provision:

"The Contract. This policy, and the application therefor, a copy of which is endorsed hereon or securely attached hereto, constitute the entire contract between the parties. All statements made by the Insured shall, in the absence of fraud, be deemed representations and not warranties, and no statement shall avoid this policy or be used in defense of a claim hereunder unless contained in the written application therefor and a copy of such application is endorsed hereon or attached hereto when issued."

The plaintiff stated in his application, among other things, that he had never had or been treated for any disease of the nose, tonsils, throat or lungs, and that no application by him for insurance had ever been declined by any insurance company. In its answer, however, the defendant alleged that the plaintiff had had asthma, a disease of the lungs, and been treated therefor; that he applied to the Missouri State Life Insurance Company for a life policy in September, 1924, and that that company refused to issue him a policy. It alleged further that these two false statements and warranties, which were material to the risk, became a part of the policies and that they were made to induce the defendant to enter into the contract and relied on by it as true in doing so; that due to this fact the provisions in the policies for the payment of benefits in the event of total disability due to bodily injury and disease were then and have since remained wholly void and of no effect.

In his reply the plaintiff denied that he had ever had or been treated for asthma or any disease or disturbance of the nose, tonsils, throat or lungs, but admitted that he applied to the Missouri State Life Insurance Company for a life policy in September, 1924, and that that company did not issue him a policy, though he alleged that it did not notify him that it had declined to do so, and that the defendant knew, or by the exercise of reasonable diligence should have known, when it accepted his money and issued him the policies in November and December, 1928, that that company did not issue a policy to him.

At the close of the testimony the defendant moved for an instructed verdict upon the ground, among others, that the evidence disclosed that the plaintiff had had asthma, a disease of the lungs, and that his application for insurance had been declined by another company notwithstanding his statement to the contrary in his application for these policies. The court granted the motion upon the latter ground but in doing so stated that the evidence relative to asthma presented an issuable fact to be passed on by the jury and that the case would be submitted to it if the testimony did not disclose without dispute that the plaintiff did apply to the Missouri State Life Insurance Company for a life policy in September, 1924, and that his application to that company was rejected. The plaintiff appeals from the judgment rendered upon the verdict returned in obedience to the direction of the court as well as from the order denying his motion for a new trial.

The principal question raised by appellant's eight assignments is that the court erred in directing a verdict for appellee, his contention being that the jury should have been permitted to determine whether his failure to inform appellee that his application to the Missouri State Life Insurance Company in September, 1924, had been rejected, was material in the matter of the application made by him in November, 1928, for disability or health insurance. Where an application with its answers becomes a part of a policy, as it did in this case, a statement therein by the applicant that he has never been denied insurance is as a matter of law material and, if false, avoids the policy at the option of the insurer. This rule is accepted by practically all the courts and in our view rests upon a sound basis because disclosure of the fact that one applying for a policy has been rejected by another company immediately suggests that he is probably not a good risk and undoubtedly leads to a more careful and thorough examination than would be true in the case of one whose application had not been rejected. It not only informs the company whether other insurers have regarded him as unsafe, and places it, so to speak, upon inquiry, but may advise it as to any anxiety for insurance the applicant might have. 14 C.J. 1080; Aetna Life Ins. Co. v. Moore, 231 U.S. 543, 34 S.Ct. 186, 58 L.Ed. 356; Mutual Life Ins. Co. v. Denton, 93 Fla. 276, 112 So. 53. In volume 4, Cooley's Briefs on Insurance, 3228, second edition, is found this language and a long list of citations supporting it:

"Among the questions invariably asked of the applicant for life insurance is whether he had ever applied to any other company for insurance and been rejected. The purpose of the question is perhaps twofold -- to discover whether the risk has ever been regarded as unsafe by other insurers, and to show the applicant's anxiety for the insurance. Whether the applicant has ever applied to other companies for insurance and been rejected is, therefore, regarded as material to the risk, and a statement in this regard whether made as a warranty or as a representation, will, if false, avoid the policy."

The position of appellant, however, is that even though this principle of law is sound the record discloses that at the time the policies were issued and the premiums paid appellee knew that the Missouri State Life Insurance Company had in September, 1924, rejected his application for a policy in that company and, therefore, the issuance of the policies and the acceptance of four annual premiums thereon with this knowledge constituted a waiver of its right to forfeit the policies upon this ground. This contention is...