Halverson v. United States, 7453.

• Citation: 121 F.2d 420
• Decision Date: 04 August 1941
• Docket Number: No. 7453.,7453.
• Parties: HALVERSON v. UNITED STATES.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

121 F.2d 420 (1941)

HALVERSON v. UNITED STATES.

No. 7453.

Circuit Court of Appeals, Seventh Circuit.

June 25, 1941.

Rehearing Denied August 4, 1941.

Frank A. McCarthy and John E. Toomey, both of Chicago, Ill., for appellant.

J. Albert Woll, U. S. Atty., of Chicago, Ill., Julius C. Martin, Asst. Atty. Gen., and Fendall Marbury, of Washington, D.C., for appellee.

Before SPARKS and KERNER, Circuit Judges, and LINDLEY, District Judge.

SPARKS, Circuit Judge.

This appeal from a judgment in favor of the Government in a suit on a policy of war risk insurance presents two questions: (1) Whether the facts show that the insured obtained reinstatement of his policy by fraudulent misrepresentation; and (2) whether the Government is estopped from setting up that fraud as a defense to the suit, having collected premiums for some years after it received notice of the facts upon which the defense is based. The case was tried to the court without a jury, and the court found that the insured was guilty of fraud in procuring the policy sued on, and that the policy was, therefore, void; and that the Government was not estopped to set up the defense of fraud.

The policy involved was lapsed for nonpayment of premium in July, 1919. March 11, 1931, the veteran made application for its reinstatement for the full amount of $10,000. He was examined by a medical examiner at Hines Hospital who recommended acceptance of the risk as a firstclass one. In the applicant's own statement to the medical examiner, the following questions and answers appear:

"25. Are you now in good health? Yes.

"26. Have you ever been treated for any disease of * * * kidney or bladder No, genito-urinary organs No * * *

"27. Have you ever been ill, or contracted any disease, or suffered any injury, or been prevented by reason of ill health from attending your usual occupation, or consulted a physician in regard to your health, since date of discharge? (Answer `Yes' or `No') No. If so, give dates and full particulars, including the name and address of physician."

Relying upon the answers of the insured as to his health and freedom from disease and the absence of medical consultation, as well as upon its own examination, the Government reinstated the policy as of March 1, 1931. Thereafter the insured dropped two other policies in private companies which he was then carrying, totalling $4,500.

In December, 1932, the veteran was examined at Hines Hospital and given deep X-ray treatments for hematuria. He stated then that he had noted the condition three years earlier. The examining physician testified that he found at that time that he had a cancer of the bladder. In February, 1933, the veteran made application for compensation for disability claimed to be due to disease of the genito-urinary organs dating back to February, 1920. In this application he listed the names of three physicians who had treated him for kidney trouble or "G. U." in 1920, 1930, and from February 2, 1931. In connection with this application he stated that he had first passed blood in 1929. In 1937, he made claim for benefits under his insurance policy for total permanent disability said to be caused by recurrent carcinoma of the bladder, again listing the three physicians who treated him in 1920, 1930, and 1931-32. His application was dated May 13, 1937, but the record does not show when it was received. The insured died May 28, 1937, of carcinoma of the bladder with hydronephrosis and broncho-pneumonia. Appellant then filed claim for death benefits under the policy. July 6, 1937, she was notified of the disallowance of her claim on the ground that the policy had been fraudulently reinstated. Premiums paid after reinstatement have not been tendered back.

The evidence showed that Halverson was a rather active man who worked regularly for a company selling investment securities until 1932 when he went to work for a coal company. He was in the accounting department of the investment company, doing inside work at first, and later he went out on the street, selling. Two office associates testified that he appeared to be in good health, working every day, and playing golf frequently. They did, however, recall that he complained of his bladder, and of blood in the urine prior to 1931.

Two of the physicians whose names had been furnished in the application of the insured for compensation in 1933, testified. One stated that according to his records, he had examined him in 1920 at his home, diagnosing his complaint as "guarded cystitis, acute inflammation of the bladder." He had talked to him again in 1930 when he was in his home for the purpose of attending Mrs. Halverson. At that time he made no diagnosis of the insured, although he stated that he suspected then that he had some form of bleeding from the bladder and advised him to have a cystoscopic examination. The second physician testified that Halverson made an appointment and came to his office for an examination, complaining of backache and blood in the urine. By means of a cystoscopic examination he found a small wart-like growth on the posterior wall of the bladder which the physician advised having removed by cautery. The growth was not then malignant. Halverson did not return for the cauterization as advised. He appears never to have had any treatments for his condition until those of December, 1932.

Appellant testified that...