Hubbard v. Mutual Reserve Fund Life Ass'n

• Decision Date: 10 May 1897
• Citation: 80 F. 681
• Court: U.S. District Court — District of Rhode Island
• Parties: HUBBARD v. MUTUAL RESERVE FUND LIFE ASS'N.

80 F. 681

HUBBARD v. MUTUAL RESERVE FUND LIFE ASS'N.

United States Circuit Court, D. Rhode Island.

May 10, 1897

Bassett & Mitchell, for plaintiff.

Edwards & Angell, for defendant.

BROWN District Judge.

This is an action on a policy of insurance issued by the defendant corporation upon the life of George W. Hubbard. The policy was issued upon a written application made by the insured. The insured agreed, in the application, that the answers and statements therein contained, whether written by him or not were warranted to be full, complete, and true, and that this agreement and the constitution and by-laws of the defendant association, together with the application, were thereby made a part of any certificate or policy that might be issued thereon; that, if any of such answers and statements were not full, complete, and true, then the certificate or policy issued thereon should be null and void; and that the person taking said application, and also the medical examiner should be and were the agents of the applicant, and not the agents of said association, as to all statements and answers in the application; and that no statements or answers made or received by any person or to the association should be binding on the association unless reduced to writing, and contained in the application. The insured, in said application, further warranted that the answers as written to the questions put in the medical examiner's report forming part 2 of the application were his answers, and were full, complete, correct, and true, and that the same should be made part of the contract of his certificate of membership or policy of insurance. In and by the certificate of membership or policy of insurance, and in and by the constitution or by-laws of the defendant corporation, the answers and statements contained in the application were made part of said certificate or policy. The defendant pleads that certain answers and statements made by the insured in the application were untrue; that a false statement was made by the insured to the medical examiners; that satisfactory proofs of death have not been presented to or accepted by the defendant, as required by the policy as a condition precedent to recovery; that the policy was never delivered to the insured while in good health, as required by the policy; that the policy was issued subject to the provisions of the constitution or by-laws of the defendant association; and that the insured never became a member of the association in accordance with these provisions. To these defenses the plaintiff replies in the second replication that the defendant association received the proofs of loss December 31, 1893, and thereafter approved the claim founded thereon and of this action gave notice to the plaintiff April 5, 1894, and May 2, 1894, also notified her again of the approval of the claim, and that she might expect payment within a few days of June 1, 1894; that during all this time the defendant had ample opportunity to determine the truth or falsity of said representations and statements, as it ought to have done if it relied upon the same; and that said acts and failure to act, on the part of the association, constitute a waiver of the defenses set forth in the pleas, and estop the defendant from pleading the same in bar.

The first question for consideration is raised by the demurrer to the second replication, and is whether the facts therein set forth constitute a waiver of the defenses set forth in the pleas. There is no averment that, at the time of approval of the claim and of the notification of the company to the plaintiff that she might expect payment, the company had knowledge that there was a forfeiture of the policy on account of the alleged false statements contained in the application. Since waiver is the intentional relinquishment of rights, knowledge of the existence of the rights is a necessary element, and should be averred.

In Bennecke v. Insurance Co., 105 U.S. 355, the rule of law is thus stated by Mr. Justice Woods:

'A waiver of a stipulation in an agreement must, to be effectual, not only be made intentionally, but with knowledge of the circumstances. This is the rule when there is a direct and precise agreement to waive the stipulation. A fortiori is this the rule when there is no agreement, either verbal or in writing, to waive the stipulation, but when it is sought to deduce a waiver from the conduct of the party.' Further, as said by Mr. Justice Field in Insurance Co. v. Wolff, 95 U.S. 326:

'The doctrine of waiver, as asserted against insurance companies to avoid the strict enforcement of conditions contained in their policies, is only another name for the doctrine of estoppel. It can only be invoked where the conduct of the companies has been such as to induce action in reliance upon it, and where it would operate as a fraud upon the assured if they were afterwards allowed to disavow their conduct, and enforce the conditions. To a just application of this doctrine, it is essential that the company sought to be estopped from denying the waiver claimed should be apprised of all the facts.'

The replication avers merely that from December 31, 1893, to the date of the notification that payment might be expected, May 2, 1894, 'there was ample opportunity to investigate and determine the truth or falsity of all said representations and statements in said various pleas represented to be untruthfully made by said Hubbard, as said defendant corporation ought to have done had it relied upon the same ' To hold that such a duty existed would be tantamount to holding that in such cases a presumption of fraud exists, casting upon the company the duty of inquiry, whereas the true rule is that the company is entitled to rely upon the statement of the assured, and can rescind for fraud whenever it is brought to its knowledge. In the absence of an averment of actual knowledge or of facts sufficient to put the company upon...