Independent Life Ins. Co. of America v. Butler, 8 Div. 177.

• Decision Date: 29 May 1930
• Docket Number: 8 Div. 177.
• Parties: INDEPENDENT LIFE INS. CO. OF AMERICA v. BUTLER.
• Court: Alabama Supreme Court

129 So. 466

221 Ala. 501

INDEPENDENT LIFE INS. CO. OF AMERICA v. BUTLER.

8 Div. 177.

Supreme Court of Alabama

May 29, 1930

Rehearing Denied June 26, 1930.

Appeal from Circuit Court, Morgan County; W. W. Callahan, Judge.

Action on a policy of life insurance by Sardia F. Butler against the Independent LIfe Insurance Company of America. From a judgment for plaintiff, defendant appeals. Transferred from Court of Appeals.

Affirmed.

Tennis Tidwell, of Decatur, for appellant.

Ben L Britnell and Eyster & Eyster, all of Decatur, for appellee.

BROWN J.

This is an action on a policy of life insurance issued by the defendant to William H.

Curbow on his application, naming his wife, the plaintiff, as the sole beneficiary.

The substance of the defendant's plea 3 is that the insured "made and signed a written application to the defendant for the issuance of the policy sued on," and that in said application he warranted he was in perfect health; that in fact he was not in perfect health, but was suffering from either high-blood pressure or heart or kidney disease; that the insured knew he was not in perfect health, but was suffering from one or more of these diseases at the time the application was made, and knew the warranty was false; that it was made by the insured with intent to deceive the defendant, and with the purpose of inducing the defendant to issue the policy of insurance sued on; that said warranty did deceive the defendant, and that the defendant relied on the warranty in the issuance of the policy; and that said warranty was material to the risk.

Pleas 4 and 9 were of like import, alleging a warrant made in the application for the issuance of the policy and a breach thereof.

Plea 10 was to the effect that the policy contract stipulated that "no obligation is assumed by the Company unless on the date of delivery hereof, the insured is alive and in sound health"; and averred that the insured was not in sound health on the date of the issuance and delivery of the policy, but was suffering from either high-blood pressure, heart disease, or kidney disease, which increased the risk of loss under the policy.

Plea 11 was to the same effect, except it did not aver that the alleged disease increased the risk of loss.

Embodied in the policy contract, among others, were the following provisions:

(1) "No obligation is assumed by the Company unless on the date and delivery hereof the insured is alive and in sound health," etc.

(2) "This policy shall be incontestable from date of issue except for non-payment of premiums, actual and intended fraud, or for engaging in military or naval service in time of war, without permission from the Company," etc.

(3) "All the conditions and agreements contained on this, the preceding and succeeding pages hereof, constitute the entire contract between the Company and the insured and the holder or claimant thereof," etc.

The application for the issuance of the policy was not made a part of the policy by being incorporated therein or attached thereto; and the last-quoted stipulation, 3, excludes the idea that any writing not embodied in, indorsed on, or attached to, the policy and made a part thereof, shall be considered a part thereof; and this is the clear effect of the statute, Code 1923, § 8371, as interpreted in Manhattan Life Insurance Co. v. Verneuille, 156 Ala. 592, 47 So. 72, 74. To quote from that opinion, after quoting the statute as it appeared in the Code of 1896, § 2602, "The language quoted is clear and unambiguous. It means what it says and says what it means. To hold that the insured is bound by any anterior or contemporaneous agreements, not plainly expressed in the policy, would strike down both the spirit and letter of the statute. Certainly the parties could, in the absence of the statute, make the application a part of the contract by proper reference thereto, and without setting out said agreement in the policy; but to hold that they can do so in the very face of this statute would be to emasculate it." (Italics supplied.)

This statute was carried forward into the Code of 1907, without change, except the penal provisions were embraced in the Criminal Code as section 7188, and the other provisions in the Civil Code as section 4579; and thereafter, in Empire Life Insurance Co. v. Gee, 171 Ala. 435, 55 So. 166, 167, it was noted that: "In Mutual Life Ins. Co. v. Allen, 166 Ala. 159, 51 So. 877, section 4579 was accepted as meaning that all such agreements between the parties to contracts of insurance as are not plainly expressed in the policy do not bind the parties, though so much of the contract as is so expressed remains unaffected by the part not so expressed. In the more recent case of Satterfield v. Fidelity Mutual Life Ins. Co., 171 Ala. 429, 55 So. 200, it was held that the contents of papers, incorporated by reference as a part of the policy and attached thereto, were expressed in the policy, within the meaning of this section.

"These constructions-and we adhere to them-make the policy, including documents adopted by reference and attached, the sole expositor of the contract between the parties. *** The insurer may not therefore sustain a plea that the insured has breached the contract by giving in evidence the warranties of an application for the policy, not incorporated in the body of the policy, or not so attached as to serve the purpose of the statute."

Since this decision, the statute has been brought forward into the Code of 1923 as section 8371 without change, with the effect of adopting this interpretation as its true meaning. Barnewall v. Murrell, 108 Ala. 366, 18 So. 831.

In a more recent case, Sovereign Camp W. O. W. v. Hutchinson, 214 Ala. 540, 108 So. 520, 523, we note this expression: "In order to constitute a warranty, the subject-matter must either be incorporated in the body of the policy, or in some other paper adopted by reference therein as a part of the policy." It appears from an examination of the report of that case that the pleas approved all averred that the application was a part of the policy. The quoted utterance, therefore, was not necessary to a decision of the case, and is at most a loosely expressed dictum.

The expression found in the opinion of the Court of Appeals in the case of Penn Mutual Life Ins. Co. v. Cobbs, 123 So. 94, 97, that "the plaintiff insists that, in order for an application for a life insurance policy to be regarded as a part of the contract of insurance, it must be either indorsed on the policy or physically attached thereto. We think this is too narrow a construction to place upon the language of section 8371 of the Code of 1923," is not only dictum, but is not in accord with the decisions of this court. In that case the court found as a fact that the application was attached to, and made a part of, the policy.

An application for the issuance of a policy of insurance, signed by the insured, containing representations as to the health of the insured, may be received as evidence of such representations in support of a plea of fraud and deceit, though the application is not embodied in, nor made a part of, the contract (Reliance Life Ins. Co. v. Sneed, 217 Ala. 669, 117 So. 307; Mass. Mutual Life Ins. Co. v. Crenshaw, 195 Ala. 263, 70 So. 768; Empire Life Ins. Co. v. Gee, supra); but, where the plea is of a warranty and a breach thereof, such application not embodied in, or attached to, the policy, and made a part thereof, is not evidence of such warranty. Empire Life Ins. Co. v. Gee, 171 Ala. 435, 55 So. 166; Reliance Life Ins. Co. v. Sneed, supra. For this reason, charges 8, 9, 10, 14, 14a, 16, 30, 31, 32, and 33 were refused without error.

The defendant's pleas 10 and 11 are rested upon the warranty of "sound health" embodied in the policy contract. Reliance Life Ins. Co....