Jacobson v. Equitable Life Assurance Society of US

• Decision Date: 06 September 1967
• Docket Number: No. 15401.,15401.
• Citation: 381 F.2d 955
• Parties: Sylvia JACOBSON and American Cold Hearing Corp., Plaintiffs-Appellants, v. EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

381 F.2d 955 (1967)

Sylvia JACOBSON and American Cold Hearing Corp., Plaintiffs-Appellants, v. EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, Defendant-Appellee.

No. 15401.

United States Court of Appeals Seventh Circuit.

June 29, 1967.

Rehearing Denied September 6, 1967.

Benjamin M. Becker, Robert A. Sprecher, Bernard Savin, Chicago, Ill., for plaintiffs-appellants.

Miles G. Seeley, Wm. Bruce Hoff, Jr., Burton E. Glazov, Lawrence R. Levin, Chicago, Ill., for The Equitable Life Assurance Society of the United States, Mayer, Friedlich, Spiess, Tierney, Brown & Platt, Chicago, Ill., of counsel.

Before CASTLE, KILEY and FAIRCHILD, Circuit Judges.

FAIRCHILD, Circuit Judge.

Action by named beneficiaries to recover on two $50,000 life insurance policies issued by defendant Equitable Life Assurance Society of the United States (Equitable).¹ The jury returned a verdict for Equitable.

On February 16, 1961, the insured Morton Jacobson, dealing with David Dorin, an agent for Equitable, made an incomplete application for $100,000 life insurance. Mr. Jacobson was medically examined, Part II of the application "Statements to Medical Examiner" was filled in, and Jacobson signed the Part II. He did not sign the Part I which Dorin filled out that day indicating, among other things, that a $100,000 policy was desired. Both parts are required for a complete application.

In March, 1961, subject to the requirement that an acceptable Part I be submitted to it, Equitable offered to issue a policy of insurance in the amount of $100,000 on the life of Jacobson, and sent the policy to Dorin for delivery. Jacobson was "rated." The company insisted upon a class C premium² because Jacobson had high blood pressure. The parties had previous dealings. Equitable had issued a policy in 1952, had refused to insure him in 1956 because of high blood pressure, and had offered a policy in 1959 at a class B premium. Jacobson had declined this policy.

When Dorin attempted to deliver the $100,000 policy in March, 1961, Jacobson refused because the premium was too high.

Dorin made several attempts to persuade the company's doctors to reduce the rating. Additional blood pressure readings were taken in May, and the company refused to change the rating.

On June 20, 1961, Dorin visited Jacobson and his son at the office of plaintiff American Cold Heading Corporation, Jacobson's company. It was arranged that instead of a single policy of $100,000, two $50,000 policies would be issued. On one of these Mrs. Jacobson, present plaintiff, would be owner and beneficiary, and on the other the corporation. A form entitled "Application, Part I," was made out for each policy and signed by Morton Jacobson and the owner of the policy.

Jacobson died three months later, September 21, 1961. Immediate cause of death was coronary occlusion, caused in turn by coronary arteriosclerosis and general arteriosclerosis.

Defendant Equitable alleged that certain material answers in Part II were not true, full and complete, in compliance with the terms of Part I, signed by Jacobson on June 20, that the answer to question 7a was false when made in February, and that Jacobson was not in good health on June 20, when he signed Part I and paid the first premium.

Jacobson's answer to question 7a indicated that he had never "been treated for or had any known indication of * * * chest pain. * * *" The doctor who attended Jacobson the night of his death, in September, 1961, had notes that Jacobson told him: "Has mentioned off and on for a year or more to his wife that there has been mild chest pain but when it is over he forgets it and does not consult a physician." Mrs. Jacobson, and their son, as well as the family physician, testified they had not been told of such pains, and Jacobson, aged 52, had led an active life. The evidence of falsity may be meager, but there was sufficient evidence before the jury to support a finding that the answer to question 7a was untrue in February, 1961.

Another answer indicated that Jacobson had never "been treated for or had any known indication of any disease or disorder of the * * * blood vessels. * * *" There is no evidence that this answer was untrue in February, 1961. Part I, however, executed June 20, 1961, contained an agreement that "The foregoing statements and all those contained in Part II hereof are true, full, and complete, and are made to induce the Society to issue the policy or policies applied for. * * *" Before June 20, 1961, Jacobson had consulted physicians and received a diagnosis which would render the answer untrue as of that date.

Part I also contained the agreement, "Any insurance applied for shall not take effect unless the first premium thereunder is paid during the good health of the Proposed Insured. * * *" The same diagnosis disclosed a deterioration of Jacobson's health which had not been known at the time of the earlier examinations or the signing of Part II, and which, as the evidence showed, was not a natural incident of the condition of elevated blood pressure, known to Equitable, and for which Jacobson had been rated.

In summarizing the evidence we shall, unless we indicate otherwise, state it in the light most favorable to supporting the verdict.

In early June, 1961, Jacobson "had trouble walking. After walking about one block he developed pain in the right leg and had to stop and rest for a few minutes, at which time he could walk again; another block, and this continued to go on."³ On June 7, Jacobson called on a relative, Dr. Shapiro, for advice about this trouble. Dr. Shapiro discovered that there was a poor pulsation at the right groin, and could not establish any pulsations behind the knee nor behind and on the inner side of the ankle, nor at the top of the foot.

Because Dr. Shapiro follows a rule that he does not treat his relatives, he named a group of physicians and suggested that Jacobson see one of them.

Accordingly, on June 12, Jacobson consulted Dr. Javid, a surgeon specializing in blood vessel and heart surgery. He found absence of pulsation similar to that found by Shapiro, and concluded that "there seems to be a blockage in the main artery above his liver." Dr. Javid told Jacobson "that he had blockage of the artery or occlusion of the artery and we had to make some tests to find out how extensive and how distant from the area of examination the blockage was." Javid said he would arrange for tests at Presbyterian St. Luke's Hospital, and that if it turns out that "only a short segment of the artery is blocked, then of course surgery could be corrective." On June 14, Jacobson was notified that a reservation had been made at the hospital on June 27.

This was the information Jacobson had on June 20, when he signed a Part I for each policy and paid the first premiums. Although Jacobson had told Dorin, Equitable's agent, that he couldn't keep golf dates because his leg hurt him, and told Dorin that Dr. Javid said he would have to have surgery to relieve the nerve pressure which was causing the pain, Dr. Javid testified that he said nothing about any possibility that Jacobson's difficulty was caused by a pinched nerve. On this evidence the jury could scarcely fail to find that on June 20 Jacobson had a known indication of a disease or disorder of the blood vessels. The jury could also reasonably find that he knew or should have known that this was a change in the facts which would materially affect the risk, that he deliberately gave Dorin a less alarming explanation of the pain in his leg, and that Jacobson was not in good health on June 20.

After Jacobson went to the hospital on June 27, a dye test showed a blockage of the main tube that leads into the right leg and there was a diagnosis of generalized arteriosclerosis and arteriosclerosis obliterans. On June 30 the blocked segment was removed by operation and a pieces of plastic tube inserted. His recovery was "uneventful."

Jacobson apparently returned to normal activity. Two months later, however he became ill and died, within a few hours, of a coronary occlusion caused by general arteriosclerosis. His death was not related to the June 30 operation except in the sense that both the coronary occlusion and the blocked artery for which he had surgery stemmed from the same cause.

It appears, then, that although Jacobson agreed and represented on June 20, 1961, that all statements in Part II, including the answer that he had no known indication of any disease or disorder of the blood vessels were true, full, and complete, the answer just referred to was no longer true, and evidence clearly shows that the misrepresentation materially affected the acceptance of the risk and the hazard assumed by the company. The jury could reasonably draw the inference, moreover, that Jacobson's representation to Dorin that his leg pain resulted from nerve pressure was actually intended to deceive.⁴

And we think that, independently of the representation asked for and made on June 20 in the Part I, Jacobson had a duty to disclose to the insurer on that date the information he had tending to show a serious disorder in a blood vessel, an area about which Equitable had inquired.

In Stipcich v. Metropolitan Life Ins. Co.,⁵ the Supreme Court said at p. 316,

48 S.Ct. at p. 513.

"But the reason for the rule of disclosure still obtains, and with added force, as to changes, materially affecting the risk which come to the knowledge of the insured after the application and before delivery of the policy. For even the most unsophisticated person must know that in answering the questionnaire and submitting it to the insurer he is furnishing the data on the basis of which the company will decide whether, by issuing a policy, it wishes to insure him. If, while the company deliberates, he discovers facts which make portions of his application no longer true, the most elementary spirit of fair dealing would seem to require him to make a full disclosure. * *

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