Kay v. Occidental Life Ins. Co.

• Decision Date: 03 July 1947
• Docket Number: 30156.
• Citation: 28 Wn.2d 300,183 P.2d 181
• Court: Washington Supreme Court
• Parties: KAY v. OCCIDENTAL LIFE INS. CO.

183 P.2d 181

28 Wn.2d 300

KAY v. OCCIDENTAL LIFE INS. CO.

No. 30156.

Supreme Court of Washington

July 3, 1947

Department 2

Action by Nan W. Kay, a widow, against the Occidental Life Insurance Company, a corporation, to recover on an endowment policy for the death of the plaintiff's husband. From a judgment of dismissal, the plaintiff appeals.

Judgment reversed.

Appeal from Superior Court, Pierce County; F. G Remann, Judge.

Samuel L. Crippen, Tacoma, for appellant.

Metzger Blair, Gardner & Boldt, of Tacoma, for respondent.

HILL Justice.

Only one question is here presented: Was there any credible evidence from which a jury could have determined that certain false representations or warranties in the application for a policy of life insurance were made without intent to deceive? The trial court answered no, and took the case from the jury.

The falsity of certain representations is conceded, but it is appellant's position that a jury could find from the evidence that they were not made with intent to deceive.

We have a statute which provides: 'Warranty not to avoid policy unless deceptive. No oral or written misrepresentation or warranty made in the negotiation of a contract or policy of insurance, by the assured or in his behalf, shall be deemed material or defeat or avoid the policy or prevent it attaching, unless such misrepresentation or warranty is made with the intent to deceive. * * *' Rem.Rev.Stat. § 7078.

Liability on an insurance policy cannot be avoided unless it appears that untrue representations were knowingly made in the application for the policy and that, in making those representations, the applicant had an intent to deceive the company. Houston v. New York Life Ins. Co., 159 Wash. 162, 292 P. 445; Id., 166 Wash. 611, 8 P.2d 434; Great Northern Life Ins. Co. v. Johnson, 187 Wash. 347, 60 P.2d 109; Miller v. United Pacific Cas Ins. Co., 187 Wash. 629, 60 P.2d 714.

However, where a false statement has been knowingly made, there is a presumption that it was made with intent to deceive. Quinn v. Mutual Life Ins. Co., 91 Wash. 543, 158 P. 82; Day v. St. Paul Fire & Marine Ins. Co., 111 Wash. 49, 189 P. 95; Equitable Life Ins. Co. v. Carver, D.C., 17 F.Supp. 23.

We have frequently held that a presumption is not evidence ( Gardner v. Seymour, Wash., 180 P.2d 564); and when we have said that the presumption must be overcome by evidence establishing an honest motive or an innocent intent, as was said in Day v. St. Paul Fire & Marine Ins. Co., supra, and Hayes v. Automobile Ins. Exch., 126 Wash. 487, 218 P. 252, we meant only that the burden of going forward with the evidence is upon the assured or the beneficiary seeking to enforce the policy. The bare affirmation that there was no intent to deceive is not credible evidence of good faith, and, in the absence of credible evidence of good faith, the presumption would warrant a dismissal. Day v. St. Paul Fire & Marine Ins. Co., supra. As was said in Mutual Life Ins. Co. v. Campbell, 170 Wash. 485, 16 P.2d 836, 838: 'It profits him nothing to say that he did not by his representations intend to deceive. A statement that is obviously factitious cannot be accepted as being true on its face.'

If, however, there is credible evidence from which the trier of the facts could conclude that the misrepresentations were made without intent to deceive the insurance company, the burden is upon the insurance company to prove that there was a fraudulent intent to deceive it on the part of the assured. Equitable Life Assur. Soc. v. MacDonald, 9 Cir., 96 F.2d 437, 439.

In the case just cited, Judge Denman, speaking for the ninth circuit court of appeals, said: 'There being such evidence of innocence, the question then is: 'What is the law of Washington with regard to the burden of proof when the insurance company has proved the insured's knowingly having made the false and fraudulent representations?' The Washington Supreme Court holds that it raises a presumption, which it described as follows: 'The proof of making of false and fraudulent representations raises a presumption of dishonest motive which must be overcome by evidence establishing an honest motive.'

' Great Northern Life Ins. Co. v. Johnson, supra, 187 Wash. 347, 60 P.2d 109, 112.

'Under the Washington law a presumption is not evidence and does not shift the burden of proof, but merely shifts to the party against which it exists the duty of going forward with the evidence. The presumption here disappears when there is evidence on the subject which, in its [sic] absence of the presumption, would warrant the inference of an innocent intent.

'In Anning v. Rothschild & Co., 130 Wash. 232, 235, 226 P. 1013, 1014, the Supreme Court of Washington says:

"In Scarpelli v. Washington Water Power Co., 63 Wash. 18, 114 P. 870, we quoted and adopted the following from the language of the Supreme Court of South Dakota ( Peters v. Lohr, 24 S.D. 605, 124 N.W. 853):

"'A presumption is not evidence of anything, and only relates to a rule of law as to which party shall first go forward and produce evidence sustaining a matter in issue. A presumption will serve as and in the place of evidence in favor of one party or the other until prima facie evidence has been adduced by the opposite party; but the presumption should never be placed in the scale to be weighed as evidence. The presumption, when the opposite party has produced prima facie evidence, has spent its force and served its purpose, and the party then, in whose favor the presumption operated, must meet his opponents' prima facie evidence with evidence, and not presumptions. A presumption is not evidence of a fact, but purely a conclusion. Elliott, Ev. §§ 91, 92, 93; Wigmore, Ev. §§ 2490, 2491.'"

To the same effect and relying on the same authorities, see Gardner v. Semour, supra.

And in another ninth circuit court case construing our statute, Judge Garrecht said: '* * * Ordinarily, the intent to deceive in misrepresenting past illnesses is a question for the jury. * * *' Prudential Ins. Co. v. Winn, 9 Cir., 71 F.2d 126, 135.

Having in mind the rules of law applicable to a case of this character, we turn now to a consideration of the facts, which are substantially undisputed. In September, 1943, George C. Kay, a foreign-born Chinese, applied to the Prudential Insurance Company of America for a $10,000 policy and was, after physical examination, rejected by that company, no reason being given. Thereafter, on April 5, 1944, he was contacted by a representative of the Occidental Life Insurance Company, the respondent here, and, after some discussion, made application for a twenty-year endowment policy in the amount of $10,000. He disclosed the rejection by the Prudential company the previous year and was subjected to three or four examination (the first one on April 11, 1944) Before his application was accepted. He died June 12, 1945, and, proof of loss having been made by the beneficiary, his wife, the appellant here, payment was refused by the respondent except as to the amount of the premiums paid. She then brought this action to recover on the policy.

Respondent, in its brief, listed seven questions which it contends were answered falsely in the application, as follows:

'1. (Par. 11-f [of part II of the application]) 'Have you ever had any of the following: or have you ever consulted a physician or practitioner, or received any treatment for any of the following: * * * Ulcer of the Stomach or Bowels?'

'Answer: 'No.'

'2. (Par. 15) 'Have you, in the past at any time, consulted a physician or practitioner not named (otherwise in the application) regarding yourself?'

'Answer: 'Dr. Fairborn, Tacoma, Bronchitis, 1942.'

'3. (Par. 18) 'Have you ever undergone any special tests or treatments, such as * * * X-ray?'

'Answer: 'Not that is sure of.'

'4. (Par. 14) 'Have you now, or have you ever had any illness, disease, deformity, accident or injury other than listed (in the application)?'

'Answer: 'Thinks had 'all' childhood diseases.'

'5. (Par. 19) 'Within the last five years have you ever been advised to restrict your diet?'

'Answer: 'No.'

'6. (Par. 5) 'Has your weight increased or decreased in the past twelve months?'

'Answer: 'Thinks has gained slightly.'

'7. (Par. 23) 'Are you aware of any circumstances connected with your own health or that of your family which might affect the risk of an insurance on your life?'

'Answer: 'No."

The answers to all the questions on the application were written by the insurance company's examining physician, Dr. Weldon Pascoe. The application was signed by Mr. Kay and the written and signed application was made a part of the policy, with a photostatic copy incorporated therein.

Three of these claimed false representations may be quickly disposed of. (1) We do not believe that it was established that Mr. Kay had been advised to restrict his diet within the five years preceding the application. (2) Neither is it established that his representation about his weight was false. At the time of the application to the Prudential company, in September, 1943, he weighed 124 pounds; in April 1944, when he made his application to respondent, he weighed 119 pounds. There is no evidence as to his weight in April, 1943, and the fact that he lost five pounds between September, 1943, and April, 1944, does not establish that he answered falsely when he said that he thought he had gained slightly during the past twelve months. It is also to be noted that the information concerning Mr. Kay's weight of 124 pounds, as given in the Prudential application, was known or could have been known to the respondent, Before it issued the policy. (3) The seventh and last of the claimed...