Keeton v. Jefferson Standard Life Ins. Co.

Decision Date14 April 1925
Docket Number2329.,No. 2328,2328
Citation5 F.2d 183
PartiesKEETON v. JEFFERSON STANDARD LIFE INS. CO. SAME v. EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES.
CourtU.S. Court of Appeals — Fourth Circuit

Frank T. Sutton, Jr., and M. J. Fulton, both of Richmond, Va. (John J. Wicker, Jr., and Fulton & Wicker, both of Richmond, Va., on the brief), for appellant.

Stuart G. Christian and Wyndham R. Meredith, both of Richmond, Va. (Brooks, Hines & Smith, of Greensboro, N. C., and Alexander & Green, of New York City, on the brief), for appellees.

Before WOODS, WADDILL, and ROSE, Circuit Judges.

WADDILL, Circuit Judge.

These bills in equity were respectively filed by the appellee, the Jefferson Standard Life Insurance Company, hereinafter called the Jefferson Company, in the first-named cause, and by appellee, Equitable Life Assurance Society of the United States, hereinafter called the Equitable Society, in the last-named cause, to set aside, cancel, vacate, and annul four certain life policies issued by appellees, for $5,000 each, two being issued by each company, on the life of Joseph S. Keeton.

The causes were heard together by consent, as the assured was the same in all the contracts, and the policies were issued about the same time; that is to say, by the Jefferson Company on the 29th of April, and by the Equitable Society on the 22d of May, 1921. The first-named policies were delivered June 21, 1921, and the last on the 27th of June, 1921. The assured, Joseph S. Keeton, died on the 26th of August, 1921.

Shortly after his death, the bills in these causes were filed, appellees averring that after the death of the assured they learned of certain false statements and representations made in the applications for the policies, which invalidated the same. Each company tendered the return of the premiums paid, and in the case of the Equitable Society, one of the policies payable to a beneficiary other than the assured's wife, Jessie P. Keeton, was surrendered upon return of the premium, and is not involved in these suits, leaving the contest only on a single policy for $5,000 in the Equitable Society, and two for $5,000 each in the Jefferson Company.

In his application for a policy in the Jefferson Company, the assured answered the following questions bearing on his health, and made certain stipulations, as follows:

"(a) Have you been disabled or received medical attention within the past five years? No."

"(c) Have you ever suffered from any ailment or disease of the heart, lung, etc.? No."

"E. Have you ever had rheumatism, gout, etc.? No."

"H. Have you consulted a physician for any ailment or disease not included in your above answers? No."

"(d) What physician or physicians, if any, not named in the above, have you consulted or been treated by within the last five years, and for what illness or ailment (if none so state)? None."

"I hereby agree for myself, and for any person who may have or claim any interest in any contract which may be issued on this application, that:

"First, every statement and representation hereinabove contained is material and true."

Which was signed by J. S. Keeton.

"This policy and the application therefor (parts 1 and 2), copies of which are attached hereto, constitute the entire contract, and no statement shall avoid any payment under this policy, or be used in defense of any claim hereunder unless it is contained in one of these instruments."

"No agent or other person except the president, a vice president, the secretary or an assistant secretary of the company has power on behalf of the company to make, modify or discharge this, or any contract of insurance, to extend the time for paying a premium, to waive any lapse or forfeiture of any of the company's rights or requirements, or to bind the company by making any promise respecting any benefits hereunder, or by accepting any representation or information not contained in the written application for this policy."

In his applications for policies in the Equitable, the assured answered the following questions bearing on his health, and made certain representations as follows:

"6. State every physician or practitioner whom you have consulted or who have treated you during the past five years. None."

"C. Have you ever been treated for any disease or disturbance of the heart or blood vessels? No."

"8. Have you ever had gout, rheumatism, tuberculosis, or syphilis? No."

"F. Have you ever had any other illness or injury not mentioned above? No."

The application to the Equitable contained the following stipulation:

"All of the foregoing answers and all those made to the society's medical examiner which are contained in part 2 hereof are true and are offered to the society as an inducement to issue the policy for which application is hereby made."

At the end of the application is the following:

"I agree that the foregoing answers shall be part of my application which shall consist of parts one and two taken together, and that the foregoing answers shall also become part of any policy contract which may be issued on the strength thereof.

"Dated at Richmond, Virginia, on the 21st day of May, 1921.

"Signed J. S. Keeton.

"Witness: P. W. Howle, M. D."

Keeton's policy with the Equitable Society also contained the following:

"The Contract. This policy and the application therefor, a copy of which is indorsed hereon, or attached hereto, constitute the entire contract between the parties. All statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties, etc."

Complainant in each of the causes charged that the assured procured the issuance of policies by making false statements, and concealing facts respecting material matters bearing upon his health, and medical treatment previously received by him, particularly that he had not theretofore been treated for rheumatism and heart trouble, and had never had or suffered from either of said ailments, and had had no occasion for five years preceding the dates of applications for the policies to have medical attention from any physician; all of which answers the bills charged were knowingly false and fraudulent, and affected matters of vital importance looking to the issuance of policies, and but for the making of which the policies would not have been issued.

Appellant, defendant in the District Court, answered denying generally all accusations of fraud in connection with the procuring of the insurance, and insisted that the deceased was insurable, and had not theretofore within five years preceding the dates of the policies, suffered from rheumatism or other disease that would have affected his insurability; nor had he been practiced upon within the period specified for any such ailments by a physician or physicians; and that the malady from which he died was one of short duration, the first symptoms of which appeared in the month of June, 1921.

Appellant further insisted that appellees were fully advised of the ailments with which the assured was afflicted, and that its agents and representatives knew thereof, and in the light of such knowledge made full investigation as to the health of the assured; and further averred that the answers to questions propounded to the assured were not in fact his answers, but those of insurers' representatives, who took down the same.

Issues were joined upon the pleadings, and the two causes heard together and submitted to the district judge. The testimony was all taken in open court under the new equity rules, and the District Court passed its decrees on the 17th of April, 1924, holding that said policies should be declared null and void and canceled, because procured by the assured's making false statements respecting material matters leading to their issue, which the testimony clearly established. From the decrees thus entered, these appeals were taken.

The merits of the cases, on appeal, turn so largely in our judgment upon what is the correct determination of the facts properly controlling, that we are relieved from much of the difficulty that might otherwise arise in passing upon the questions involved, by reason of the findings of fact of the learned district judge, who saw and heard the witnesses testify, and was thereby better enabled to give to their testimony the weight that properly belonged to the same. The following are excerpts from the opinion and finding of the district judge:

"The points of law, as I see them, are not really in serious doubt. I think the proper determination of the case depends upon a fair application of well-recognized principles of law to the facts. * * *

"The case, I think, presents only two questions: The question of whether or not the statements which are the basis of the suit, which were made in the answers in the examination of the applicant for the insurance, were untrue and, to that extent, false statements; and if they were, whether they were material and affected the making of the contract and the meeting of the minds of the parties. * * *

"It goes without saying that the very basis of the contract is the condition of the man's health. No insurance company could last, no insurance company could exist, unless there was a careful medical examination of the applicants for insurance. The rules which experience has taught are observed in the writing of the insurance, in the making of the contract. ...

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