Kelly v. Madison Nat. Life Ins. Co.

• Decision Date: 28 November 1967
• Citation: 154 N.W.2d 334,37 Wis.2d 152
• Parties: Alice Mae KELLY, Plaintiff-Respondent, v. MADISON NATIONAL LIFE INSURANCE COMPANY, Inc., Defendant-Appellant.
• Court: Wisconsin Supreme Court

Page 334

154 N.W.2d 334

37 Wis.2d 152

Alice Mae KELLY, Plaintiff-Respondent, v. MADISON NATIONAL LIFE INSURANCE COMPANY, Inc., Defendant-Appellant.

Supreme Court of Wisconsin.

Nov. 28, 1967.

Charles H. Johnson, Madison, for appellant.

Richard R. Rynders, Madison, Michael A. Burke, Madison, of ocunsel, for respondent.

HALLOWS, Justice.

On March 23, 1964, Kelly was solicited for insurance by an agent of the defendant and was given an application to take to his family physician for a medical examination. Kelly told the agent he was afraid he might not pass a physical examination as he had an ulcer but was advised to let the medical examiner be the judge. At the time Kelly was a 63-year-old farmer who operated three farms, rented an additional 1,800 acres of pasture land, and maintained a 1,000-head herd of cattle. Although his formal education ended at fifth grade, he was a successful self-educated man and managed most of his affairs himself. Two days later Kelly went to see Dr. Warrick who gave him an insurance medical examination, during which Kelly was asked to answer some 22 questions on the medical-examination blank. The application consisted of several pages--a general application plus a medical examination blank containing 22 questions to be answered by the applicant and another page entitled 'Report of the Examining Physician' containing questions 23 through 79 to be answered by the medical examiner. Kelly's answers with the exception of those to questions 5 and 6 were written by the doctor as he gave them. In respect to answers 5 and 6, Dr. Warrick interpreted Kelly's answer and wrote down his interpretation. After completing the medical examination of Kelly, Dr. Warrick completed and signed the report of the examining physician. In the place for 'Remarks' at the end of the report, Dr. Warrick wrote 'Applicant appears to be healthy state at present time.' Upon this application, the defendant issued its policy.

About a year and a half later on September 16, 1965, Kelly died after developing cardiac and gastro-intestinal complications. The certificate of death stated Kelly's death was caused by probable ventricular fibrillation due to posterior myocardial infarction. The questions in the application claimed to be falsely answered are:

3. Are you now in good health? Yes

4. When were you last attended by a physician or consulted one? 1/26/64

5. For what disease? General check-up

6. Give details in full. Complete medical checkup showed or revealed no gross abnormalities.

9. Has any physician ever given an unfavorable opinion of your health after either a formal or an informal examination? No

20. Have you any defect in hearing or eyesight, any malformation or varicose veins? No

22. Have you ever had an illness, disease, injury or operation other than as stated by you above? If so, give full particulars, date, duration, severity, etc. of each. Use reverse side if necessary. No 50. Is there any evidence of disease of the digestive tract? No

77. Do you find anything unfavorable in the habits, physique, occupation or environment of the applicant? No

The defendant claims these answers are false because Kelly did not enter the hospital on January 26, 1964, for a general checkup but was there four days for gastritis and the diagnosis of his ailments during this hospitalization was: Gastritis, arteriosclerotic vascular disease, and chronic tension state. It is argued these ailments are gross abnormalities, that Kelly in 1961 was told he had an ulcer, and in January, 1964, Dr. Warrick told Kelly he had gastritis and arteriosclerosis, and that Kelly wore eye glasses and during his January hospitalization complained of black-outs or blurred vision on five or six occasions. The answer to question 22 is claimed false because both Kelly and Dr. Warrick were aware of the previous diagnosis of the duodenal ulcer, arteriosclerotic vascular disease and gastritis; these constitute an illness or a disease; and Dr. Warrick did nothing to correct Kelly's answers.

In respect to the part of the application called Report of the Examining Physician, the defendant argues Dr. Warrick falsely answered question 39 in that he did not report his findings as to leg arteriosclerosis and stated in the answer to question 50 that there was no evidence of disease of the digestive tract although he was aware of the duodenal ulcer and gastritis. It is also argued the chronic tension state is reflected in the habits of a person and therefore the 'no' answer to question 77 was false.

The trial court concluded Dr. Warrick gave a 'statement of fitness for insurance' or a 'certificate of health' within the meaning of sec. 209.07, Stats., ⁷ and being Kelly's personal physician and having had recently examined and treated him, he could not be deceived in making such statement by the answers given by Kelly. Therefore, the court decided the only issue which could be submitted to the jury was whether Kelly and the doctor colluded to obtain the life insurance policy as alleged in the defendant's answer. We consider the trial court was correct in this respect and that the defense based upon sec. 209.06, Stats., dealing with the effect of misrepresentations and false statements in an insurance application, was not available to the defendant. Sec. 209.07, Stats., estops a life or disability insurance company from setting up a defense otherwise available under sec. 209.06 in those cases where its medical examiner issues a certificate of health or declares the applicant a fit subject for insurance unless such certificate or the statement is procured by or through the fraud or deceit of the insured. Under this section the collusion between Kelly and the doctor to mislead the insurance company in issuing the policy and the making of the certificate or statement by the medical examiner as a part of such collusion would satisfy the requirement of the section that the statement or certificate be 'procured by or through the fraud or deceit of the insured.'

The issues then are whether Dr. Warrick issued a certificate of health or made a declaration that Kelly was a fit subject for insurance within the meaning of sec. 209.07 and if so, whether the doctor and Kelly colluded to obtain the policy of insurance.

It is argued by the defendant the statement 'Applicant appears to be healthy state at present time' in the report of the examining physician under the heading 'Remarks' is not an opinion of the doctor but a report of a finding--an observable fact from the appearance of Kelly. This is not a reasonable interpretation. Question 24 in the report asked, 'Does his appearance indicate good health?', which was answered 'yes.' There was no need to repeat this answer. The report of the examining physician sought remarks of the examiner and while it did not expressly request an opinion, it could reasonably be understood to have done so. Both Dr. Warrick and the underwriter for the defendant seem to have so understood it and testified they considered the answer to mean that in the opinion of the doctor, the applicant was in good health at that time.

The...