Knudson v. Grand Council of Northwestern Legion of Honor

• Citation: 63 N.W. 911,7 S.D. 214
• Parties: KNUDSON et al. v. GRAND COUNCIL OF NORTHWESTERN LEGION OF HONOR et al.
• Decision Date: 22 June 1895
• Court: South Dakota Supreme Court

63 N.W. 911

7 S.D. 214

KNUDSON et al. v. GRAND COUNCIL OF NORTHWESTERN LEGION OF HONOR et al.

Supreme Court of South Dakota

June 22, 1895

Syllabus by the Court.

1. Where, by the terms of a certificate of insurance, issued by a mutual benefit association, the application and medical examination are made a part of the contract, and in such application it is stipulated that the statements made therein and answers made to the medical examiner are to be deemed warranties, untrue statements in such application and untrue answers made to the medical examiner in answer to questions propounded constitute a breach of the warranty, and avoid the contract.

2. Conversations with, or statements made by, a soliciting agent of a mutual benevolent association prior to or at the time of an application for the issuance of an insurance certificate in the absence of proof of fraud, are inadmissible to contradict or vary the terms of the written contract between the parties.

3. The provisions of section 24, c. 51, Laws 1890, do not apply to mutual benevolent associations, but are only applicable in certain cases to life insurance companies specified in the first 31 sections of the chapter.

Appeal from circuit court, Minnehaha county; Joseph W. Jones, Judge.

Action by Albert Knudson and others against the Grand Council of the Northwestern Legion of Honor and others. Judgment for plaintiffs, and defendants appeal. Reversed.

U. S G. Cherry, for appellants. Joe Kirby, for respondents.

CORSON P. J.

This was an action by the heirs of Knud C. Knudson, deceased, to recover of defendants the sum of $2,000 insurance on the life of deceased. Judgment for plaintiffs, and defendants appeal. The defense to the action is based upon the alleged fact that in the application of said deceased and in his medical examination he made certain statements that constituted warranties, and that, these statements being untrue, the plaintiffs cannot recover. The defendant is a mutual benefit association having a number of subordinate councils, one of which, No. 94, is located at Sioux Falls, where the deceased resided at the time of his death. To entitle a person to the benefits of the association, he was required to become a member of a subordinate council. This membership was obtained by making an application to a subordinate council, which application, together with his medical examination and the certificate of the local medical examiner, was forwarded to the grand council, located at Marengo, Iowa, where, if the application was satisfactory, a certificate in the nature of a policy of insurance was issued. In April, 1892, the deceased made application for membership in the Sioux Falls council, the material parts of which application are as follows: "To the officers and members of Sioux Falls council, No. 94, N.W. L. of H located at Sioux Falls, South Dakota. Having become acquainted with the objects of your order, I hereby make application for 2nd degree membership in your council, and do declare, upon my honor, that the statements by me subscribed herein are each and every one of them true, to the best of my knowledge and belief. And this application, when received by the grand council, and a benefit certificate therein is issued to me, is to be deemed a warranty by me that all answers and statements made by me upon the subjects herein specified are in all respects correct and true. *** I am temperate in my habits. *** I do hereby consent and agree that any untrue or fraudulent statements made above, or to the medical examiner, or any concealment of facts by me in this application, *** shall forfeit the right of myself or family or dependents to all benefits or privileges therein. *** This application is made and signed by me with the express stipulation and agreement, and upon the express condition on my part, that neither will I claim any benefit or privilege in your order, nor shall my beneficiary herein named, *** unless all the statements herein made by me are true, nor, further, unless all answers given by me in medical examination as to my physical condition and family history shall be strictly true, and my medical examination to be duly approved." On April 21st the deceased appeared before the medical examiner at Sioux Falls, and answered a large number of questions submitted to him, and among others were the following: "Have you had delirium tremens? No. Do you use alcohol or other stimulants? No. What has been your habit as to either through life? Temperate." To this examination the medical examiner annexed a certificate, and the same, with his application, was forwarded to the grand council, which, on May 11th, issued to the deceased a certificate, the material parts of which are as follows: "This certificate is issued to Companion Knud C. Knudson, *** upon condition that the statements made by said companion in application for membership in said council, and the statements certified by said companion to the medical examiner, both of which are filed in the grand secretary's office, be made a part of this contract. *** These conditions being complied with, the grand council of the Northwestern Legion of Honor hereby promises and binds itself to pay out of its benefit fund to Augusta Knudson (his wife) a sum not exceeding two thousand dollars in accordance with and under the provisions of the laws governing said fund, upon satisfactory evidence of the death of said companion, and upon the surrender of this certificate." The jury found a general verdict, and also found special findings, as follows: "1. Was the deceased, Knud C. Knudson, ever intoxicated prior to the issuance of the benefit certificate introduced in evidence by the plaintiffs in this action, and described as benefit certificate No. 4,044? Ans. No. 2. Was the deceased, Knud C. Knudson, addicted to the use of alcoholic liquors prior to the issuance to him of said benefit certificate? Ans. Moderately. 3. Did the deceased, Knud C. Knudson, prior to the issuance of said benefit certificate to him, take a medical treatment commonly known as 'Dittmer Cure' for the drink habit? Ans. Yes. 4. Did the deceased, Knud C. Knudson, at the time his application was made for the said benefit certificate, and at the time said benefit certificate was issued, improperly use alcoholic or other intoxicating liquors? Ans. No."

The appellant has assigned a large number of errors, but, in the view we take of this case, it will be only necessary to consider those relating to application, medical examination, and certificate issued, and the alleged breach of statements made in the application and medical examination. Three questions naturally present themselves for our consideration. First. Did the statements made by the deceased in his application and medical examination constitute warranties? Second. If they did constitute warranties, do the special findings and uncontradicted evidence show that there was a breach of these warranties? Third. If the statements constituted warranties, and they were untrue, has the company in any manner waived such breach of warranty, or is it estopped from insisting upon such breach or breaches as a defense to this action?

Few questions have given rise to more discussion than the distinction between representations and warranties in insurance contracts. The inclination of courts in modern times seems to be to construe the statements made as representations, when the language used will admit of such a construction of the contract. But when the language used is free from ambiguity, and there is no question as to the application constituting a part of the contract, and the basis of the same, the statements will be construed as warranties and not representations. In the case before us there seems to be little room for construction. It will be noticed that by the terms of the certificate it is issued upon the condition that the statements made in the application and the statements made in the medical examination be made a part of the contract; and in the application it is stipulated that all answers and statements made upon the subjects therein specified are warranted to be true; and the appellant consents that any fraudulent or untrue statements made to the medical examiner should forfeit the right of himself and family to all benefits and privileges therein; and he further stipulates that neither he nor his family will claim any benefits, unless all statements made by him are true. Respondent's counsel insist that by the last clause of the application the stipulations as to his answers to the medical examiner are limited by the term, "physical condition and family history shall be strictly true," and that his habits as to being temperate are not included in this stipulation. If this was...