Lindstrom v. National Life Ins. Co. of U.S.

• Decision Date: 19 June 1917
• Parties: LINDSTROM v. NATIONAL LIFE INS. CO. OF UNITED STATES.
• Court: Oregon Supreme Court

165 P. 675

84 Or. 588

LINDSTROM v. NATIONAL LIFE INS. CO. OF UNITED STATES.

Supreme Court of Oregon

June 19, 1917

Department 2.

Appeal from Circuit Court, Multnomah County; W. N. Gatens, Judge.

Action by Eda J. Lindstrom against the National Life Insurance Company of United States of America. Judgment for plaintiff and defendant appeals. Reversed and remanded for new trial.

This is an action by Eda J. Lindstrom against the National Life Insurance Company of the United States of America to recover upon a policy of insurance. The complaint alleges in effect that on April 17, 1913, the plaintiff was the wife of Oscar F. Lindstrom; that the defendant then, and at all times thereafter, was and is a corporation, and authorized to do business in Oregon; that on that day the defendant, in consideration of $51.67, executed to Oscar F. Lindstrom a policy of insurance by the terms of which it agreed to pay plaintiff $1,000 upon receipt of the proof of the death of the assured during the continuance of such contract; that on April 3, 1914, and while the policy was in force, Oscar F Lindstrom died; that within proper time thereafter the plaintiff furnished due proof of such death to the defendant which failed and refused to pay the sum specified. The answer denies the material averments of the complaint, and for a further defense alleges that Lindstrom's application for insurance became a part of the policy which was issued; that in such request he represented that all answers made to the medical examiner were full, true, and complete; that Lindstrom signed the report of the medical examination, which was made a part of the application, and thereby warranted that the answers which he made to the medical examiner had been read by him; that they were true, full, and complete and should form the basis for the contract of insurance; that he fraudulently represented he had not within five years employed or consulted a physician for any ailment, and falsely stated he had not been treated for or afflicted with any renal or urinary disease; that he had within such period employed a physician, who gave him an unfavorable opinion in respect to his health as an insurance risk; that at the time of the making of such application Lindstrom was suffering from kidney and vesical diseases, particularly describing them. For a second affirmative defense it is averred generally that, notwithstanding liability under the contract has at all times been and now is denied by the defendant, in order to avoid annoyance and expense it effected a compromise settlement with the plaintiff June 22, 1914, whereby there was paid to and accepted by her as such beneficiary, in full satisfaction of all claims and demands under the policy, $100, which sum she retains with full knowledge of all the facts set forth herein, thereby authorizing the defendant to annul the contract of insurance. The averments of new matter in the answer were denied in the reply, which alleged, in effect, that Oscar F. Lindstrom correctly answered all questions asked him by the medical examiner, giving a full, complete, and truthful statement of his health and physical condition; that the answers so made were written by the medical examiner; that, if the answers set forth in the application are in any respect false, they were so inserted in the application by the defendant's duly authorized agent, after the full and exact truth had been communicated to him by Oscar F. Lindstrom, and became a fraud and deceit on the part of the medical examiner; that Lindstrom signed the application for insurance without fraud or attempt to deceive the defendant, and without collusion on his part with the medical examiner. For a further reply it is alleged generally that the pretended release was obtained from the plaintiff by the fraud of the defendant; that she was induced to sign the release by reason of false, fraudulent, and unlawful representations made by defendant to her to defraud and deceive her; that defendant represented to the plaintiff that the policy of insurance was void because of false representations which had been made by Oscar F. Lindstrom as to his condition of health, thereby causing the policy to be invalid; that the plaintiff relied upon such false and fraudulent representations, and was induced thereby to sign the pretended release, and to accept the sum stated under a misapprehension of law and fact as to her rights in the premises; that thereafter she elected138 to rescind, and hereby consents that there be deducted from any judgment rendered in her favor against the defendant the sum of $100 so paid to her. The defendant's counsel moved the court to require the plaintiff to make the reply more definite and certain by stating whether Lindstrom's answers to the medical examiner's questions were true or false, to specify what particular acts of fraud and deceit were practiced upon Lindstrom by the medical examiner to obtain his signature to the application, and to detail what false and fraudulent representations were made by the defendant to the plaintiff with respect to the declarations uttered by Oscar F. Lindstrom to the medical examiner as to the condition of his health. This motion was denied and an exception saved. A demurrer to the reply was thereupon interposed on the ground that it did not state facts sufficient to constitute such a pleading. The demurrer was overruled, and the cause, having been tried, resulted in a verdict and judgment for $900 in favor of the plaintiff, from which the defendant appeals.

A. H. McCurtain, of Portland, and Samuel R. Stern, of Spokane, Wash. (Bauer & Greene, of Portland, on the brief), for appellant. Omar C. Spencer and Alfred A. Hampson, both of Portland, for respondent.

MOORE J. (after stating the facts as above).

The demurrer alone will be considered. In order clearly to understand that part of the reply the sufficiency of which is thus challenged, attention will be called to cases cited by plaintiff's counsel holding, in effect, that if a person, in applying for a policy of life insurance, makes truthful statements as to his health and physical condition to a medical examiner, who, without the knowledge of the applicant, fraudulently changes the answers to questions on that subject so as to make it appear the insured is a safe risk, the insurance company so represented by the physician is liable on a policy issued in consequence of the deceit of its agent. Thus in Mutual Reserve Fund Life Ass'n v. Cotter, 81 Ark. 205, 99 S.W. 67, a headnote reads:

"Where an applicant for life insurance correctly answered the questions propounded to him by the insurance company's medical examiner, but without his knowledge the examiner wrote down incorrect answers, the insurance company is estopped to take advantage of the wrong of its own agent."

In Lyon v. United Moderns, 148 Cal. 470, 83 P. 804, 4 L. R. A. (N. S.) 247, 113 Am. St. Rep. 291, 7 Ann. Cas. 672, it was ruled that the trial court properly allowed the plaintiff to prove that the insured made a true statement to the medical examiner that he had the "grippe" and a slight attack of pleurisy; and where there was no pretense that he had actual knowledge of the contents of the report, but was merely asked to sign the statement at the end thereof, the court properly instructed the jury that, if he had had the disease of pleurisy and answered "No," it would be a misrepresentation of a material fact which would avoid the policy, but that if he told the true facts to the medical examiner, and he neglected or omitted to write the answer in his report, the insured was not responsible for such omission or neglect unless he had actual knowledge that the answer had been imperfectly or incorrectly written. So, too, in Pfiester v. Missouri State Life Ins. Co., 85 Kan. 97, 116 P. 245, it was decided that an applicant for insurance, without knowledge to the contrary, may assume that the agent has prepared the application according to agreement, that the company has written the policy according to the application, and that he is not negligent in failing to examine such instruments for errors and omissions.

The part of the reply which refers to the answers alleged by the defendant to have been falsely made by the insured to questions propounded at his medical examination is as follows:

"That if said answers contained in said application * * * are in any respect false or untrue, they were inserted in said application by the duly authorized medical examiner and agent of defendant only after the full and exact truth had been communicated to him by the said Oscar F. Lindstrom, and because of fraud and deceit on the part of said medical examiner; that the said Oscar F. Lindstrom signed the written application without fraud or attempt or intent to deceive the defendant, and without collusion on his part with defendant's medical examiner."

It will thus be seen that the alterations, if any, in the answers to the medical examiner's questions, are not alleged to have been made without the knowledge of the insured. Webster's New International Dictionary defines the word "collusion" used in the reply as follows: "A secret agreement and co-operation for a fraudulent or deceitful purpose; a playing into each other's hands deceit; fraud." It is possible, therefore, that Oscar F. Lindstrom may have had full knowledge of the medical examiner's alleged scheme to defraud his principal without co-operating in any manner in such agent's deceit. The rules of practice adopted by the circuit court of the state of Oregon for Multnomah county, where this cause was tried, require a party who attacks an adversary's pleading by motion or demurrer also to give a written notice stating the specific question to be considered. ...