Livingston v. Union Cent. Life Ins. Co. of Cincinnati, Ohio

• Decision Date: 20 May 1922
• Docket Number: 10727.
• Parties: LIVINGSTON v. UNION CENT. LIFE INS. CO. OF CINCINNATI, OHIO.
• Court: South Carolina Supreme Court

112 S.E. 547

120 S.C. 93

LIVINGSTON v. UNION CENT. LIFE INS. CO. OF CINCINNATI, OHIO.

No. 10727.

Supreme Court of South Carolina

May 20, 1922

Appeal from Richland County Court; M. S. Whaley, Judge.

Action by Mrs. Mattie Caldwell Livingston against the Union Central Life Insurance Company of Cincinnati, Ohio. Judgment for plaintiff on directed verdict, and defendant appeals. Affirmed.

Marion J., dissenting in part.

Cothran J., dissenting.

R. B Herbert, of Columbia, for appellant.

Lyles & Lyles, of Columbia, for respondent.

WATTS J.

This is an appeal from a directed verdict in favor of plaintiff by the trial judge, county court, Judge Whaley. His honor directed a verdict on the ground of materiality, ruling that the evidence upon this trial differed merely in quantity and not in quality of character from that before the Supreme Court then, the opinion in which has since been filed. Livingston v. Insurance Co., 115 S.C. 128, 104 S.E. 538. The exceptions are four in number, and respondent served notice that she would ask that the verdict be sustained on three additional grounds.

Counsel for appellant admitted on the record during the trial that he did not allege or charge in the evidence that Livingston was guilty of fraud. This was an admission that Livingston did not know, and was not conscious at the time he made the answers, that his answers were false in fact. In the court's ruling he eliminated any charge of fraud. The record expressly admitted that Livingston, in making answers, was not conscious of any falsity. Even if he had answered, as appellant now contends that he should have answered, and the appellant had written the doctors, the appellant would not have received any further information that would have helped it, as an examination of the testimony of Drs. Gibbes, Taylor, and McIntosh will disclose. Livingston was examined at the request of his wife, and did not himself consult a physician.

His honor could not have done otherwise under the case of Livingston v. Union Central Life Insurance Co., 115 S.C. 128, 104 S.E. 538, than direct a verdict. He was correct in holding that the evidence in the case on the question of materiality differed only in quantity not in quality of character, and, under the opinion by Mr. Justice Gage, in the other case, the court would stultify itself not to overrule the exceptions and affirm the judgment. There is no evidence that Livingston himself at any time consulted any physician.

Judgment affirmed.

GARY, C.J. and FRASER, J., concur.

COTHRAN, J., dissents.

FRASER, J.

I concur with Mr. Justice WATTS.

It seems to me that the plain meaning of the statement in the application, which is made a part of the policy, is that fraud alone should avoid the policy and there is no claim that either in allegation or proof is there a claim of fraud. The only thing to do therefore was to direct a verdict for the plaintiff.

MARION J. (concurring).

Action was brought by the plaintiff as the beneficiary of a policy of insurance issued by defendant company, March 26, 1918, for $1,000, on the life of her husband, John F. Livingston, who died February 23, 1919. The appeal is from judgment of the Richland county court, upon verdict for the plaintiff directed by the trial judge.

The defense set up in the answer was that the policy was invalid and void, in that the application of the insured, forming a part of the policy contract, contained false answers to certain inquiries. But, as conceded by the appellant, "although it was charged that the answers were false and were misrepresentations of material facts, the defendant did not allege fraud or attempt to prove fraud."

The term "fraud," as used in that connection by appellant and as it will be used throughout this opinion, is understood to mean actual fraud, importing bad faith and conscious deceit, as distinguished from constructive or legal fraud. The plaintiff moved the court to direct a verdict in favor of the plaintiff upon three grounds, which will be stated and considered in the following order; First, because the erroneous answers, alleged to be material misrepresentations, were not material; second, because there is no allegation or evidence of fraud on the part of the insured in making alleged erroneous answers in the application and that in the absence of fraud such alleged misrepresentations constitute no defense; and, third, that the defendant company did not elect to rescind or tender the premium within a reasonable time.

The trial judge based the direction of verdict upon the first ground, expressly predicating his conclusion upon the decision of this court in Livingston v. Insurance Company, 115 S.C. 128, 104 S.E. 538, which was an action between the same parties involving a similar contract. In that case this court said:

"But we are satisfied that there is no testimony tending reasonably to prove that the instant answer was material to the risk, and that a verdict ought to have been directed for the plaintiff."

As to the testimony upon the issue of materiality, the court further says:

"The only testimony thereabout is that of the medical director, Dr. Muhlberg. He testified: 'If any applicant states that he has consulted a physician within five years, our practice is to find out why he consulted a physician.' That is all."

In the case at bar the additional testimony directed to this issue, as developed by the examination of defendant's witnesses, Dr. M. B. Heyward, Dr. William O. Pauli, Dr. William Muhlberg, and Mr. F. G. Query, tended to establish that, if insured's answer to a particular interrogatory in the application had been true and not false, an investigation would have been undertaken which would have led to a rejection of the applicant for insurance. The testimony referred to is fully reviewed and analyzed in the dissenting opinion of Mr. Justice Cothran. That testimony differs both in quantity and quality from that produced in the other case of Livingston v. Insurance Co., supra. The decision in that case, therefore, does not control the determination of the question here presented. I am clearly of the opinion that the testimony directed to the issue of the materiality of the alleged false representation was sufficient, in the case at bar, to warrant the submission of that issue to the jury.

Respondent, having served due notice of intention to ask that the judgment be affirmed upon the additional grounds urged in support of the motion to direct a verdict in the court below, it becomes necessary to pass upon the contentions thus made. The second ground upon which that motion was based squarely presents the question whether the defendant is entitled to avoid the policy by reason of a material misrepresentation on the part of the insured, constituting a part of the contract, in the absence of actual fraud.

The first consideration is a clear understanding and sound construction of the terms of the contract itself. At the foot of the application the insured signed the following certificate:

"I hereby declare that my answers to the questions in part I and part II, which together constitute my application to the Union Central Life Insurance Company for life insurance are complete and true, and I agree that they shall form a part of the contract issued by the said company on my life."

Part II of the application, containing report of the medical examiner, Dr. Heyward, was in the handwriting of Dr. Heyward, the signature only being that of the applicant, Mr. Livingston. The application contained a large number of questions with numerous subdivisions. Question 26 made inquiry as to whether the applicant had ever had symptoms of almost every disease that "flesh is heir to." Question 27 was: "Have you had any illness or have you consulted any physician in the last 5 years? Answer Yes or No." To this question the applicant answered, "No." In case the answer was "Yes" the applicant was asked to specify the illness, giving the month, year, duration, result, and the physician's name and address. It is upon the answer of the applicant to question 27, that defendant contests the validity of the policy. Section 20 of the contract is as follows:

"This policy, together with application, a copy of which is indorsed hereon or attached hereto shall constitute and contain the insurance contract. All statements shall, in the absence of fraud, be deemed representations and not warranties. No such statement shall avoid this policy or be used in defense of a claim thereunder, unless it is contained in the written application, and unless a copy of such application is indorsed or attached to the policy when issued."

It thus appears, by the express terms of section 20 of the contract quoted, that "all statements, shall, in the absence of fraud, be deemed representations and not warranties." The clear intendment of this provision was to make any statement contained in the application a mere representation and not a warranty, if there was no fraud. With fraud, a warranty; without fraud, a representation. Applicant was thus expressly invited to enter upon this contract with the assurance that no statement made by him should be deemed a "warranty" in the absence of fraud. It is significant that even his certificate, to the effect that the answers given "are complete and true," does not in terms "warrant" or guarantee the completeness and truth thereof. In conformity with the provisions of section 20 of the contract, the language used is: "I hereby declare." Since, in the law of insurance, all statements which are not express warranties are representations, the only possible effect of this provision would be to convert a representation fraudulently made into a technical warranty entitling the insurer to avoid...