Metro. Life Ins. Co. v. Alvarez.

• Decision Date: 11 February 1943
• Docket Number: 139/67.
• Citation: 30 A.2d 297
• Parties: METROPOLITAN LIFE INS. CO. v. ALVAREZ.
• Court: New Jersey Court of Chancery

30 A.2d 297

METROPOLITAN LIFE INS. CO.

v.ALVAREZ.

139/67.

Court of Chancery of New Jersey.

Feb. 11, 1943.

Suit by the Metropolitan Life Insurance Company against Ruth Alvarez to rescind a life insurance policy and to restrain an action at law thereon, on ground that policy was issued through fraudulent statements in insured's application.

Decree for complainant.

1. An applicant for insurance is, in the absence of fraud practiced upon him, conclusively presumed to have read the application which he signs and is thereby bound by it.

2. The insured in accepting the policy with the annexed application containing the misrepresentations adopted and ratified the misstatements contained therein and they are binding upon him and his beneficiary.

3. Although there is no causal relationship between the insured's misrepresentations and the cause of his death, the detachment will not affect the complainant's right to relief.

McCarter, English & Egner, of Newark, for complainant.

Jack Geddy Goldberg, of Jersey City, for defendant.

EGAN, Vice Chancellor.

The complainant issued a policy of insurance for $1,000 (Exhibit C-1) on the life of S. Joseph Alvarez, the defendant's husband, on a written application signed by him on September 19th and September 30th in the year 1938 (Exhibit C-2). The insured died July 3, 1940, from a malignant hypertension renal involvement (Exhibit C-3).

The complainant seeks to rescind the policy and to restrain an action at law thereon, alleging that it was issued through false statements in the insured's application. Its claim for relief is based on equitable fraud. Prudential Ins. Co. v. Cafiero, 126 N.J.Eq. 33, 7 A.2d 882; Metropolitan Life Ins. Co. v. Babb, 128 N.J.Eq. 391, 16 A.2d 548.

In his application the insured denied medical history or consultation with physicians over or during the period indicated therein. The evidence shows the falsity thereof.

In January, 1940, the insured was a patient in the Jersey City Medical Center. He was then and there questioned and examined by Dr. William A. Lee, who obtained from him a medical history. He told the doctor that for two years previously he had had severse headaches; and that in the summer of 1938 he had swollen ankles while on a vacation at the seashore, for which he sought medical aid or advice (Exhibit C-4). Dr. Street testified that the insured had consulted him in August, 1938, complaining of pains in his joints and of swollen ankles. Dr. Street diagnosed his ailment as a mild rheumatic condition.

The defendant testified that the insured in the summer of 1938, while on vacation at the seashore, consulted Dr. Feeman of Keansburg for an infected toe; and that upon his return home from his vacation he visited Dr. Street for treatment for the infected toe and for swollen ankles.

In his application the insured stated in answer to question 17, which called for the name and address of his usual medical attendant, that he had ‘none’. There is evidence that in 1934 the insured had severe headaches for which he consulted a local physician and received treatment (Exhibit C-5); and when he was of the age of fifteen years he had a tonsillectomy operation. He also had an attack of pleurisy when he was the approximate age of twenty-seven years (Exhibit C-4). He was born in the year 1902.

Although there is no causal relationship between the insured's misrepresentations and the cause of his death, the detachment will not affect the complainant's right to relief. In Metropolitan Life Ins. Co. v. Coddington, 131 N.J.Eq. 430, 26 A.2d 41, 45, Vice Chancellor Lewis said that ‘it is now well settled that the mere absence of a causal relationship between the insured's misrepresentations as to a material fact and the cause of his death will not defeat the insurer's right to a rescission or cancellation of its policy of life insurance obtained as a result of said misrepresentation.’

The defendant's contention is that there are no misrepresentations in the policy; that the insured did not know or believe that his answers were false, and therefore the complaint should be dismissed.

It is clear that the insured in his application made representations that were untrue; and, concededly, he may have had no thought or intention to deceive threrby. His misstatements nevertheless constitute equitable fraud, which is a complete defense to the beneficiary's right to recover against the insurer. Prudential Ins. Co. v. Cafiero supra; Ettelson v. Metropolitan Life Ins. Co., D.C., 42 F.Supp. 488; Metropolitan Life Ins. Co. v. Tarnowski, 130 N.J.Eq. 1, 20 A.2d 421, 423.

In the last cited case the Court of Errors and Appeals held: ‘Whatever the rule be in other jurisdictions, it is embedded in our jurisprudence that, while a mere misrepresentation devoid of intent to deceive will not sustain an action in deceit at law, in equity ‘an untruthful representation of a material fact, though there be no moral delinquency, is deemed...