Metropolitan Life Ins. Co. v. Goodman

• Decision Date: 12 May 1914
• Docket Number: 88
• Citation: 10 Ala.App. 446,65 So. 449
• Parties: METROPOLITAN LIFE INS. CO. v. GOODMAN.
• Court: Alabama Court of Appeals

65 So. 449

10 Ala.App. 446

METROPOLITAN LIFE INS. CO. v. GOODMAN.

No. 88

Court of Appeals of Alabama

May 12, 1914

Rehearing Denied June 3, 1914

Appeal from City Court of Montgomery; Gaston Gunter, Judge.

Action by Nancy E. Goodman against the Metropolitan Life Insurance Company, upon a policy issued upon the life of Louis M Goodman, in which she was named as beneficiary. Judgment for plaintiff, and defendant appeals. Reversed and remanded.

Steiner, Crum & Weil, of Montgomery, for appellant.

Letcher, McCord & Harold, of Montgomery, for appellee.

THOMAS J.

In the law of insurance, as established and declared by judicial decision, a warranty is a statement of the contract with reference to the conditions on which it is predicated, the truth of which is made a condition to its validity; while a representation is a statement made as an inducement to a proposed contract of insurance and collateral to it. Warranties are of two kinds, affirmative and promissory. Affirmative warranties may be express or implied, and consist of representations in the policy of the existence of some fact or state of things at or previous to the time of making the policy. Promissory warranties may also be express or implied, but they usually have respect to the happening of some future event, or the performance of some act in the future. The distinction between affirmative and promissory or executory warranties is that the former represent the existence of certain facts or condition of things at the time when the policy is effected, and the latter represent that certain things shall exist during the continuance of the policy.

An affirmative warranty is in the nature of a condition precedent, while a promissory warranty is in the nature of a condition subsequent, to the contract; and, whether affirmative or promissory, the effect of a breach thereof by the insured is to relieve the liability of the insurer, and this regardless, until the enaction of section 4572 of the Code, of whether the matters warranted be material or not to the risk, and regardless of whether the insured acted in good faith or not in making the warranty. On the other hand, in order to avoid a contract of insurance for false representations or misrepresentations not amounting to warranties, which, as seen, are a mere inducement to the making of the contract, it must appear, or be made to appear not only that the matters and things so represented are false, but also that they were material to the risk. A false representation or misrepresentation renders the policy void on the ground of fraud on the part of the applicant in procuring it, while a noncompliance with a warranty by him operates as a breach of the conditions of the contract. Quite frequently it is a difficult question, even for the courts, to determine whether a clause in a contract of insurance amounts to a warranty or only a representation. Ala. Gold Life Ins. Co. v. Johnston, 80 Ala. 467, 2 So. 125, 59 Am.Rep. 816; 16 Am. & Eng.Ency.Law (2d Ed.) p. 919 et seq.; 25 Cyc. 798 et seq., 821 et seq; 6 Am. & Eng.Ency.Law (2d Ed.) 499 et seq.; 19 Am. & Eng.Ency.Law (2d Ed.) 62 [10 Ala.App. 451] et seq. To avoid this uncertainty and confusion, and in the interest of honesty and fair dealing, and to protect unwary applicants for insurance against the artifices and schemes of designing insurance companies, the Legislature of this state, following the lead of other states, passed the statute which has become section 4572 of the present Code, and which reads as follows:

"No written or oral misrepresentation, or warranty therein made, in the negotiation of a contract or policy of life insurance, or in the application therefor or proof of loss thereunder, shall defeat or void the policy, or prevent its attaching, unless such misrepresentation is made with actual intent to deceive, or unless the matter misrepresented increase the risk of loss."

The manifest purpose, as declared by our Supreme Court, of this statute was to break down the effect upon the contract of the distinction drawn by the courts, as before pointed out, between warranties and representations, and to permit neither to avoid the policy unless made either with the actual intent to deceive, or (if not so made) unless the matter misrepresented increased the risk of loss. Empire Life Ins. Co. v. Gee, 171 Ala. 441, 55 So. 166; Mutual Life Ins. Co. v. Allen, 174 Ala. 519, 56 So. 568; State Life Ins. Co. v. Westcott, 166 Ala. 192, 52 So. 344; Mutual Life Ins. Co. v. Allen, 166 Ala. 159, 51 So. 877. The statute is to be liberally construed so as to advance the legislative intent and suppress the mischief aimed at. See cases cited in note 78 on page 807 of 25 Cyc.

In the present case the complaint counted upon a policy of life insurance and was in code form. The appellant, defendant below, pleaded thereto the general issue and a number of special pleas, each of the latter setting up that the policy sued on contained a condition to the effect that (quoting), "unless otherwise stated in the blank space below, in a waiver signed by the secretary, this policy is void if the insured, before its date, has been attended by a physician for any serious disease or complaint," and each averring that no such statement signed by the secretary, waiving said condition was in the policy or blank space below and each further averring that, before the date of the policy, the insured had been attended by a physician for a serious disease or complaint. Some of these special pleas went further and stated this serious disease or complaint, for which assured was so attended by a physician before the date of the policy, to be gonorrhea, and others stated it to be syphilis, and some, so stating, alleged that the said disease or complaint increased the risk of loss, and others failed to do so. To all that failed to so allege, the plaintiff filed a demurrer upon the ground of such failure, which the court in each instance sustained. It is conceded by the appellant, defendant below, that the action of the court was without error, provided that section 4572 of the Code, which we have before quoted, is applicable. It is contended by it, however, that the section has no application to the contract here under consideration, inasmuch as the matter set up in the pleas in attempted avoidance of the policy is, it is insisted, neither a misrepresentation nor a false warranty on the part of the insured, but a condition in the policy, which vigore propria destroys it in the event that "before its date, the insured had been attended by a physician for any serious disease or complaint." We cannot so agree. Our conclusion is that it is a warranty--in the nature of a condition, it is true, but not, technically speaking, a condition, since a technical condition (that is, one not predicated upon a warranty) must, in order to be valid as such, relate to the future and not to the past. In insurance law, the terms "warranty" and "condition" are often inaptly used as synonymous terms. Words and Phrases, vol. 2, p. 1399, subtitle Warranties; 16 Am. & Eng.Ency.Law (2d Ed.) 919; Ala. Gold Life Ins. Co. v. Johnston, 80 Ala. 471, 2 So. 125, 59 Am.Rep. 816.

A condition in the law of estates, where the term as a technical term originated, is thus defined:

"A condition is a qualification or restriction annexed to a deed or devise, by virtue of which an estate is made to vest, to be enlarged or defeated upon the happening or not happening of a particular event, or the performance or non-performance of a particular act. A condition may be *** precedent or subsequent. A condition precedent is, as the term implies, such as must happen or be performed before the estate dependent upon it can arise or be enlarged. A condition subsequent is one that, when it does or does not happen, is or is not performed, as the case may be, defeats the estate." 6 Am. & Eng.Ency.Law (2d Ed.) 500; Words and Phrases, vol. 2, p. 1400.

"In the law of contracts, a condition precedent is a condition which must be performed before the agreement of the parties becomes a valid and binding contract. A condition precedent calls for the performance of some act, or the happening of some event, after the terms of the contract have been agreed upon, before the contract shall take effect--that is to say, the contract is made in form, but does not become operative as a contract until some future specified act has been performed, or some subsequent event transpires--hence it is said a condition precedent doth get or gain the thing or estate made upon condition by the performance of it, as a condition subsequent keeps and continues the estate by the performance of the condition." Redman v. AEtna Fire Ins. Co., 49 Wis. 431, 4 N.W. 591; 2 Words and Phrases, p. 1400 et seq.

It thus appears that conditions technically such, that is, those not grounded upon warranties, must have reference to and be based on future events, acts, or states of things, that is, on something that is to occur or take place, and not on past acts, events, or states of things, or something that has occurred or taken place. On the other hand, an affirmative warranty, while in the nature of a condition--a condition precedent to the vesting of the right under the contract--is not, technically speaking, a condition, since it relates to past acts, events, or conditions of things, and consists in the assertion of a past or existing fact, upon the truth or accuracy of which the validity of the contract is made to depend. 16 Am. & Eng.Ency.Law (2d Ed.) 919. See 2 Words and Phrases, p. 1399, under subtitle Warranties; May on Insurance, vol. 1, § 156. Past or existing facts or states of things may, when unknown to both parties to the contract form the basis of a valid provision in the...