Metropolitan Life Ins. Co. v. Devore

• Decision Date: 10 March 1967
• Citation: 66 Cal.2d 129,56 Cal.Rptr. 881,424 P.2d 321
• Court: California Supreme Court
• Parties: , 424 P.2d 321, 30 A.L.R.3d 376 METROPOLITAN LIFE INSURANCE COMPANY, Plaintiff and Appellant, v. Josephine DEVORE, Individually and as Administratrix of the Estate of Charles Devore, Deceased, Defendant and Respondent. Josephine DEVORE, Plaintiff and Respondent, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant and Appellant. L.A. 27982. In Bank

Page 881

56 Cal.Rptr. 881

66 Cal.2d 129, 424 P.2d 321, 30 A.L.R.3d 376

METROPOLITAN LIFE INSURANCE COMPANY, Plaintiff and Appellant, v. Josephine DEVORE, Individually and as Administratrix of the Estate of Charles Devore, Deceased, Defendant and Respondent.

Josephine DEVORE, Plaintiff and Respondent, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant and Appellant.

L.A. 27982.

Supreme Court of California,

In Bank.

March 10, 1967.

Rehearing Denied April 5, 1967.

Adams, Duque & Hazeltine and James S. Cline, Los Angeles, for plaintiff and appellant and for defendant and appellant.

Pollock, Pollock & Fay, Eugene P. Fay, Edward I. Pollock and Louis P. Friedman, Los Angeles, for defendant and respondent and for plaintiff and respondent.

MOSK, Justice.

Metropolitan Life Insurance Company (hereinafter Metropolitan) brought an action to cancel or rescind a 15-year mortgage term life insurance policy issued to Charles Devore. The complaint alleged that Metropolitan's liability was conditioned on Devore's 'continued insurability' at the time the policy was delivered, that Devore was not in good health at the time of delivery and was aware of this fact, and that he had concealed material matters relating to his health in his application for insurance. Devore died after this action was filed and subsequently his widow and beneficiary of the policy, Josephine Devore, brought suit to recover death benefits. ¹ The two actions were consolidated for purposes of trial and the court, sitting without a jury, found against Metropolitan and in favor of Mrs. Devore.

On September 2, 1959, Charles Devore executed Part A of a written application for insurance. The questions in this part did not relate to his medical history. At the end of Part A, the application provided, 'The Company shall incur no liability under this application until a policy has been delivered and the full first premium specified in the policy has actually been paid to and accepted by the Company during the lifetime and continued insurability of the applicant, in which case such policy shall be deemed to have taken effect as of the date of issue as recited therein. * * *'

On September 21, 1959, Devore submitted to a medical examination by a doctor of Metropolitan's choice. During the examination, the doctor filled in Parts B and C of the application. Part B, which was signed by Devore, consisted of his answers to a series of questions relating to his medical history, and Part C was the doctor's report on the physical examination given to Devore. In Part B the following questions and answers appear:

'4. Have you ever had or been treated for or sought advice concerning * * * any disease of the blood or blood vessels? (A) No.

'5. (a) Have you ever been a patient in or visited a hospital, clinic, dispensary or sanitorium for observation, examination or treatment? (A) Yes. Appendectomy 5 yrs ago. Good Samaritan hosp. Portland, Ore, Dr. Chauncey.

'(b) Have you ever had or been advised to have a surgical operation? (A) Yes. (Same as answer to (a).)

'(c) Have you ever been advised to modify or restrict your eating, drinking or living habits because of any health condition? (A) No.

'(d) Do you have periodic physical examinations or check-ups? (A) Yes--Dr. Thorner Beverly Hills.

'(e) Have you ever had an electro-cardiogram or X-ray examination or any laboratory examinations or tests? (A) Yes. 1 yr ago. Routine exam Dr. Thorner ch. X-ray EKG neg.

'(f) Have you consulted any physician, healer or other practitioner within the past 5 years for any reason not mentioned above? (A) No.'

Devore's application was sent to Metropolitan's headquarters in San Francisco, and after an investigation Metropolitan discovered that Devore had a history of dyspepsia or indigestion in 1953 and a possible cardiospasm or pylorospasm in 1959 (a spasm of the muscles at the inlet or outlet of the stomach). Metropolitan asked Devore to report to its doctor again and at this interview on October 14, he stated that he had experienced occasional attacks of indigestion, that in 1952 he had been advised by a physician to refrain from eating fatty foods, and that the tests given at that time were negative.

On October 10, 1959, Devore went to Dr. Thorner, his own physician, for a routine physical examination. On that date Dr. Thorner took an electrocardiogram, which was found to be normal, but he requested Devore to return on October 19. Another electrocardiogram, taken on the 19th after exercise, showed an abnormality. The doctor diagnosed Devore's condition as arteriosclerotic heart disease, but did not convey this information to Devore. The evidence with regard to Devore's condition and his knowledge of it will be discussed in more detail hereinafter. Dr. Thorner suggested that Devore be admitted to the hospital 'for rest and medication to prevent trouble' and Devore entered the hospital on October 21, 1959, remaining there until he was discharged on October 26. After his discharge, he continued under Dr. Thorner's care until he died of heart disease on January 10, 1962. Witnesses for Metropolitan testified that the company would not have issued a policy if it had known about Dr. Thorner's diagnosis and treatment of Devore's heart condition.

Metropolitan approved the issuance of a policy to Devore on November 12, 1959, and issued a policy on an 'intermediate' basis, which required a higher premium than would be applicable for a man of Devore's age who was in average health. The policy was delivered to him on November 30, at which time he paid a full year's premium. He also executed a document entitled 'Application Amendment,' which stated in part:

'The undersigned hereby amends the application for Life insurance made to your Company on the date stated above--By changing the classification to Intermediate. By correctly stating the amount of insurance as $20,000. By requesting that the policy issued bear date of issue of September 1, 1959. By Answering 'No' to Question 9(b), Part B, reading: 'Have you during the past five years been associated with any person suffering from tuberculosis?' These amendments and declarations are to be considered as a part of the said application and subject to the agreements, covenants, and statements therein contained. The said application, together with these amendments, is to be considered as the basis of and as a part of the contract of insurance. The said application, as amended, is correct and true, and I hereby ratify and confirm the statements therein made as of the date hereof.' (Emphasis added.)

The first question for determination is whether the italicized portion of the application amendment should be construed to mean, as Metropolitan contends, that the answers given by Devore in the original application were true as of November 30, the date the amendment was executed, or whether the language is ambiguous and may reasonably have been understood by Devore to mean he was confirming that the answers in the original application were true when they were made in September. The trial court found in favor of the latter construction. It also found that Devore reasonably understood the language of the amendment to mean that 'Metropolitan Life Insurance Company is satisfied with and is relying upon the application of September 2, 1959, and on the basis of said application the Company is issuing a substandard Intermediate policy if the insured * * * authorizes said application to be amended so as to apply for said sub-standard policy at a higher rated premium and to include therein the other specific amendments. * * *'

Metropolitan does not seriously contend that Devore made material misrepresentations in his original application. ² It is obvious, however, that if the application speaks as of November 30, Devore's answers to several questions are false.

In urging the ambiguity of the application amendment, Mrs. Devore relies heavily on Marshall v. Metropolitan Life Ins. Co. (1950) 405 Ill. 90, 90 N.E.2d 194, in which the identical language was held to be ambiguous and to refer not to the date of the execution of the amendment, but to the date of the original application. There, in an application for insurance executed on March 3 and 4, 1944, the insured gave certain answers to questions relating to his medical history, stating, Inter alia, that he had never experienced any heart disease. On March 10, he suffered a heart attack and, prior to delivery of the policy on March 22, he was informed that he had a serious heart disorder. When the policy was delivered, the company's agent sold the insured additional insurance. No application was filled out for the second policy and, on April 4, the second policy was delivered, together with a photostatic copy of the original application and an amendment identical to the one involved here except, of course, that the substance of the matter amended was different. The insured died approximately two years thereafter, and the insurer refused to pay the benefits under either policy on the ground that the application for insurance and the amendment contained material misrepresentations.

The court held that a misrepresentation on the application for the first policy regarding consultation with a physician for a gall bladder attack was immaterial. As to the asserted misrepresentation in the application for the second policy, the insurer claimed that by signing the amendment the insured had stated that the representations made in the original application were true as of the amendment date. In reply to this argument the court stated:

'To the insured layman, the words of the amendment said that the application spoke as of its own date and also as of the date of the amendment. Alongside the application itself, the words of the amendment say, in effect, that the company is satisfied with the application of March 3, 1944, and that, on the basis of that application, the company is issuing additional insurance if...