Metropolitan Life Ins. Co. v. Becraft

• Decision Date: 15 February 1938
• Docket Number: 27001.
• Citation: 12 N.E.2d 952,213 Ind. 378
• Parties: METROPOLITAN LIFE INS. CO. v. BECRAFT.
• Court: Indiana Supreme Court

12 N.E.2d 952

213 Ind. 378

METROPOLITAN LIFE INS. CO. v. BECRAFT.

No. 27001.

Supreme Court of Indiana

February 15, 1938

Appeal from Howard Circuit Court; Joseph C. Herron, Judge.

McClure & Shenk, of Kokomo, for appellant.

Overson & Manning, of Kokomo, for appellee.

FANSLER Judge.

The appellee, the beneficiary of an insurance policy, brought this action to recover against the appellant on a $1,000 policy issued upon the life of John H. Becraft. The insured died within two years of the issuance of the policy and within the contestable period. The appellant answered that the policy was void by reason of certain misrepresentations in the application with reference to the health of the insured. It is alleged in this answer that the insured stated in his application that he had never suffered from any ailment of the heart or lungs; that he had never consulted a physician for any ailment or disease not included in his answers; that the only ailments he referred to in the application were an attack of influenza in 1931, and an automobile accident in 1917 resulting in the loss of a limb. He answered that he had not consulted or been treated by any physician within five years other than those named in the application. It is alleged that these answers were false that, at the time of making the application, and for a number of years prior thereto, the applicant suffered from attacks of chronic bronchial asthma, a disease of the lungs, and from chronic myocarditis, a disease of the heart; that he had in fact consulted a physician a number of times for the treatment of the lung and heart diseases; and that he had consulted and been treated by a physician on numerous occasions within five years prior to the making of the application, contrary to the representations therein; that the facts misrepresented were material to the risk; that the defendant was ignorant of the facts, and relied upon the representations and was induced thereby to issue the policy that, after the death of the insured, it was discovered that the representations were false, and defendant tendered back the premiums, which were not accepted. The appellant brought the premiums into court. There was a trial, and judgment for appellee.

The court gave instructions tendered by the appellee, setting out the pleadings and advising the jury that the burden was upon the plaintiff to prove the material allegations of the complaint, and upon the defendant to prove the material allegations of the affirmative answer. The jury was then instructed as follows:

'The court instructs the Jury that it is provided by Statute of the State of Indiana, as follows:

"That all statements made by the insured in the application shall, in the absence of fraud, be deemed representations and not warranties."

'Fraud is seldom, if ever, presumed, the presumption being that a man acts honestly.

'In this connection I instruct you that the burden is upon the defendant to prove fraud as against the applicant for insurance, John Harrison Becraft, by a fair preponderance of the evidence before it is entitled to recover on this issue.'

The court, on its own motion, gave the following instruction:

'The defendant in this case defends on the theory that John Harrison Becraft in his application for the insurance made false statements and concealed material facts, and that the representations made in Becraft's application were false.

'You are instructed that the burden of showing that these representations and concealment of material facts were false is on the defendant and you are further instructed that fraud must be shown even if the representations were false, and you are further instructed that you must find that the representations were material and affected the hazard of the risk on the part of the defendant. You are the sole judges of the facts that would constitute fraud of the insured. You are also the sole judges as to whether or not the representations concealment made by the insured, if they were false, were representations material to the risk. If you find that the representations and concealment made by Becraft were false and if you further find that Becraft practiced no fraud in making the representations, or if you further find that the representations that were false were not material to the risk, and if you further find that the plaintiff has proved each and all of the material allegations of her complaint then your verdict should be for the plaintiff.'

The appellant tendered the following instructions, which were refused:

'You are instructed that this is a civil action based on an insurance policy. That the insurance policy and application therefor constitutes the contract which is construed the same as a contract between two individuals. If one party to the contract makes a false statement as to facts material to the contract and thereby induces the other to agree to terms which it might not otherwise have assented to, the party deceived cannot be held on the contract. If John Harrison Becraft made false statements in his application for a policy of insurance and that false statement was of a material fact or facts, the insurance company cannot be held and your verdict should be for the defendant.'

'I instruct you that misrepresentations or false statements in an application for insurance respecting a fact material to the risk voids the policy and that this is true whether or not the misrepresentation was made innocently or designedly.'

The instructions tendered by the appellant, and refused, correctly state the law. The instructions given, and above set out, to the effect that the defendant was required to prove actual fraud, that is to say, a fraudulent intention upon the part of the applicant, are erroneous. The court seems to have misapprehended the effect of the statute, Burns' Ann.St.1933,§ 39-801, cl. 5, section 9723, Baldwin's Ind.St.1934, which provides: 'That all statements made by the insured in the application shall, in the absence of fraud, be deemed representations and not warranties.' Under the statute in question, actual fraud is only material in determining whether the statements are to be treated as representations or warranties. Where statements in a policy, which, according to the terms of the policy, are to be treated as warranties, are false, the policy will be avoided if the statements were made fraudulently, irrespective of their materiality. But, if statements in the nature of warranties are false, and there is no showing of fraud, they will only avoid the policy if material. The statute does not make, or attempt to make, any change in the rule respecting representations that do not amount to warranties. False representations, concerning a material fact, which mislead, will avoid an insurance contract, like any other contract, regardless of whether the misrepresentation was innocently made or made with a fraudulent design. New York Life Insurance Co. v. Kuhlenschmidt, Ind.Sup., 1937, 11 N.E.2d 673.

The appellant made no contention that the statements were warranties, and therefore no question of fraudulent intent or actual fraud is involved. The appellant contended only that the answers were false and...