Monahan v. Mutual Life Ins. Co.

• Decision Date: 15 February 1906
• Citation: 63 A. 211,103 Md. 145
• Parties: MONAHAN v. MUTUAL LIFE INS. CO. OF BALTIMORE.
• Court: Maryland Court of Appeals

63 A. 211

103 Md. 145

MONAHAN v. MUTUAL LIFE INS. CO. OF BALTIMORE.

Court of Appeals of Maryland

February 15, 1906

Appeal from Superior Court of Baltimore City; Henry Stockbridge Judge.

Action by Mary B. Monahan against the Mutual Life Insurance Company of Baltimore. From a judgment in favor of defendant plaintiff appeals. Reversed.

Argued before McSHERRY, C.J., and BRISCOE, BOYD, PAGE, SCHMUCKER PEARCE, and JONES, JJ.

Edwin H. Brownley, for appellant.

Paul M Burnett, for appellee.

McSHERRY C.J.

This is an appeal from the superior court of Baltimore city. Suit was brought by the appellant against the appellee to recover the amount payable by the latter under an insurance policy issued by it on the life of one Mary J. Marian in favor of her daughter, the appellant on this record. The Mutual Life Insurance Company of Baltimore issues industrial insurance policies. On December 3, 1904, it wrote the policy which constitutes the cause of action in this case. The policy provides that "in consideration of the application for this policy and of the several statements and representations made therein, all of which are hereby made warranties and are hereby made a part of this contract," and in consideration of certain weekly payments and the performance of other conditions, the company will pay to the beneficiary, upon due proof of the death of the insured, a sum of money stipulated in a schedule annexed to the policy and marked "amount of insurance." By the fourth of the restrictions and conditions contained in or upon the policy it is declared: "This policy shall be void if *** there is in force upon the life of the insured a policy previously issued by this company, unless the policy first issued contains an indorsement signed by the president or secretary, authorizing this policy to be in force at the same time." The tenth condition states that "agents (which term includes superintendents and assistant superintendents) are not authorized to make, alter, or discharge contracts, or waive forfeitures," etc. The application signed by the appellant, Mary B. Monahan, contains this stipulation: "The undersigned hereby declares and warrants that the answers made below are strictly true; that they shall form the basis and become part of the contract of insurance; that any untrue answer will render the policy null and void," etc. The fifteenth question propounded to the beneficiary, and to which the above-quoted stipulation relates, was as follows: "(15) Is life proposed now insured in this company? If so, state numbers and amounts of policies." And the answer given by the appellant was: "No." The appellant paid the weekly premiums until the death of her mother in September, 1905. She then made out in due form the proofs of death in compliance with the terms of the policy and delivered them to the company. When she asked the company to pay the amount to which she was entitled under the policy, she was informed for the first time of the now conceded fact that a prior policy had been issued on the life of her mother in 1899 in favor of the appellant's sister, and that there had not been indorsed on that policy a permission for the second policy to be issued. It is not pretended that the negative answer given by the appellant to the fifteenth question was knowingly false. No question arises on the pleadings, and the only propositions presented for consideration by this court are those which the rejected prayers of the appellant and the granted prayer of the appellee contain. Under an instruction given at the instance of the appellee company the trial court ruled that the policy sued on was void because the first policy had not had written upon it an indorsement authorizing the second policy to be in force at the same time; and accordingly a verdict and judgment were entered in favor of the company. Hence this appeal.

Two grounds of defense were relied on below by the insurance company, viz.: That the statements contained in the application signed by the appellant were warranties, and as the reply to the fifteenth interrogatory was in point of fact untrue, though innocently made and though believed to be true when made, the policy was, in consequence of the inaccuracy of that reply, rendered nugatory and inoperative; and, secondly, that under the terms of the fourth condition or restriction the failure to have indorsed upon the first policy an authorization for the second one to be in force at the same time caused the policy sued on (the second one in date) to be void from the beginning. In answer to and in avoidance of those contentions, as respectively asserted in the appellee's first and second prayers, the appellant maintained by its third prayer, which was granted, that the statement made in the application was simply a representation and not a warranty; and by her first and second prayers, which were rejected, she asserted that the company was estopped to deny its liability on the second policy, and that its acceptance of the weekly premiums constituted a waiver of the cause of forfeiture relied on under the fourth condition.

There is a broad and material distinction between a warranty and a representation. A representation is not a part of the contract, but is collateral thereto, while a warranty is a part of the contract. In consequence of this, while the falsity of a representation is not a ground for avoiding the contract unless material to the risk, a warranty as to any fact will preclude any inquiry as to the materiality of that fact. 16 Am. & Eng. Ency. L. 932. The legislation of many of the states, including Maryland, has modified the harsh rule respecting warranties in this class of contracts, and has swept away a group of merely technical objections to a recovery on life insurance policies. (Md. Gas. Co. v. Gehrmann, 96 Md. 648, 54 A. 678), by declaring that, "whenever the application for a policy of life insurance contains a clause of warranty of the truth of the answers therein contained, no misrepresentation or untrue statement in such application, made in good faith by the applicant, shall effect a forfeiture or be a ground of defense in any suit brought upon any policy of insurance issued upon the faith of such application, unless such misrepresentation or untrue statement relate to some matter material to the risk." Section 196, art. 23, Code Pub. Gen. Laws 1904. What is a matter material to the risk is ordinarily and generally for the jury to determine. In the case now before us the court below ruled, in granting the appellant's third prayer, that the statement contained in the application and relied on by the appellee to defeat a recovery was not a warranty, but a mere representation; and, as no appeal was taken from the ruling, it is not before us for review and finally settles the law of the case on this ground of defense.

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