Mutual Ben. Health & Acc. Ass'n of Omaha, Neb., v. Bell

• Decision Date: 26 March 1934
• Docket Number: 23516.
• Citation: 176 S.E. 124,49 Ga.App. 640
• Parties: MUTUAL BEN. HEALTH & ACCIDENT ASS'N OF OMAHA, NEB., v. BELL.
• Court: Georgia Court of Appeals

176 S.E. 124

49 Ga.App. 640

MUTUAL BEN. HEALTH & ACCIDENT ASS'N OF OMAHA, NEB., v. BELL.

No. 23516.

Court of Appeals of Georgia, Second Division

March 26, 1934

Rehearing Granted June 25, 1934.

Judgment Adhered to after Rehearing Sept. 19, 1934.

Syllabus by the Court.

The verdict in the plaintiff's favor was amply authorized by the evidence, and none of the special grounds of the defendant's motion for new trial show any reversible error of law. The court below did not err in overruling the motion for a new trial.

Error from Superior Court, Bibb County; Louis L. Brown, Judge.

Suit by W. F. Bell against the Mutual Benefit Health & Accident Association of Omaha, Neb. Judgment for plaintiff defendant's motion for a new trial was overruled, and defendant brings error.

Affirmed.

Harris Russell, Popper & Weaver, of Macon, for plaintiff in error.

Miller & Lowrey, of Macon, for defendant in error.

SUTTON Judge.

Plaintiff made application to the defendant insurance company for a policy of health and accident insurance, which was issued to him; the application being attached to and made a part of the policy. Thereafter plaintiff became totally disabled as a result of diabetes. His demand upon the insurer for payment under the policy was refused, and he brought suit on the policy. The defendant contended that the policy was void because the plaintiff had, in answer to a question propounded in the application, failed to disclose that he had other health and accident insurance, and had failed to disclose that he had been treated by a physician prior to his application for this insurance. The trial resulted in a verdict for the insured for the full amount sued for, with 25 per cent. damages and attorney's fees, as provided by section 2549 of the Civil Code (1910). The defendant moved for a new trial, the motion was overruled, and to this judgment it excepted.

1. It is insisted by counsel for the insurance company that the trial court erred in permitting plaintiff, the insured in a policy of health and accident insurance, to testify that, in answering the question propounded to him in the application for the policy as to whether he had other health and accident insurance, that he had a policy of health and accident insurance with the Gem City Life & Accident Insurance Company, without disclosing to the insurance company that he also had at that time two policies of life insurance, each containing a total disability clause, he did not consider these two policies of life insurance, with total disability clauses, health and accident insurance, and therefore did not inform the insurer thereof in the answer to said question; this testimony being objected to upon the ground that such failure on the part of the plaintiff to disclose, in his answer to this question, that he had such two policies of life insurance, with total disability clauses, constituted a material variation from the truth as avoided the policy of insurance sued on, in that such failure to supply in full the information sought by this question in the application was such a variation from the truth as to change the nature, extent, or character of the risk, and that the same voided the policy regardless of whether the answer was made in good faith, without knowledge of its untruth or not. The application for insurance in this case was attached to and made a part of the contract of insurance. In other words, the insurance company contends that the question of good faith or motive does not enter into the question at all; but that, where an applicant for insurance fails to state a material fact in his application, which is made a part of the policy, such omission voids the policy, if the fact omitted is material to the risk, whether the failure to state the same is willful and fraudulent or in good faith, by reason of an oversight or of mistaken judgment as to its materiality.

At the outset it is well to note that prior to the Act of August 17, 1906, the answers to material questions in the application for insurance were considered as covenants and warranties on the part of the applicant. Southern Life Ins. Co. v. Wilkinson, 53 Ga. 535, 550 (10). However, this act, now embodied in section 2471 of the Civil Code of 1910, is in the nature of the statute of frauds, and was designed for the protection of persons insuring their lives or property. The portion of this statute pertinent for our consideration is as follows: "All life * * * insurance policies issued upon the life * * * of persons within this State * * * which contain any reference to the application for insurance * * * shall contain, or have attached to said policy, a correct copy of said application signed by the applicant * * * and unless so attached * * * such application" shall not "be considered a part of the policy or contract between such parties." Civil Code 1910, § 2471. Under this section the application on which an insurance policy is based is not to be considered as a part of the insurance contract, unless a copy of the application is attached to or accompanies the policy; and this is true though it be sought by the express terms of the policy itself to make such unattached application a part of the agreement. Bankers' Health & Life Ins. Co. v. Murray, 22 Ga.App. 495, 96 S.E. 347; Wilkins v. National Life & Acc. Ins. Co., 23 Ga.App. 191, 97 S.E. 879; Interstate Life & Acc. Co. v. Bess, 35 Ga.App. 723, 134 S.E. 804, and citations; Couch v. National Life & Acc. Ins. Co., 34 Ga.App. 543, 130 S.E. 596; Ætna Ins. Co. v. Foster, 43 Ga.App. 662, 159 S.E. 882; Johnson v. American Nat. Life Ins. Co., 134 Ga. 800, 68 S.E. 731. Therefore statements made in the application are not to be treated as warranties or covenants, on account of the failure or falsity of which the policy may be avoided, unless a copy of the application is attached to the policy or accompanies it, though representations contained in the application, if fraudulently made, may give to the insurance company the right to avoid the policy. Thus it has been held that, while it is true that the representations as made in such an unattached application cannot be treated as part of the contract, and are not to be taken as covenants or warranties, still, if such statements furnished the actual basis on which the policy was issued, and they were not only false but were also fraudulently made by the applicant acting for himself, the insurer may set up such facts as a means of avoiding the policy, not under and by virtue of the terms of the contract, but for the reason that the insurance is thus shown to have been fraudulently procured. Bankers' Health & Life Ins. Co. v. Murray, supra; Wilkins v. National Life & Acc. Ins. Co., supra; Life Ins. Co. v. Pate, 23 Ga.App. 232, 97 S.E. 874. The effect of noncompliance with the above section of the Code upon the part of the insurance company is that the application shall not be considered a part of the insurance contract. Southern Life Ins. Co. v. Logan, 9 Ga.App. 503, 71 S.E. 742; Southern Life Ins. Co. v. Hill, 8 Ga.App. 857, 70 S.E. 186.

We will consider first the effect of an actual misrepresentation made by the assured, in answer to a question propounded to him in the application for the insurance, as to a matter material to the risk, where the application is attached to and made a part of the policy of insurance sued on. In the early case of Southern Life Ins. Co. v. Wilkinson, 53 Ga. 535 (10), it was ruled that applications for insurance, under the provisions of our Code "must not only be made in the utmost good faith, but the representations contained therein are covenanted to be true by the applicant. Not that they are warranties so as to vacate the policy, if any of them whether material or not, are not true; but any variation in them from what is true, whereby the nature or extent or character of the risk is changed, will, if the policy makes them the basis of the contract of assurance, void the policy, whether they are or are not wilfully and fraudulently made." The sections of the Code considered in the decision of the above case and of the cases hereinafter referred to are as follows: "Every application for insurance must be made in the utmost good faith, and the representations contained in such application are considered as covenanted to be true by the applicant. Any variation by which the nature, or extent, or character of the risk is changed will void the policy." Civil Code 1910, § 2479. "Any verbal or written representations of facts by the assured to induce the acceptance of the risk, if material, must be true, or the policy is void. If, however, the party has no knowledge, but states on the representation of others, bona fide, and so informs the insurer, the falsity of the information does not void the policy." Civil Code 1910, § 2480. The principle ruled in the case cited from 53 Ga., supra, which was but an application of the two Code sections above quoted, was applied in Mobile Fire Dept. Ins. Co. v. Coleman, 58 Ga. 251, Phenix Ins. Co. v. Fulton, 80 Ga. 224, 4 S.E. 866, Morris v. Imperial Ins. Co., 106 Ga. 461, 32 S.E. 595, and Northwestern Life Insurance Co. v. Montgomery, 116 Ga. 805, 43 S.E. 79. The principal case on this subject was probably Supreme Conclave Knights of Damon v. Wood, 120 Ga. 328, 47 S.E. 940, where it was held that, "Where an applicant for life insurance covenants in his application that the statements made to the medical examiner are true, and these statements are made a part of the contract of insurance and form the basis of such contract, any variation in any of them which is material, whereby the nature or extent or character of the risk is changed, will avoid the policy, whether the statement was made in good faith or willfully or fraudulently." In ...