Mutual Benefit, Etc., Ass'n v. Alley

• Decision Date: 11 September 1936
• Citation: Mutual Benefit, Etc., Ass'n v. Alley, 167 Va. 144, 187 S.E. 456 (1936)
• Parties: MUTUAL BENEFIT HEALTH AND ACCIDENT ASSOCIATION v. PERRY E. ALLEY.
• Court: Virginia Supreme Court

Page 144

167 Va. 144

MUTUAL BENEFIT HEALTH AND ACCIDENT ASSOCIATION v.PERRY E. ALLEY.

Supreme Court of Virginia, Staunton.

September 11, 1936.

Present, Campbell, C.J., and Hudgins, Gregory and Eggleston, JJ.

1.ACCIDENT, CASUALTY, HEALTH AND INDUSTRIAL INSURANCE — Evidence — Admissibility — Statements in Original Application Not Incorporated in Policy — Case at Bar.— In the instant case, an action on a health and accident insurance policy, defendant, without objection from plaintiff, introduced in evidence plaintiff's original application insurance, which contained a question and answer not included in a copy of the application which was attached to plaintiff's policy.Section 4315 of the Code of 1936 provides that no statement made by the applicant for insurance, which is not incorporated in or endorsed on the policy shall avoid the policy or be used in evidence.

Held: That notwithstanding the fact that plaintiff did not object to the introduction of the original application, it was the duty to the Supreme Court of Appeals to eliminate all statements in the original application not set out in the purported copy incorporated in the policy.

2.ACCIDENT, CASUALTY, HEALTH AND INDUSTRIAL INSURANCE — Application — Liability of Assured for False Answers Written by Agent — Case at Bar.— In the instant case, an action on a health and accident insurance policy, liability was denied on the ground of the falsity of the answers to certain questions in the application.A policy of insurance held by plaintiff having lapsed he was induced to renew the insurance and signed a blank application therefor, which was filled in by the agent later.Plaintiff was asked by the agent if there had been any changes in his health, address or the like, since the old policy, to which plaintiff replied that everything was the same as in the old one.One question, which was identical in both applications, was whether plaintiff had ever received indemnity on account of any injury or illness, and was answered in the negative, although it appeared that plaintiff had received indemnities for seventeen months for ulcerated stomach.Plaintiff contended that while the answer to the question was untrue, he was not responsible therefor.

Held: That under the circumstances plaintiff could not evade responsibility for the answers written by the agent to the interrogatories in the second application.

3.ACCIDENT, CASUALTY, HEALTH AND INDUSTRIAL INSURANCE — Application — Materiality of Information as to Payment of Indemnities.— Information as to substantial payments made on account of illness or accidents is material to the risk assumed in health and accident insurance.

4.ACCIDENT, CASUALTY, HEALTH AND INDUSTRIAL INSURANCE — Avoidance of Policy — Misrepresentations — Go to Validity of Policy at Its Inception — Case at Bar.— In the instant case, an action on a health and accident insurance policy, liability was denied on the ground of the falsity of the answers to questions in the application as to whether plaintiff had ever received indemnity on account of injury or illness, or had received any medical or surgical treatment within the past five years.Plaintiff contended that there must be causal connection between the false representation and the loss, and that inasmuch as the disability for which the present action was instituted was due to an accident in which the plaintiff was badly scalded, and not to any previous condition of his health, the false representations were not material.

Held: That the health and accident divisions of the policy were inseparable; false representations of material facts in the application went to the validity of the policy at its inception, and it could not be held valid for one purpose and invalid for another.

5.ACCIDENT, CASUALTY, HEALTH AND INDUSTRIAL INSURANCE — Avoidance of Policy — Misrepresentations — Liability of Assured for False Answers Written by Agent — Case at Bar.— In the instant case, an action on a health and accident insurance policy, liability was denied on the ground of the falsity of the answers to questions in the application as to whether plaintiff had ever received indemnity on account of injury or illness, or had received any medical or surgical treatment within the past five years.The application was for renewal of a policy which had lapsed, and the agent asked plaintiff if he had received medical treatment or if there had been any changes in his health, address, or the like, since the old policy had lapsed, to which plaintiff replied that everything was the same as in the old one.Plaintiff signed a blank application which the agent filled in later.

Held: That although the agent wrote the answers to the questions in the application without reading the same to plaintiff, under the circumstances plaintiff was responsible for the statements therein contained, and his was sufficient to avoid the contract of insurance.

Error to a judgment of the Law and Chancery Court of the city of Roanoke.Hon. Beverley Berkeley, judge presiding.Judgment for plaintiff.Defendant assigns error.

The opinion states the case.

Apperson, Rush & Gentry, for the plaintiff in error.

John G. Challice and Charles B. Satchwell, for the defendant in error.

HUDGINS, J., delivered the opinion of the court.

Plaintiff, an engineer on the Norfolk & Western Railway, on August 29, 1931, applied for and received a health and accident insurance policy issued by defendant.He paid, in quarterly instalments, the premiums due on this policy until January, 1934.After the policy had lapsed, because of nonpayment of premiums, he was induced to renew the insurance, and on April 18, 1934, on request of the local agent for defedant, he signed a blank application for the same or a similar policy.The agent wrote the answers to the questions in the application, and on April 23, 1934, a new policy was issued and delivered to plaintiff.

On May 20, 1934, plaintiff was badly injured by the derailment of an engine on which he was then working as a fireman.In due course he filed his claim for the payments provided in the policy.The claim was rejected, and this action instituted on the contract of insurance, which resulted in plaintiff's obtaining a verdict and judgment for $933.To that judgment defendant sought and obtained this writ of error.

The main defense relied upon to defeat recovery is based upon the falsity of the answers to certain questions set forth in the application for the insurance.

Before discussing the case on its merits we deem it advisable to dispose of a preliminary question not alluded to in the briefs.The photostatic copy of the insurance policy contains what purports to be a copy of the application.During cross-examination of plaintiff, defendant introduced the original application dated April 18, 1934, containing the signature of the applicant.Question 12, and the answer thereto, in the original application is as follows: "Have you ever had any of the following diseases: Rheumatism, neuritis, arthritis, sciatica, epilepsy, appendicitis, diabetes, any kidney trouble, cystitis, any disease of the brain or nervous system, heart disease, tuberculosis, bronchitis, gall bladder trouble, any stomach trouble, any intestinal trouble, cancer, syphilis, high or low blood pressure, tonsilitis, rectal trouble, malaria?Name diseases, dates and length of disability.NO."

No such question or answer is found in the purported copy of the application attached to the policy.Plaintiff made no objection to the introduction of the original application as evidence, either in the trial court, or in this court.Defendant, for another purpose, invoked the provisions of Code, section 4315, which among other things provides that in the class of insurance contracts now under consideration, "no statement made by the applicant for insurance, which is not incorporated in or endorsed on the policy issued to such applicant shall avoid the policy or be used in evidence, and no provision of the charter, constitution or by-laws shall be used in defense of any claims arising under any such policy unless such provisions are incorporated in full in the policy."(Italics supplied.)

Notwithstanding the fact that plaintiff did not object to the introduction of the original application, it is our duty, in the light of the above quoted legislative mandate, to eliminate all statements in the original application not set out in the purported copy incorporated in the policy.In so holding we will consider, as a part of the evidence, all statements made in the original application which are set forth in the purported copy incorporated in the policy, without considering or determining the effect, if any, of defendant's failure to incorporate in the policy an exact copy of the original application.This elimination restricts our consideration to the following questions and answers:

"10.Have you ever made claim for or received indemnity on account of any injury or illness?If so, what companies, dates, amounts and causes?No.

"13.Have you received medical or surgical treatment or had any local or constitutional disease not mentioned above, within the last five years?Answer as to each.No.

"Do you hereby apply to the MUTUAL BENEFIT HEALTH & ACCIDENT ASSOCIATION for a policy to be based upon the foregoing statements of facts and do you understand and agree that the falsity of any statement in this application shall bar the right to recover if such false statement is made with intent to deceive or materially affects either the acceptance of the risk or the hazard assumed by the Association, and do you agree to notify the Association promptly of any change in your occupation, or earnings, or if you take additional insurance, and do you hereby authorize any physician or other person who has attended or may attend you to disclose any information thus acquired?Yes."

Both parties concede that the local agent for defendant obtained plai...