Mutual Life Ins. Co. of New York v. Powell

• Decision Date: 05 October 1914
• Docket Number: 2549.
• Parties: MUTUAL LIFE INS. CO. OF NEW YORK v. POWELL.
• Court: U.S. Court of Appeals — Fifth Circuit

217 F. 565

MUTUAL LIFE INS. CO. OF NEW YORK v. POWELL.

No. 2549.

United States Court of Appeals, Fifth Circuit.

October 5, 1914

James H. Gilbert, of Atlanta, Ga., and William H. Fleming, of Augusta, Ga., for plaintiff in error.

James N. Talley, of Macon, Ga., and John T. West, of Thomson, Ga for defendant in error.

Before PARDEE and SHELBY, Circuit Judges, and FOSTER, District Judge.

FOSTER District Judge.

This is an action on a policy of life insurance, brought by W. C Powell, as administrator of the estate of his deceased wife M. Emma Powell. The defendant admitted the issuance of the policy sued on and the receipt of the premium, return of which it tendered, but set up that the policy never took effect, as a contract binding upon the defendant, because at the time of the payment of the first premium and the issuance of the policy the applicant was not in good health, but was afflicted with a disease which caused her death within less than seven months thereafter, to wit, carcinoma or cancer of the breast, of which fact defendant was ignorant at the time of the payment of the premium and the issuance of the policy, and continued ignorant until after the death of the applicant, relying upon statements of the applicant which were false. The policy was issued February 9, 1910, and the insured died on December 6, 1910, of cancer, shorty after an operation by which her entire left breast was removed.

At the close of the evidence defendant moved the court to direct a verdict in its favor, which was denied. This action of the court is one of the errors assigned.

The policy contains the following clauses:

'This policy and the application herefor, a copy of which is indorsed hereon, or attached hereto, constitute the entire contract between the parties hereto. All statements made by the insured shall, in the absence of fraud, be deemed representations, and not warranties, and no such statement of the insured shall avoid, or be used in defense to, a claim under this policy, unless contained in the written application herefor, copy of which is indorsed hereon, or attached hereto.'

'Agents are not authorized to modify this policy or to extend the time for paying a premium.'

The application, made part of the policy, contains the following clause:

'All the following statements and answers, and all those that I make to the company's medical examiner, in continuation of this application, are true, and are offered to the company as an inducement to issue the proposed policy, which shall not take effect unless and until the first premium shall have been paid during my continuance in good health, and unless also the policy shall have been issued during my continuance in good health.'

The medical examiner's report, as set out in the policy, contains, among others, the following questions and answers (the answers are italicized):

'4. What illnesses, diseases, or accidents have you had since childhood? (The examiner should satisfy himself that the applicant gives full and careful answers to this question.)

'Name of disease, etc.: None. Number of attacks: None.

'5. Have you stated in answer to question 4 all such illnesses, diseases, or accidents? Yes.

'6. State every physician who has prescribed for you or whom you have consulted in the past five years.

'Name of physician: None. Address: None. When consulted. Give nature of complaint. Give full details above under Q. 4. (No answer.)

'7. (a) Are you now in good health? Yes. (b) If not, what is the impairment? (No answer.) * * *

'10. Have you undergone any surgical operation? No. * * *

'17. (a) Have you ever been under treatment at any asylum, cure, hospital or sanitarium? No. (b) If so, when, how long, and for what cause? (No answer.)

As to her said answers the insured signed the following certificate:

'I certify that my answers to the foregoing questions are correctly recorded by the medical examiner.

'(Signature of the person examined.)

M. Emma Powell.'

All the above answers were untrue. It is shown that in 1904 the insured consulted Dr. Groves, who was her family physician, and who also conducted the medical examination for the insurance company, about a sore on her left breast, and he sent her to Dr. Culbertson, a specialist in such matters, who treated her; that in 1907 she again consulted Dr. Groves, who this time sent her to Dr. Oertel, also a specialist, and he in turn took her to a hospital, where she remained two days and underwent an operation by Dr. Crane, by which her left nipple and some surrounding tissue were excised. Defendant also offered evidence to the effect that the said answers were material, and, had they been answered truthfully, the policy would not have issued. There was also some showing that other answers regarding family history were materially false. All of the physicians testified in the case, except Dr. Groves, who was deceased. Dr. Culbertson testified that he diagnosed the sore on her breast as epithelioma, or skin cancer, and was under the impression that he had so informed her and her husband; and Dr. Crane testified that the disease for which he excised the nipple was Paget's disease, which he now considers always develops into cancer.

Had the case ended here, the defendant undoubtedly would have been entitled to a directed verdict, regardless of whether the statements to the medical examiner be considered as warranties, because of the apparent fraud, or merely as representations, since they were untrue and material to the risk.

But plaintiff seeks to avoid the effect of the false answers on the theory that the insured was in good faith and made true answers to the questions propounded, but that they were incorrectly recorded by the medical examiner; that the insured relied upon his advice in permitting the answers as written to stand; that the said doctor was the agent of the insurer, and had full knowledge of the facts, and the company is charged with his knowledge and bound by his acts.

To support this theory the plaintiff was sworn as a witness in his own behalf, and testified that he was present when his wife was examined by Dr. Groves prior to her visit to Dr Culbertson, and he was also present when she was examined for the insurance policy. His...