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

Decision Date11 February 1922
Docket Number6 Div. 584.
Citation92 So. 440,207 Ala. 234
CourtAlabama Supreme Court

Appeal from Circuit Court, Tuscaloosa County; Henry B. Foster Judge.

Action by Temmie Mandelbaum against the Mutual Life Insurance Company of New York, upon a policy issued on the life of Solly Mandelbaum, in which she was named as beneficiary. Judgment for the plaintiff, and the defendant appealed. Reversed and remanded.

Tillman Bradley & Baldwin and W. M. Rogers, all of Birmingham, for appellant.

Brown &amp Ward, of Tuscaloosa, for appellee.


Appellee sued appellant upon an insurance policy, insuring the life the one Solly Mandelbaum, her husband, in which she was named as beneficiary. From a judgment for the plaintiff the defendant prosecutes this appeal.

Numerous pleas were interposed and sustained by the rulings of the court below, setting up fraudulent representations with intent to deceive on the part of the insured at the time of his application for a policy, and also certain representations contained in the policy as to his physical condition, which were alleged to have been untrue, and concluding with the averment that "the risk of loss was thereby increased." The defendant also interposed pleas 2 and 25, demurrers to which were sustained, and this ruling of the court constitutes the first assignment of error argued in brief.

Plea 2 presents the question in a very clear manner, and a consideration of that plea will suffice. This plea sets up in substance (omitting that part not considered as essential), that on February 7, 1919, said Solly Mandelbaum made application to the defendant for said policy of insurance sued on, which application is made a part of the contract of insurance; then follows quotation from the language in the application, the portion here pertinent being:

"The proposed policy 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 delivered to and received by me during my continuance in good health."

The plea then concludes as follows:

"And the defendant avers that said policy of insurance was delivered to and received by the said Solly Mandelbaum, on, to wit, February 19, 1919, and that between the date of said application for insurance and the delivery of said policy the said Solly Mandelbaum did not continue in good health, for that, between said dates the deceased became and was ill, being affected with attacks of acute abdominal pains, during which time he was attended by a physician, or physicians.
"And the defendant hereby tenders the plaintiff and pays into court the sum of $42.32, which said sum is the amount of the premiums paid by the said insured, together with interest thereon."

This plea was drawn upon the theory that it shows neither a warranty nor a misrepresentation, but a condition precedent, and therefore was not subject to the provisions of section 4572 of the Code of 1907, which reads as follows:

"No written or oral misrepresentation, or warranty therein made, in the negotiation of a contract or policy of life insurance, or in the application therefor or proof of loss thereunder, shall defeat or void the policy, or prevent its attaching, unless such misrepresentation is made with actual intent to deceive, or unless the matter misrepresented increase the risk of loss."

The ruling of the court below was to the effect that the plea came within the provisions of the foregoing section, and held it subject to the demurrer, evidently upon the ground that it failed to allege, in the language of the foregoing statute, that said condition "increased the risk of loss." The application for the policy of insurance was attached to and made a part thereof, as required by section 4579 of the Code of 1907, as shown by the averments of this plea. Cherokee Life Ins. Co. v. Brannum, 203 Ala. 145, 82 So. 175.

That the language in the application above quoted is not a representation is quite clear. The question to be determined therefore is whether or not it could be said to constitute a warranty within the meaning of the statute above set out, or must it be held as a condition precedent and not within the influence of that statute.

In Metropolitan Life Ins. Co. v. Goodman, 10 Ala. App. 446, 65 So. 449 (see, also, Metropolitan Life Ins. Co. v. Goodman, 196 Ala. 304, 71 So. 409, on second appeal), the Court of Appeals discussed at some length the different character of warranties and also conditions precedent, and the opinion contains many citations with quotations of authority. The opinion in that case also pointed out the fact that in insurance law the terms "warranty" and "condition" are often used interchangeably. This statement is sustained by reference to the authorities, and cited among them are 2 Words & Phrases, p. 1399; 16 Am. & Eng. Ency. of Law (2d Ed.) 919. The authorities cited in Words and Phrases, supra, disclose that there is much conflict among them as to the distinction between warranties and conditions, and that the word "warranty" has been used in a great variety of senses. They are of two kinds, affirmative and promissory. The latter class of warranties usually have regard to the happening of some future event, or the performance of some act in the future. The words "warranty" and "conditions precedent" are used interchangeably in the text to 25 Cyc. 798, also 801. So, also, in 3 Cooley's Briefs on the Law of Insurance is found quoted with approval the following:

"Promissory warranties may also be express or implied, and they have respect to the happening of some future event, or the performance of some future act, and that may be conditions precedent or conditions subsequent."

In Johnson v. Ala. Gold Life Ins. Co., 80 Ala. 467, 2 So. 125, 59 Am. Rep. 816, it was said that a warranty in an insurance policy was "in the nature of a condition precedent."

While strictly and technically speaking there exists a distinction between a warranty and a condition precedent, yet the foregoing authorities are cited to the effect that these terms are nevertheless used in insurance law interchangeably and as synonymous. We are not here so much concerned with this technical distinction, but more with the fact that these terms were so commonly used interchangeably, as indicating the legislative intent in the enactment of section 4572 of the Code. The question is a new one in this state, and has been very forcibly presented by counsel for appellant in an interesting brief.

This precise question was presented, however, in the comparatively recent case of Salts v. Prudential Life Ins. Co., 140 Mo.App. 142, 120 S.W. 714, where a statute somewhat similar to our own was construed. The case is directly in point, well reasoned, and in our opinion a sufficient answer to the insistence made by counsel for appellant. We therefore take therefrom the following quotation:

"This is the technical definition, but in truth the terms 'warranty' and 'condition precedent' are used interchangeably in insurance law, and in many instances an insurance warranty is nothing more or less than a condition precedent to the taking effect of the contract, as when the insured warrants the premium will be paid by the date of the policy. The frequent identity of the two terms for all purposes of determining liability on a policy in a given case is assumed in numerous treatises and decisions; the assumption sometimes being tacitly applied, and at other times a warranty is spoken of as a condition precedent or vice versa. ***
"It would be subtle to the last degree to distinguish between clauses originally inserted in a policy to make certain facts conditions precedent (e. g., payment of premium by a given day or the sound health of the insured at the date of the policy) and warranties of those facts in the application, which were absorbed in the policy as part of the contract. Such a distinction could have no solid foundation in reason or justice. *** To our minds this construction of the statute is not called for by the language in which it is framed and would go far toward defeating its purpose and destroying its usefulness."

The opinion then proceeds to point out that the statute was intended to obviate an avoidance of liability because of immaterial errors in representation and warranties, and that to give the statute the interpretation contended for...

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