Mutual Life Insurance Company of New York v. Bamford

• Decision Date: 15 July 1938
• Docket Number: 210-1938
• Citation: 132 Pa.Super. 255,200 A. 907
• Parties: Mutual Life Insurance Company of New York v. Bamford, Appellant
• Court: Pennsylvania Superior Court

200 A. 907

132 Pa.Super. 255

Mutual Life Insurance Company of New York v. Bamford, Appellant

No. 210-1938

Superior Court of Pennsylvania

July 15, 1938

Argued April 20, 1938

Appeal from decree of C. P. Washington Co., No. 3753, in equity, in case of The Mutual Life Insurance Company of New York v Margaret P. Bamford.

Bill in equity. Before Hughes, J.

The facts are stated in the opinion of the Superior Court.

Decree entered in favor of plaintiff. Defendant appealed.

Errors assigned, among others, were various findings and conclusions of chancellor.

Decree affirmed.

Louis Vaira, with him Paul N. Barna, for appellant.

William H. Eckert, with him Richard G. Miller and Smith, Buchanan &amp Ingersoll, for appellee.

Before Keller, P. J., Cunningham, Baldrige, Stadtfeld, Parker and Rhodes, JJ.

OPINION

Cunningham, J.

Appellant was the beneficiary in a reinstated contract of insurance issued by the appellee company upon the life of her husband, Mark H. Bamford, in the amount of $ 2,000; she has appealed from a decree of the court below, sitting in equity, cancelling and rescinding the policy upon the ground that its reinstatement had been procured by fraud.

The fraud charged in the bill was that the insured, in making his written and signed application for the reinstatement of the policy (which had lapsed for nonpayment of a premium) and while being examined by appellee's medical examiner, knowingly and willfully made false answers to material questions relative to physical examinations, laboratory tests and consultations with and treatments by physicians, since the due date of the premium in default, and concerning the condition of his health during that period.

Preliminary objections were filed to the bill upon two grounds: (a) That appellee had a full, complete and adequate remedy at law; and (b) that appellant had instituted in the common pleas an action at law upon the policy on the same day the preliminary objections were filed. These objections were overruled and trial was had before Hughes, J., sitting as a chancellor. The court below, in banc, approved and adopted his findings of fact and conclusions of law and entered a final decree cancelling the policy and directing appellee, upon its surrender, to pay over to the estate of the insured the premium of $ 101.24, with interest, received by it in connection with the application for reinstatement. We permitted appellant to present her appeal from that decree in forma pauperis.

The twenty-five assignments of error filed in this court raise two general questions for our consideration and disposition: First, whether the record contains any competent evidence supporting the chancellor's findings of fact to the effect that the reinstatement was procured by fraud, and, if so, whether the law has been properly applied to those findings: Second, whether the bringing of appellant's action in assumpsit upon the policy, after service of the bill, ousted the jurisdiction of the court below to proceed in equity to the final determination of the case.

1. The policy was dated September 4, 1933, and lapsed because the annual payment of $ 101.24, due on September 4, 1934, was not paid. It was provided in section 11 of the contract that it might be "reinstated at any time within five years after default in payment of premium upon evidence, satisfactory to the company, of the insured's then insurability and the payment of all overdue premiums." On January 5, 1935, the insured made application, in writing, for the reinstatement of the policy and paid the overdue premium. The application was made upon a blank entitled, "Application for Establishing or Reinstating Policy -- With Medical Examination." Printed upon the paper were a number of questions to be propounded to the applicant by the appellee's medical examiner followed by blank spaces for the insertion of the answers of the insured. The application blank also included a provision by which the insured agreed for himself and every person who then had, or might later have, any interest in the policy "that the foregoing statements and answers, and the statements and answers made to the company's medical examiner, are true and are offered to the [company] as an inducement to . . . . reinstate . . . . said policy, and further that the same are material to the risk which the company is asked to assume by . . . . reinstating said policy." It is conceded the answers (written with pen and ink) to the printed questions on the face of the application are in the handwriting of Dr. J. Add. Sprowls, one of appellee's medical examiners.

The second question is subdivided into three paragraphs designated (a), (b), and (c). We are here concerned with question 2(c). In so far as applicable it reads: "Has the insured . . . . since the original due date of the first premium now in default . . . . Had any illness, disease, impairment of health, surgical operation, or physical examination or laboratory test, or been prescribed for, treated by or consulted a physician, surgeon or practitioner? (If so, give details of each and the name of each physician, surgeon or practitioner.) (If none, so state)."

The answer written in the space following this question was, "Yes"; but the only illnesses, operations, or medical or surgical treatments detailed in the written explanation of the affirmative answer to the question were that on June 29, 1934, he was treated and operated upon in West Penn Hospital, Pittsburgh, by a Dr. Baily, for appendicitis and for a hernia, with complete recovery in July, 1934, and without "any remaining effects." The date of these operations was prior to the "due date" of the defaulted premium. The application bore a certificate signed by Dr. Sprowls to the effect that the "statements were read, approved and signed by the insured in [his] presence." The insured's application for reinstatement was approved by the home office of appellee on January 8, 1935, and the policy reinstated as of January 10th.

On the following day the insured entered the Homeopathic Hospital at Pittsburgh where he was operated upon by Dr. F. S. Morris for cancer of the stomach, which had existed for at least three months, and died on January 22, 1935 -- seventeen days after signing his application for reinstatement. Proofs of death were received by the appellee on February 5, 1935. On the 25th of the following month it tendered return of the overdue premium received in connection with the application, with interest thereon, which tender was refused. Proceedings in equity for the cancellation of the policy were commenced on April 4, 1935.

Facts, established by uncontroverted evidence and having a material bearing upon the issue whether the insured's answers to question 2(c), as above quoted, were false and known to him to be false, may be thus summarized: In October, 1934, while the policy was lapsed, the insured consulted Dr. Carl E. Miksch on three different occasions, complaining of indigestion, weakness, and loss of weight. In the latter part of that month Dr. Miksch found his patient's stomach had dropped out of place; about the middle of the following month the insured began wearing, at the suggestion of Dr. Miksch, an abdominal belt with a pad on it. On December 26, 1934, Dr. Miksch was called to the residence of the insured where he found him in a seriously weakened condition, confined to bed and vomiting blood. By that time the insured also had a protrusion of about one inch caused by some form of abdominal tumor. Suspecting cancer of the stomach, Dr. Miksch advised the insured to go to Dr. William B. Ray at the Allegheny General Hospital in Pittsburgh for an X-ray examination. On January 3, 1935, only two days prior to making application for the reinstatement of his policy, the insured went from his home in Donora to Pittsburgh and had an X-ray examination, lasting some six hours and including the eating of a barium meal. Dr. Ray concluded insured had been suffering from cancer of the stomach for several months and so reported to Dr. Miksch.

It does not appear from the testimony that the insured had been advised prior to the making of his application for reinstatement that he was suffering from cancer. Dr. Miksch testified that during his above mentioned professional visit on December 26, 1934, he informed appellant of his suspicion that her husband's ailment was cancer of the stomach. There was evidence, however, that on January 7, 1935, while the application for reinstatement was pending, Dr. Miksch communicated to the insured, as well as to appellant, the contents of Dr. Ray's report and sent the insured to Dr. Morris for an operation. As the chancellor based no specific finding on this testimony, we merely call attention in passing, to Stipcich v. Metropolitan Life Ins. Co., 277 U.S. 311, 72 L.Ed. 895, 48 S.Ct. 512, and Gordon v. Prudential Ins. Co., 231 Pa. 404, 411, 80 A. 882, holding that good faith upon the part of the insured would require him to acquaint appellee, before accepting reinstatement of the policy, with the fact that he was going to a hospital for an operation.

The question whether the statements made by the insured were representations or warranties may be debatable under the language of the contract, but for the purposes of this appeal we shall give appellant the benefit of the doubt and assume appellee had the burden of showing the answers of the insured upon which it sought cancellation were not only false in fact but were also known to him to be false. "An answer known by insured to be false when made is presumptively fraudulent": Evans v. Penn Mutual L. Ins. Co. 322 Pa. 547, 553, 186 A. 133, and cases there cited. In this connection, we also assume the insured had not been told by any physician,...