Myler v. Fidelity Mut. Life Ins. Co. of Philadelphia
| Decision Date | 24 July 1917 |
| Docket Number | 8217. |
| Citation | 167 P. 601,64 Okla. 293,1917 OK 371 |
| Parties | MYLER et al. v. FIDELITY MUT. LIFE INS. CO. OF PHILADELPHIA. |
| Court | Oklahoma Supreme Court |
Rehearing Denied Sept. 25, 1917.
Syllabus by the Court.
A contract between an insurer and an insured involving a substitution of one for another policy of life insurance is intrinsically fiduciary, and necessarily calls for perfect good faith and full disclosure on the part of the insurer.
(a) Where in such contract the policy surrendered by the insured was based upon the assessment, or flexible premium, plan of insurance and the policy received by him in lieu thereof was based upon the legal reserve, or fixed premium, plan of insurance, and where, in such contract of substitution, the insured signed a separate writing, acknowledging an indebtedness in the form of a "loan" to be a lien upon the new policy as security for the same, on account of assessments against him under the old policy, the policy and the separate writing are parts of a single contract.
(b) Where, in such case, the insured is unable to read because of defective eyesight, and the insurer, upon whom he rightfully relies for information, represents to him, without mentioning any fact disclosed by such separate writing, that upon his death the amount specified in such new policy will be paid such representation is false, in that it is not qualified by information to the insured that the obligation to pay under the new policy is subject to the provisions of said separate writing.
(c) Where, in such case, the insured, in ignorance of the character of such separate writing, enters into such contract of substitution and signs such separate writing in rightful reliance upon such false representations as to the contract as a whole, he is entitled to a rescission of the same as fraudulent under the provisions of section 892, Stats. 1890 (section 984, Rev. Laws 1910), in view of the character of such contract and the opportunities it afforded for his signature to writings appropriate to the same notwithstanding his inability, for want of memory, after a lapse of about ten years, during which he believed such contract, as a whole, was as so represented to him, to allege what additional representations more immediately and specifically directed to such separate writing and to his act of signing the same, were made to him, except that he alleges that they were false and fraudulent and, in effect, that they were not inconsistent with and did not qualify the aforesaid false representations as to the contract as a whole.
(d) Since it is not essential to plaintiffs' right to rescind in such case under said section of the statutes that they allege all the false and fraudulent representations made to the insured as inducement to the execution of such contract it is reversible error to sustain a general demurrer to their petition, alleging, in effect, the foregoing false and fraudulent representations, and suppression of facts, for want of allegations of what additional affirmative fraudulent representation more immediately and specifically directed to such separate writing induced the insured to sign the same.
(e) A petition for such rescission, filed on November 15, 1915, and alleging the foregoing facts, and further showing that on March 7, 1914, the defendant, to whom said new policy had been sent to enable it to indorse thereon the fact of a certain loan of that date upon the security of such policy at the same time indorsed upon said policy the fact of the indebtedness and lien evidenced by the aforesaid separate writing, and, further, that plaintiffs did not have actual knowledge of the latter fact until January 24, 1915, does not show such laches as to be vulnerable to a general demurrer upon that ground.
(f) Under the facts shown above, equity will not require an offer by the plaintiffs, to compensate the insured for the time he has had the protection of the policy issued in such fraudulent contract to entitle them to a rescission.
(g) The recitals in such new policy that the same is in consideration "of the payment in advance of $317.20 and of the payment in advance of a like amount on or before the 24th day of January and every year thereafter until premiums for twenty years were duly paid or until the prior death of the insured," and that said policy was granted of a date 9 years prior to its issuance, and, further, that such premium should be paid for 11 years only, and that the premium period would end on a specific date 11 years after the issuance of such policy, although apparently inconsistent in this respect, is not constructive notice to the insured that the surrender of such old policy and the promise to pay 11 premiums of $317.20 is not the sole consideration for the same.
A petition,based upon fraud in a substitution of one for another contract of life insurance, which alleges facts entitling the plaintiffs to no relief other than an equitable rescission of such contract, will be deemed sufficient to show plaintiffs' right to the same, notwithstanding the prayer is for "the sum of $6,659.06, the items going to make up this sum being the alleged value of policy No. 58303, together with interest thereon from January 24, 1905, and the several annual premiums paid on policy 167821, with interest thereon from the dates of payment," * * * and for "the further sum of $5,000 as exemplary or punitive damages," for costs of suit, and "for all other proper relief."
(a) The prayer for relief is not conclusive as to the character of the petition nor as to the relief that the plaintiffs may be allowed to recover.
While courts of equity will not grant a rescission of a contract for fraud when the legal remedy for the same is plain, adequate, and complete, it will grant such relief where the legal remedy does not appear, in all respects, as satisfactory as the relief that may be furnished by a court of equity, as, for instance, where is may grant more complete relief by compelling the cancellation or surrender of the instrument fraudulently obtained.
Action by James K. Myler and Eletha Myler against the Fidelity Mutual Life Insurance Company of Philadelphia. Judgment for defendant, and plaintiffs bring error. Reversed and remanded with instructions.
E.G. McAdams and Norman R. Haskell, both of Oklahoma City, and George L. Kelly, of Lordsburg, N. Mex., for plaintiffs in error.
Burwell, Crocket & Johnson, of Oklahoma City, for defendant in error.
The plaintiffs in error bring this case here for a review of a judgment against them as plaintiffs in the trial court upon the sustention of a general demurrer filed by the defendants in error to the allegations of their petition.
We deem it unnecessary to set out at length the allegations of the petition; but there allegations, in so far as they are important to be understood in determining the questions presented for decision here, may be stated according to their effect, as follows: That on January 24, 1905, James K. Myler held a policy of life insurance, numbered 58303, then of the value of $2,392.76, payable at his death to Eletha, Myler, his wife, or in the event of her prior death to his administrators, executors, and assigns, for $5,000, which had been issued by the Fidelity Mutual Life Association, of Philadelphia, an association organized and operating upon what is known as the assessment, or flexible premium, plan of insurance, on April 30, 1805, and calling for a premium of $145.90 per annum, then aggregating $1,459, which the insured had paid as they became due; that said policy No. 58303, among other things, provided:
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