New York Life Ins. Co. v. Simons

• Decision Date: 27 June 1932
• Docket Number: No. 2673.,2673.
• Citation: 60 F.2d 30
• Parties: NEW YORK LIFE INS. CO. v. SIMONS et al.
• Court: U.S. Court of Appeals — First Circuit

60 F.2d 30 (1932)

NEW YORK LIFE INS. CO. v. SIMONS et al.

No. 2673.

Circuit Court of Appeals, First Circuit.

June 27, 1932.

F. H. Nash, of Boston, Mass. (Stuart C. Rand and Richard Wait, both of Boston, Mass., on the brief), for appellant.

Wendell P. Murray, of Boston, Mass. (Isaac E. Simons, of Boston, Mass., on the brief), for appellees.

Before BINGHAM, WILSON, and MORTON, Circuit Judges.

WILSON, Circuit Judge.

This is an appeal from a decree in equity in the District Court of Massachusetts. 53 F.(2d) 859. The appellees' testate, who will be hereafter referred to as the applicant, procured from the appellant in July, 1928, two policies of insurance on his life, and in February, 1930, two more. The latter are the policies involved in this appeal. The appellant brought two bills in equity, one seeking the cancellation of the policies issued in July, 1928, and the other seeking the cancellation of the policies issued in February, 1930, and in each case on the ground of fraudulent misrepresentations.

The District Court issued a decree declaring the policies issued in July, 1928, to be null and void, but found there was no intent to deceive on the part of the applicant by the misrepresentations made in the application for the policies issued in February, 1930, and that the facts concealed by the appellant did not materially increase the risk.

No appeal was taken from the decree declaring the policies issued in 1928 null and void by the representatives of the estate of the applicant. The insurance company appealed from the decree dismissing the bill seeking to have the policies issued in February, 1930, declared null and void.

In his written applications for the policies, both in July, 1928, and in February, 1930, the following questions and answers appear, except that in the 1928 application the word "ever" does not appear in questions 7c, 8, and 10:

"7c. Has albumin or sugar ever been found in your urine? Answer: No.

"8. Have you ever consulted a physician or practitioner for or suffered from any ailment or disease of C the Stomach or Intestines, Liver, Kidneys or Bladder? Answer: No.

"10. Have you ever consulted a physician or practitioner for any ailment or disease not included in your above answers? Answer: No.

"11. What physicians or practitioners, if any, not named above have you consulted or been examined or treated by within the past five years? Answer: None."

The applications also contained the statement to the effect that the above answers were true, and that the company could act and rely on them.

The undisputed facts are that the applicant on September 16, 1926, did go to his family physician for medical treatment or an examination. Either on this visit or a month later on October 29, traces of sugar were found in his urine, and, as the District Court found, probably on the first visit. He went again on November 14, and in January, May, and September, 1927, and on March 1 and July 24, 1928.

His physician prescribed the usual antidiabetic diet, and after a period of six months all traces of sugar, even on a normal diet, disappeared on urinalysis made by his physician, and he was pronounced cured.

The District Court found the above facts, and that the answers made by the applicant as above set forth were not true. Although the family physician in signing the proof of death furnished to the appellant stated in answers to questions contained therein that he had treated the applicant for diabetes for a period of six months about three years before his death, and somewhat reluctantly admitted on cross-examination that he diagnosed his condition as diabetic at the time he was being treated, the District Court found that the sugar in the urine of the applicant did not necessarily indicate that the applicant was suffering from what is termed by the medical profession diabetes, but only from a temporary condition sometimes described by physicians as glycosuria, in which traces of sugar appear, but readily yield to dietetic treatment. The applicant died of pneumonia about May 1, 1930. During his last illness no sugar appeared on urinalysis, though traces of albumen did.

In the case involving the policies issued on the application made in July, 1928, the District Court found as a fact that the representations made by the applicant that no sugar had been found in his urine, and that he had not consulted a physician within five years, either for a disease of the intestines, kidneys, or bladder, or for any other ailment, were false, and that he knew them to be false, and that they were made for the deliberate purpose of deceiving the insurance company; and also found that, although there was evidence that the fact that sugar was found in the applicant's urine was regarded by insurance companies as material to the risk, the condition of the deceased disclosed by the evidence in this case did not tend to shorten his expectancy of life or increase the risk.

Upon the finding, however, that the applicant had deliberately concealed material facts with intent to deceive the insurance company, a decree was made declaring the policies issued on the application filed in July, 1928, null and void.

But as to the policies issued in February, 1930, the District Court found that the applicant may then have been justified in believing that he was cured, and therefore in concealing these facts there was no intent to deceive; that his condition was not one that materially increased the risk, and refused to so rule as a matter of law as requested by the appellant.

This is an appeal in equity, and the case comes here to be heard on the record, except that facts found by the District Judge will be accepted by this court, unless the findings of fact appear to be clearly wrong. Keller v. Potomac Elec. Co., 261 U. S. 428, 444, 43 S. Ct. 445, 67 L. Ed. 731.

For an appellate court to hold that a finding of fact by a sitting justice in an equity case is clearly wrong, it is not necessary that there shall be no substantial evidence to support it; but, if it clearly appears to the appellate court that the great weight of the evidence is clearly contrary to the factual finding of the sitting justice, or the inference of the sitting justice from proven facts is unreasonable, then his finding may be disregarded, and the appellate court determine the facts from the evidence before it, or may draw different conclusions from the facts found.

Under the assignments of error of law, the appellant challenges generally the decree dismissing the bill; that the refusal of the District Court to rule that, since the answers in the application were false and a denial of material facts, they were fraudulent as a matter of law; and also a refusal to rule that, if the applicant failed to disclose to the complainant that less than four years prior to his application for the policies sugar had been found in his urine, the complainant is entitled to rescind the policies; and also that, if the applicant failed to disclose that within five years prior to the application by him for policies he had consulted a physician, the complainant was entitled to rescind the policies.

No question is raised as to the application of the Massachusetts statute, G. L. c. 175, § 186. It applies directly to all domestic companies and as a condition on which all foreign insurance companies can do business in Massachusetts, and in effect must be read into every policy issued by any such company. Abraham v. Mutual Reserve Fund Life Association, 183 Mass. 116, 66 N. E. 605; Hancock Mutual Life Ins. Co. v. Warren, 181 U. S. 73, 21 S. Ct. 535, 45 L. Ed. 755; Northwestern Life Ins. Co. v. Riggs, 203 U. S. 243, 254, 27 S. Ct. 126, 51 L. Ed. 168, 7 Ann. Cas. 1104.

Under this statute, the burden is on an insurance company in an equity proceeding to declare a Massachusetts contract for insurance void for misrepresentation in the application on which the policy was issued, or, as an affirmative defense in an action by the assured on the policy, to show that either the misrepresentation was made with intent to deceive, or the facts misrepresented materially increased the risk. McDonough v. Metropolitan Life Ins. Co., 228 Mass. 450, 117 N. E. 836.

Counsel for the appellant, however, argues and cites authorities in support of his contention that, if a misrepresentation in an application for insurance is as to a material fact, it follows as a matter of law that it is fraudulent and renders a policy issued thereon voidable. New York Life Ins. Co. v. McCarthy (C. C. A.) 22 F.(2d) 241; Mutual Life Ins. Co. v. Hilton-Green, 241 U. S. 613, 36 S. Ct. 676, 60 L. Ed. 1202.

But we do not think that under the Massachusetts statute the District Court erred in refusing to rule as a...