New York Life Ins. Co. v. McCarthy

• Decision Date: 05 December 1927
• Docket Number: No. 5075,5112.,5075
• Citation: 22 F.2d 241
• Parties: NEW YORK LIFE INS. CO. v. McCARTHY (two cases).
• Court: U.S. Court of Appeals — Fifth Circuit

22 F.2d 241 (1927)

NEW YORK LIFE INS. CO. v. McCARTHY (two cases).

Nos. 5075, 5112.

Circuit Court of Appeals, Fifth Circuit.

November 4, 1927.

Rehearing Denied December 5, 1927.

Gessner T. McCorvey, of Mobile, Ala. (Gessner T. McCorvey and Stevens, McCorvey, McLeod, Goode & Turner, all of Mobile, Ala., on the brief), for appellant and plaintiff in error.

Gregory L. Smith, of Mobile, Ala., for appellee and defendant in error.

Before WALKER, BRYAN, and FOSTER, Circuit Judges.

WALKER, Circuit Judge.

These two cases are considered together, as both of them relate to a life insurance policy in the sum of $5,000 issued on February 24, 1925, by the New York Life Insurance Company (herein called the insurer) to William P. McCarthy (herein called the insured) in favor of his wife (herein called the beneficiary). The insured died on November 6, 1926. On February 1, 1927, the insurer filed a bill in equity against the beneficiary, praying that it be decreed that said policy was obtained by misrepresentations and concealment, and that the same be canceled. That bill, as it was amended, was dismissed for want of equity on April 6, 1927, and the insurer appealed from the decree to that effect. On February 2, 1927, the beneficiary brought an action at law against the insurer for the recovery of $4,377.65, alleged to be due on said policy. That suit was tried to a jury on issues joined on pleas filed by the insurer, and resulted on May 6, 1927, in a judgment in favor of the beneficiary for the amount sued for and costs. That judgment is presented for review by a writ of error sued out by the insurer.

The suit at law will first be considered. The pleas filed therein by the insurer were the general issue and several special pleas. The special pleas set up that specified answers of the insured to written questions asked in his medical examination in connection with his written application for insurance were false, and made with intent to deceive; the following being one of those questions and insured's answer thereto: Question: "What physician or physicians, if any, not named above, have you consulted or been examined or treated by within the past five years?" Answer: "None." The special pleas referred to provisions of the policy and of the insured's application for insurance, which are set out below, and contained allegations to the following effect:

The answer of the insured to the questions mentioned in the several special pleas were written down by the medical examiner in the presence of the insured. The insured within five years preceding the making of the above set out answer had consulted a physician, which fact was known to the insured at the time he made such answer. That answer was made by the insured with the intent that it be relied and acted on by the insurer, and to induce the insurer to execute the contract sued on, and the insurer believed that answer was true, was deceived thereby, and relied and acted thereon, and was induced thereby to execute the policy sued on. The insurer had no notice of the falsity of that answer until after the death of the insured, and after insurer's receipt of proofs of such death, which proofs indicated the falsity of such answer, whereupon insurer made investigation and discovered the falsity of such answer, and thereupon notified the beneficiary that the insurer elected to and did rescind said policy, because of the failure of the insured to disclose in his application for insurance material facts as to his insurability, and tendered to the beneficiary the amount of premiums paid on said policy, with interest thereon, the principal and interest aggregating $622.35. The beneficiary accepted the amount so tendered.

Undisputed evidence showed that several times within three years next preceding the date of the making of the above set out answer the insured consulted a physician with regard to an internal growth near his heart. It was agreed between the parties that proofs of death required by the policy sued on were furnished to the insurer by the beneficiary on December 8, 1926; that prior to the receipt by the insurer of such proofs of the insured's death the insurer had no knowledge or notice that the insured had, within five years prior to the making of the above set out answer, consulted or been examined or treated by a physician. It was further agreed that, upon the insurer's receipt of proofs of the insured's death, the insurer made investigation and inquiry relative to the statements, representations, and answers contained in the insured's application for insurance, including his answers to the medical examiner, and thereby obtained the first information it had that the insured had within five years prior to the making of said answer consulted or been examined or treated by a physician, and that upon obtaining such information the insurer made to the beneficiary the above-mentioned tender. Evidence showed that the amount so tendered was the amount of premiums paid by the insured, with interest thereon, and was tendered and accepted with the understanding that that was the amount which the insurer admitted it owed to the beneficiary, and that by accepting the check for that amount the beneficiary waived none of her rights to endeavor to hold the insurer for the balance of $5,000 which the insurer denied owing.

Pursuant to an order of the court below, the original of the insured's application for insurance, and of the policy introduced in evidence by the beneficiary, including the photostatic copy of such application, containing the answers to questions propounded by the medical examiner, have been transmitted to this court. It is disclosed by the original documents so sent up that the photostatic copy of the application, including the questions asked and answered, is smaller in size than the original application, and that the print and writing in the copy are correspondingly reduced. Some of the words written in ink in the original are indistinct in the copy. The questions and answers referred to in the special pleas are legible in the copy. There was no evidence tending to prove that they could not be read by normal eyes under normal conditions.

The insurer duly reserved exceptions to the following, among other, rulings of the court: The refusal of requested instructions to the effect that, if the jury believe the evidence, they must find for the defendant; that under the evidence the jury cannot find a verdict for the plaintiff; and the refusal of the following charge requested by the insurer: "The court charges the jury that, if they find from the evidence that those portions of the copy of the application containing the answers relied on are plainly, clearly, and legibly copied in the policy, then it is immaterial if the other portions of the copy of the application attached to the policy are not plainly, clearly, and legibly expressed."

The giving by the court of the following instruction to the jury also was excepted to: "The court, at the request of the plaintiff, charges the jury that the policy sued on provides, among other things, as follows: `The policy and the application therefor, copy of which is attached hereto, constitutes the entire contract. All statements made by the insured shall in absence of fraud be deemed representations and not warranties, and no such statement shall avoid the policy or be used in defense to a claim under it, unless it be contained in the written application, and a copy of the application is indorsed upon or applied or attached to the policy when issued.' The laws of Alabama also provide that: `No life nor any other insurance company, nor any agent thereof, shall make any contract of insurance or agreement as to policy contract other than is plainly expressed in the policy issued thereon.' Based upon these provisions, the court charges the jury that, if the defendant did not, at the time it issued the policy sued on, attach thereto a legible copy of the entire application for such insurance, it cannot defend against liability upon said policy, on account of any misstatement of fact contained in the application for the policy."

The policy contains the following provisions: "This policy takes effect as of the third day of February, nineteen hundred and twenty-five, which day is the anniversary of the policy. * * * All statements made by the insured shall, in absence of fraud, be deemed representations and not warranties, and no such statement shall avoid the policy or be used in defense to a claim under it, unless it be contained in the...