New York Life Ins. Co. v. Wertheimer

• Decision Date: 10 December 1920
• Docket Number: 501.
• Citation: 272 F. 730
• Parties: NEW YORK LIFE INS. CO. v. WERTHEIMER et al.
• Court: U.S. District Court — Northern District of Ohio

272 F. 730

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

No. 501.

United States District Court, N.D. Ohio, Eastern Division.

December 10, 1920

Garfield MacGregor & Baldwin, of Cleveland, Ohio, for plaintiff.

Max P Goodman, of Cleveland, Ohio, for defendants.

WESTENHAVER District Judge.

This action is brought to compel the surrender and cancellation of two insurance policies issued by plaintiff upon the life of Benjamin Wertheimer, one for $5,000, dated February 12, 1918 for the benefit of his wife, Hattie S. Wertheimer, and the other for $3,500, dated July 31, 1918, for the benefit of his said wife and a son M. Albert Wertheimer. Both policies contain clauses making them incontestable upon any ground after two years from the date of issue. Plaintiff alleges that in August, 1919, it discovered for the first time that the insured was not, when the policies were issued and delivered, in good health, and also that the insured had made material representations which were willfully false, and on which it relied, in order to procure the issue of the policies, and that upon discovery thereof the plaintiff on August 30, 1919, tendered back all the insurance premiums received, with legal interest, and had demanded the surrender of the policies, which demand had been refused. The money thus tendered was paid into court on the filing of the petition herein.

Plaintiff's right to relief rests on two grounds. One is that these insurance contracts contained a condition that they should not take effect unless the insured was in good health at the time the policies were delivered. The other is that the insured, in his written applications, which are made a part of the policies, made material statements and representations which were willfully false and fraudulently made, and were relied upon. The law relating to these grounds of relief is different and will therefore be considered separately.

1. The applications do contain a clause which provides that the insurance applied for shall not take effect unless the first premium is paid and the policy is delivered to and received by the insured during his lifetime and good health. The applications are made a part of the policies, and have the same effect as if written in the policies. See Hubbard v. Mutual Reserve Fund (1 C.C.A.) 100 F. 719, 40 C.C.A. 665; First National Bank v. Hartford Ins. Co., 95 U.S. 673, 675, 24 L.Ed. 563. The effect of these provisions is to make it a condition that the policies shall not take effect and become valid and binding unless the insured was in fact in good health at the time the policies were delivered. In this aspect, the insurer's obligation is not made to depend upon willful fraud or misrepresentation, but upon the fact as to whether or not the insured's health was good or otherwise. The inquiry then becomes an inquiry as to that fact, and does not depend upon the insured's knowledge or belief. It was so held in Metropolitan Life Ins. Co. v. Howle, 62 Ohio St. 204, 56 N.E. 908, and Metropolitan Life Ins. Co. v. Howle, 68 Ohio St. 614, 68 N.E. 4. Such, also, is the general, if not the uniform, rule of decision. See Barker v. Metropolitan Life Ins. Co., 188 Mass. 542, 74 N.E. 945; note 17 L.R.A. (N.S.) 1145, 1148. Nothing in conflict therewith is found in Mutual Life Ins. Co. of New York v. Long, Ohio Law Reporter, July 26, 1920, cited and relied on by defendants; but, on the contrary, the law as thus declared is fully recognized, and the only inquiry was whether or not the Court of Appeals would set aside a verdict of a jury because it was said to be against the manifest weight of the testimony. The provisions of section 9391, G.C. of Ohio, have no application to a condition of this nature embodied in an insurance policy. See authorities last cited.

The expression 'good health,' or 'sound health,' thus used in life insurance policies, it is uniformly held, means a state of health free from any disease or ailment that affects seriously the general soundness and healthfulness of the system, and not merely such temporary disturbances or disorders which yield readily to treatment and do not tend to weaken or undermine the constitution. See Metropolitan Life Ins. Co. v. Howle, 62 Ohio St. 204, 56 N.E. 908; Standard Life & Accident Ins. Co. v. Sale (6 C.C.A.) 121 F. 664, 57 C.C.A. 418, 61 L.R.A. 337; Mutual Life Ins. Co. of New York v. Hurni Packing Co. (8 C.C.A.) 260 F. 641, 171 C.C.A. 405; Brown v. Insurance Co., 65 Mich. 306, 32 N.W. 610, 8 Am.St.Rep. 894; Plumb v. Penn Mutual Life Ins. Co., 108 Mich. 94, 65 N.W. 611.

That the insured was not, at the time these applications were made and the policies issued and delivered, in good health as thus defined, but on the contrary, was then afflicted with a serious and mortal disease, is clearly proved by the evidence. He was examined and treated twice by Dr. Fisher in May, 1917, by Drs. Grosh and Miller in July, 1918, and by Dr. Drysdale in the latter part of August, 1918, and thereafter at intervals until his death on August 19, 1920. These witnesses agree that he was afflicted with paresis, or an illness of a paretic nature. Dr. Drysdale's testimony differs only from the others in that he is unwilling to ascribe the cause of his ailment to syphilis, as do the other three. The insured's condition became acute, resulting in dementia, about the middle of August, 1918, and continued, with brief remissions, to grow worse until August 16, 1919, when a committee was appointed for him, and thereafter until his death resulted. The witnesses also agree that this ailment, although the victim himself may not have been aware of it until it reached an acute stage, or shortly prior thereto, was nevertheless present, and had been present for years, probably not less than eight years. Bearing in mind the rule of law already stated, that the insurer's obligation does not depend upon the insured's knowledge of his state of health or any misrepresentation with respect thereto, but upon the fact itself as to whether the insured was in good or sound health, the extent of the insured's knowledge of his state of health becomes immaterial. It will, however, be adverted to in discussing the other ground upon which relief is sought.

2. The insurance applications contain questions and answers by the insured respecting past illnesses and the state of his health. Among these are the following:

'Have you ever had rheumatism, gout, or syphilis? Have you ever consulted a physician for any ailment or disease not included in your above answers? What physician or physicians, if any, not named above, have you consulted or been treated by within the last five years, and for what illness or ailment?'

To each of these questions, as well as to all others relating to the insured's present health or past ailments, he gave an unqualifiedly negative answer. The applications also contain a clause reciting that each of the answers is written by the applicant and that they are full, complete, and true; that the statements, representations, and answers...