New York Life Ins. Co. v. Gist

• Decision Date: 13 March 1933
• Docket Number: No. 6879.,6879.
• Citation: 63 F.2d 732
• Parties: NEW YORK LIFE INS. CO. v. GIST et al.
• Court: U.S. Court of Appeals — Ninth Circuit

63 F.2d 732 (1933)

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

No. 6879.

Circuit Court of Appeals, Ninth Circuit.

March 13, 1933.

Meserve, Mumper, Hughes & Robertson, of Los Angeles, Cal. (E. Avery Crary, of Los Angeles, Cal., of counsel), for appellant.

Clyde C. Shoemaker, of Los Angeles, Cal., for appellees.

Before WILBUR and SAWTELLE, Circuit Judges.

WILBUR, Circuit Judge.

This suit was brought by the appellant to cancel a life insurance policy for $10,000 with double indemnity in case of death by accident, issued by the appellant insurance company upon the life of Cecil W. Gist, in favor of his brothers, Brooks D. Gist and Herrold Gist, beneficiaries. The ground upon which the insurance company seeks to cancel the policy is that between the date of the application for the insurance and the delivery of the policy the insured consulted a physician, and that, when the policies were delivered to the insured, the company was ignorant of that fact. The application and medical examination were made on November 16, 1925, the policy was delivered and the first premium paid thereon on December 8, 1925, and the insured died on December 15, 1925. The application contained the following provision:

"It is mutually agreed as follows: 1. That the insurance hereby applied for shall not take effect unless and until the policy is delivered to and received by the applicant and the first premium thereon paid in full during his lifetime, and then only if the applicant has not consulted or been treated by any physician since his medical examination; provided, however, that if the applicant, at the time of making this application, pays the agent in cash the full amount of the first premium for the insurance applied for in Questions 2 and 3 and so declares in this application and receives from the agent a receipt therefor on the receipt form which is attached hereto, and if the company, after medical examination and investigation, shall be satisfied that the applicant was, at the time of making this application, insurable and entitled under the company's rules and standards to the insurance, on the plan and for the amount applied for in Questions 2 and 3, at the company's published premium rate corresponding to the applicant's age, then said insurance shall take effect and be in force under and subject to the provisions of the policy applied for from and after the time this application is made, whether the policy be delivered to and received by the applicant or not."

The appellees denied the fact of consultation, and alleged that, if the deceased did in fact consult with, or was treated by, any physician after his medical examination and before delivery of the policy, "that the same related to some feeling of trivial or slight discomfort or temporary indisposition not affecting the general health of said applicant, that the same did not relate to any matter of substantial nature and did not constitute a consultation or a treatment within the meaning" of the application. The beneficiaries under the policy in addition to their answer above referred to filed a cross-bill to recover upon the policy in question, alleging accidental death and praying for $20,000, double indemnity, with 7 per cent. interest from the date of death, December 15, 1925. The court entered a decree in favor of the defendants and cross-complainants as prayed for, and denied appellant relief upon its bill.

The application for the policy provided that the insurance policy should be dated as of the date of the application (November 16, 1925), in order that the premium paid should conform to the age of the applicant at that time rather than at any later date.

The appellees contend that, inasmuch as the policy here in question contained the recital that the premium had been paid on the 16th of November, 1925, the company thereby waived the condition precedent with reference to the consultation with or treatment by physicians subsequent to that date, and that the issuance of the policy with this recital by the officers of the company at its head office in New York, and the mailing of the policy to the agent at Tulare, Cal., for delivery by that agent to the insured, was a constructive delivery at the time of such subscription and mailing on November 30, 1925, and made the policy effective from the date thereon; namely, November 16, 1925. This argument is predicated in large part on the law of California (section 2598 Cal. Civ. Code), which expressly provides that: "An acknowledgment in a policy of the receipt of premium is conclusive evidence of its payment so far as to make the policy binding, notwithstanding any stipulation therein that it shall not be binding until the premium is actually paid."

If the insured had actually paid the premium on the policy in advance and obtained at that time the proper receipt therefor in accordance with the provision in the application above quoted, the insurance policy would have been effective on the date the application was approved and the policy signed by the proper officers at the head office of the insurer, and would relate back to the date contained in the policy. Under the terms of the application, which is a part of the insurance contract, this would constitute an express waiver by the insurance company of the provision rendering the policy ineffective if the applicant consulted a physician between the time of his application for insurance and the delivery of the policy. 32 C. J. 1101; Schwartz v. Northern Life Ins. Co. (C. C. A.) 25 F.(2d) 555; Vierra v. N. Y. Life Ins. Co., 119 Cal. App. 352, 6 P.(2d) 349. At the time of the application in the case at bar, however, the insured was undecided as to whether he and each of his brothers would take policies for $10,000 on their respective lives in favor of the other two brothers, or whether he would participate in a policy for $30,000 upon the joint lives of himself and his two brothers who were partners. The insurance company made out both types of policies, and forwarded them to the insured upon receipt of which the insured was to decide which one he would take and pay the premium thereon. From this it is clear that there was no intention either upon the part of the insurance company or the...