New York Life Insurance Company v. Brandwene

• Decision Date: 21 May 1934
• Docket Number: 8
• Citation: 316 Pa. 218,172 A. 669
• Parties: New York Life Insurance Company v. Brandwene et ux., Appellants
• Court: Pennsylvania Supreme Court

172 A. 669

New York Life Insurance Company v. Brandwene et ux., Appellants

316 Pa. 218

No. 8

Supreme Court of Pennsylvania

May 21, 1934

Argued April 10, 1934

Appeal, No. 8, Jan. T., 1934, by defendants, from decree of C.P. Lackawanna Co., Sept. T., 1931, No. 8, in equity, in case of New York Life Insurance Company v. Harry R. Brandwene et ux. Decree affirmed.

Bill for rescission of insurance contract. Before LEACH, J.

The opinion of the Supreme Court states the facts.

Decree entered providing for conditional cancellation of policy. Defendants appealed.

Error assigned, inter alia, was decree, quoting record.

The decree of the court below is affirmed; costs to be paid by appellants.

R. L Levy, with him J. Julius Levy, for appellants. -- A plaintiff seeking to rescind a contract of life insurance upon the ground of fraud is held to the same measure of proof as is any litigant who seeks to avoid a contract of any character for this reason: Phipps v. Buckman, 30 Pa. 401; Sulkin v. Gilbert, 218 Pa. 255; Wilson v. Oil Co. 275 Pa. 359.

Concealment on a material point is not enough to overthrow the contract unless the further fact is established that the concealment was the means which caused the company to enter into the contract: Lakeside Forge Co. v. Oil Co., 265 Pa. 528; Kuhns v. Ins. Co., 297 Pa. 418; Sulkin v. Gilbert, 218 Pa. 255.

Representations as distinguished from warranties which are untruthful cannot avoid a policy unless the false representations are both material and made with intent to defraud: Livingood v. Ins. Co., 287 Pa. 128.

Clarence Balentine, of Kelly, Balentine, Fitzgerald & Kelly, for appellee. -- (Hon. D. M. LARRABEE appeared for appellee until elected to be the judge of C. P. Lycoming County.) It was not necessary for plaintiff to call a witness to prove that it would not have issued the contract of insurance if it had known the facts proved in this case: Arnold v. Ins. Co., 20 Pa.Super. 61; Baldi v. Ins. Co., 24 Pa.Super. 275; U. B. Mutual Aid Society v. O'Hara, 120 Pa. 256; Lutz v. Ins. Co., 186 Pa. 527; Rigby v. Ins. Co., 240 Pa. 332; Timlin v. American Patriots, 249 Pa. 465; McEntee v. Ins. Co., 79 Pa.Super. 457.

Before FRAZER, C.J., SIMPSON, KEPHART, SCHAFFER, MAXEY, DREW and LINN, JJ.

OPINION

MR. JUSTICE DREW:

The plaintiff insurance company seeks by this bill in equity to rescind a contract of life insurance with disability benefits, entered into between it and the defendant Harry Brandwene, under which the defendant Rose Brandwene, wife of the insured, is beneficiary. The bill alleges that the policy was procured by fraud and misrepresentation on the part of the insured, and prays that the policy be declared void and that the defendants be ordered to deliver it to the plaintiff for cancellation upon receipt of the amount of premiums paid, with interest. After a hearing, the learned chancellor entered a decree nisi in accordance with the prayers of the bill, which decree the court below later made absolute. Defendants appealed.

Fraud is, of course, a familiar source of equity jurisdiction, ^[*] and it is well settled that one who has been induced to enter into a formal contract by the fraud of the other party may in a proper case secure the assistance of a court of equity, which will order the fraudulent party to surrender for cancellation the instrument evidencing the contract: Sutton v. Morgan, 158 Pa. 204; Am. Union Life Ins. Co. v. Judge, 191 Pa. 484; Wagner v. Fehr, 211 Pa. 435; DeCosta v. Scandret, 2 P. Wms. 170; Phoenix Ins. Co. v. Bailey, 13 Wall. (U.S.) 616; see Black, Rescission and Cancellation (2d edition), sections 476, 643. Thus, where the execution of a contract of insurance has been induced by fraudulent misrepresentations of the insured, the insurer may secure its cancellation: Am. Union Life Ins. Co. v. Judge, supra; DeCosta v. Scandret, supra; Mut. Life Ins. Co. of N.Y. v. Rose, 294 F. 122; Jefferson Standard Life Ins. Co. v. McIntyre, 294 F. 886; N.Y. Life Ins. Co. v. Sisson, 19 F. (2d) 410 (W.D. Pa.); Metropolitan Life Ins. Co. v. Freedman, 159 Mich. 114, 32 L.R.A. (N.S.) 298; Pac. Mut. Life Ins. Co. v. Glaser, 245 Mo. 377, 45 L.R.A. (N.S.) 222; Travelers Ins. Co. v. Pomerantz, 246 N.Y. 63; Home Life Ins. Co. v. Zuribowitz, 87 A. (R.I.) 25; see Phoenix Ins. Co. v. Bailey, supra; Am. Trust Co. v. Life Ins. Co. of Va., 173 N.C. 558; Couch, Insurance, section 1412. The burden of proving the fraud is, of course, upon the party who alleges it (Livingood v. N.Y. Life Ins. Co., 287 Pa. 128; Kuhns v. N.Y. Life Ins. Co., 297 Pa. 418; Campdon v. Continental Assurance Co., 305 Pa. 253), and it must be established by clear and satisfactory evidence: Suravitz v. Prudential Ins. Co., 261 Pa. 390; Pusic v. Salak, 261 Pa. 512; Campdon v. Continental Assurance Co., supra; McCreary v. Edwards, 113 Pa.Super. 151. These principles cannot be disputed, but, appellants argue, the evidence does not support a finding that the alleged representations were made fraudulently, or that the plaintiff relied upon them in issuing its policy.

The defendant Harry Brandwene applied for the policy which is the subject of this suit on October 28, 1929. He certified, in his application, to the correctness of his answers to the examining physician, and stipulated that the company might rely on them to be true. In the application, Brandwene stated, in reply to questions, that he had not, in the preceding five years, consulted a physician for any ailment, except "Dr. C. L. Mattas, in the year 1926 for cold in head." This answer was so false that it could hardly have been more so. As a matter of fact, Brandwene had consulted Dr. Mattas in the two years preceding the making of his application at least five times for various ailments, including arthritis and inflammation of the muscles, and had at various times in the five-year period been treated by other physicians for more serious illnesses. In 1925, he was confined to his home with influenza; during this illness, he was attended by a Dr. Wormser and required the services of a nurse. This illness lasted from April 25th to May 23d, and he subsequently claimed and received disability benefits for this period from an insurance company. Later in the same year, he entered a hospital for a week and had his tonsils removed by a Dr. Bishop; as a result he was unable to work for about two and a half weeks, and for the time thus lost he also received disability benefits. Again, in 1928, he was sick in bed at home with influenza from February 10th to February 20th; during this period, he was treated by a Dr. Morris. On account of his illness, he claimed and received, upon another insurance policy, benefits for total disability during a period of almost five weeks. In March, 1931, within the two-year period in which the policy could be contested, Brandwene applied to plaintiff for benefits for permanent total disability caused by an enlargement of the heart. The plaintiff's investigation of the claim disclosed the above facts, indicating that Brandwene's statements in his application for the insurance policy had been false, whereupon it tendered back the amount paid as premiums and attempted to rescind the policy. Brandwene refused, and this suit followed.

It is conceded by defendants that under our decisions (Rigby v. Metropolitan Life Ins. Co., 240 Pa. 332; Livingood v. N.Y. Life Ins. Co., supra; Koppleman v. Commercial Cas. Ins. Co., 302 Pa. 106; Applebaum v. Empire State Life Assurance Society, 311 Pa. 221), such inaccurate statements in an application for a life insurance policy, as to the employment of other physicians than those named, are to be deemed material representations. Even if this concession were not made, the facts of this case would present no room for an argument to the contrary. The illnesses for which Brandwene consulted other physicians were not trivial, and the plaintiff was entitled to know of them. While it may be that plaintiff would not have refused to insure Brandwene because of these illnesses, certainly it is not improbable that had it known of them...