Northwestern Life Assur. Co. v. Bodurtha

• Decision Date: 12 May 1899
• Parties: NORTHWESTERN LIFE ASSUR. CO. v. BODURTHA et al.
• Court: Indiana Appellate Court

23 Ind.App. 121

53 N.E. 787

NORTHWESTERN LIFE ASSUR. CO.

v.BODURTHA et al.¹

Appellate Court of Indiana.

May 12, 1899.

Appeal from circuit court, Miami county; J. T. Cox, Judge.

Action by Arthur L. Bodurtha, guardian, and others against the Northwestern Life Assurance Company. There was a judgment for plaintiffs, and defendant appeals. Reversed.

Bailey & Cole, for appellant. Loveland & Loveland and W. E. Mowbray, for appellees.

COMSTOCK, J.

This action is based upon a certificate of membership or policy of life insurance issued by the appellant to Charles F. Bodurtha for the benefit of his children, who are the respective wards of appellees. The complaint was originally in three paragraphs, upon which issues were formed and evidence heard, but at the conclusion of the argument appellees were permitted to withdraw the first and third paragraphs. The issues upon which the cause was submitted to the jury were formed on the second paragraph of complaint, the answer, and reply. The trial resulted in a verdict and judgment in favor of appellees for $2,279. The answer admits the execution of the policy in suit; the death of the insured; the appointment of appellees as guardians, respectively, of the minor children of the deceased; the furnishing of proofs of death; and the demand for the payment of the policy,-but seeks to avoid the payment because of false statements, breaches of certain warranties and covenants of the insured, contained in the application for insurance, made a part of the policy, as to the health of and use of intoxicating liquors by the insured. Plaintiff replied-First, by general denial; second, affirmatively, that, with full knowledge that the answers to the interrogatories in question were false, the association issued the policy to said Bodurtha, and accepted premiums thereon after it was known to its agents that he was violating his promise as to the future use of intoxicating liquor, and retained the premiums so paid.

Appellant claims, first, that the court erred in overruling its demurrer to the sixth paragraph of the reply, which paragraph is as follows: “The plaintiffs, for further reply to the said defendant's answer, and to each and every paragraph thereof, say that, for the purposes of this reply, they admit, all and singular, the allegations of said answer, and in each paragraph thereof; but say that, with full notice and knowledge of the untruthfulness of answers in the application complained of in said answer of the association, and of such other matter complained of in said several paragraphs of answer, the defendant association accepted and approved the application of the said Charles F. Bodurtha, issued and delivered to him the policy sued on, and collected the premiums due thereon at the date of said policy, and all subsequent premiums which accrued thereon before the death of the said Bodurtha.” It avers, also, that no part of said premium was ever returned or tendered to the said Bodurtha, or to the plaintiffs, or either of them, but it is still retained by said association. This reply is addressed to all the paragraphs of the answer. It must, therefore, be good as to all, to withstand a demurrer. The defense pleaded in the several paragraphs of answer are representations and warranties of certain false statements in his application for insurance and membership in the association, to the effect that he had never had disease of the heart nor rheumatism; that he had never used intoxicating liquors to excess; that he would not thereafter use intoxicating liquors to excess,-when, in fact, he had been afflicted with rheumatism, and had disease of the heart, as he knew at the time of said application; that he had been in the habit of using intoxicating liquors to excess, and that, after the issuing of the policy, he used intoxicating liquors to excess, and that his death was caused, in part, by their excessive use; that the appellant was induced to enter into the contract of insurance by reason of the false statements, representations, and promises of the insured. The clause of the application referred to is as follows: “I further agree and warrant that I will not use intoxicating liquors to excess, nor practice any pernicious habit that obviously tends to shorten life; that if, after becoming a member of said association, I shall fail to pay any bimonthly premium or assessment on or before the day on which the same shall fall due, or fail to comply with this agreement, then, and in either event, my membership shall cease, and said certificate of membership or policy become void, and all moneys I shall have paid shall be forfeited to said association, for its sole use and benefit.” The reply is pleaded as a waiver of the false representations and the breach of the promise to abstain from the excessive use of intoxicating liquors. It is claimed that, in issuing the policy and accepting the premium with knowledge that the representations were untrue, appellant waived any defense on account of their falsity. This paragraph does not, however, aver that the association, after the execution of the policy, waived the breach of the promise of the insured not in the future to use intoxicating liquors to excess, by accepting premiums after notice of such breach. The knowledge, alleged to be in the possession of the association at the time of the issuance of the policy and the payment of the premium, that the representations made by the insured were false, must be held to apply to knowledge existing at those dates; it could not apply to the future conduct of the insured. To be good, the paragraph should have averred that appellant had notice of the violation of the agreement not to use intoxicating liquors to excess, and, with such notice, accepted payment of premiums. Construing, under the universally accepted rule of pleading, this paragraph most strongly against the pleader, such averments are wanting. The acceptance of premiums after the violation by the insured of a condition of the policy rendering it void must be with knowledge of such violation, to estop the insurer to deny liability on account thereof. The insurer may be willing to assume a risk upon the life of one who has been intemperate in his habits, upon his promise to be temperate in the future. We have set out the clause in the application containing the agreement as to the future use of intoxicating liquors. By its terms, and the language of the policy, it is made a part of the contract. The policy reads: “In consideration of the representations, agreements, and warranties made in the application for this policy of insurance, which application is made a part of this contract,” etc. The application contains two sets of questions to be answered by the applicant,-one under “Form A,” the other under “Form B.” The agreement is under “Form B.” Its first sentence is as follows: “I, the undersigned, hereby agree that each and all of the foregoing statements and answers in forms A and B, whether written by me or not, are material, and are warranted to be true, and that the foregoing application and this agreement are hereby made part of any certificate of membership or policy that may be issued pursuant thereto.” Assurance Fund v. Allen, 106 Ind. 593, 7 N. E. 317;Insurance Co. v. Miller, 39 Ind. 475. The court erred in overruling the demurrer.

Appellant next claims that the court erred in overruling its demurrer to the seventh paragraph of reply. This paragraph contains substantially the averments of the sixth, and alleges, in addition, that, before Bodurtha became a member of the appellant association, the insured, at...