Northwestern Nat. Life Ins. Co. v. Nalbant

• Decision Date: 15 May 1941
• Docket Number: No. 8624.,8624.
• Citation: 119 F.2d 725
• Parties: NORTHWESTERN NAT. LIFE INS. CO. v. NALBANT et al.
• Court: U.S. Court of Appeals — Sixth Circuit

119 F.2d 725 (1941)

NORTHWESTERN NAT. LIFE INS. CO. v. NALBANT et al.

No. 8624.

Circuit Court of Appeals, Sixth Circuit.

May 15, 1941.

Harvey A. Fischer, of Detroit, Mich. (Oxtoby, Robison & Hull, Harvey A. Fischer, and Lawrence E. Brown, all of Detroit, Mich., on the brief), for appellant.

Ernest P. Lajoie, of Detroit, Mich., for appellees.

Before HICKS, SIMONS, and MARTIN, Circuit Judges.

MARTIN, Circuit Judge.

Appellees, as beneficiaries of a life insurance policy issued by appellant on the life of their brother, Dr. John P. Nalbant, recovered judgment in the District Court on the verdict of a jury for the face amount of the policy with interest from the date of the death of the assured.

The basis of the appeal is that the assured made false representations materially affecting the acceptance of the risk and the hazards assumed by the insurer, and that, therefore, the trial judge should have directed a verdict in favor of appellant. It is charged that the assured, in his application, falsely represented that he was in good health and free from every disease; that he had never occupied the same house or room with a tuberculous person; that there had never been any cases of tuberculosis in his family; that he had not consulted a physician in the last ten years, except for an appendectomy in 1933; and that he did not have and had never had asthma.

The assured, a practicing physician in Plymouth, Michigan, made written application on October 26, 1937, to appellant for an insurance policy, which was issued on November 15, 1937.

Dr. Nalbant had not sought the policy. Indeed, he had at first declined to apply for the insurance. A supervisor and an agent, jointly soliciting, had finally prevailed upon him to take the policy. They had stressed the point that, because he was one of its medical examiners, Dr. Nalbant should have insurance in the Northwestern National.

The insured physician became a patient of Dr. Sturgis at the University of Michigan Hospital in Ann Arbor on January 25, 1938, entered the University Hospital January 28th, and left on February 4, 1938. His case history, given the hospital physicians, revealed that for about one year Dr. Nalbant had suffered from dull epigastric pains, sufficient to awaken him at night. The pain was "slightly relieved by soda, also relieved by heat." Dr. Sturgis noted that the patient's pain "has had a tendency to come on before meals, but also when he sits down to eat" and "at the first sip of liquid his pain becomes intensified." Food offered no relief, nor did alkalies, but the latter relieved the sensation of sour stomach.

Further describing the case history given by his patient, Dr. Sturgis recorded: "He has tried all types of diet, eliminating meats, carbohydrates, etc., but without improvement. * * * His symptoms have tended to be present for several weeks and then disappear for a number of weeks, followed by a recurrence. His appetite has been good but he has been afraid to eat as he attributes his distress to his food. He has gained five or six pounds in weight during the past few months, which he thinks has been due to his taking codliver oil and various tonics. Sometimes when he has had a `sour' feeling in his stomach, he has induced vomiting, with relief. During the past two months he has had an area of tenderness in the right lower quadrant, but no pain. * * * There has been some abdominal bloating but he has not been troubled with eructation of much gas. He has no other complaints except that he has felt tired out for the past few months and feels the need of more sleep — he averages eight or nine hours sleep each night." The insured's trouble was diagnosed as "peptic ulcer" and the treatment prescribed consisted of a sippy diet, as much rest at home as possible for two additional weeks, and certain therapeutic measures.

On February 26, 1938, the insured doctor, himself, in claiming sick benefits under a policy in another company, described the nature of his illness as "peptic ulcer" and stated that he first noticed that he was "beginning to get sick" about a year previously.

The peptic ulcer diagnosis proved to be incorrect, for it is conceded that Dr. Nalbant died on October 3, 1938, of cancer of the secum, or junction of the small and large bowels. Dr. Schneck, an expert witness, described a cancer of the secum as a "very imitating" disease. "It can imitate almost any condition in the intestinal tract," he asserted. "It is one of the hardest conditions there is to diagnose in the intestinal tract until it has reached advanced stages so that it can very well simulate a peptic ulcer."

Dr. Sturgis, who made the wrong diagnosis, testified that, although he could not be sure, he considered it probable, in the light of developments, that Dr. Nalbant had cancer of the secum when the insured first consulted the witness.

Dr. Kerlikowske, assistant director of the University of Michigan Hospital, testified that the hospital records copied from the certificate of death furnished the Registrar of Vital Statistics for the Michigan State Department of Health stated that the cancer which caused the death of the assured had its inception from four to six months prior to the final admission of the assured to the University Hospital on September 14, 1938.

Dr. Bourg of the University of Michigan Hospital staff, who also examined Dr. Nalbant on January 28, 1938, recorded that the patient's health had been good prior to his present illness. The record establishes the fact that, with normal interruptions, Dr. Nalbant practiced his profession steadily until September, 1938.

On these material facts, appellant insists that the jury should not have been permitted to decide the issue of whether Dr. Nalbant obtained the policy in suit by materially false representations affecting the insurance hazard. It is urged that on all the evidence in the case, Dr. Nalbant was not, as a matter of law, entitled to recovery. The appellee replies that the issue involved was a question of fact for the jury, which has been determined with finality against the contention of appellant.

Michigan law governs. The following provision is found in the general insurance law of Michigan: "The falsity of any statement in the application for any policy covered by this chapter shall not bar the right to recovery thereunder unless such false statement was made with actual intent to deceive or unless it materially affected either the acceptance of the risk or the hazard assumed by the insurer." Michigan Statutes Annotated, Vol. 17, Sec. 24.280; C. L. '29, Sec. 12444.

In Krajewski v. Western & Southern Life Ins. Co., 241 Mich. 396, 402, 403, 217 N.W. 62, 64, the Supreme Court of Michigan said: "It will be noted that this statute permits voidance of a policy, in case of a false statement, for any one of three reasons: (1) If made with actual intent to deceive; (2) if it materially affected the acceptance of the risk; (3) if it materially affected the hazard assumed by the insurer." The Court said, further, that this statute "condones no fraud perpetrated by an applicant in obtaining insurance and whitens no lies inducing acceptance of the risk." It is important to observe that the Court recognized that whether a representation made in an application for life insurance was false is a question for the jury, although the materiality of the representation is for the court.

In construing this same statute in North American Life Assur. Company v. Jones, 287 Mich. 298, 283 N.W. 587, 589, the Court said that "Misstatements made in good faith which materially affect acceptance of the risk constitute sufficient grounds for cancellation of the policy." This authority was cited by this court in Mutual Benefit Health & Accident Association v. Snyder, 6 Cir., 109 F.2d 469. See, also, National Life & Accident Insurance Co., Inc., v. Nagel, 260 Mich. 635, 245 N.W. 540; Prudential Insurance Co. of America v. Ashe, 266 Mich. 667, 254 N.W. 243; Metropolitan Life Insurance Co. v. Jankowski, 285 Mich. 291, 280 N.W. 766. But it has been held that, under the Michigan statute, the burden rests upon the insurer to prove not only the falsity of the statement, but an intent to deceive or some other specified material result injurious to the insurer. Business Men's Assur. Co. v. Marriner, 223 Mich. 1, 193 N.W. 907.

Appellant stresses the decision of this court in the Snyder case, supra. But the situation revealed there differs materially from that found here. It was observed in the former opinion that "there is not a fact or circumstance in the case which tends to raise a doubt as to the truth" of the testimony of the insured's family physician that the insured was suffering from a fatal disease around the time of the issuance of the policy, less than two months before his death. There was, therefore, no jury issue in the Snyder case and a verdict for the insurance company was properly directed.

Three other decisions emphasized by appellant have no bearing here. In Subar v. New York Life Ins. Company, 6 Cir., 60 F.2d 239, 240, it was made clear that "the point to be decided is accordingly not one of fraud or misrepresentation, but of contract law where the parties agreed that the insurance should not take effect upon the delivery of the policy and the payment of the premium if the insured...