Otte v. Hartford Life Insurance Company

• Decision Date: 30 January 1903
• Docket Number: 13,304 - (207)
• Citation: Otte v. Hartford Life Insurance Company, 93 N.W. 608, 88 Minn. 423 (Minn. 1903)
• Parties: KATHERINE OTTE v. HARTFORD LIFE INSURANCE COMPANY
• Court: Minnesota Supreme Court

93 N.W. 608

88 Minn. 423

KATHERINE OTTE v. HARTFORD LIFE INSURANCE COMPANY

Nos. 13,304 - (207)

Supreme Court of Minnesota

January 30, 1903

Action in the district court for Dakota county to recover $1,500 and interest upon a life insurance policy. The case was tried before Crosby, J., and a jury, which rendered a verdict in favor of plaintiff for the sum demanded. From an order denying a motion for judgment notwithstanding the verdict or for a new trial, defendant appealed. Affirmed.

SYLLABUS

Authority of Insurance Agent.

When a foreign life insurance company has a general manager for this state, with authority to appoint canvassers to be paid by the manager, such canvasser, while engaged in taking applications on blanks furnished by the company, is the agent of the insurer, and his acts within his apparent authority are binding upon it.

Fraud of Agent in Application for Insurance.

Where such an application is made out by the solicitor, and the insured truthfully states the real facts, but the agent writes down his answers incorrectly, and the insured signs the application without knowledge of the fraud, in reliance upon the good faith of the agent, the insurer is not relieved from the liability contract in the policy issued thereon even though there is a provision in the application attached thereto that the statements of the insured therein shall be considered as warranties.

Acceptance of Policy.

In such case the acceptance of the policy, with the application attached, does not require the insured to institute an investigation into its provisions, or the conditions upon which it was issued, to ascertain whether the agent has acted in good faith, since, under such circumstances, the insured may rely upon the presumption that he has been honestly dealt with by the insurer.

Tryon & Booth, for appellant.

The statements made in the application were warranties, first because expressly so stated therein; second, because that would be the legal effect of making the application a part of the policy itself. This rule has been repeatedly recognized by this court. Stensgaard v. St. Paul R.E.T. Ins. Co., 50 Minn. 429, 435; Cerys v. State Ins. Co., 71 Minn. 338; Cushman v. U.S., 63 N.Y. 405; Foot v. AEtna, 61 N.Y. 571. But whether the statements contained in said application were warranties or representations, if false, they would, in the present case, avoid the policy. Price v. Phoenix Mut. Life Ins. Co., 17 Minn. 473 (497); Chambers v. N.W. Mut. Ins. Co., 64 Minn. 495; Bruce v. Connecticut Mut. Life Ins. Co., 74 Minn. 310; Perine v. Grand Lodge A.O.U.W., 51 Minn. 224; Rhode v. Metropolitan, 129 Mich. 112; Smith v. AEtna, 49 N.Y. 211, 215, 216. Knowledge on the part of the solicitor taking the application of a different state of facts from that set forth in the application, would, under the circumstances of the present case, make no difference even if such knowledge had been proven. The legal effect of such statements would remain the same; first, because of the express agreement to that effect in the application; second, because such is the legal effect of signing the application. New York v. Fletcher, 117 U.S. 519; Maier v. Fidelity Mut. Life Assn., 78 F. 566; U.S. Life Ins. Co. v. Smith, 92 F. 503; May, Insurance, §§ 144 F. 144 G., 145 A.; Dimich v. Metropolitan, 67 N.J.L. 367; Finn v. Metropolitan., 67 N.J.L. 17; Ryan v. World, 41 Conn. 168; Foot v. AEtna, supra; Barteau v. Phoenix, 67 N.Y. 595; Brown v. Cattaraugus, 18 N.Y. 385; Alexander v. Germania, 66 N.Y. 464; Chase v. Hamilton, 20 N.Y. 52; Insurance v. Pyle, 44 Oh. St. 19.

The fact that Otte received and kept the policy of insurance in his possession from December, 1900, to May, 1901, with a copy of the application attached, containing the false answers, binds him as having adopted the answers as his own, whether false or true. It is no defense in such case that the deceased did not read the policy. Reynolds v. Atlas Accident Ins. Co., 69 Minn. 93; New York v. Fletcher, supra; Johnson v. Dakota, 1 N.D. 167; Quimby v. Shearer, 56 Minn. 534; Wilkins v. State Ins. Co., 43 Minn. 177; Bostwick v. Mutual, 116 Wis. 392. Even where a party gives correct answers, and the insurance agent puts false ones in the application and a copy of the application is attached to the policy thereafter issued, it is held that the policy is void. New York v. Fletcher, supra; Maier v. Fidelity Mut. Life Assn., supra; U.S. Life Ins. Co. v. Smith, supra; May, Insurance, §§ 144 F. 144 G., 145 A. And even in case of collusion between the insurance agent and the applicant, for the purpose of defrauding the company, the principal is not bound. May, Insurance, § 133 B.; National v. Minch, 53 N.Y. 144; Elliott, Insurance, § 190; Hanf v. Northwestern, 76 Wis. 450.

Ernest Otte and William Hodgson, for respondent.

There was no ambiguity about the provisions of the application, and it was the duty of the court to determine from the contract what was material to the risk. Price v. Phoenix Mut. Ins. Co., 17 Minn. 473 (497). When an insurance agent, authorized to procure applications for insurance and to forward them to the company for acceptance, makes out an application incorrectly, notwithstanding all the facts are correctly stated to him by the applicant. the error is chargeable to the insurer and not to the insured. It was competent under the contract at bar to prove that the assured fully informed the soliciting agent of his condition, and that the agent at the time of the contract had actual knowledge that assured was afflicted with diabetes, and had consulted physicians and received treatment therefor. Brandup v. St. Paul F. & M. Ins. Co., 27 Minn. 393; Kausal v. Minnesota F.M.F. Ins. Co., 31 Minn. 17; Wilson v. Minnesota F.M.F. Ins. Assn., 36 Minn. 112; Whitney v. National Masonic Accident Assn., 57 Minn. 472; Insurance Co. v. Wilkinson, 13 Wall. 222; Rowley v. Empire, 36 N.Y. 550; Viele v. Germania, 26 Iowa 9; Kettenbach v. Omaha, 50 Neb. 846; Van Houten v. Metropolitan, 110 Mich. 682; Beebe v. Ohio, 93 Mich. 514; Stone v. Hawkeye, 68 Iowa 737. Insurance companies cannot shield themselves by inserting in their policies a condition that the soliciting agent shall not be considered the agent of the company. Reiner v. Dwelling House, 74 Wis. 89; Lamberton v. Connecticut Fire Ins. Co., 39 Minn. 129; Dick v. Equitable, 92 Wis. 46; Improved Match v. Michigan, 122 Mich. 256; Jamison v. State, 85 Iowa 229; 16 Enc. Law (2d Ed.) 946.

OPINION

LOVELY, J.

Action on a life insurance policy issued to William Otte, since deceased. His widow is the beneficiary. The cause was tried to the court and a jury. There was a verdict for plaintiff. A motion for judgment, or a new trial in the alternative, was overruled. From this order defendant appeals.

The insured was a farmer living near Randolph, in this state. One E. L. Hills was acting as a canvasser for defendant. Late in November, 1900, he went to the home of Otte, and requested him to apply to defendant for a policy on his life. As a result of Hills' solicitations, he was authorized to make out Otte's application for a policy in defendant's company for $1,500. The application contained questions relative to Otte's health. The answers were written therein by Hills. It was signed by Otte, and forwarded by Hills to the general manager of the company for Minnesota, located at Minneapolis, who then sent it to the general office, at Hartford. In due time the risk was accepted, and a policy issued, which was delivered to the insured, who paid the premium. In the application were the following questions and answers:

"Q. Are you now in sound physical and mental health, so far as you know? A. Yes. Q. How much time have you lost by sickness during the last three years, for which you were attended by or consulted a physician? A. None. Q. When did you last consult a physician? A. Never. Q. For what disease? How long were you sick? Fully recovered? A. None. Q. What are the names and addresses of every physician consulted in the last three years? A. None. Q. Have you now, or have you ever had any of the following discases? If so, give the dates and full particulars. If not, answer 'No.' Asthma, difficulty in breathing, pleurisy, pneumonia, consumption, chronic or persistent cough, spitting of blood, or any lung disease? A. No. Q. Diseases of the liver, kidneys, bladder, enlargement of the prostate gland, renal or hepatic colic from stone or gravel? A. No."

There was attached to the application a certificate for the physician of the company, Dr. Woodward, of Cannon Falls, who was required to examine the applicant and certify to his state of health; but Hills, who was a physician, inserted the answers therein, and carried it to Dr. Woodward, who, at such request, approved and signed the same, relying upon the statements of Hills, instead of an examination by himself, as required by the regulation of the company, which regulation was not known to Otte.

The legal relation of Hills to the insurer and insured is an important subject of contention in determining the liability of defendant. But the facts are not in dispute. Previous to the application, defendant had appointed Samuel Johnson its general manager for Minnesota, to reside in Minneapolis. The manager was authorized to take applications for life insurance, and forward the same to the home office, in Hartford, for action. He was not, however, the only person soliciting insurance for defendant in his territory, for he was authorized by the company to appoint solicitors to canvass for applications, under terms of compensation to be paid by him. Upon this authority, Johnson appointed Hills to solicit insurance for defendant, and furnished him with blank applications for that purpose. Hills entered upon and...