Pacific Mut. Life Ins. Co. v. Manley

• Decision Date: 04 August 1928
• Docket Number: No. 424.,424.
• Citation: 27 F.2d 915
• Parties: PACIFIC MUT. LIFE INS. CO. v. MANLEY et al.
• Court: U.S. District Court — Panama Canal Zone

27 F.2d 915 (1928)

PACIFIC MUT. LIFE INS. CO. v. MANLEY et al.

No. 424.

District Court, N. D. Georgia, Atlanta Division.

August 4, 1928.

Bryan & Middlebrooks, of Atlanta, Ga., for plaintiff.

Colquitt & Conyers, of Atlanta, Ga., for defendants.

SIBLEY, District Judge.

The suit seeks to cancel an insurance policy on the life of Wesley D. Manley, because of misrepresentations in the written application for it, which constitutes part of the policy. The answer seeks to uphold the policy and to collect upon it certain sums due on account of the failure of the health of the insured. The application was made April 9, 1920. Question 15 was in part: "Have you ever had, or have you now, any bodily or mental infirmity, or are you in any respect maimed or in unsound condition mentally or physically? Give particulars" — and was answered, "No." The accompanying medical examination contained question 4, in part as follows: "The applicant must answer each of these questions fully and with special care. Have you now, or have you ever had, any of the following complaints, symptoms or diseases? Headache? Neuralgia?" Answer: "No." Mental derangement or any other nervous disease not mentioned above?" Answer: "No." Question 5 was: "Have you ever consulted or been treated by a physician or other practitioner for any ailment or disease? If so, give dates and full particulars." Answer: "Only for influenza, light case, three months ago, two days' duration." Question 17 was: "Do you agree that the falsity of any answer in this application for insurance, or any answer made to the company's medical examiner in continuance of this application for insurance, shall bar the right to recover thereunder, if such answer is made with intent to deceive, or materially affects either the acceptance of the risk or the hazard assumed by the company?" Answer: "Yes."

The agreement made in the last question is in line with the statute law of Georgia under which the contract was made. Code, §§ 2479, 2480 (made applicable to life insurance by section 2499), are:

"Every application for insurance must be made in the utmost good faith, and the representations contained in such application are considered as covenanted to be true by the applicant. Any variation by which the nature, or extent, or character of the risk is changed will void the policy. Any verbal or written representations of facts by the assured to induce the acceptance of the risk, if material, must be true, or the policy is void. If, however, the party has no knowledge, but states on the representation of others, bona fide, and so informs the insurer, the falsity of the information does not void the policy."

By section 21 of the Acts of 1912, p. 119, a medical examination was required in insurance such as this, and it was provided that the beneficiary might collect the insurance, "unless the applicant or beneficiary has been guilty of actual fraud or has made material misrepresentations in procuring such policy, which misrepresentations change the character and nature of the risk, as contemplated in the policy so issued by the Company." This act did not change the former law as to the effect of misrepresentations. Lee v. Metropolitan Co., 158 Ga. 517, 123 S. E. 737.

That representations as to the previous health of the insured are in general material, when not only life, but future health, are to be insured, requires neither argument nor authority to prove. Even though a misrepresentation relates to a time several years prior to the application, it is material, unless it is very clear that the ill health was due to a transient cause, and left no bad effects. Mental derangement, because of its obscurity, especially might well be traced back indefinitely. Statements as to consultations with and treatment by physicians are always considered material, because the means are thereby furnished for the company to check the information and good faith of the applicant as to the nature and extent of his ailments. See Metropolitan Life Insurance Co. v. James, 37 Ga. App. 678, 141 S. E. 500; Jefferson Standard Life Ins. Co. v. Henderson, 37 Ga. App. 704, 141 S. E. 498; New York Life Insurance Co. v. Price (C. C. A.) 16 F.(2d) 660.

And it will be noted that the actual falsity of the representations, if they materially affect the nature and character of the risk, independently of intentional deceit, which also invalidates, defeats the insurance, both under the agreement in question 17, the Georgia statutes, and the decisions of the courts, supra. See, also, Prudential Insurance Co. v. Moore, 231 U. S. 560, 34 S. Ct. 191, 58 L. Ed. 367; New York Life Insurance Co. v. McCarthy (C. C. A.) 22 F.(2d) 241. Good faith is not a reply to actual falsity, unless the representation is made on information from others, and the insurer is...