Pacific Mut. Life Ins. Co. v. Cunningham

• Decision Date: 05 January 1932
• Docket Number: No. 647.,647.
• Citation: 54 F.2d 927
• Court: U.S. District Court — Southern District of Florida
• Parties: PACIFIC MUT. LIFE INS. CO. v. CUNNINGHAM et al.

54 F.2d 927 (1932)

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

No. 647.

District Court, S. D. Florida.

January 5, 1932.

COPYRIGHT MATERIAL OMITTED

Doggett, McCollum, Howell & Doggett, of Jacksonville, Fla., for complainant.

Baker & Baker and Martin Sack, all of Jacksonville, Fla., for defendants.

STRUM, District Judge.

This is a suit in equity seeking the cancellation of three life insurance policies, issued by complainant to the defendant Cunningham, upon the ground that in his written application for the insurance defendant knowingly made material misrepresentation of facts.

The controversy grows out of the following question and answer in the application for the policies:

"7. What injuries, or illnesses, or treatments by or consultations with physicians or practitioners, have you had during last seven years? Give particulars of your illness, injury, consultation or treatment.

"Answer: None."

By the terms of the application, it was agreed that statements therein contained were "complete, true and correct, and that the company, so believing them, would rely and act upon them." The application is dated November 6, 1928.

The evidence establishes that Dr. Cunningham is a practicing physician, who for twenty years had specialized in X-ray work. For three or four years, or possibly longer, prior to March, 1929, Dr. Cunningham was troubled with a "fullness of the throat." In his words, "the right tonsil would give me a little trouble * * * early in the morning when I swallowed my throat might feel a little sore." For this condition, he would have a lady assistant in his office give him X-ray therapy, "which might be once in two or three months, might be once in five or six months." During said period of three or four years he received eight of such X-ray therapies. These were never for more than four minutes at a time, and not frequent enough to atrophy the tonsils, nor for any purpose other than to reduce the swelling. The X-ray applications were for the same purpose as an ordinary person would use a throat gargle to reduce swelling or irritation of the tonsils, and of about the same effect, though the X-ray was more efficient. His tonsils were never so diseased that he considered it necessary to have them surgically removed. He was not in any sense ill, but would take the X-ray applications "just as he would an aspirin tablet for a headache."

These X-ray applications were given "over the right tonsil" by a young woman assistant of Dr. Cunningham, regularly employed in his office. She was in a sense skilled in doing that work, but not entirely so. She was accustomed to giving the same applications to Dr. Cunningham's patients, but always under his direction and supervision. She was not a licensed physician, and did not administer the X-ray without instructions from Dr. Cunningham, but she was something more than a "mere nurse." She had been employed by Dr. Cunningham seven or eight years, and had been trained by him to give X-ray therapy under his direction and supervision, which she was thoroughly competent to do. The method by which the X-ray therapy was applied to Dr. Cunningham was, in its technical aspect, essentially the same as would have been used on any other patient for a like purpose.

About March, 1929, some four months after the application for insurance here in question, Dr. Cunningham experienced a more pronounced and tenacious condition of fullness in his throat. He consulted other physicians, who discovered a cancerous growth upon the vocal cords, which, of course, are in the larynx and below the tonsils, for the removal of which growth Dr. Cunningham immediately underwent an operation with successful results.

Medical and other officers of the complainant, as well as medical officers of three other reputable insurance companies, testified that in their opinion an accurate and truthful answer to question No. 7 was material for intelligent consideration of the risk, and that, had the above-mentioned X-ray therapies been disclosed, Dr. Cunningham's application would have been rejected by their respective companies.

Other medical specialists, in behalf of the defendant, testified that the malignant growth upon Dr. Cunningham's vocal cords, which was the object of the operation, was of such a nature that it would manifest itself in a week at most, and that it was impossible for it to have existed for as long as three or four months before becoming apparent, and that there was no relation or connection between the malignant growth and Dr. Cunningham's tonsils, that the X-ray applications taken by Dr. Cunningham could not have any effect upon his larynx, and that the application of the X-ray to a temporarily swollen tonsil is very similar and practically equivalent to a gargle, except that it is more efficient.

In view of the above-quoted language of the application, the assured's statements therein are representations as distinguished from warranties. Substantial truth in everything material to the risk is, therefore, requisite. Being representations, the statements will not avoid the policy, even though untrue in fact, unless insured knew they were untrue or was chargeable with such knowledge. Ætna L. Ins. Co. v. Moore, 231 U. S. 543, 34 S. Ct. 186, 58 L. Ed. 356, 366; Wharton v. Ætna L. Ins. Co. (C. C. A.) 48 F.(2d) 37; New York Life Ins. Co. v. Hunter (C. C. A.) 32 F.(2d) 173; Security Life Ins. Co. v. Brimmer (C. C. A.) 36 F.(2d) 176; Metropolitan L. Ins. Co. v. Goodman, 10 Ala. App. 446, 65 So. 449; Alabama Gold L. Ins. Co. v. Johnston, 80 Ala. 467, 2 So. 125, 59 Am. Rep. 816; Reppond v. Nat. L. Ins. Co., 100 Tex. 519, 101 S. W. 786, 11 L. R. A. (N. S.) 981, 15 Ann. Cas. 618.

False statements material to the risk, however, if known to be untrue by the applicant when made, will invalidate the policy without further proof of actual conscious intent to defraud or deceive, there being no statute in Florida, such as exists in some states (Mutual Life Ins. Co. v. Hurni C. C. A. 260 F. 641), rendering such statements inoffensive, unless made with intent to deceive. Mutual L. Ins. Co. v. Hilton-Green, 241 U. S. 613, 36 S. Ct. 676, 60 L. Ed. 1202; Moulor v. American L. Ins. Co., 111 U. S. 335, 345, 4 S. Ct. 466, 28 L. Ed. 447, 450; Phœnix Mutual L. Ins. Co. v. Raddin, 120 U. S. 183, 189, 7 S. Ct. 500, 30 L. Ed. 644, 646; Ætna Life Ins. Co. v. Moore, 231 U. S. 543, 556, 34 S. Ct. 186, 58 L. Ed. 356, 365, 366.

Whether or not an applicant has suffered from an illness in the last past seven years is an inquiry material to the risk, in answering which an applicant for insurance must exercise good faith toward the company. The relationship demands fair dealing by both parties. Mutual L. Ins. Co. v. Hilton-Green, supra; Mutual Life Ins. Co. of New York v. Geleynse, 241 Mich. 659, 217 N. W. 790, 56 A. L. R. 702.

The cancellation, however, of an executed contract of insurance is an exertion of the most extraordinary power of a court of equity, which will not be exercised except in a clear case. Atlantic Delaine Co. v. James, 94 U. S. 207, 24 L. Ed. 112. Rescission of such contracts by reason of asserted falsity or inaccuracy of answers to questions, even when properly made warranties, are not favored in the law. Mutual Ben. L. Ins. Co. v. Lehman, 132 Ala. 640, 32 So. 733.

Fraud is never presumed. The burden here is upon the complainant, who asserts the fraud, to show "by clear, cogent, convincing and certain proof" that defendant's answer was materially and knowingly false. Northwestern Mutual L. Ins. Co. v. Wiggins (C. C. A.) 15 F.(2d) 646.

The application being a part of the policy, and having been prepared by the company, an interpretation thereof will be adopted which is most favorable to the insured, if such interpretation be consistent with the language thereof, and if interpretation be necessary to determine its meaning. Royal Ins. Co. v. Martin, 192 U. S. 162, 24 S. Ct. 247, 48 L. Ed. 385; Bennett v. Cosmopolitan F. Ins. Co. (C. C. A.) 50 F.(2d) 1017; Wharton v. Ætna L. Ins. Co. (C. C. A.) 48 F.(2d) 37.

Putting aside the word "injuries," with which we are not here concerned, question No. 7 of the application, when analyzed, is of dual aspect, and may be thus stated as two questions: (1) "What `illnesses' have you had during the last seven years?" (2) "What treatments by or consultations with physicians or practitioners have you had during the last seven years?"

First, therefore, do the matters shown in evidence constitute an "illness," not merely in an abstract sense, but within the fair intendment of the question, so as to charge defendant with material concealment?

Whether or not the applicant intended to deceive in answering the question is of no moment in this case. Absence of intent to deceive will not relieve against the consequences of conscious falsity. New York Life Ins. Co. v. Fletcher, 117 U. S. 519, 6 S. Ct. 837, 29 L. Ed. 934; Provident Sav. Life Assur. Soc. v. Hadley (C. C. A.) 102 F. 856. 857. Nevertheless, the purport and scope of the question, and what disclosures it would ordinarily and reasonably tend to elicit in reply, may be considered upon the issue of falsity vel non. Moreover, for the purpose here under consideration, the word "illness" must be considered in the light of ordinary conception and understanding of that term as used in applications for life insurance, as well as in the light of legal principles defining the term, and not in the light of abstract, scientific technical definitions. Nor is the matter to be determined solely upon the opinions of medical experts, such as were given in evidence here, though the latter will be accorded their appropriate weight. Connecticut Mut. L. Ins. Co. v. Union Trust Co., 112 U. S. 250, 257, 5 S. Ct. 119, 28 L. Ed. 708, 711; Northwestern Mutual L. Ins. Co. v. Wiggins (C. C. A.) 15 F.(2d) 646; Penn Mutual v. Mechanics' Savings Bank (C. C. A.) 72 F. 413, 38 L. R. A. 33.

"Illness" is a term which may properly...