Pacific Mut. Life Ins. Co. of California v. Edmonson

• Decision Date: 20 January 1938
• Docket Number: 6 Div. 201
• Citation: 235 Ala. 365,179 So. 185
• Parties: PACIFIC MUT. LIFE INS. CO. OF CALIFORNIA et al. v. EDMONSON.
• Court: Alabama Supreme Court

179 So. 185

235 Ala. 365

PACIFIC MUT. LIFE INS. CO. OF CALIFORNIA et al. v. EDMONSON.

6 Div. 201

Supreme Court of Alabama

January 20, 1938

Rehearing Denied Feb. 24, 1938

Appeal from Circuit Court, Jefferson County; J. Edgar Bowron, Judge.

Action on a policy of disability insurance by John Heron Edmonson against the Pacific Mutual Life Insurance Company of California, Samuel J. Carpenter, Jr., Insurance Commissioner of the State of California, as Conservator of said Pacific Mutual Life Insurance Company of California, and the Pacific Mutual Life Insurance Company. From a judgment for plaintiff defendants appeal.

Affirmed.

Coleman Spain, Stewart & Davies, of Birmingham, for appellants.

Bradley Baldwin, All & White, of Birmingham, for appellee.

THOMAS Justice.

The suit was upon a policy of insurance issued September 9, 1921.

The policy was of that type which is known as a "non-cancellable" insurance policy, and provided indemnity for loss of time by accident or sickness. The plaintiff, having become disabled from sickness in 1935, was paid by defendant for a short period of time, about six months, and the defendant then denied further liability because of alleged misrepresentations in the original application for the insurance. The suit sought to enforce the terms of the policy, and the judgment was for the principal payments due on the contract with accrued interest thereon. Defendant's motion for a new trial being overruled, the case was duly appealed to this court.

The sufficiency of count 1 was challenged by demurrer. The count, in substance, alleges that the policy provides that, if disability occurs while that instrument is in force, defendant will pay monthly indemnity during disability; that such eventuality has taken place; that plaintiff has paid all premiums due, and hence is entitled to the sum for which suit is present. The demurrer was properly overruled. Travelers Ins. Co. v. Whitman, 202 Ala. 388, 80 So. 470; National Life & Accident Ins. Co. v. Hannon, 212 Ala. 184, 101 So. 892.

Many special pleas were filed by defendant alleging misrepresentations relied upon, either increasing the risk or made with the intent to deceive, or misrepresentations having both effects. They may be catalogued as follows: (1) Misrepresentations concerning a fractured skull; (2) misrepresentations concerning alleged cancellation of a policy in another company previous to the issue of the policy sued on; (3) misrepresentations concerning a broken leg sustained in plaintiff's boyhood; (4) misrepresentations as to the state of insured's health when the policy was issued; and (5) misrepresentations as to the presence of indigestion, appendicitis, and a duodenal ulcer.

The statement in the application for insurance, applicable to the last misrepresentation relied upon, is as follows:

" '5.E Have you ever had or been treated for: Gastric or Duodenal Ulcer, Indigestion, Appendicitis, Piles, Fistula?' to which the plaintiff answered: 'No.'

"To this answer the defendants averred:

"That the answer to the said question numbered 5E is false in this:

"That prior to and at the time when the application was made as aforesaid, plaintiff had a duodenal ulcer, and had had, or had been treated for indigestion and appendicitis.

"Defendants further aver:

"That said separate and several misrepresentations were made by the plaintiff with actual intent to deceive; that the same related to matters material to the risk and that the Pacific Mutual Life Insurance Company of California did issue and deliver said policy relying on the truth of said answers made by the plaintiff.

"Plea XVI. For this plea defendants adopt all of Plea XV down to and including the words 'plaintiff had a duodenal ulcer, and had had, or had been treated for indigestion and appendicitis' where the same last appears in said Plea, and in addition thereto add the following averments:

"And defendants further aver:

"That said separate and several misrepresentations made by the plaintiff materially affected the acceptance of the risk and the hazard assumed by The Pacific Mutual Life Insurance Company of California.

"Plea XVII. For this plea defendants adopt all of Plea XV down to and including the words 'plaintiff had a duodenal ulcer, and had had, or had been treated for indigestion and appendicitis' where the same last appears in said Plea, and in addition thereto add the following averments:

"And defendants further aver:

"That the facts misrepresented by the plaintiff increased the risk of loss."

The foregoing is sufficient to illustrate the case presented in the trial court, where demurrers to special pleas were overruled.

The plaintiff's replications 2 and 3 allege a waiver of the matters set up in the pleas in that the defendant, with knowledge of the facts, accepted premiums paid by plaintiff.

Hence the case went to the jury on count 1, pleas III to XLIX, inclusive, and replications 2 and 3.

The statutes and our decisions recently declared in effect are as follows: "It is provided by the statutes, sections 8364, 8507 of the Code, that neither misrepresentations nor warranties shall avoid a policy of insurance, unless they were made with (1) the actual intent to deceive, or (2) unless the matter misrepresented increased the risk of loss. As construed by this court, if (1) the actual intent to deceive and the matter misrepresented or breached in the warranty was material to the contract as to its assumption by the insurer, or (2) if the matter misrepresented or breached in the warranty increased the risk of loss, the policy is avoided thereby. Metropolitan Life Ins. Co. v. Chambers, 226 Ala. 192, 146 So. 524; Commonwealth Life Ins. Co. v. Harmon, 228 Ala. 377, 153 So. 755; Commonwealth Life Ins. Co. v. Brandon, 232 Ala. 265, 167 So. 723; Sovereign Camp, W.O.W., v. Moore, 232 Ala. 463, 465, 168 So. 577, 579." Sovereign Camp, W.O.W., v. Thompson, 234 Ala. 216, 174 So. 761, 764.

And it is further declared by the decisions (Woodmen of the World v. Alford, 206 Ala. 18, 24, 89 So. 528, 533) as to the several classes of policies of insurance that: "As applied to policies of insurance, it is elementary law that all terms and provisions thereof shall be construed most strongly against the insurers; that the by-laws of a mutual benefit society shall be construed more favorably to the insured, in view of its object to give insurance, and not unreasonably to deprive one of the same (Union Cent. Relief Ass'n v. Johnson, 198 Ala. 488, 73 So. 816; Sovereign Camp, W.O.W., v. Adams, 204 Ala. 667, 86 So. 737), and that one having authority may waive conditions in a policy intended for the benefit of the insurer ( Mutual Life Ins. Co. v. Lovejoy, 201 Ala. 337, 78 So. 299, L.R.A.1918D, 860; United Order of the Golden Cross v. Hooser, 160 Ala. 334, 341, 342, 347, 49 So. 354.)"

A statement of the facts is that on August 19, 1921, plaintiff made application to the Pacific Mutual Life Insurance Company (one of the appellants) for a policy of insurance providing monthly payments of $1,000 for disability from accident or sickness; that on September 9, 1921, the policy was issued to him, signed by its secretary and president, and countersigned by "W.F. Fitts & Son, Authorized Agent or Manager." The policy recited: "In witness whereof, the company has, by its proper officers, signed this Contract in the City of Los Angeles and caused same to be countersigned by its authorized Agent or Manager, as of the Ninth day of September, 1921."

It is indorsed on the policy, as follows:

"Los Angeles, Calif., September 9, 1923.

"At the request of the Insured under policy No. 4622405, the Disability Monthly Indemnity provided by said policy is hereby reduced from One Thousand dollars per month to Five Hundred dollars per month and the annual premium is hereby changed from Two Hundred twenty-five dollars to One Hundred twelve and 50/100 dollars.

"The Pacific Mutual Life Insurance Company of California."

The company's signature to the above indorsement was authenticated or affixed by its "Assistant Secretary" and by its "Vice President."

We may observe that, by the testimony of Drs. Levine, Carter, and Lewis, the plaintiff was suffering with what is known as "angina pectoris," when he made his application for disability or monthly allowance. Plaintiff, as a witness, testified that until he was so last affected or afflicted in 1935 he was engaged in the practice of medicine (his profession) and regularly discharged his duties as such; that he had no active ulcer attacks "since before I went in the army" and that he has "had gastric disturbances."

The plaintiff, as a witness, further testified of the pertinent matters on which pleas and replications are based. He said "I mean that last attack of duodenal ulcer was in 1919, I said back there, and I wouldn't say definitely when the last attack of duodenal ulcer manifested. To my best knowledge, I believe I did not have it for sometime before I went in the army, and my general health was excellent. When I came out of the army I don't recall having more than symptoms that would show the indication of faulty diet condition, constipation, or something of that kind or character; that I would never have a definite hunger pain. I feel convinced that the ulcer I had back yonder has been healed. I went to the Veterans Administration in 1936. It was in the Spring sometime. As to whether I have a history of having had intermittent duodenitis and ulcers since 1919, I don't recall. I must have told the people there that I had intermittent digestive disturbances, but I don't recall having said that I had duodenal ulcer definitely because I don't think that I was subject to it. You ask me whether I told them that...