Pelican v. Mutual Life Ins. Co. of New York

• Decision Date: 08 December 1911
• Citation: 119 P. 778,44 Mont. 277
• Parties: PELICAN v. MUTUAL LIFE INS. CO. OF NEW YORK.
• Court: Montana Supreme Court

119 P. 778

44 Mont. 277

PELICAN v. MUTUAL LIFE INS. CO. OF NEW YORK.

Supreme Court of Montana

December 8, 1911

Appeal from District Court, Silver Bow County; Jeremiah J. Lynch Judge.

Action by Jennie Pelican against the Mutual Life Insurance Company of New York. Judgment for plaintiff, and defendant appeals. Affirmed.

Action on a policy of insurance. The Mutual Life Insurance Company of New York, the defendant, on October 9, 1908, issued to Henry Pelican, in Butte, Mont., a policy of insurance on his life for $1,000, designating the plaintiff herein, his surviving wife, the beneficiary; the consideration being the payment of an annual premium of $25.24. One of the conditions of the policy was the following: "This policy and the application therefor, a copy of which is indorsed hereon or attached hereto, constitute the entire contract between the parties hereto. All statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties, and no such statement of the insured shall avoid or be used in defense to a claim under this policy unless contained in the written application herefor, copy of which is indorsed hereon or attached hereto."

The application contains this recital: "This application is made to the Mutual Life Insurance Company of New York. All the following statements and answers, and all those that I make to the company's medical examiner, in continuation of this application, are true, and are offered to the company as an inducement to issue the proposed policy, which I hereby agree to accept and which shall not take effect unless and until the first premium shall have been paid, during my continuance in good health, and unless also the policy shall have been issued during my continuance in good health; except in case a binding receipt shall have been issued as hereinafter provided."

During the course of his examination, Pelican was questioned as to the condition of his health then and theretofore. The questions and answers thereto were, among others, the following, omitting immaterial matters: "Q. 3 (a). What illnesses, diseases, or accidents have you had since childhood? A. Name of disease: Influenza. Number of attacks One. Date of each: Aug. 26, '08. Duration: Two weeks. Severity: Moderate. Q. 3 (b). Have you stated in answer to question 3 (a) all such illnesses, diseases, or accidents? A. Yes. Q. 4. State every physician whom you have consulted in the past five years. A. Name of Physician: Dr. Matthews. Address: Butte, Mont. When consulted: Aug. 26, '08. Nature of complaint: Give full details above under Q. 3 (a). A. Influenza as above. *** Q. 6 (a). Are you now in good health? A. Yes. *** Q. 8. Have you undergone a surgical operation? A. No. *** Q. 12(a). Have you gained or lost weight in the past year? A. No. *** Q. 19 (a). Has any member of your household suffered from tuberculosis or consumption during the past year? A. No."

The complaint is in the ordinary form, alleging the execution and delivery of the policy upon payment of the stipulated premium, the death of the assured on July 29, 1909, the furnishing of due proof to the defendant, and its refusal to pay the amount stipulated for in the policy, or any part thereof. The defendant admits, substantially, all the allegations of the complaint. It then alleges as an affirmative defense that, when Pelican made application for the policy, he was examined by defendant's medical examiner; that his answers to the several questions quoted in the foregoing statement and incorporated in the application were wholly untrue; that they were known to him to be untrue that defendant believed them to be true and relied upon the truth of them; that it would not otherwise have accepted the application or issued the policy; and that, because of said untrue statements and misrepresentations so made, the policy never became binding as a contract of insurance. Upon these allegations there was issue by reply. The jury found for the plaintiff for the full amount of the policy, with interest from December 17, 1910. From the judgment entered thereon and from an order denying its motion for a new trial, the defendant has appealed.

Mattison & Cavanaugh and H. G. & S. H. McIntire, for appellant.

M. F. Canning, for respondent.

BRANTLY, C.J. (after stating the facts as above).

1. Plaintiff, being sworn, testified that she was the surviving wife of Henry Pelican, the beneficiary named in the policy, and that no part of the sum stipulated for therein had been paid. Her counsel then introduced the policy and rested. Thereupon counsel for defendant moved for a nonsuit on the ground that plaintiff had failed to show that Pelican was in good health at the time the policy was delivered. The motion was overruled. Defendant assigns error. Counsel argue that, since in the application Pelican agreed that the contract should not become effective unless the first premium was paid and the policy was issued during his "continuance in good health," it had not become a binding contract in the absence of evidence showing that he was in good health at the date of its issuance. The ruling was proper. It stood admitted by the answer that the first premium had been paid and retained by the defendant. Under this condition of the case, the plaintiff was entitled to judgment, in the absence of evidence tending to establish the fraud upon which alone the defendant relied to avoid the contract. Therefore the burden was upon the defendant. Revised Codes, § 7972. Furthermore, if any evidence had been necessary to make out a prima facie case, the application, a copy of which was attached to the policy, recites that the binding receipt had been given by the solicitor of the defendant upon a completion of the medical examination.

2. During the cross-examination of the plaintiff, counsel for defendant had her identify the papers containing the proof of death furnished by her to defendant, and then offered them in evidence for the purpose of showing the cause of the death. They were excluded. There was no issue in the pleadings as to the cause of death. If material for any purpose, the evidence tended to show that, at the time the application was signed, Pelican was probably suffering from tuberculosis, and therefore that his statement that he was in good health was not true. The inquiry in this regard appertained to defendant's affirmative defense, and, since the plaintiff had not given testimony on this subject, it was not within the right of counsel to cross-examine her with reference to it. Borden v. Lynch, 34 Mont. 503, 87 P. 609.

3. The next contention is that the court erred in overruling defendant's motion for a directed verdict. Counsel's theory of the case is that the statements contained in the application touching the condition of Pelican's health were warranties, and that, since they were conclusively shown to be untrue, the result was that the policy was avoided. The assumption by counsel is erroneous.

The general rule is that a warranty must be a part and parcel of the contract--made so by express agreement of the parties upon the face of the policy. It is in the nature of a condition precedent and must be strictly complied with or literally fulfilled, to entitle the assured to recover on the policy. It need not be actually material to the risk; its falsity will bar recovery because by the express stipulation the statement is warranted to be true, and thus is made material. Alabama Gold Life Ins. Co. v. Johnston, 80 Ala. 467, 2 So. 125, 59 Am. Rep. 816; Collins v. Metropolitan Life Ins. Co., 32 Mont. 329, 80 P. 609, 1092, 108 Am. St. Rep. 578.

"A representation is not, strictly speaking, a part of the contract of insurance, or of the essence of it, but rather something collateral or preliminary, and in the nature of an inducement to it. A false representation, unlike a false warranty, will not operate to vitiate the contract, or avoid the policy, unless it relates to a fact actually material, or clearly intended to be made material by the agreement of the parties. It is sufficient if representations be substantially true. They need not be strictly, or literally, so. A misrepresentation renders the policy void on the ground of fraud, while a noncompliance with a warranty operates as an express breach of the contract." Alabama Gold Life Ins. Co. v. Johnston, supra.

When, therefore, the statements are mere representations, the transaction becomes a matter of fair dealing on the part of the insured; and, if it appears from the application that the questions put to the applicant call for information founded upon his knowledge or belief, a misstatement or omission to answer will not avoid the policy, unless the answer is made knowingly and willfully with intent to deceive. Mutual Life Ins. Ass'n v. March, 118 Ill.App. 261; Globe Mutual Life Ins. Co. v. Wagner, 188 Ill. 133, 58 N.E. 970, 52 L. R. A. 649, 80 Am. St. Rep. 169; Moulor v. American Life Ins. Co., 111 U.S. 335, 4 S.Ct. 466, 28 L.Ed. 447; Ames v. Manhattan Life Ins. Co., 40 A.D. 465, 58 N.Y.S. 244; Horn v. Amicable Life Ins. Co., 64 Barb. (N. Y.) 81; Equitable Life Assur. Soc. v. McElroy, 83 F. 631, 28 C. C. A. 365; Caruthers v. Kansas Life Ins. Co. (C. C.) 108 F. 487; Henn v. Metropolitan Life Ins. Co., 67 N. J. Law, 310, 51 A. 689; 25 Cyc. 800; 3 Cooley's Briefs on the Law of Insurance, 1956.

It is true that in the application there is found the statement that the answers made to the medical examiner were true and were made to the company "as an inducement to issue the proposed policy." Yet it appears, from the condition quoted above from the policy itself, that in the absence of fraud these statements were to be "deemed as representations and not warranties." Of course, if they were...