Penn Mut. Life Ins. Co. v. Hartle

• Decision Date: 26 May 1933
• Docket Number: 39.
• Parties: PENN MUT. LIFE INS. CO. v. HARTLE ET AL.
• Court: Maryland Court of Appeals

166 A. 614

165 Md. 120

PENN MUT. LIFE INS. CO. v. HARTLE ET AL.

No. 39.

Court of Appeals of Maryland

May 26, 1933

Appeal from Circuit Court, Washington County; Frank G. Wagaman Judge.

Suit by the Penn Mutual Life Insurance Company against Calvert K Hartle and another, committee of the person and estate of Louis A. McAbee. From a decree dismissing the bill of complaint, the complainant appeals.

Reversed and case remanded in accordance with opinion.

Argued before BOND, C.J., and PATTISON, URNER, ADKINS, OFFUTT DIGGES, PARKE, and SLOAN, JJ.

Augustine S. Mason, of Hagerstown, and Randolph Barton, Jr., of Baltimore, for appellant.

Calvert K. Hartle, of Hagerstown (Elias B. Hartle, of Hagerstown, on the brief), for appellees.

URNER Judge.

A policy issued by the Penn Mutual Life Insurance Company, as of May 25, 1928, insured the life of Louis A. McAbee for $5,000, and by a supplemental agreement, attached to the policy, the company contracted, for additional premiums, to pay to the insured, or to his legal guardian or committee, if he were then insane, the sum of $50 per month in the event of his becoming totally and permanently disabled, and to waive the payment of premiums under the policy during the period of such disability, and to pay double the amount of life indemnity if the death of the policyholder resulted from an accident. In 1931 the insured became insane, and, after due claim and proof, his committee were paid the amounts of the disability benefits accruing under the policy from May 1st of that year until January 1, 1932. There was a coincident waiver of the premiums which otherwise would have been payable under the policy. On January 18, 1932, the insurer learned that the insured had been treated in Johns Hopkins Hospital in 1927 and 1928 for cerebro spinal syphilis. In the application for the insurance it was stated by the applicant that he never had such a disease. After discovering that this statement was false, the insurance company refused to make further monthly payments under the policy and notified the committee of the insured that the provision for disability benefits and waiver of premiums was rescinded. A tender was duly made to repay the premiums collected on account of that phase of the insurance. The committee of the insured refused the tender and also the demand of the insurance company to be reimbursed for the disability payments made prior to the rescission. In this equity suit the company asked for a decree declaring the portion of the supplemental agreement which provided for such payments and the waiver of premiums to be null and void, and requiring the committee of the insured to make the demanded reimbursement. The result of the trial was a decree dismissing the bill of complaint, and the appeal is from that disposition of the case.

The denial in the application for the insurance that the applicant had contracted syphilis was false and material. As to this there is no dispute. It was a misrepresentation which, under the circumstances shown by the record, clearly entitled the insurer to rescind the contract thus induced. Loving v. Mutual Life Ins. Co., 140 Md. 173, 117 A. 323; Mutual Life Ins. Co. v. Willey, 133 Md. 665, 106 A. 163; Metropolitan Life Ins. Co. v. Jennings, 130 Md. 622, 101 A. 608; Forwood v. Prudential Life Ins. Co., 117 Md. 254, 83 A. 169; Stiegler v. Eureka Life Ins. Co., 146 Md. 629, 127 A. 397; Mutual Life Ins. Co. v. Held, 157 Md. 551, 555, 146 A. 755. The question for decision is whether the insurer is prevented from relying upon that ground of rescission, to the extent proposed, by any of the considerations, to be presently stated, which have been urged in opposition to such relief.

In regard to the life insurance, the policy was by its terms incontestable after the lapse of one year from its date, except for nonpayment of premiums. But the disability and double indemnity features of the insurance were, by the supplemental agreement, excluded from the effect of the incontestability provision.

It is contended that the disability clause is indivisible from the other portions of the policy and is, therefore, not subject to separate rescission while the associated terms are recognized by the insurer as remaining in effect. For the proposition that an entire insurance contract is not susceptible of rescission in part, the decision in Stiegler v. Eureka Life Ins. Co., supra, is sufficient authority. The policy in that case was solely for life insurance. In the present case a supplemental agreement provided for the disability insurance with respect to which rescission has been attempted. The terms of that agreement expressed a complete and effective contract as to each of the additional forms of insurance therein described. It thus distinguished between the disability and the double indemnity benefits while making both the subjects of contract supplemental to the life policy. The right of the insurer to rescind the whole of its contract with the insured, because of his material misrepresentation in its procurement, is barred, as to the life insurance, by the stipulation that...