Penn Mutual Life Insurance Co. v. Ireton

• Decision Date: 27 February 1937
• Docket Number: 6280
• Citation: 65 P.2d 1032,57 Idaho 466
• Parties: THE PENN MUTUAL LIFE INSURANCE COMPANY, a Corporation, Respondent, v. LEONARD H. IRETON, Appellant
• Court: Idaho Supreme Court

65 P.2d 1032

57 Idaho 466

THE PENN MUTUAL LIFE INSURANCE COMPANY, a Corporation, Respondent, v. LEONARD H. IRETON, Appellant

No. 6280

Supreme Court of Idaho

February 27, 1937

INSURANCE-CANCELATION-APPLICATION FOR INSURANCE-FRAUD-EVIDENCE-ADMISSION OF EVIDENCE-HARMLESS ERROR.

1. Instruction of Administrator of Veterans' Affairs, that information would be given from records of administration in event of litigation in connection with commercial insurance where necessary to prevent perpetration of a fraud or miscarriage of justice, held within power of administrator under statutes.

2. In insurer's action to cancel disability provisions of life policy, copies of affidavits filed by insured with United States Veterans' Bureau in connection with his claim for veterans' compensation held admissible on issue whether insured made false statements in life policy application in regard to his health, as against contention that affidavits were privileged communications, where copies were released pursuant to instructions of Administrator of Veterans' Affairs.

3. In insurer's action to cancel disability provisions of life policy on ground of misrepresentation in application, alleged erroneous admission of testimony of insurer's assistant medical director that medical examination did not contain certain statements held not prejudicial, where there was other competent evidence to the same effect and case was tried to court without jury, in which event it would be presumed that court did not consider alleged inadmissible evidence.

4. In insurer's action to cancel disability provisions of life policy on ground of misrepresentations in application admission of photostatic copy of application and medical examination without admission of deposition of witness upon which application and examination was based held not prejudicial, where application and examination were sufficiently identified and authenticated on cross-examination of insured.

5. Supreme Court would not consider truthfulness of witnesses and weight of testimony as though originally heard in Supreme Court, where trial court considered that appellant's own testimony on examination and cross-examination overcame appellant's contention that all material testimony offered on main question was by deposition and was documentary, since trial court had opportunity to consider not only substance of appellant's testimony but also his conduct and demeanor on witness stand.

6. Evidence that insured stated under oath in connection with his claim for veteran's compensation that he was in bad health and incapacitated for work held to show that insured's statement, in application for life policy, that he was in good health, was false statement intentionally made for purpose of deceiving insurer, warranting cancelation of disability provisions of life policy.

7. Fraud is to be determined from all the facts and circumstances of the case.

8. In insurer's action to cancel disability provisions of life policy containing disability provisions on ground of misrepresentations in application as to insured's health admission of evidence of officers of insurer that policy would not have been issued had insurer had knowledge of true state of insured's health held proper.

9. Admission of subsequent competent evidence corrected alleged error in admitting incompetent evidence where trial was to court without jury.

APPEAL from the District Court of the Third Judicial District for Ada County. Hon. Charles E. Winstead, Judge.

Appeal from judgment canceling disability and double indemnity features of insurance policy, and for repayment of money paid under said disability clause, and for premiums waived. Affirmed.

Affirmed. Costs to respondent.

Oppenheim & Lampert for Appellant.

Assuming some answers to questions in application not to be correct they must be, by the assured, known to be untrue when made, and in order to invalidate the policy there must be proof of actual conscious design to defraud. (Mutual Life Ins. Co. v. Hilton-Green, 241 U.S. 613, 36 S.Ct. 676, 60 L.Ed. 1202; Russell v. New York Life Ins. Co., 35 Idaho 774, 209 P. 273; Turner v. Pacific Mut. Life Ins. Co., 52 Idaho 672 at 681, 20 P.2d 210.)

A charge of fraud implies knowledge. (Davis v. Central Land Co., 162 Iowa 269, 143 N.W. 1073, 49 L. R. A., N. S., 1219. Other citations are: 26 C. J. 1060, sec. 3; 32 C. J. 1287, sec. 513; 32 C. J. 1270, sec. 483.)

A statement by an applicant for accident insurance that he is in sound condition cannot be said to be untrue, as a matter of law, unless he had an ailment of a character so well defined as appreciably to affect his health. (Mays v. New Amsterdam Cas. Co., 46 App. D. C. 249, 46 L. R. A., N. S., 1108; 14 R. C. L., p. 1068, secs. 247, 248, p. 1070, 1071, sec. 249.)

Richards & Haga for Respondent.

Misrepresentations or concealment of facts by an applicant for insurance relative to his health, any prior illness, his hospitalization record, and previous consultations with and treatments by physicians, are a fraud on the insurer and are ample ground for rescission. (Sakallaris v. New York Life Ins. Co., 134 Me. 91, 181 A. 669; John Hancock Mut. Life Ins. Co. v. DeWitt, 259 Ky. 220, 82 S.W.2d 317; John Hancock Mut. Life Ins. Co. v. Yates, 50 Ga.App. 713, 179 S.E. 239; 4 Cooley, Briefs on Insurance, 2d ed., p. 3268.)

Where an applicant knows, or is presumed to know, that the answers given are untrue, the intention to deceive is implied as a matter of law. (Illinois Bankers L. Assn. v. Theodore, 44 Ariz. 160, 34 P.2d 423; Mutual L. Ins. Co. v. Hilton-Green, 241 U.S. 613, 36 S.Ct. 676, 60 L.Ed. 1202; Layton v. New York L. Ins. Co., 55 Cal.App. 202, 202 P. 958; Lyttle v. Pacific Mut. L. Ins. Co., (C. C. A. 6) 72 F.2d 140, 142.)

GIVENS, J. Morgan, C. J., Holden, and Ailshie, JJ., concur.

OPINION

GIVENS, J.

September 30, 1925, respondent issued appellant a life insurance policy containing a permanent and total disability clause under which respondent, upon appellant's application, began payments June 4, 1928, of $ 20 per month, continuing until November 28th, 1933. December, 1928, appellant filed affidavits with the United States Veterans' Bureau at Boise, and by various appeals to the Board of Appeals at San Francisco and the Council of Appeals in Washington, D. C., was granted compensation for a presumptive service-connected disability, i. e., active tuberculosis to a degree of ten per cent or more prior to January 1, 1925. Thereafter, January 26, 1932, appellant verified a complaint filed in federal court to recover payments under a War Risk Insurance policy on the theory that he had become totally and permanently disabled due to his military service, specifically enumerating influenza, bronchitis, pulmonary tuberculosis, tuberculosis of the spinal column (bone tuberculosis), and arthritis as the cause of his permanent total disability.

November, 1933, respondent company becoming cognizant of this suit and appellant's various showings, brought suit in equity to cancel the disability provision of the policy, on the ground that the appellant had knowingly and fraudulently made misstatements in his medical examination to respondent company in his application for insurance.

After a trial without a jury, the district court made the following findings with regard to these representations:

"IV

"That defendant in his written application for such policy of insurance intentionally and willfully concealed from plaintiff the condition of his health and the fact that he was not in sound physical condition at the time of making said application.

. . . .

"XI

"That the said statements, answers and representations so made by the defendant in his application for insurance and relied upon and believed by the plaintiff as true when it issued the said policy were material to the risk assumed by the plaintiff under the said policy, and the said policy was obtained by the defendant because of the untrue, false and misleading statements, answers and representations made by him in his said application, and plaintiff would not have issued said policy of insurance had it known before the same was issued the true facts regarding defendant's previous illnesses and diseases, and regarding his true physical condition.

"XII

"That on or about the 17th day of May, 1928, the defendant made application to this plaintiff for disability benefits under said policy of insurance in which he claimed that he had become totally disabled on the 1st day of November, 1927, and that the nature of the disability was tuberculosis of the first and second lumbar vertebrae, and from time to time thereafter the said defendant has made reports to plaintiff in substance to the effect that he was totally disabled from tubercular spine and arthritis of hip.

"XIII

"That plaintiff, relying upon the proof so submitted of total disability and upon the statements, answers and representations made by defendant in his said application for insurance, and not otherwise, paid to the defendant monthly disability benefits under said policy at the rate of $ 20.00 per month, commencing on or about May 28, 1928, and continuing for a period of 67 months, the last payment being made on November 28, 1933; that the monthly payments so made by plaintiff to defendant aggregate the principal sum of $ 1,340.00. That in addition thereto plaintiff, relying upon the proof of total disability so submitted by defendant and upon the false statements, answers and representations made by defendant in his said application for insurance, and not otherwise, waived six annual premium payments on said policy, beginning with the premium payment due September 28, 1928, said premium payments being in the amount of $ 55.12 each, making a...