Prudential Ins. Co. of America v. Whittington

• Citation: 98 So.2d 382
• Decision Date: 15 November 1957
• Docket Number: No. 83,83
• Parties: The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Appellant, v. Eleanor WHITTINGTON, Appellee.
• Court: Florida District Court of Appeals

Page 382

98 So.2d 382

The PRUDENTIAL INSURANCE COMPANY OF AMERICA, Appellant, v. Eleanor WHITTINGTON, Appellee.

No. 83.

District Court of Appeal of Florida, Second District.

Nov. 15, 1957.

Knight & Bell, Tampa, for appellant.

Julian H. Lifsey, Jr., Robert L. Pursifull, Tampa, for appellee.

PLEUS, Judge.

The action below was at law to recover on a life insurance policy brought by the widow as beneficiary thereunder, issued by the defendant below who is appellant here, upon the life of Jay R. Whittington. The face of the policy was $9,000, the cause was submitted to the jury and a verdict in the sum of $4,500 returned upon which final judgment was entered and to which final judgment this appeal is directed. The parties will be referred to as they appeared in the court below, the beneficiary as plaintiff, the insurer as defendant, and the deceased as the insured or applicant.

On November 20, 1953 the applicant made a written application for the insurance involved. In Part 2 thereof, he was asked and answered as follows:

'15. Question: Have you lost any time from work through illness during the past five years? Answer: No.

'16. Question: Have you consulted or been attended by a physician for any reason during the past five years? Give names, addresses, dates and reasons. Answer: No.

'18e. Question: Have you ever had: * * * a gastric or duodenal ulcer, * * * stomach * * * intestinal * * * trouble, or any indication of any disorder of the stomach * * * intestines * * *? Answer: No.

'18h. Question: Have you ever had: Any X-rays for diagnostic purposes or treatment * * *? Answer: Yes. State Health survey--annually 3 years. Results negative.' ¹

The policy applied for, except for a preliminary term of two months, was what is referred to in the application as modified life at the standard premium rate. Because of the age of the insured and the fact that the amount applied for was less than $10,000, the policy was subject to issuance on a nonmedical basis, i.e. without actual medical examination.

The customary credit reports were run and the policy was actually issued and became effective as of January 28, 1954 with the interim term in the same face amount effective as of November 28, 1953, the policy being actually delivered December 2, 1953. The purpose of this arrangement was so that at the reduced cost for term insurance the policy could become effective as to coverage with the higher rate being postponed for the two months interim. The applicant paid the sum of $16.02 of the interim term coverage.

Twenty-nine days after delivery of the policy and on December 31, 1953 insured suffered an intestinal hemorrhage, was admitted to the hospital January 2, 1954; surgery was performed January 5, 1954, and the insured died January 14, 1954, the medical cause of death being gastro-intestinal hemorrhage due to a penetrating duodenal ulcer.

The company denied liability and complaint was filed by the plaintiff September 22, 1954. To the complaint the defendant filed affirmative defenses that the answers to Questions 15, 16, and 18e were false in fact and the answer to Question 18h was falsely incomplete and constituted fraudulent concealment.

The plaintiff then filed a reply setting up that the applicant's statements were made in good faith, that he believed himself to be in good physical condition and with a normal life expectancy. Motion to strike this reply was denied.

At the trial it was conclusively proved as follows:

1. That the applicant had lost time from work through illness during the period of sixteen months preceding the application and that he knew the cause of such illness to be an ulcer.

2. That applicant had consulted a physician, making six visits to him, during the first six months of 1952 at which time his illness was diagnosed as an active duodenal ulcer and of such fact applicant was fully apprised. Likewise was it proved that applicant consulted a physician in June of 1953 because of illness resulting from the ulcer.

3. That applicant had a duodenal ulcer in 1952 of which he had express knowledge and that he in fact died as a result thereof.

4. That applicant had had an X-ray for diagnositc purposes in January 1952 which X-ray showed an active duodenal ulcer and of which fact applicant was apprised.

It was further shown that upon being admitted to the hospital on January 2, 1954 applicant and plaintiff, jointly and in the presence of each other, furnished the physician at the hospital with applicant's medical history fully disclosing to such physician the past history of the ulcer. ²

The basic question is whether or not the above recited facts and proofs are such to avoid the policy as a matter of law. ³ We have no hesitancy in saying that they are and that the court below erred in allowing the case to go to the jury on the false premise of alleged good faith. ⁴ It would be almost sufficient to conclude the opinion at this point. However, in view of the uncertainty injected into the law of Florida by certain federal decisions we deem it essential to place the matter finally at rest.

We unhesitatingly state that the rule in Florida from the time originally announced to and including the present has been:

That there is nothing mysterious or unique in contracts of insurance in this regard; that an applicant for insurance is bound to exercise toward the company the same good faith which he may rightly demand of it; that fair dealing by both parties should be expected. Therefore, a failure on the part of an applicant to truthfully answer material questions propounded by the company concerning facts within his knowledge, will invalidate the policy without proof of any actual, conscious design or intent on his part to defraud; and accordingly in such case there is nothing to submit to the trier of the facts dealing with the alleged good faith of the applicant. This rule is not only common sense, in keeping with the general rules of contract law but is likewise the only rule consonant with moral principle and ethical business dealing.

This case does not involve the situation where there is a mere expression of opinion concerning the general health or insurability of the applicant. Cases calling attention to this distinction are noted in the margin. ⁵ Nor does this case concern itself with inconsequential and immaterial matters involved in the answers of an applicant such as disclosing consultations with a physician for slight or temporary ailments. ⁶ Nor does this case involve the situation where, in good faith the applicant truthfully answers but the soliciting agent or the medical examiner inserts false or incomplete replies. ⁷ We are equally unconcerned with the ramifications of the situation existing where the company conducts its own independent investigation, complete enough to satisfy itself and in reliance thereon elects to contract with the applicant. ⁸

Having now eliminated the matters not involved we are better able to focus attention upon the precise deviation by our brethren of the federal bench injecting the uncertainty that gave rise to the erroneous premise in the court below:

Beginning in Mutual Life Ins. Co. of New York v. Denton, 1927, 93 Fla. 276, 112 So. 53, the Supreme Court of Florida announced the rule heretofore stated that an untrue answer knowingly made to a question which is material, vitiates the policy. It cited with approval a long list of cases including Mutual Life Ins. Co. of New York v. Hilton-Green, 1916, 241 U.S. 613, 36 S.Ct. 676, 60 L.Ed. 1202.

The rule, rather than being weakened was reaffirmed in Kincaid, footnote 5, supra, wherein the Supreme Court said [122 Fla. 283, 165 So. 559]:

'It is also academic that failure by the one insured to disclose conditions material to the risk of which he is aware make the contract voidable at the insurer's option. This principle is well settled and is approved by this court.'

The true rationale of Kincaid is that where a policy of insurance has been carried long enough to acquire equities under its terms and the company frustrates the maturity of such equities the insured cannot thereafter be deprived of them; particularly in view of the fact that the company made its own additional investigation as the result of which, so says the Supreme Court:

'All the evidence relied on to cancel the reinstated policies were (sic) present and available at the time of reinstatement.'

Seventeen days before the decision in Winer, footnote 6, supra, the Supreme Court decided Thompson v. New York Life Ins. Co., 1940, 143 Fla. 534, 197 So. 111 in which it reaffirmed Denton and Hilton-Green; cited with approval Aetna Life Ins. Co. v. Moore, 231 U.S. 543, 34 S.Ct. 186, 58 L.Ed. 356, and held that false answers on matters material to the risk were sufficient to vitiate the policy; that an insurance company is entitled to exercise its discretion and judgment and elect to contract or not contract on the basis of such information as it may desire regarding the physicial condition of the applicant; and that it is the duty of an applicant to answer truthfully the questions which he assumes to answer and which are to become a part of his application and of the contract. The question of whether these disclose facts material to the risk are matters for the insurer to determine and it can only reach a fair determination when furnished with truthful answers. The Circuit Court had adjudged as a matter of law that plaintiffs were not entitled to recover and reversed the Civil Court of Record; on petition for certiorari the writ was denied.

In Winer v. New York Life Ins. Co., footnote 6, supra, there is some fuzzy language but the unquestioned crux of the decision is to interpret Kincaid, supra, as not having been decided on any test of good faith but rather upon the additional investigation disclosing all evidence relied on; and in drawing the distinction between immaterial and inconsequential answers concerning slight or temporary...