Prudential Insurance Company of America v. John Moore

• Decision Date: 22 December 1913
• Docket Number: No. 47,47
• Citation: 34 S.Ct. 191,58 L.Ed. 367,231 U.S. 560
• Parties: PRUDENTIAL INSURANCE COMPANY OF AMERICA, Petitioner, v. JOHN T. MOORE, Administrator of John Andrew Salgue, Deceased
• Court: U.S. Supreme Court

231 U.S. 560

34 S.Ct. 191

58 L.Ed. 367

PRUDENTIAL INSURANCE COMPANY OF AMERICA, Petitioner,

v JOHN T. MOORE, Administrator of John Andrew Salgue, Deceased.

No. 47.

Argued November 6, 1913.

Decided December 22, 1913.

Messrs. Eugene R. Black, Sanders McDaniel, and Edward D. Duffield for petitioner.

Messrs. Minter Wimberly, Alexander Akerman, and Jesse Harris for respondent.

Mr. Justice McKenna delivered the opinion of the court:

Action upon a policy of insurance for $5,000, issued by petitioner, herein called the insurance company, upon the life of John Andrew Salgue. It was consolidated and tried with the case against the AEtna Company, and resulted in a verdict for the amount of the policy, upon which judgment was entered. It was affirmed by the circuit court of appeals and the case was then brought here. Though consolidated in the district court with the other case, it is here upon a separate record and submitted upon a separate argument. It, however, involves some of the same fundamental questions.

Salgue, in his application for insurance, declared and warranted that he was in good health and that all the statements and answers to the questions put to him were complete and true, and that the declaration should constitute a part of the contract of insurance applied for. He further agreed that the policy should not take effect until the same should be issued and delivered by the company while his health was in the same condition as described in the application.

Certain provisions were made part of the policy, among others, that 'no agent has power in behalf of the company to make or modify this or any contract of insurance, extending the time for paying a premium, to waive any forfeiture, or to bind the company by making any promise, or making or receiving any presentation or information.'

On the medical examination he declared as follows: 'I hereby warrant that the answers to these questions are true and correct, and that they shall form a part of the contract of insurance applied for.' The questions in the application and the answers thereto were as follows:

'Has any company or association ever declined to grant insurance on your life, or issue a policy of a different kind, or for a sum less than that applied for?

Answer: 'No.'

'If 'yes,' give name of company or companies and when.'

(No answer was given to this question.)

'Is application for insurance on your life pending at this time in any other company; if so, give the name of the company.'

Answer: 'Yes; Provident Savings Life.'

'When were you last attended by a physician?'

Answer: 'Early spring of 1905.'

'For what complaint?'

Answer: 'Bilious fever, two days.'

'Have you ever had any serious illness?'

Answer: 'No.'

'Are you in good health?'

Answer: 'Yes.'

There was testimony in the case tending to show that these answers were untrue; that he had chronic acid gastritis and heart disease, and that other applications for insurance were pending, and others not granted. And it is urged that, the answers to the questions above stated being in the negative, he omitted to answer other questions which were material to be answered in order to make his statement complete and truthful; that therefore his omission to answer amounted to a fraudulent concealment.

Error is assigned on the ruling of the court refusing to direct a verdict for the insurance company and refusing certain special instructions.

The policy is conceded to be a Georgia contract, and it is contended that the warranties contained in the application were all material to the risk, and that they were all broken (1) because the evidence showed that the answers to the questions were false, thereby avoiding the policy; (2) the policy was not delivered to Salgue while he was in good health, that being a condition precedent to its taking effect; and (3) the policy was void by reason of incomplete and untruthful answers. This, it is urged, is the effect of the Georgia law, which, while it modifies the imperative character of statements by an applicant for insurance as warranties, yet provides that any variation from the facts stated 'by which the nature or extent or character of the risk is changed will void the policy.' Code of Georgia, § 2479.

The insurance company, therefore, to sustain its contention that a verdict should have been directed for it, must establish that the representations were material to the risk, and that they were untrue. Whether they were untrue is a question of fact; and as the proposition of law which the insurance company relies upon is exhibited by the special request, we shall pass to the consideration of the latter. It presents the question of the materiality of Salgue's statements to the risk as one of law. The court submitted it to the jury as a question of fact, and made as elements of decision Salgue's motive, his good or bad faith, his mistake or fraud in making the representations. This, we think, is the sense conveyed by the charge of the court, as we said in AEtna L. Ins. Co. v. Moore, just decided [231 U. S. 543, 58 L. ed. ——, 34 Sup. Ct. Rep. 186], notwithstanding there are here and there qualifying words and a distinction made between misrepresentation of facts and the concealment of them. A few excerpts from the charge will illustrate this. After defining a warranty the court said: 'On the other hand, representations are statements made to give information to the insurer, and otherwise induce it to enter into the insurance contract, and unless distinctly material, and made with fraudulent purpose (italics ours) do not avoid the policy. . . . Substantial integrity of conduct on the part of both insurer and insured is the prime object the law seeks to obtain. . . . The law of Georgia, while requiring that every application for insurance must be made in the utmost good faith, and that representations are considered as covenanted to be true, otherwise the policy will be voided, also provides that a failure to state a material fact, if not done fraudulently, does not void the policy. On the other hand, the wilful and fraudulent concealment of such a fact which would enhance the risk of the company will have the effect to void it. What is here stated to be true of wilful concealment is...