Reliance Life Ins. Co. v. Sneed

Decision Date07 June 1928
Docket Number8 Div. 844
Citation217 Ala. 669,117 So. 307
PartiesRELIANCE LIFE INS. CO. v. SNEED.
CourtAlabama Supreme Court

Appeal from Circuit Court, Morgan County; O. Kyle, Judge.

Action on a policy of life insurance by Myrtle Sneed against the Reliance Life Insurance Company. From a judgment for plaintiff, defendant appeals. Reversed and remanded.

Actual intent to deceive is not generally element of actionable or defensive fraud (Code 1923, § 8049).

Statement by SOMERVILLE, J.:

The action is brought by Myrtle Sneed, as beneficiary, on an insurance policy issued June 30, 1924, insuring the life of George A. Sneed. The complaint is in Code form, and alleges that the insured died on November 2, 1924.

Besides the general issue the defendant pleaded 22 special pleas numbered from 3 to 24, inclusive; pleas 21 to 24, inclusive being amendments, respectively, of pleas 3, 6, 10, and 13.

Demurrers were sustained to all of these pleas except 14, 16, 19, 20 and 24.

Pleas 3 to 13, inclusive, and 15 and 18, aver that the policy "was issued in consideration of an application therefor, signed by the insured, a copy of which application was set out in the policy and made a part thereof," and that in said application the insured made false representations, viz. that he had not suffered with any disease of the stomach; or had not consulted a physician therefor; or that he was in sound health; or that he had given full answers to and concealed nothing from the examiner. Each of these avers that the insured in fact was not in good health, but was suffering with a cancer of the stomach, except that 7 and 12 allege an ulcer of the stomach, and 13 alleges "serious trouble of the stomach." Each plea avers, also, either that the misrepresentations were made with actual intent to deceive, or that they increased the risk of loss under the policy. None of them avers that defendant was misled by the false statements, or relied upon them in issuing the policy.

Plea 17 sets up certain provisions of the policy, as follows:

"All insurance provided by this contract is based upon the application therefor, a copy of which is hereto attached and made a part of this contract, and the payment of premiums, etc.
"The policy and the application therefor, a copy of which is hereto attached, constitute the entire contract between the parties and shall be incontestable after one year from its date, except for nonpayment of premium. All statements made by the insured in said application shall, in the absence of fraud, be termed representations, and not warranties, and no such statement shall avoid the policy unless it is contained in the written application thereof, a copy of which is hereto attached."

Also, the insured's statement in the application as follows:

"I declare, on behalf of myself and any person who shall have or claim any interest in any policy issued hereunder, each of the above answers to be full, complete and true, and that I have concealed nothing from the examiner, and that, to the best of my knowledge and belief, I am in good health and I am a proper subject for life insurance."

It is then alleged that the insured stated, in his application dated June 14, 1924, that he had not suffered from any ailment or disease of the stomach, and that he knew his answer was false, in that he had consulted a reputable physician on or about June 1, 1924, who X-rayed his stomach and advised him that he had a cancer of the stomach, which was in fact his condition. It is then averred that these misrepresentations were made with actual intent to deceive defendant, and that defendant relied on said representations, and issued the policy.

The amended pleas, 21, 22, and 23, adopt, respectively, all of pleas 3, 6, and 10, and add thereto:

"And defendant was deceived thereby and in reliance thereon issued said policy."

Pleas 14 and 16 set up false representations of good health by insured, when he knew at the time that he was suffering with cancer of the stomach, and aver that they were made with actual intent to deceive, and that defendant relied on them in issuing the policy.

Plea 21 is substantially like 14 and 16.

Pleas 19 and 20 declare upon a breach of warranty in the policy, viz.:

"That the insurance should not take effect unless and until the policy is delivered to and received by the applicant, *** and then only if the applicant is in good health."

It is averred that the insured was not in good health when the policy was delivered on June 30, 1924, but was suffering from a serious disease of the stomach, to wit (plea 19), a cancer of the stomach, or (plea 20) a cancer or ulcer of the stomach.

In each plea it is averred that the stated illness increased the risk of loss under the policy.

To each of the five pleas at issue (14, 16, 19, 20, and 24) plaintiff replied specially as follows: (3) That, notwithstanding the alleged false and fraudulent representations made by the insured, the defendant thereafter and before the issuance and delivery of the policy sued on, had its medical examiner, and who was then and there acting as its duly authorized agent, inquire into the insurability of said insured, and said agent examined the said insured and investigated his physical condition, and said agent reported his conclusions to his principal, the defendant, and the defendant, acting upon the report of its said agent, thereupon and thereafter issued and delivered said policy to the insured. (4) After the insured made his application as alleged in the plea, defendant elected to investigate the physical condition of the insured, having its medical examiner examine the insured's physical condition; that its said medical examiner and agent reported to it that the insured was a fit subject for insurance, and upon considering said report the defendant issued and delivered said policy. Demurrers were sustained to these replications as answers to pleas 14, 16, and 21, on the ground that they were in effect the general issue, and the demurrers were overruled, and the replications sustained as answers to pleas 19 and 20.

Among other grounds of demurrer were the following:

(8) It is not sufficiently shown that defendant's medical examiner knew that the warranties as averred in defendant's pleas were false when made to him by insured.

(28) Said application fails to allege that said defendant knew and was apprised of the falsity of the statements and misrepresentations contained in insured's application at the time of the issuance of the policy.

(29) Said replication fails to allege that the true condition of plaintiff's health, and that he had a cancer, was made known to the defendant, and that said defendant, with such knowledge, issued the policy.

(38) Said replication fails to allege that defendant issued the policy wholly upon the report of its alleged medical examiner, who is alleged to have examined insured.

(40) For aught alleged the defendant issued its policy upon the representations or warranties as set out in defendant's pleas.

(43) Said replication fails to allege that the medical examiner did ascertain the true state of insured's health from said examination.

(47) Said replication fails to allege that defendant issued the policy on the report of the medical examiner.

On the evidence adduced, and under the instructions of the trial judge, the jury found for the plaintiff for $1,062, and, from the judgment thereon, the defendant appeals.

Cabaniss, Johnston, Cocke & Cabaniss, of Birmingham, and Eyster & Eyster, of Decatur, for appellant.

AMPLE & KILPATRICK, OF HARTSELLE, AND S.A. LYNEE, OF DECATUR, FOR APPELLEE.

SOMERVILLE J.

This court has often considered and stated the distinction between warranties which are contractual terms of a policy of insurance, and usually promissory in form, and representations, which are matters of inducement merely, and usually relate to presently existing facts or conditions. Ala. Gold Life Ins. Co. v. Johnston, 80 Ala. 467 470, 2 So. 125, 128, 59 Am.Rep. 816; Mut. Ben. Life Ins. Co. v. Lehman, 132 Ala. 640, 32 So. 733; Kelly v. Life Ins. Clearing Co., 113 Ala. 453, 21 So. 361; Sov. Camp, W.O.W., v. Hutchinson, 214 Ala. 540, 542, 108 So. 520; Brotherhood, etc., v. Riggins, 214 Ala. 79, 107 So. 44. These cases hold that representations will not be regarded as...

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