Roe v. Nat'l Life Ins. Ass'n

• Decision Date: 17 March 1908
• Citation: 115 N.W. 500,137 Iowa 696
• Parties: ROE v. NATIONAL LIFE INS. ASS'N.
• Court: Iowa Supreme Court

137 Iowa 696

115 N.W. 500

ROE

v.NATIONAL LIFE INS. ASS'N.

Supreme Court of Iowa.

March 17, 1908.

Appeal from District Court, Polk County; Wm. H. McHenry, Judge.

The National Life Insurance Association issued its certificate insuring the life of Thomas S. Roe October 7, 1903, naming his wife, Sarah D. Roe, as beneficiary. The insured died September 4, 1904, and in this action the beneficiary seeks to recover the indemnity promised. The defense interposed was that the insured procured the medical examiner of the defendant company to report him as a fit subject for insurance by fraud, and that the certificate never took effect, owing to a condition therein that it should not become operative until delivered to the applicant in good health. The reply asserted that the defendant's agent prepared the application and procured the insured's signature thereto without reading it to him, or allowing him to read it, and by reason thereof the association was estopped from questioning the truthfulness of the statements contained therein. After the evidence had been introduced, the court directed a verdict for plaintiff and entered judgment accordingly. The defendant appeals. Affirmed.Carr, Hewitt, Parker & Wright and Sullivan & Sullivan, for appellant.

Clark & Byers, Roe & Roe, and A. A. McLaughlin, for appellee.

LADD, C. J.

The insured may not have been in good health at the time the certificate was issued to him by the defendant, but that alone constitutes no defense. The association was not prohibited from carrying such a risk, nor did the insured owe it the duty of warning it against such an undertaking. It was purely a matter of contract between the parties, and, if each acted in good faith toward the other in making it, there is no reason for relieving either from performance, even though the association may rue its bargain. Insurance companies and associations necessarily act through agents, and their medical examiners are the agents whose duty it is to inquire into the insurability of the applicants for insurance. Unless this association's agent was purposely misled by the deceased and inveigled into recommending him to the association as a fit subject for insurance, when but for such deception he would not have done so, it is estopped from putting in issue whether at the time of the issuance or delivery of the certificate he is a fit subject for insurance or not. Section 1812, Code; Weimer v. Insurance Ass'n, 108 Iowa, 451, 79 N. W. 123;Nelson v. Insurance Co., 110 Iowa, 600, 81 N. W. 807;Stewart v. Insurance Ass'n, 110 Iowa, 528, 81 N. W. 782;Peterson v. Insurance Ass'n, 115 Iowa, 668, 87 N. W. 397. In other words, the insurer, having elected to investigate the physical condition of the insured, is bound by the conclusion of its authorized agent and specialist, unless this has been induced by fraud or deceit on the part of the insured, notwithstanding any warranties in the contract to the contrary. This merely requires the parties to deal “at arm's length” when contracting, and without reservation on the part of the insurer of the right to reinvestigate the same subject, after the insured has departed this life, with the design of depriving the beneficiary of the bounty intended. This much is said in response to counsel's animadversions on the character of the risk undertaken by the association in issuing its certificate of insurance to the deceased. A company or association is entitled to no more consideration than an individual in being compelled to suffer the consequences of bad bargains, and if an applicant for insurance, without practicing deception either by false representations or concealing facts he should disclose, can obtain a policy of insurance on his life, even though not a good risk, we know of no reason for not enforcing performance of its conditions.

1. The insured was not a fit subject for insurance, but, as said before, this did not prevent the defendant from promising indemnity upon his death. He did not knowingly mislead the medical examiner as to his physical condition, nor was such examiner deceived. The deceased was examined by a physician, acting for the defendant, who recommended the risk. It is estopped then from setting up as a defense “that the insured was not in the condition of health required by the policy at the time of the issuance or delivery thereof unless the report of the physician was procured by or through fraud or deceit of the assured.” Section 1812, Code. To constitute such fraud or deceit there must have been an intention to deceive, and the examiner must have relied on false statements or representations made by the assured, or been misled by the concealment of facts which good faith required him to disclose. Boddy v. Henry, 126 Iowa, 31, 101 N. W. 447;Ley v. Metropolitan Ins. Co., 120 Iowa, 203, 94 N. W. 568. Had the negotiations for insurance continued after the application had been made, and the health of the applicant become impaired in the meantime, good faith might have required that he disclose the fact. See Equitable Ins. Co. v. McElroy, 83 Fed. 631, 28 C. C. A. 365;Cable v. Insurance Co., 111 Fed. 19, 49 C. C. A. 216. But there was no showing of any delay or of any impairment of his health subsequent to the examination and before the delivery of the certificate. Undoubtedly, some of the statements in the application were not correct. For instance, it was said in answer to questions that he had never had any illness, that he had not consulted physicians, that he had no disease of the heart, and that he was in good health. He had been consulting a physician for several months, and, according to the testimony of the doctor, was then afflicted with a fatal disease of the heart; but the evidence that Roe was not aware of the nature of these answers is conclusive. The defendant's agent prepared the application from information obtained from another application the insured had made to another company some time previous, and, by representing to him that the application was prepared according to the association's...