O'Rourke v. John Hancock Mpt, Life Ins. Co.

• Decision Date: 06 January 1902
• Citation: 50 A. 834,23 R.I. 457
• Parties: O'ROURKE v. JOHN HANCOCK MPT, LIFE INS. CO.
• Court: Rhode Island Supreme Court

50 A. 834

23 R.I. 457

O'ROURKE

v. JOHN HANCOCK MPT, LIFE INS. CO.

Supreme Court of Rhode Island.

Jan. 6, 1902.

Action by Mary A. O'Rourke against the John Hancock Mutual Life Insurance Company. Verdict for plaintiff, and defendant petitions for a new trial. Denied.

Irving Champlin, for petitioner.

John Doran, for defendant.

STINESS, C. J. This is an action on a policy of life insurance, in which the plaintiff is the beneficiary, upon the life of her son, a boy 15 years old when the policy was issued. The defense is that the application contained false answers to questions which are made warranties by the terms of the policy. To the question, "Has this company ever refused to issue a policy on this life?" the answer was, "No." The plaintiff admits in her testimony that she knew that the boy had been previously rejected by this company, and says that she and her husband so stated to the agent who took the application and wrote in the answers, but that she did not know what he wrote. A question and answer of the same import is repeated on the back of the application in the statement to the medical examiner. Another question, "When did you last consult a doctor, and for what?" was answered, "Two years ago; bronchitis; not predisposed." Another question, asking if the boy had ever had any serious illness from either one of 15 diseases named, including rheumatism, was answered, "No." A previous application had an answer that the boy had consulted a doctor for rheumatism in January, 1893. The case was tried to a jury, and a verdict was rendered in favor of the plaintiff for the sum of $243.40, the amount claimed, and the defendant petitions for a new trial, upon the grounds that the verdict was against the evidence, and that there were errors of law in rulings at the trial.

The first, third, fifth, and sixth exceptions were to the admission of testimony by the plaintiff that at the time of this application the defendant's agent was told that the applicant had been previously rejected by this company, and as to the powers of the agent Taken by themselves, the rulings were erroneous. In Reed v. Insurance Co., 17 R. I. 785, 24 Atl. 833, 18 L. R. A. 496, this court adhered to the rule, recognized in this state since Wilson v. Insurance Co. (1856) 4 R. 1. 141, that an agent in simply procuring Insurance is the agent of the applicant and not of the company, in drawing the application, and that the applicant is responsible for his mistakes and false answers. See, also Bryan v. Association, 21 R. I. 149, 42 Atl. 513. Testimony of what was stated to or by the solicitor was therefore immaterial. The effect of these rulings will be considered later.

The second exception related only to the form of a question claimed to be leading, which is not important.

The fourth exception was to the refusal of the trial judge to direct a verdict for the defendant, because of failure to prove the warranties embraced in the questions and answers stated above. It was held in Sweeney v. Insurance Co., 19 R. I. 171, 36 Atl. 9, 38 L. R. A. 297, 61 Am. St. Rep. 751, that such answers are warranties, which must be proved by the plaintiff, but which, for convenience of trial, may stand on presumption or prima facie evidence until contradicted, like the signature and consideration of a promissory note. There was, however, testimony that the answers were true, except as to rheumatism and the previous rejection, which will be considered under the seventh and eighth exceptions.

The seventh exception relates to an alleged statement by the solicitor that the former rejection was an immaterial matter, which statement, if made, would bind the company. It does not appear from the charge that the judge so ruled, but inasmuch as the jury were allowed to consider the fact whether the agent made the statement the exception is applicable. The solicitor in making the application, being, as we have said, the agent of the insured, would not bind the company by his statements. But another question is presented which renders this question of fact of what the agent said quite unimportant. The previous application was in the hands of the company. The rejection of it was by the defendant itself. The purpose of warranties in a policy is not to set a trap for applicants, but to inform the company about important facts upon which the contract is based. When, therefore, a company is in actual possession of knowledge of a fact, and by turning to its own record can assure itself better than by the imperfect memory of an applicant, it is a perversion of the purpose of a warranty to allow it to avoid a contract. It is evident injustice for one party to allow another to enter into a contract which the former knows, or is bound to know, is invalid. As stated in Reed v. Insurance Co., 17 R. I. 785, 24 Atl. 833, 18 L R. A. 496, it is taking advantage of one's wrong. See, also, Greene v. Insurance Co., 11 R. I. 434.

The defendant argues that it is unreasonable to hold that a company is bound to have present knowledge of all that appears on its previous files. To this suggestion at the trial the judge asked the pertinent question: "Any more so than it was to ascertain that fact just after the boy died? They have taken the money. Now, just as soon as the boy died, and the beneficiary asks to be paid. then their records are looked up: then they saved the record." The company had exactly the same information in its possession at the time the contract was made that it has now. If it is available at one time, it ought to be imputable at the other. But it is said that the company cannot be supposed to know that it is the same person, even though the name may be the same. While this might be so in some cases, we do not see that there would be any uncertainty in this case, because the applications identify the same applicant by date of birth, age, town, occupation, and parents' names. There was ample opportunity for examination, as the application was dated July 22, 1896; the medical examination was August 22, 1896; it is stamped, doubtless by the company, September 2, 1896; and the policy was not issued until September 9, 1896. In Jerrett v. Insurance Co., 18 R. I. 754, 30 Atl. 793, there had been a previous rejection, but the policy was held to be invalid because neither application stated the fact, called for by a question, that a sister of the assured had died of consumption. This was a fact that the company could not be held to know, and hence the case was essentially different from the case at bar. The answer about rheumatism stands in a somewhat different relation. The first...