Schaefer v. Peninsular Cas. Ins. Co.

• Decision Date: 03 April 1934
• Docket Number: No. 15.,15.
• Parties: SCHAEFER v. PENINSULAR CASUALTY INS. CO.
• Court: Michigan Supreme Court

266 Mich. 386

254 N.W. 139

SCHAEFER

v.PENINSULAR CASUALTY INS. CO.

No. 15.

Supreme Court of Michigan.

April 3, 1934.

Appeal from Circuit Court, Kent County; Leonard D. Verdier, Judge.

Action by Alice Schaefer against the Peninsular Casualty Insurance Company. From a judgment in favor of the plaintiff, the defendant appeals.

Judgment reversed without a new trial.

Argued before the Entire Bench.

BUSHNELL, J., NELSON SHARPE, C. J., and EDWARD M. SHARPE, J., dissenting.

Shields, Silsbee, Ballard & Jennings, of Lansing, for appellant.

Butterfield, Keeney & Amberg, of Grand Rapids, for appellee.

WIEST, Justice.

The judgment should be reversed without a new trial.

The insured never paid the premium and never intended to pay. Repeated requests to pay were ignored and, on one occasion, met by a falsehood that a check had been sent. The policy recited an undertaking, in consideration of the payment of the premium. There was no occasion for defendant to declare the stillborn policy dead.

I cannot sanction recovery under the circumstances here disclosed.

POTTER, NORTH, FEAD, and BUTZEL, JJ., concurred with WIEST, J.

BUSHNELL, Justice (dissenting).

This case was tried without a jury. The plaintiff declared on an accident insurance policy issued on November 19, 1920, to Earl E. Leonard. In his application, bearing the same date as the policy. Leonard directed that, in case of his death by accident, the proceeds should be payable to Alice Leonard, whom he described therein as his wife, and among other representations he said: ‘My habits are temperate.’ The recitals of the policy as to consideration are also of importance; it was agreed that defendant, ‘in consideration of the statements in the application for this policy, a copy of which is endorsed hereon and made a part hereof, and of seventy-five ($75.00) Dollars premium, does hereby insure,’ etc.

The application was secured by F. A. Botsford, then an authorized agent of defendant and ‘Assistant Manager of the Accident and Health Department’ of the defendant company. Botsford personally delivered the policy. The date of delivery is not definitely fixed in the record, although the policy shows that Botsford countersigned it on December 6, 1920. Botsford went over the contract with Leonard when he delivered it and started to write a receipt. Leonard interrupted him, saying: ‘I have plenty of money to pay that, but I wish to pay this by check, and I am having my account transferred from Detroit to Lansing. It is after hours and I will mail you a check tomorrow.’ He showed Botsford four or five hundred dollars in cash.

Botsford testified: ‘I left the policy in his possession, thinking he would send me a check the next day, as agreed. The check did not come to me.’

Botsford further testified that he next saw Leonard after the Christmas holidays, and asked that the policy by returned to him; that Leonard said his wife had it in Chicago, and added, ‘And by the way, we just sent a check to your home office in Bay City for $37.50,’ and that he went over the records later and could find no receipt. Botsford's final conversation with Leonard occurred a month or so later, at which time Leonard declared: ‘I don't want that accident policy; I want a health and accident policy, one hundred dollars a week. What will it cost?’ The agent testified that he replied: ‘$140.00, Mr. Leonard, and you will have to have the cash this time.’

Leonard died as the result of an automobile accident near Chelsea, Mich., on November 4, 1921. The attending physician testified that he smelled liquor on the insured's breath, but the remainder of his testimony indicates that the deceased was perfectly rational and in full command of his senses up to the end.

Plaintiff, through her attorney in Chicago, requested forms on which to make proof of loss, which were refused by the company in a letter dated November 21, 1921, in which the following appears: ‘Our investigation disclosed the fact that we had made several attempts to collect this premium from Mr. Leonard, at least two of them personally by Mr. Botsford, and on each occasion Mr. Leonard agreed to send in the premium but unfortunately he neglected to do so.’

Plaintiff commenced ber action on the policy on July 21, 1922, and the record includes as an exhibit a copy of a bill of complaint by a successor company, praying for a cancellation of the policy and an injunction to restrain the action at law. This bill was sworn to on March 9, 1923, but the record is silent as to the date of filing or the outcome of this action. Almost ten years after the commencement of suit, the court below heard the case, and on December 14, 1932, entered a judgment in favor of the plaintiff for the face of the policy ($10,000) plus interest at 5 per cent. We are not informed as to the reasons for this ten-year delay. Defendant has appealed from this judgment and the denial of its motion for a new trial.

In discussing the materiality of certain statements made by the insured in his policy application, and claimed by the defendant to have been false, we must consider the provisions of section 12444, Comp. Laws 1929, which reads: ‘The falsity of any statement in the application for any policy covered by this chapter shall not bar the right to recovery thereunder unless such false statement was made with actual intent to deceive or unless it materially affected either the acceptance of the risk or the hazard assumed by the insurer.’ These provisions were substantially embodied in the application form.

Prior to the passage of this act, we held that insurance companies had the right by contract to make most representations material. See Bonewell v. Accident Insurance Co., 160 Mich. 137, 125 N. W. 59, and cases therein cited. Since its passage, however, a different rule has prevailed. As pointed out by Justice Steere, the statute ‘* * * puts upon plaintiff not only the burden of proving the falsity of the statement, but intent to deceive, or other specified material results injurious to the insurer.’ Business Men's Assurance Co. v. Marriner, 223 Mich. 1, 193 N. W. 907, 909.

It cannot be said from the evidence produced by the defendant that the trial court erred in its finding as to the insured's habits. Occasional drinking, even to excess, is not in itself sufficient to brand one as intemperate in habits. Knickerbocker Life Insurance Co. v. Foley, 105 U. S. 350, 26 L. Ed. 1055;Northwestern Mut. Life Ins. Co. v. Muskegon Nat. Bank, 122 U. S. 501, 7 S. Ct. 1221, 30 L. Ed. 1100.

Part 7 of the policy application reads as follows:

‘Policy to be payable in case of death by accident under its provisions to

‘Beneficiary's name in full Alice Leonard

‘Residence same.

‘Relationship wife.’

It seems to be undisputed that, when the application was signed by Leonard, he and Alice Schaefer had an understanding between them that they were to be married; that plaintiff was granted a decree of divorce from her former husband in Cook county, Ill., on November 23, 1920; and that the Illinois law forbade marriage for one year from the date of the decree.

Appellant contends that part 7 of the application contained such a material misrepresentation of fact that it was relieved from liability. This claim must be tested by the statute quoted above. As to this, we agree with the conclusions of the trial court. We quote from its opinion:

‘There is nothing in this record to indicate that the applicant falsely stated his marital condition with any actual intont to deceive. Knowing that he purposed to marry plaintiff, he merely described his intended wife as his present wife, and it is fair to assume that this was done merely as a matter of convenience to obviate the necessity of a future change in the policy.

‘The weight of authority apparently sustains the view that a statement in the application as to the relationship of a beneficiary is to be regarded as intended merely for identification and not as a material representation affecting either the acceptance of the risk or the hazard assumed by the insurer.’

See Metropolitan Life Ins. Co. v. Olsen, 81 N. H. 143, 123 A. 576, 32 A. L. R. 1472, 1477 (citing numerous cases); Standard Life & Accident Ins. Co. v. Martin, 133 Ind. 376, 33 N. E. 105;Bogart v. Thompson, 24 Misc. 581, 53 N. Y. S. 622;Berdan v. Milwaukee Mut. Life Ins. Co., 136 Mich. 396, 99 N. W. 411,4 Ann. Cas. 332.

The record is silent as to any inquiry on this subject by the company, and it is apparent that the only object of the question was to identify the beneficiary for the purposes of payment. After having held, in the Berdan Case, 136 Mich. 396, 99 N. W. 411,4 Ann. Cas. 332, that the description of the beneficiary as a nephew, when in fact he was no blood relation, could not invalidate the policy, we cannot now, with the added effect of the statute, hold as a matter of law in the case at bar that such a statement materially affected either the acceptance of the risk or the hazard assumed by the insurer.

The appellant asks: ‘When the applicant for an accident policy obtains possession of the policy from the agent upon the pretext that he desires to pay the premium by check, and his promise to send a check to the Insurance Company the next day, but in fact never pays the premium, did the policy constitute a valid contract?’ To state the question as it was put on the argument before us: Was there a failure of consideration?

It seems to us that this is the important...