Schas v. Equitable Life Assur. Soc.
| Decision Date | 20 May 1914 |
| Docket Number | 597. |
| Parties | SCHAS v. EQUITABLE LIFE ASSUR. SOCIETY. |
| Court | North Carolina Supreme Court |
Appeal from Superior Court, Buncombe County; Carter, Judge.
Action by Fannie Schas against the Equitable Life Assurance Society. Judgment for plaintiff, and defendant appeals. Reversed, and new trial granted.
Where an applicant for life insurance stated that he had not consulted a physician for two years preceding the application, but the evidence showed that he had been under treatment of several physicians at various times during those two years, such misrepresentation was material, and avoids the policy.
This is an action upon a policy of insurance issued January 8, 1912 by defendant to Lewis Schas for the benefit of his mother the plaintiff, Fannie Schas. Lewis Schas died about September 3, 1912. Defendant alleged that he committed suicide, and that he obtained the said policy by falsely representing to the defendant that at the time of its delivery he was then in good health, whereas he was suffering from a serious ailment attended with nervous derangement and indigestion, which was the result of his own evil habits, practices, and abuse of himself, and, further, that he falsely represented that for two years immediately preceding the time of his medical examination he had not consulted a physician, or been under a physician's care, whereas he had consulted a physician and been under his care for serious ailments and disturbances of his health; that by these false representations defendant was induced to issue the policy, and that by reason thereof it was and is void, and plaintiff is therefore not entitled to recover thereon. There was evidence that the insured had been afflicted with a nervous disease resulting from self-abuse, which increased in its intensity until he died. We need not consider the issue as to suicide, but only the one as to the false representation. In respect to that issue the court charged the jury, in part, as follows:
"(1) A fraud or deception may be perpetrated as well by intentional concealing as by an active, affirmative deception. In this case it would not be sufficient to establish fraud for the defendant to show that the facts were not as stated in the application for insurance, nor yet would it be sufficient if the defendant went further and showed that the applicant knew that the facts were different; they would have to go still further and show that the facts that were not stated were material, and that they were known to the applicant to be material, and that he purposely withheld them from the company, with knowledge of the materiality, for the purpose of deceiving and misleading the company.
(2) Although you may find from the evidence in the case, wherever it comes from, that the defendant was addicted to a practice that had seriously undermined his health, and that that fact was not disclosed to the company, in order to constitute a fraud, it would be necessary that the applicant, Lewis Schas, should have known that the matter was a serious matter, and that he intentionally withheld the fact from the company, with the intention of misleading and deceiving the company.
(3) In other words, he must have practiced an intentional deception upon the company, either by making statements to the company which he knew to be false, or by intentionally withholding from the company facts which he knew to be material. If he did either of these things, and the company relied upon the information furnished by him, and was thereby induced to enter into this contract, why it would be a fraud."
There was a verdict for the plaintiff, and defendant appealed from the judgment thereon.
Bourne, Parker & Morrison and Theo. F. Davidson, all of Asheville, for appellant.
Mark W. Brown, of Asheville, for appellee.
WALKER, J. (after stating the facts as above).
This case has been tried upon the wrong theory. It is a mistake to suppose that a false representation of a material fact will not vitiate the policy, unless it involves actual fraud or moral turpitude. This is not the rule we have adopted in such cases. We need not inquire whether there was a moral or intentional wrong, for if the representation made in the application was false and material, and the jury so find, and the company was ignorant of its falsity, and it is such representation as would have influenced the action of the company upon the application in regard to whether or not it will grant the insurance, it will vitiate the policy, unless the company has in some way waived the benefit of it by its conduct, and with knowledge of the facts.
"A false representation avoids a contract of insurance when material, and wholly without reference to the intent with which it is made, unless it is otherwise provided by statute." Vance on Insurance, p. 269.
We need not inquire whether this rule is too broadly stated by Mr. Vance, as it applies, with the meaning intended by him, to the facts of this case, and it has been stated by this court substantially in the same terms.
Every fact which is untruly stated or wrongfully suppressed must be regarded as material, if the knowledge or ignorance of it would naturally and reasonably influence the judgment of the underwriter in making the contract at all, or in estimating the degree or character of the risk, or in fixing the rate of premium. 16 Am. & Eng. Enc. of Law (2d Ed.) 933; Vance on Insurance, 284. This definition was adopted by us in Fishblate v. Fidelity Co., 140 N.C. 589, 53 S.E. 354, and has since been approved several times, and is also the definition of other courts. Bryant v. Insurance Co., 147 N.C. 181, 60 S.E. 983; Alexander v. Insurance Co., 150 N.C. 536, 64 S.E. 432; Annuity Co. v. Forrest, 152 N.C. 621, 68 S.E. 139; A. L. Insurance Co. v. Conway, 11 Ga.App. 557, 75 S.E. 915; Maddox v. Insurance Co., 6 Ga.App. 681, 65 S.E. 789; Talley v. Insurance Co., 111 Va. 778, 69 S.E. 936; Penn M. Life Insurance Co. v. N. S. & Trust Co., 73 F. 653, 19 C. C. A. 316, 38 L. R. A. 33; 3 Cooley's Briefs on Insurance, p. 1953; Vance on Insurance, pp. 267, 269. It may be stated as a general rule that where, in an application for insurance, a fact is specifically inquired about, or the question is so framed as to call for a true statement of the fact, or to elicit the information desired, reason and justice alike demand that there should be a full and fair disclosure of the fact, or at least a substantial one. 3 Cooley's Briefs on Insurance, p. 2009 (d). Our case is not essentially different from Alexander v. Insurance Co., supra, in which the court said:
...
To continue reading
Request your trial