Silberstein v. Massachusetts Mut. Life Ins. Co.

• Decision Date: 03 November 1947
• Docket Number: 16.
• Citation: 55 A.2d 334,189 Md. 182
• Parties: SILBERSTEIN v. MASSACHUSETTS MUT. LIFE INS. CO. WINKLER v. SAME.
• Court: Maryland Court of Appeals

55 A.2d 334

189 Md. 182

SILBERSTEIN v. MASSACHUSETTS MUT. LIFE INS. CO.

WINKLER v. SAME.

No. 16.

Court of Appeals of Maryland

November 3, 1947

Appeals from Circuit Court No. 2 of Baltimore City; Edwin T Dickerson, Judge.

Suits by the Massachusetts Mutual Life Insurance Company against Anne C. Silberstein and Nathalie S. Winkler to cancel insurance policies and enjoin defendants from making any claim under them, wherein the defendants filed cross-bills seeking recovery under the policies. From a decree cancelling the policies and dismissing the cross-bills the defendants appeal.

Decree affirmed.

William Saxon, of Baltimore, for appellants.

Jacob S. New and J. Cookman Boyd, Jr., both of Baltimore, for appellee.

Before MARBURY, C.J., and DELAPLAINE, COLLINS, HENDERSON and MARKELL, JJ.

DELAPLAINE Judge.

These appeals are from a decree cancelling four life insurance policies issued by Massachusetts Mutual Life Insurance Company to Marie A. Silberstein, now deceased. Appellants are her daughters, Anne C. Silberstein and Nathalie S. Winkler beneficiaries.

On December 8, 1943, Mrs. Silberstein applied to the company's agency in Baltimore for two insurance policies in the amount of $2,500 each. On that day she signed Part 1 of the application, and on January 30, 1944, after her medical examination, she signed Part 2. She certified that she had not had cancer or any tumor during the past 10 years; that all answers and statements in the application were full, complete and true; and that she was in sound physical condition. The two policies were issued by the company, but were later exchanged into four policies for $1,250 each. They were paid by the company, and are not the subject of dispute here.

On April 3, 1944, the insured applied for two additional policies for $1,250 each. The beneficiary in one policy was to be Miss Silberstein, with Mrs. Winkler contingent beneficiary; in the other Mrs. Winkler was to be beneficiary, with Miss Silberstein contingent beneficiary. The home office in Springfield, Massachusetts, wrote the policies and agreed to issue them upon proper amendment of the original application in lieu of another medical examination. On April 11, 1944, the insured signed the amendment, which certified that since January 30, 1944, she had not had any illness, injury, impairment of health or symptom thereof; that she had not consulted or been attended by a physician; that all answers and statements in the amendment were full, complete and true; and that she was in sound physical condition. The two policies were returned to the home office with the signed amendment, but with two changes made by the applicant. First, she increased her application from two to four policies for $1,250 each, thereby providing for additional insurance for $5,000. Second, she requested that the beneficiary in each policy be Anne C. Silberstein, if living, otherwise to Nathalie S. Winkler. The company's underwriting department issued four policies, but one of them names Mrs. Winkler primary beneficiary, and Miss Silberstein contingent beneficiary.

Objection was made by Mrs. Winkler that, notwithstanding that it was agreed that the application and the amendment should become a part of the contract, nevertheless, since the amendment and the policy designated different beneficiaries, the application and the amendment should not be considered a part of the contract. But it is undeniable that the insurer would not have issued any of the policies except upon the application and the amendment as part of the contract. Presumably the error in the one policy was made inadvertently in the home office. All four policies were issued at the same time, and were duly delivered to the insured. In accordance with the rule prevailing as to contracts generally, the parties to an insurance contract may make such lawful modifications thereof as they may mutually agree upon. Moreover, an insurance policy may be reformed, even after the death of the insured, so as to correct a mistake in the name of the beneficiary of the contract. Snell v. Atlantic Fire & Marine Insurance Co., 98 U.S. 85, 25 L.E.d. 52. But in this case the insured accepted the policies without objection, and kept them until her death. Since the insured accepted them as they were written, and held them more than a year and a half, Mrs. Winkler, named as beneficiary in the policy, cannot maintain a cause of action on her policy unaffected by the application and the amendment, which the parties clearly intended to form a part of the contract. A somewhat similar situation existed in Reeder v. Metropolitan Life Insurance Co., 340 Pa. 503, 17 A.2d 879, where it was held that the fact that a life insurance policy was issued in a different amount from that stated in the attached insurance application did not warrant the conclusion that the application was not the one upon which the policy was issued, or that it should not be considered in interpreting the contract.

Mrs. Silberstein died on December 9, 1945, at the age of 46. After proof of death was filed in February, 1946, the company learned that on April 14, 1944, her physician, Dr. Richard W. Te Linde, found a tumor in her left breast about two inches in diameter. She told her physician that it had been giving her pain since she first felt it 'a few days before.' Dr. Te Linde, diagnosing it as carcinoma, referred her to Dr. Alfred Blalock, a general surgeon, for the reason that breast operations in Johns Hopkins Hospital are performed by the general surgeons, rather than the gynecologists. She entered the hospital on April 17, when she informed the interne, who took her case history, that she noticed the mass in her left breast 'two weeks before admission.' On April 18 Dr. Blalock, concurring in the diagnosis, performed the operation of removing the patient's left breast. She was discharged in May, 1944, but returned to the hospital in October, 1945, still suffering from carcinoma, which finally resulted in her death.

The insurance company, claiming that Mrs. Silberstein had made material misrepresentations, instituted these suits to cancel the policies and enjoin defendants from making any claim under them. Miss Silberstein filed a cross-bill praying that the insurer be ordered to pay her $3,750. Mrs. Winkler filed a similar cross-bill praying that it be ordered to pay her $1,250. The chancellor passed a decree cancelling the four policies and dismissing the cross-bills.

It is a general rule in the law of contracts that where a party is induced to enter into a transaction with another party which he was under no duty to enter into by means of the latter's fraud or material misrepresentation, the transaction is voidable as against the latter and all who stand in no better position. Thus, innocent material misrepresentation, even though not accompanied by negligence has the same effect as fraud in rendering a contract voidable. 2 Restatement, Contracts, sec. 476. We specifically hold that a material misrepresentation by an applicant for life insurance, in reliance upon which a policy is issued, avoids the policy, regardless of whether the misrepresentation was made intentionally or through mistake and in good faith, because it results in the assumption by the insurer of a risk different from that which the applicant led it to suppose it was assuming. Bankers' Life Insurance Co. v. Miller, 100 Md. 1, 59 A. 116; AEtna Life Insurance Co. v....