Southern States Mut. Life Ins. Co. v. Herlihy

• Decision Date: 12 May 1910
• Citation: 128 S.W. 91,138 Ky. 359
• Parties: SOUTHERN STATES MUT. LIFE INS. CO. v. HERLIHY.
• Court: Kentucky Court of Appeals

128 S.W. 91

138 Ky. 359

SOUTHERN STATES MUT. LIFE INS. CO. v. HERLIHY.

Court of Appeals of Kentucky.

May 12, 1910

Appeal from Circuit Court, Jefferson County, Common Pleas Branch First Division.

"To be officially reported."

Action by Mamie Herlihy against the Southern States Mutual Life Insurance Company. Judgment for plaintiff, and defendant appeals. Affirmed.

Edwards Ogden & Peak, for appellant.

D Moxley and H. J. Scheirich, for appellee.

CARROLL J.

This action was brought by the appellee as the beneficiary in two policies of life insurance issued by the appellant company to her mother, Mary Herlihy. One of the policies, for $1,000, was issued on the 30th of March, 1908, and the other for $3,000 was issued on April 20, 1908.

The company set up several defenses; one being that the insured in her application falsely and fraudulently stated that the only insurance then upon her life was $240 in the Prudential Life Insurance Company, when, in fact, she then had insurance in the Intermediate Life Insurance Company for $2,000. Another, that she stated in her application that she had never applied to any company for life insurance and failed to receive a policy, when, in fact, she had made application for insurance in other companies which was rejected because of her physical condition. They further set up that she represented in the application that she was in good health, which statement was false, as she was not in good health, but was suffering at the time with heart and kidney troubles. It alleged that each of these statements was material to the risk, and that, if either of them had been answered truthfully, the applications for insurance would have been denied. It was also charged that the insured at the time of the application had no property or income, was financially unable to pay the premiums, and that she entered into a conspiracy with other persons, who did not have an insurable interest in her life, for the purpose of obtaining insurance from the appellant and other companies, and that the persons so conspired with were to participate in and be beneficiaries in the insurance so obtained whenever the insured should die, and that these facts avoided the policy. It further set up in an amended answer that one Cora M. Smith or a person unknown who had entered into a conspiracy with the insured for the purpose of defrauding the company in the issual of the policy was really the person examined for the insurance in place of the insured. Upon the issues made by the pleadings, a trial was had before a jury and a verdict returned in favor of appellee for the amount of the policies. The appellant complains of the judgment upon the verdict, and insists that it should have a new trial for errors committed by the court that will be noticed in the course of the opinion.

It appears from the evidence that the insured was a widow in humble circumstances, and that she did not own any property or have any income on her own account. She had two children, a son and a daughter who lived with her, and these children, who worked for a living and earned small wages, contributed to her support. The insured died in July, 1908, and between July, 1907, and her death obtained insurance in the following companies: On August 5, 1907, $2,000 in the Western Indemnity Company; on December 13, 1907, $2,000 in the Western Reserve Life Insurance Company; on December 28, 1907, $2,000 in the Intermediate Life Assurance Company; on February 7, 1908, $2,000 in the Western Reserve Life Insurance Company; on March 26, 1908, $1,000 in the Southern States Mutual Life Insurance Company; on April 20, 1908, $4,000 in the Southern States Mutual Life Insurance Company; on May 20, 1908, $2,000 in the Limited Term Life Association. She also held a policy of $240 in the Prudential Life Insurance Company, but when this policy was issued does not appear. It was also shown that about December, 1907, she made application to the Pacific Mutual Life Insurance Company for $2,000, which was rejected, and that in June, 1908, the insured executed her note to one Cora M. Smith for $1,000, payable one day after date, and to secure the payment of this note there was pledged to Cora M. Smith the policy for $1,000, and that a few days after the death of the insured Cora M. Smith accepted $160 in satisfaction of her note. It was also shown that diligent efforts were made by the appellant company to secure the personal attendance as a witness or the deposition of Cora M. Smith, but notwithstanding these efforts she could not be found, although two days after the suit was filed she by attorney filed her answer, subscribed and verified by her before one of the clerks of the court in Louisville, in which she entered her appearance and stated that she had no interest in the policy. Without reciting more of the evidence, it is sufficient to say that there are many circumstances indicating that fraud was practiced upon the company in obtaining the policies, although the application for insurance was made to an agent of the company and the insured examined by a physician selected by the company, neither of whom are charged with complicity in the fraud. But the question remains: Did the company have the right to avail itself of the facts disclosed by the record that might, if admissible as evidence, defeat a recovery? On the trial of the case the appellant offered in evidence both the applications and the medical examination made when the first insurance policy was issued, but the court upon objection of counsel for the appellee excluded them, as well as evidence of their contents, and the ruling of the court upon this question is really the chief error relied on.

Each of the policies recites that: "In consideration of the representations made in the application herefor, and of the sum of $___, first annual premium in advance, and of a like sum on the ___ day of ___ next hereafter, insures the life of Mary Herlihy. ***" This is the only reference in either of the policies to the application. Neither of the applications nor the medical examination were attached to or made a part of the policies. The first application offered shows that the insured, in answer to the question, "How much insurance she had on her life?" said that she had "$240 in the Prudential Life Insurance Company." And also that she stated she had never applied for life insurance, and failed to receive a policy. In the application for the $3,000 insurance, she stated "that she had $240 in the Prudential Life Insurance Company, and $1,000 in the Southern States Mutual Life Insurance Company, and that she had never applied to any other company for life insurance and failed to receive a policy." Each of the applications also recited that the insured agreed that "all the statements and answers herein are warranted to be true." And in the medical examiner's report of his examination for the first policy which was signed by the insured, she stated that no unfavorable opinion had ever been expressed as to her health or chances of obtaining insurance, and that she had never had any of a number of the diseases mentioned in the report, including heart and kidney troubles.

Section 679 of the Kentucky Statutes (Russell's St. § 4400) reads, in part: "All policies or certificates hereafter issued to persons within the Commonwealth by corporations transacting business therein under this law, which policies or certificates contain any reference to the application of the insured, *** either as forming part of the policy or contract between the parties thereto or having any bearing on said contract, shall contain or have attached to said policy or certificate a correct copy of the application as signed by the applicant, *** and unless so attached and accompanying the policy, no such application *** shall be received as evidence in any controversy...