Spaulding v. Mutual Life Insurance Company of New York

• Decision Date: 02 May 1922
• Parties: JOHN L. SPAULDING, ADMR. ET AL. v. MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
• Court: Vermont Supreme Court

117 A. 376

96 Vt. 67

JOHN L. SPAULDING, ADMR. ET AL. v. MUTUAL LIFE INSURANCE COMPANY OF NEW YORK

Supreme Court of Vermont

May 2, 1922

November Term, 1921.

ACTION OF CONTRACT on a life insurance policy. Answer: A denial of some of the facts alleged in the declaration; a special statement in defense that the contract never took effect as a binding contract of insurance by reason of certain unfulfilled conditions precedent therein contained; and further special statements in defense, of fraudulent representation, breach of warranty, and concealment by the insured of and respecting facts material to the risk in his application. Trial by jury at the March Term, 1921 Washington County, Stanton, J., presiding. At the close of the evidence the court granted defendant's motion for a directed verdict, and directed a verdict for the plaintiff for the sum tendered into court by the defendant, covering the amount of premiums received on the policy in the lifetime of the insured. The plaintiff excepted. The opinion states the case.

Judgment affirmed.

J Ward Carver and J. W. Gordon for plaintiffs.

Theriault & Hunt and Frederick L. Allen (of New York City) for defendant.

Present POWERS, TAYLOR, MILES, and SLACK, JJ., and WILLCOX, Sup. J.

OPINION

TAYLOR

This action is brought on a policy insuring the life of Orvie M. Jones, deceased. Though entitled in the name of the administrator of Jones' estate, the cause is prosecuted by the beneficiary, who is the widow of the deceased. The policy in suit was issued at the same time and on the same application as that involved in Spaulding, Admr. et al. v. Mutual Life Insurance Co., 94 Vt. 42, 109 A. 22. where a more detailed statement of the pleadings and claims of the parties will be found. The original answer of the defendant was the same in both cases. After the final disposition of the companion case the defendant pleaded the judgment therein in bar of this action. The plaintiff replied denying that the cause of action in both suits was the same and that both policies were issued upon the same application, and averring that the answers in the application which the defendant claimed to be false were made under the instruction and by the advice of the defendant's medical examiner, relied upon by the insured, and were understood to be correct when made. The defendant demurred to this replication, the court sustained the demurrer and rendered judgment for the plaintiff for the sum tendered by the defendant as premiums paid on the policy. The case came to this Court on plaintiff's exceptions, where the judgment was reversed and the cause remanded. 94 Vt. 445, 111 A. 522. It was then held that the action being on a different policy, though issued on the same application, was not for the same cause of action, and so the former judgment could not be pleaded as a bar, but could only be used in evidence. The trial that followed was by jury; and at the close of the evidence the defendant moved for a directed verdict, which was granted and the jury was directed to return a verdict for the plaintiff for the amount tendered into court by the defendant. The case is now here on plaintiff's exceptions to the directed verdict.

The principal questions relate to the effect to be given the adjudication in the former case. The trial court regarded it as conclusive of the controlling questions in the case and ruled accordingly. The rule applicable to such a situation is well settled in our cases and was stated when the case was here on the pleadings. When the second action between the same parties or some of them is upon a different cause of action the former adjudication operates as a bar as to those matters in issue, or points controverted, upon the determination of which the findings or verdict was rendered and no further. Otherwise stated, in such case it is only upon matters actually litigated and determined that the adjudication is conclusive. The decisions are of one accord on the general proposition, but there is not the same agreement respecting what should be deemed to be "matters in issue or points controverted," in contemplation of the rule. Besides, the application of the rule is not without its difficulties in many cases. Ordinarily, it involves an inquiry as to the identity of the subject-matter upon evidence outside the record in the former case; and, unless the proof admits of only one conclusion, presents a question for the jury.

The plaintiff relies upon the claim that a new issue, not decided in the former trial, is raised by the pleadings and proof to the effect that the defendant's medical examiner was fully informed by the insured at the time of the examination respecting previous illness and treatments by physicians, that the medical examiner informed him how to answer the questions contained in the application, and that he answered according to instructions. Much is made of the claim that there is no res judicata, because there was no judgment rendered in the former suit on the question involved here. The argument is that as the former case finally turned, the question of fraud became collateral only to the judgment rendered, which was for the plaintiff to recover the sum tendered by the defendant; in other words that the judgment rested on the defendant's concessions and not on the evidence of fraud. This amounts to saying that it is only the judgment that is binding in a subsequent action and that there can be no estoppel because there was no judgment rendered in favor of the defendant. The argument overlooks the well recognized distinction between what is technically known as an estoppel by the judgment and an estoppel by the verdict. See Brack v. Boyd, 211 Ill. 290, 71 N.E. 995, 103 Am. St. Rep. 200; Perkins v. Walker, 19 Vt. 144. We are dealing with an estoppel of the latter class, which applies when some specific fact or question has been litigated and determined in a former suit and the same fact or question is again put in issue between the same parties or their privies. True, in such a case there would be no estoppel without a judgment. It is not the finding of facts which constitutes an adjudication, but the conclusion of the court as to the effect of those facts determined as matter of law. 15 R. C. L. 979. But the finding having become merged in a judgment no longer lacks the sanction necessary to give it the effect of res judicata. Technically the estoppel is not by the judgment but by the verdict or finding. Lord Ellenborough, speaking to this point, said in Ontranor v. Morewood, 3 East 346: "It is not the recovery, but the matter alleged by the party, and upon which the recovery proceeds, which creates the estoppel. The recovery of itself in an action of trespass is only a bar to the future recovery of damages for the same injury, but the estoppel precludes parties and privies from contending to the contrary of that point or matter of fact, which having been once distinctly put in issue by them, or by those to whom they are privy in estate or law, has been, on such issue joined, solemnly found against them."

This is what occurred in the former suit: There was a trial by jury on the issues raised by the defendant that the policy was of no effect as a binding contract of insurance, for the reason that when the first premium was paid and the policy delivered the insured was not in good health, and for the further reason that it was rendered void by certain fraudulent representations of the insured made in the application for insurance. The defendant tendered and paid into court $ 489.85 to cover premiums received on the policy in the lifetime of the insured. The case was tried and submitted to the jury upon the theory that the plaintiffs were entitled to a verdict for that amount in any event. At the close of the evidence there was a motion by the defendant for a directed verdict on the grounds, stated generally, that on the undisputed evidence, the insured was not in good health at the time the policy was delivered and the first premium paid; and that, on the undisputed evidence, the insured was guilty of fraud in the application, avoiding the policy. The case was submitted to the jury, which returned a general verdict for the plaintiffs for the full amount of the policy. On review, we held that the court erred in denying the defendant's motion on the last ground stated. This result was reached by holding among other things that on the undisputed evidence certain answers appearing in the "statements to medical examiner," were both false and fraudulent. In short, that the necessary elements of defendant's claim that the policy was rendered voidable by insured's false representations were conclusively established. The judgment rendered on these conclusions was such as the trial court should have rendered upon a proper determination of the issues litigated at the trial. The effect of the judgment is the same as it would have been if rendered at the close of the trial in the court below and amounts to a determination of the issues litigated which entered into and formed the basis of the decision. In legal effect, so far as such issues are concerned, the result is the same as though the formal judgment had been for the defendant.

This brings us to the question whether the evidence, received against defendant's objection, respecting what passed between the insured and the medical examiner supports a new issue, not embraced in the former decision, or is merely additional evidence bearing upon issues that are concluded thereby. The plaintiff's position is clearly defined in her reply to the plea of res judicata. The plea is not answered by way of confession and avoidance but is met by alleging facts tending to impeach the former adjudication. Her claim here is that...