Stark v. Equitable Life Assur. Soc.

• Decision Date: 14 April 1939
• Docket Number: No. 32013.,No. 32012.,32012.,32013.
• Citation: 285 N.W. 466,205 Minn. 138
• Parties: STARK v. EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES.
• Court: Minnesota Supreme Court

285 N.W. 466

205 Minn. 138

STARK v. EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES.

No. 32012.

No. 32013.

Supreme Court of Minnesota.

April 14, 1939.

Appeal from District Court, Clay County;

Byron R. Wilson, Judge.

Action by George E. Stark against the Equitable Life Assurance Society of the United States to recover a disability annuity under a life policy. From an order overruling a demurrer to the complaint, the defendant appeals, and the trial court certified the questions involved as important and doubtful.

Affirmed.

Kellogg, Morgan, Chase, Carter & Headley, and David W. Raudenbush, all of St. Paul, for appellant.

W. Geo. Hammett, of Moorhead, for respondent.

GALLAGHER, Chief Justice.

The trial court overruled demurrers to complaints in two actions and in each instance, pursuant to the provisions of 2 Mason Minn.St.1927, § 10756, certified the questions involved as important and doubtful. The appeals are from the orders overruling the demurrers. The issues being identical, only one case, No. 32012, is considered.

In substance, the amended complaint alleges that defendant is a corporation licensed to transact an insurance business in the state of Minnesota; that under date of August 19, 1926, defendant, in consideration of stated premiums, issued to plaintiff its policy of life insurance in the sum of $2,500, which policy provided that if plaintiff became wholly and permanently disabled before reaching the age of 60 years, defendant would waive subsequent premiums and pay to him a disability annuity of $25 per month during said total and permanent disability; that said policy and contract of insurance stated and provided as follows, to-wit: "It is not necessary to employ any person, firm or corporation to collect the insurance or secure any of the benefits under this policy. Write direct to the Society, 393 Seventh Avenue, New York, or communicate with the nearest authorized agent of the society whose duty is to facilitate all settlements without charge."

Said complaint further alleges that plaintiff at all times mentioned was unable to read and write intelligently, is a man of limited business experience and generally illiterate, which facts have at all times been known to defendant and its agent at Felton, Minnesota; that on or about October 13, 1926, and while said policy and contract of insurance was in full force and effect and while plaintiff was less than 60 years of age, he became totally and permanently disabled physically by reason of bodily disease and thereupon and continuously since that time has been totally and permanently disabled physically to such an extent as to render him wholly and permanently unable to engage in any occupation or perform any work of any kind for compensation or of financial value; that on or about the 13th day of October, 1926, and while said policy was in full force and effect and plaintiff was less than 60 years of age, he duly notified defendant through its duly appointed agent at Felton, Minnesota, of his total and permanent disability and demanded benefits under and in accordance with the terms of said policy; that defendant and its agent then and there represented to plaintiff that he had no claim for benefits under said policy of insurance for the reason that said disability did not confine him to his bed and refused further to consider said claim and demand; that defendant's agent at Felton, Minnesota, for some years prior to October 13, 1926, had been employed and engaged in a lumber yard at that place and that plaintiff and said agent had for a long time been close friends and business acquaintances; that because thereof plaintiff had great respect for said agent and had implicit trust and confidence in him; that the statements and representations above set forth were made by defendant and its agent knowing the same to be false and with the intention that plaintiff would believe the same and act thereon; that plaintiff having implicit trust and confidence in defendant's agent believed his representations to be true and acted thereon to his damage in that he concluded that he had no valid claim for benefits under said policy and permitted said policy to lapse for the reason that he was no longer able to earn money with which to pay the premiums thereon by reason of his total, continuous and permanent disability; that thereafter and during the summer of 1935, plaintiff was informed by another insurance agent that he undoubtedly had a good claim under said policy, assuming he had suffered the disability which he related to said agent; that the information obtained from said agent as to his rights under said policy was the first time plaintiff discovered the fraud which defendant had perpetrated upon him in the fall of 1926 through its agent; that thereafter and during 1936 plaintiff again notified defendant of his claim and at the special instance and request of defendant submitted proof of said disability as required by said policy; that defendant has waived the requirements of said policy as to due proof and disability and has waived the requirements and necessity of any other and further proof and notice of such disability other than that furnished by plaintiff; that under the conditions and circumstances set forth defendant was obliged to waive any premium or premiums which should occur after the disability and notice and that defendant was estopped from asserting or claiming that due proof was not duly and seasonably presented in accordance with the terms of the policy; that after receipt of due notice and proof defendant again denied liability and refused to pay the amount due to plaintiff's damage in the sum of $3,000 with interest and refused to reinstate the policy in accordance with its terms. Judgment was prayed for in the amount which would have accrued to plaintiff had he been found disabled in 1926 and reinstatement of the policy demanded.

Defendant demurred generally upon the ground that the complaint does not state facts sufficient to constitute a cause of action. Upon this demurrer the order appealed from was entered. Appellant contends that the trial court erred in overruling its demurrer for the reasons: (1) That the amended complaint fails to state a cause of action since the misrepresentation relied upon is one of law and not of fact; and (2) because the complaint fails properly to negative the bar of the statute of limitations.

1. By its demurrer defendant admits that its agent represented to plaintiff that he had no claim for benefits against defendant under the policy in question for the reason that his disability did not confine him to his bed. It also admits that such representation was false. A demurrer admits all the material facts well pleaded in the pleading to which it is directed. 5 Dunnell, Minn. Dig. (2 ed. § 1932 Supp.) § 7542. It also admits all necessary inferences or conclusions of law, whether stated or not, which follow from facts well pleaded. Harriet State Bank v. Samels, 164 Minn. 265, 204 N.W. 938.

The defendant contends that the misrepresentation alleged by the plaintiff was one of law as distinguished from fact and that it cannot be held legally responsible therefor. We concede the existence of the general rule in civil actions that a misrepresentation as to a matter of law does not constitute remedial or actionable fraud. Jaggar v. Winslow, 30 Minn. 263, 15 N.W. 242; Valley v. Crookston Lumber Co., 128 Minn. 387, 151 N.W. 137; Miller v. Osterlund, 154 Minn. 495, 191 N.W. 919; 26 C.J. p. 1207, § 106; First National Bank v. Schirmer, 134 Minn. 387, 159 N.W. 800; Pieh v. Flitton, 170 Minn. 29, 211 N.W. 964; 14 Am. & Eng. Enc. of Law (2 ed.) 54; Upton v. Tribilcock, 91 U.S. 45, 23 L.Ed. 203; Coddington v. Pensacola & G. R. Co., 103 U.S. 409, 26 L.Ed. 400; Mutual L. Ins. Co. v. Phinney, 178 U.S. 327, 20 S.Ct. 906, 44 L.Ed. 1088; Security Savings Bank v. Kellems, Mo.App., 274 S.W. 112; Burns v. Mills, 82 Ind.App. 621, 147 N.E. 300; Gormely v. Gymnastic Ass'n, 55 Wis. 350, 13 N.W. 242; Easton-Taylor Tr. Co. v. Loker, Mo.App., 205 S.W. 87; 12 R.C.L. 295.

This dogma seems to have been carried into the civil from the criminal law and to rest upon the unreal assumption that every one knows the law. Often the rationale is dignified by a Latin garb and reads, "Ignorantia legis neminem excusat" which simply means, "ignorance of the law excuses no one". That this court will not accept the maxim blindly is indicated by the case of Peterson v. First National Bank of Ceylon, 162 Minn. 369, 375, 203 N. W. 53, 55, 42 A.L.R. 1185, where in relieving a party from a serious mistake of law on the part of his own attorney, the court said: "The idea that equity has no relief from mistakes of law had its origin in the almost humorous and wholly supposititious presumption that all know the law — a proposition contrary to both law and sense. There has been misuse also of the rule that ignorance of the law excuses no one. There is such a rule, but it goes only to the extent of making legal duty inescapable because of the subject's ignorance of the law. Neither in letter, spirit, nor purpose does it justify or even suggest that a loss should be imposed on one and an unconscionable gain permitted another merely because of the former's ignorance of law."

Misrepresentations of law are treated as are misrepresentations of fact in at least two types of cases: (a) Those in which the person misrepresenting the law is learned in the field and has taken advantage of the solicited confidence of the party defrauded and (b) Those in which the person misrepresenting the law stands with reference to the person imposed upon in a fiduciary or other similar relation of trust and confidence. See Restatement of the Law of Torts, § 545 (2) and comment.

Numerous decisions illustrate the application of the first of these exceptions. Releases from liability under insurance policies have been frequently set aside on the ground that an insurance...