Stegman v. Professional & Business Men's Life Ins. Co.

• Decision Date: 24 January 1953
• Docket Number: No. 38727,38727
• Citation: 252 P.2d 1074,173 Kan. 744
• Parties: STEGMAN v. PROFESSIONAL & BUSINESS MEN'S LIFE INS. CO.
• Court: Kansas Supreme Court

Page 1074

252 P.2d 1074

173 Kan. 744

STEGMAN v. PROFESSIONAL & BUSINESS MEN'S LIFE INS. CO.

No. 38727.

Supreme Court of Kansas.

Jan. 24, 1953.

Syllabus by the Court

1. The general rule is that a contracting party is bound by an agreement to which he assents, where the assent is uninfluenced by fraud, violence, undue influence, or the like, and he will not be permitted to say he did not intend to agree to its terms.

2. 'Fraudulent representations as to the legal effect of an instrument will avoid it, even if made to one who has actually read it, if unable to judge of its true construction. But the fraud must be contemporaneous with the execution of the instrument and must consist in obtaining the assent of the party defrauded, by inducing a false impression as to its legal or literal nature and operation.'

3. The terms of an application or of a receipt for a policy of insurance are subject to explanation, even though they contain contractual features, if induced by fraud.

4. Mere lapse of time in giving notice to rescind a contract of insurance is not necessarily determinative where no prejudice from the delay results to the insurer.

5. Absent a clear case of unreasonable delay in rescinding a contract of insurance the question of time is one of fact to be determined under all the facts and circumstances of a particular case.

6. Evidence of the same or similar fraudulent representations to others than a plaintiff concerning the terms of a policy of insurance, although not admissible to prove the fraud in the particular case on trial, is competent for the sole purpose of tending to establish the element of motive or intent to defraud.

7. For the purpose of obtaining a ruling on a motion non obstante veredicto the findings of fact are admitted to be true.

8. The record in an action to recover the first premium paid on an insurance policy on the ground it was obtained by fraud examined, and held: (a) The trial court did not err in the admission of evidence; (b) in overruling defendant's demurrer to plaintiff's evidence; (c) in overruling defendant's motion for judgment non obstante veredicto; (d) in instructions given; (e) in refusing requested instructions; or (f) in overruling defendant's motion for a new trial.

John A. Etling, of Kinsley, argued the cause, and W. N. Beezley, of Kinsley, and Joseph P. Constantine, of Denver, Colo., were with him on the briefs, for the appellant.

Charles Vance, of Liberal, argued the cause, and H. Hobble, Jr., and Chester A. Nordling, both of Liberal, and J. S. Brollier, of Hugoton, were with him on the briefs, for the appellee.

WEDELL, Justice.

The defendant insurance company appeals from a money judgment rendered against it in an action by the insured to recover the first premium paid on the policy on the ground it was obtained by fraud.

The petition, in substance, alleged: The policy was solicited by defendant's agent April 3, 1950; it was delivered May 1, 1950; misrepresentations were not discovered until May 25, 1950; the policy was returned June 13, 1950, on which date plaintiff also rescinded the contract in writing; at all times prior to rescission plaintiff believed the policy to be as represented by defendant's agent.

The petition further alleged:

'(5) That said Giles H. Florence, agent of the defendant, at said time and place, orally represented and stated to plaintiff that in consideration of the payment by the plaintiff to the defendant of $1,787.50 as the first annual premium, the defendant would issue to plaintiff a policy or contract of insurance on plaintiff's life in the face amount of $25,000.00;

'(6) That at said time and place said agent of the defendant orally represented and stated to the plaintiff that said policy or contract of insurance which would be issued to the plaintiff by the defendant would provide, among other benefits, the following:

'(a) That after the payment of twelve annual premiums in the amount of $1,787.50 each, as the same became due, the policy would be paid in full and each year thereafter the defendant would pay to the plaintiff during his lifetime an amount not less than a sum equal to ten per centum per annum on all funds and accumulations invested with said defendant by the plaintiff;

'(b) That after the payment of eight annual premiums in the amount of $1,787.50 each, as the same became due, the policy would be paid in full if no coupons had been detached from the policy and surrendered to defendant:

'(c) That after the payment of two annual premiums in the amount of $1,787.50 each, as the same became due, coupons attached to said policy could be detached and surrendered to defendant in payment of the third annual premium;

'(d) That after the payment of the third annual premium, no coupons having been surrendered by plaintiff, the defendant would pay to the plaintiff an amount equal to ten per centum per annum on the amount of the first two annual premiums paid by plaintiff, from the dates of such payments, or such amount could be left with the defendant as an accumulation and in such event it would earn and defendant would pay to plaintiff an amount not less than ten per centum per annum on such accumulation;

'(e) That any advance payment of premiums made by plaintiff to defendant would earn three per centum per annum to the date such premium was due, and thereafter it would earn and defendant would pay to plaintiff not less than ten per centum per annum on such amount. * * *'

The petition further, in substance, alleged:

All the false representations were relied on by plaintiff and induced him to sign the application for insurance; defendant's agent assured plaintiff the application was drawn in accordance with his oral statements and representations and plaintiff signed the application without reading it or having an opportunity to do so; the policy does not contain any of the benefits which defendant's agent represented it would contain and defendant's agent knew it did not; on receipt of the policy plaintiff assumed it was as represented; the misrepresentations were not discovered until on or about May 25, 1950; defendant has refused to return the money paid to its agent or to deliver a policy which conformed to the representations plaintiff understood and believed it would contain.

The letter of rescission was attached to the petition. It reads:

'Gentlemen:

'At the request of Anthony G. Stegman, for whom I am attorney, we are returning herewith your Policy No. 2998-S, for the reason that this contract is not as represented by your agent, Mr. G. H. Florence, at the time he obtained the application for the same. He represented and stated to the insured that this policy would provide that your Company would pay not less than ten per centum per annum on all funds invested in this policy, and that each annual premium would start drawing ten per centum per annum from the date the same was paid, and that after the payment of twelve annual premiums, the insured would thereafter have an annual income for life in an amount not less than ten per centum per annum on all funds and accumulations invested in the policy, and that the face amount of the policy would be paid to the beneficiary upon the death of the insured. These representations and statements were believed by the insured and were the sole deciding factors in making application for this insurance.

'Since this policy does not conform to the representations made by your agent, the insured has elected to rescind the agreement. You may consider this as a formal demand on behalf of the insured for a prompt return of all funds paid for this policy.'

Defendant moved to strike subdivisions (b), (c) and (d) of paragraph 6 of the petition on the ground such complaints were not made the basis of rescission, plaintiff had waived them and was estopped to rely thereon. The motion was overruled. Defendant did not demur to the petition but answered. The answer denied the alleged misrepresentations and further, in substance, alleged:

Plaintiff and defendant's soliciting agent examined the policy together on the delivery thereof; plaintiff acknowledged receipt of the policy by letter in which he stated defendant's agent, Mr. Florence, delivered the policy and explained it thoroughly and that plaintiff found it to be the same as when he accepted the offer.

Plaintiff's reply denied all allegations of the answer not admitted in the petition and, in substance, further alleged:

On delivery of the policy defendant's agent advised plaintiff the policy complied with the representations he previously had made as alleged in the petition; the agent represented the instrument plaintiff signed constituted a receipt for such policy; that plaintiff was unable, by reason of lack of knowledge and experience in insurance and legal matters, to determine whether such policy did or did not comply with such representations.

On the issues thus joined the action was tried. The jury rendered a general verdict for plaintiff and answered special questions, as follows:

'No. 1. Did Giles H. Florence, soliciting agent of the defendant, make any misrepresentations with respect to the terms of the life insurance policy to be issued by defendant to plaintiff? A. Yes.

'No. 2. If you answer question No. 1 in the affirmative, then state what said misrepresentations were made. A. He was led to believe he would draw 10% int. on all money paid in to Company after 3rd payment was made.

'No. 3. State the time or times when such misrepresentations were made. A. On solicitation of application for said policy, also again when policy was delivered.

'No. 4. At the time said policy was delivered to said plaintiff did the plaintiff have the opportunity to examine the same? A. Yes.

'No. 5. At the time said policy was delivered to said plaintiff did the plaintiff examine the same? A. Examined policy to some extent.

'No. 6. If you answer 'Yes' to question No. 5, then did the plaintiff know and understand the...