Stewart v. American Life Ins. Co.

• Decision Date: 02 June 1937
• Docket Number: No. 1268,1269.,1268
• Citation: 89 F.2d 743
• Parties: STEWART et al. v. AMERICAN LIFE INS. CO. (two cases).
• Court: U.S. Court of Appeals — Tenth Circuit

89 F.2d 743 (1937)

STEWART et al. v. AMERICAN LIFE INS. CO. (two cases).

Nos. 1268, 1269.

Circuit Court of Appeals, Tenth Circuit.

April 20, 1937.

Rehearing Denied June 2, 1937.

Chas. G. Yankey, of Wichita, Kan. (William Keith, Harvey C. Osborne, John G. Sears, Jr., and Verne M. Laing, all of Wichita, Kan., on the brief), for appellants.

Henry V. Gott, of Wichita, Kan. (Jos. G. Carey and Vermilion, Evans, Carey & Lilleston, all of Wichita, Kan., on the brief), for appellee.

Before PHILLIPS and BRATTON, Circuit Judges, and KENNEDY, District Judge.

PHILLIPS, Circuit Judge.

On February 23, 1932, the American Life Insurance Company issued two policies of insurance on the life of Reese Smith Stewart. Stewart died May 31, 1932. On September 3, 1932, the Insurance Company brought these suits in equity to cancel the policies on the ground of alleged material misrepresentations in the applications therefor. On October 11, 1932, Reese Smith Stewart, Jr., and Ora Inez Stewart, the respective beneficiaries under the policies brought actions at law thereon. The Insurance Company filed supplemental bills in which it set up the pendency of the actions at law and prayed that the prosecution thereof be enjoined. The defendants to the equity suits filed motions to dismiss the bills on the ground that the Insurance Company had an adequate remedy at law. The court overruled the motions to dismiss. Thereupon the parties stipulated that the suits in equity should be tried in advance of the actions at law. The equitable actions were consolidated. From a decree cancelling the policies the defendants appealed.

In our first opinion herein, we held that the Insurance Company had an adequate remedy at law and directed that the decree be reversed and the cause remanded with instructions to dismiss the bills without prejudice to setting up the alleged fraud as a legal defense to the actions at law. Stewart v. American Life Insurance Co., 80 F.(2d) 600. On petition for rehearing, we adhered to our former conclusion, one judge dissenting. Stewart v. American Life Insurance Co., 85 F.(2d) 791.

The Supreme Court reviewed our decision on its writ of certiorari, held that the bills stated good causes of action in equity and that the trial court rightfully proceeded with the trial of the suits in equity in advance of a disposition of the actions at law, and remanded the causes "for a consideration of the merits and for other proceedings in accord with" its opinion. American Life Insurance Co. v. Stewart, 57 S.Ct. 377, 381, 81 L.Ed. ___.

On February 11, 1932, Reese Smith Stewart, hereinafter referred to as the insured, made a written application, designated as Part I, to the Insurance Company for a $5,000.00 policy of life insurance.

Part I of the application was taken by the supervisor of agents for the Insurance Company who filled in insured's responses to the questions therein contained. It in part reads as follows:

"b. With what Companies, Societies or Orders have you an application for Life Insurance now pending? 5000 N. Y. Life, 5000 Metropolitan, (For inspection). C. Letter Attached. * * *

"10. In what companies, societies or orders is your life now insured? Company, M.W.A., Amount, 2000, Form of Policy, Year Taken, 1900, and no others. * * *

"I hereby agree to submit to such examinations by the Company's Medical Examiners and to furnish such further information as may be required by the Company.

"Signed at Wichita, State of Kansas, this 11 day of February, 1932. * * *

"Reese Smith Stewart "Signature of Applicant in Full and of Guardian if Required."

The supervisor of agents testified that he propounded the questions in Part I of the Application to the insured and wrote down the answers therein as given to him by the insured; and that the insured then executed the application.

On February 18, 1932, the insured was examined by the local medical examiner for the Insurance Company. The medical examination, designated as Part II of the application and consisting of questions propounded by the medical examiner and answers made by the insured, in part reads as follows:

"* * *

"14. Name below all causes for which you have consulted a physician in the last ten years:

"Illness, Influenza. Number of Attacks, 1. Date, Feb. 28. Severity and Duration, Two weeks. Any Remaining Effects, No. Attending Physician's Name and Address, Dr. McComb, Wichita, Kas.

"15. Are you now in good health, as far as you know and believe? Yes.

"16. Has any medical examiner or physician expressed an unfavorable opinion as to your insurability or health, No. * * *

"22. Have you now, or have you ever had, any other diseases or any injury? No. * * * "I hereby declare that all statements and answers as written or printed herein and in Part I of this application are full, complete and true, whether written by my own hand or not, and I agree that they are to be considered the basis of any insurance issued hereon. I hereby authorize any physician or other person who has or may attend me to disclose to said Insurance Company any information thus acquired.

"Dated at Wichita, Kansas, this 18th day of Feb., 1932.

"Witness: O. C. McCandless, M. D.

"Signature of Medical Examiner. "Reese Smith Stewart, Applicant."

The local medical examiner testified that he asked the insured the questions set forth in Part II and wrote down the answers therein as the insured gave them to him. The examiner testified that with respect to question 14, he asked the insured all the causes for which he had consulted a physician in the last ten years and that the insured answered "flu, one attack"; that he did not remember the exact date but that it was in February, 1928; that he asked insured its duration and he said "about two weeks"; that he asked insured if there were any complications or after effects and he said "no."

On February 18, 1932, after being advised that the medical examiner had recommended the acceptance of his application, the insured agreed with the soliciting agent to apply for an additional policy for $5,000.00 and executed a blank form for Part I of the application. It was agreed between the insured and the agent that the questions and answers in the first application should be treated as an application for both policies.

The application consisting of Parts I and II, the additional signed form for Part I and the medical examiner's report were forwarded to the Insurance Company. Relying on the truth of the answers set forth in the application, the Insurance Company issued the two policies mentioned above.

Dr. T. J. McComb, a duly licensed and practicing physician and surgeon at Wichita, Kansas, testified to these facts: He was called to attend the insured at the latter's home in Wichita, Kansas about three or four o'clock, P. M., December 27, 1928. He found the insured unconscious and in a state of general prostration. Insured's extremities were cold, his circulation poor, and his finger nails dark and stenotic, indicating a myocardial weakness. The insured did not respond to questions, stimulants, or tests given at that time. Dr. McComb could not detect any pulse at the wrist. Insured's limbs were helpless, but Dr. McComb could not determine whether it was due to exhaustion or paralysis. He saw insured again later in the day, and got some response to questions and to reflex tests and noted a slight improvement. He gave insured digitalis, a heart stimulant, and tried to resuscitate him and stimulate him, but insured remained only semi-conscious, and his circulation remained weak. Dr. McComb made a urinalysis and found that insured's kidneys were not functioning normally. He learned from the members of the insured's family that insured had been ill for a week or ten days and, from the history, determined that the insured had had influenza. He diagnosed his illness as acuate nephritis and myocarditis. He gave insured urinary and intestinal stimulants. He continued to treat insured until February 19, 1929, calling two times daily until January 10, 1929, and once daily thereafter. When he discontinued treating insured, the latter still had a myocardial insufficiency. After insured regained consciousness, Dr. McComb told him he had had influenza and had overdone; that his heart and kidneys were not in good condition; that he would have to ease up on his way of living, not try to do much and take more rest so that his heart and kidneys would regain strength. In the early part of insured's illness, Dr. McComb did not expect him to recover and advised members of insured's family to send for insured's son, who resided on the Pacific coast.

Dr. McComb found that insured had a well defined case of pyorrhea, and advised insured to have his teeth extracted when his condition had sufficiently improved.

Dr. McComb was called to treat insured again on April 13, 1932. He diagnosed insured's illness as flu. Insured had cramps in his extremities, a temperature of 102 degrees, was prostrated and unable to answer questions intelligently. About April 20, 1932, Dr. McComb detected a weakened condition of the heart and kidneys. On May 31, 1932, insured's pulse ran up to 160 per minute, his blood pressure to 190 and he had a complete suppression of the urine other than that obtained by a catheter. Insured died of uremic convulsions on that day.

Dr. McComb gave as his opinion that insured's heart and kidneys were left weakened by the first illness and stated that a person never made a complete recovery from an attack of nephritis and myocarditis.

Another duly licensed and practicing physician and surgeon of twenty-four years experience, engaged in general practice at Wichita, Kansas, basing his opinion on the facts testified to by Dr. McComb, stated that insured's illness in 1928 and 1929 permanently impaired his heart and kidneys and left him in danger of a recurrence on any slight illness that he might contract.

A duly licensed and practicing dentist at Wichita, Kansas,...