Taylor v. Metropolitan Life Ins. Co.

• Decision Date: 29 October 1965
• Citation: 106 N.H. 455,214 A.2d 109
• Parties: John E. TAYLOR v. METROPOLITAN LIFE INSURANCE COMPANY.
• Court: New Hampshire Supreme Court

Page 109

214 A.2d 109

106 N.H. 455

John E. TAYLOR v. METROPOLITAN LIFE INSURANCE COMPANY.

Supreme Court of New Hampshire.

Argued April 6, 1965.

Reargued Sept. 9, 1965.

Decided Oct. 29, 1965.

Cofran, Quint & Greenhalge, Frederic T. Greenhalge, Concord, for plaintiff.

Sulloway, Hollis, Godfrey & Soden and Lawrence E. Spellman, Concord, for defendant.

LAMPRON, Justice.

Arthur Swenson was on July 1, 1959, when the policy in question was issued, an authorized and trained agent of Metropolitan dealing only in policies issued by it. Prior to that date he had visited the plaintiff Taylor to collect premiums on existing policies and discuss the prospects for additional coverage. On July 1, 1959, he called on Taylor and his wife and discussed with them the issuance of the present policy. Pursuant to the training given to him by Metropolitan, Swenson read to Taylor each and every question in the application consisting of two pages, entitled 'Part A' and 'Part B', both of which were signed by Taylor and witnessed by Swenson.

The sole issue before us is whether Metropolitan's motion to dismiss the Taylor suit as a matter of law was granted properly by the Trial Court. The Company's main argument in support of this dismissal is that the plaintiff made false statements concerning his medical history in answer to questions 7 and 8 'Part B' of the application signed by him which became a part of the insurance contract between the parties.

Question 7 read as follows: 'Have you, within the past five years, had any treatment, examination, or advice by a physician or other practitioner, or at a clinic, hospital, dispensary, or sanatorium? (If yes, give particulars of each instance in item 8 below)'. When Swenson read this question to him, 'Taylor told Swenson that he had had chest complaints commencing in the summer of 1956 and continuing through December of that year * * * Taylor further told Swenson that, as a result of these complaints he was examined on an outpatient basis at the Mary Hitchcock Clinic on November 1, 1956, and that nothing ever came of it although he still had occasional twinges of pain. Swenson advised Taylor that he was not required to include that information under paragraph 7 of Part B. For that reason Taylor did not include such information in response to said paragraph 7'. The answer to question 7 in the paragraph so numbered in 'Part B' of the application which was inserted by Swenson based upon answers given to him by Taylor was 'No'. Question 8 which sought 'the details of any affirmative answers' to question 7 contained no entries.

The parties agree that on September 26, 1956, Taylor visited his family physician with complaints of chest pains and that X-rays of the affected area and electrocardiograph examination both proved negative. This doctor referred him to the Mary Hitchcock Clinic in Hanover where he was examined as an outpatient on November 1, 1956. At that time Taylor described chest pains of six years duration which had become worse. He was examined by three specialists and X-rays of the affected area again proved negative. He consulted his family physician three times in December, 1956, apparently with the same complaint and the last two entries in the doctor's records read 'Some improvement'. On November 6, 1960, after this insurance policy was issued, he consulted his family doctor with a complaint of 'return of chest pain'. X-ray examination of the affected area and electrocardiograms taken at that time were again negative as were those taken at the Hanover Clinic on February 8, 1961. Taylor was disabled on November 6, 1960, by this chest condition which his family doctor has since diagnosed as acute radiculitis. Webster's Third New International Dictionary defines radiculitis as 'inflammation of a nerve root.'

It is also agreed that Taylor consulted his physician on February 16, 1959, for 'Pain back of neck, shoulder & rt. arm? neuritis'. Also that he was hospitalized overnight on or about May 1, 1953, when his back 'gave out'. This ailment apparently originated when Taylor lifted 'heavy buckets of lead, shortly after discharge from service'. In November, 1956, it 'only bothers at night--most when he turns over'. Metropolitan does not claim that there is any medical connection whatsoever between this and the chest condition which disabled Taylor on November 6, 1960. Plaintiff's declaration alleges that the claim which is in issue before us at this time is for 'an accidental injury resulting in total disability' suffered by Taylor on or about November 6, 1960.

RSA 415:9 provides as follows: 'The falsity of any statement in the application for any policy covered by this chapter [Accident and Health Insurance] shall not bar the right to recover thereunder, unless such false statement was made with actual intent to deceive, or unless it materially affected either the acceptance of the risk or the hazard assumed by the insurer.' Metropolitan correctly argues in its brief that 'it is not material to the application of this statute that fraud be shown either in fact or by implication. It is sufficient that the false statements materially affected either the acceptance of the risk or the hazard assumed by the insurer'.

However, relying on Manelas v. National Accident & Health Insurance Company, 89 N.H. 559, 560, 2 A.2d 310, the Company further maintains that a false statement as to medical history is held as a matter of law to have materially affected the acceptance of the risk. With this contention, we cannot agree. By the very language used in its enactment, the Legislature could not have intended that the non-fraudulent omission in an application of prior visits to a doctor for trivial ailments which passed away leaving no permanent effect would be held as a matter of law to have materially affected the issuance of the policy. The test under RSA 415:9 of the materiality of a false statement made without actual intent to deceive is whether the statement could reasonably be considered material in affecting the insurer's decision to enter into the contract, in estimating the degree or character of the risk, or in fixing the premium rate thereon. 12 Appleman, Insurance, s. 7294; Couch on Insurance 2d s. 35:79. The question of such materiality is for the trier of fact unless the record is such that the Trial Court must reach the conclusion that the statement materially affected the acceptance of the risk. Heidenreich v. Metropolitan Life Insurance Co., 213 Md. 286, 131 A.2d 914; Davidson v. Massachusetts Casualty Ins. Co., 325 Mass. 115, 89 N.E.2d 201; Marshall v. Metropolitan Life Ins. Co., 337 Ill.App. 498, 86 N.E.2d 262, affirmed 405 Lii. 90, 90 N.E.2d 194; 22 Appleman, Insurance, s. 12861; Couch on Insurance 2d ss. 35:48, 35:49, 35:79.

Metropolitan further correctly argues in its brief that, although RSA 408:7 regulates life insurance contracts, it, and the cases decided thereunder, illustrate the commonlaw rule that 'the binding effect of an insurance agent's conduct is to be determined by the rules of the common law whether we are dealing with an application for life insurance or one for accident and health insurance.' RSA 408:7 provides as follows: 'Any person who shall solicit an application for insurance upon the life of another shall, in any controversy between the assured, or his beneficiary, and the company issuing any policy upon such application, be regarded as the agent of the company and not the agent of the assured.' Under this statute it was held in Boucouvalas v. John Hancock Mutual Life Ins. Co., 90 N.H. 175, 5 A.2d 721, that the insurer was not chargeable with the knowledge of the soliciting agent who fraudulently wrote false answers in an application which an illiterate applicant subsequently signed. In Levesque v. Metropolitan Life Ins. Co., 88 N.H. 41, 183 A. 870, it was decided that the insurer was not chargeable with the negligent failure of the soliciting agent to ask the questions contained in the application. As was suggested in Perkins v. John Hancock Mutual Life Insurance Company, 100 N.H. 383, 385, 128 A.2d 207, it is questionable whether this statute as construed is accomplishing its apparent objective.

It was stated in the Boucouvalas case, supra, that this statute created an agency relation between the agent and the insurer but left to the common law 'the decision of the question of the scope and extent of the agency relationship which it created.' 90 N.H. p. 177, 5 A.2d p. 723. 'The factual situation under consideration presents a question of the common-law rule applicable to an agency relationship of statutory origin. As a rule of the common law it stands as others do, subject to judicial revision or reversal without regard to the re-enactment by the legislature of the statute which creates the relationship to which the common-law rule applies.' P. 181, 5 A.2d p. 725.

The parties agree that Swenson was an authorized agent and employee of Metropolitan. He has been trained by this company and deals only in insurance policies issued by it. Previous to the date of the application and policy in issue, as such agent and employee he visited Taylor to collect premiums on existing policies and discuss the prospects for additional coverage. Pursuant to his training he read to Taylor the questions in the application and inserted the answers based on the information obtained from Taylor. As to question 7 'Part B' pertaining to medical treatment, examination or advice within the previous five years, Taylor told Swenson of his chest complaints, of his examination therefor as an outpatient at the Mary Hitchcock Clinic and that nothing ever came of it, although he still had occasional twinges of pain. Swenson advised Taylor that he was not required to include this information under question 7 and for that reason it was omitted.

Although the Trial Court refused to rule upon plaintiff's requests for findings, it stated, without ruling, that it agreed...