The Grand Fraternity v. Keatley

• Citation: 88 A. 553,27 Del. 308
• Court: United States State Supreme Court of Delaware
• Decision Date: 22 January 1913
• Parties: THE GRAND FRATERNITY, a corporation under the laws of the State of Pennsylvania, defendant below, plaintiff in error, v. MARY C. KEATLEY, plaintiff below, defendant in error

88 A. 553

27 Del. 308

THE GRAND FRATERNITY, a corporation under the laws of the State of Pennsylvania, defendant below, plaintiff in error, v. MARY C. KEATLEY, plaintiff below, defendant in error

Supreme Court of Delaware

January 22, 1913

[Copyrighted Material Omitted]

Supreme Court, January Term, 1913.

WRIT OF ERROR (No. 1, June Term, 1912) to the Superior Court in and for New Castle County--(No. 45, May Term, 1911, below. 2 Boyce 267, 82 A. 294).

Action in covenant brought by Mary C. Keatley against The Grand Fraternity, a corporation of Pennsylvania, to recover the amount of a death benefit certificate of membership, alleged to have been issued to plaintiff's husband in his lifetime, payable to said plaintiff upon her husband's death. Verdict for plaintiff for two thousand two hundred and fifty-seven dollars, and the defendant brings error. Judgment reversed, but the defendant, having by its plea of tender admitted its indebtedness to the plaintiff in the amount of one hundred and ninety dollars and thirty-six cents representing dues or premiums paid by the deceased to the defendant, and costs of the cause then incurred, the court below, on motion of the plaintiff, shall enter judgment for the plaintiff for that amount, and against the plaintiff for all costs incurred subsequent to the filing of said plea, including the costs in this court.

ARGUMENT ON THE LAW BY COUNSEL FOR PLAINTIFF IN ERROR.

The material issue is with respect to the act of June 23, 1885 (Pa.) p. 134, which was invoked by the plaintiff below to prevent the defeat of her claim under the benefit certificate, issued to her husband.

In any case where this statute is sought to be applied two things must affirmatively appear, viz.: (1) The good faith of the applicant; and (2) a representation or statement relating to some matter not material to the risk.

It is well settled that every fact in an insurance application is material, which increases the risk, or which, if disclosed would have been a fair reason for demanding higher premium. The test of the materiality of a misrepresentation or concealment, is that it influences the insurer in determining whether to accept the risk or not. May on Insurance, 184; Hartman v. Insurance Co., 21 Pa. 466; McCaffrey v. Knights, 213 Pa. 609, 612, 63 A. 189.

If Keatley had made truthful answers to the questions here involved--which under both moral and legal obligations he was bound to do, but which the evidence clearly shows he did not do --the benefit certificate would not have been issued, because he would have been rejected as an undesirable risk. March v. Insurance Co., 186 Pa. 629, 642, 40 A. 1100, 65 Am. St. Rep. 887 (1898).

The principle has been repeatedly recognized and upheld by the courts of last resort in Pennsylvania (in which the act of 1885 was involved) that, where the evidence is either uncontroverted that the insured made false answers to questions about his last consulting a physician and as to the absence of specific diseases, or the evidence is of such a conclusive character that it would be impossible to sustain a verdict rendered in opposition to it, it is error to submit the case to the jury. Murphy v. Insurance Co., 205 Pa. 444, 450, 453, 55 A. 19 (1903).

In Priestly v. Sav. Co. (C. C.) 112 F. 271, where an applicant stated that he was last attended by a physician "in 1869", and named Dr. Houghton as the physician and the complaint as "scarlet fever", the court held that the statement was both a warranty and a representation material to the risk.

In Hews v. Society, 143 F. 850, 853, 74 C. C. A. 676, 679 (1906), the insured stated in his application, inter alia: "Nor have I been intemperate, or had any serious illness or disease, except diseases incident to childhood." The policy was dated November 9, 1903, and the evidence showed that in 1896 the insured had admitted to one Morgan that he then had diabetes. There was other evidence tending to show that he continued to have this disease up to the time of his application, and also used alcoholic beverages, and the court held that the defendant was entitled to binding instructions.

In Mengel v. Insurance Co., 176 Pa. 280, 281, 35 A. 197 (1896) the questions for the applicant and his answers thereto were as follows: "How long since you have consulted any physician? For whet disease? Give name and residence." Answered: "About one year, for light influenza, Dr. James W. Keiser, Reading, Pa." The evidence clearly showed that, during the five years preceding the death of the insured, a doctor had attended him for vomiting and nausea, the effects of overdrinking, and had even attended him within four months preceding the application. The court held that the facts showed a breach of a material warranty as to require the court to pronounce upon it as a matter of law. The judgment for the plaintiff below was reversed, and judgment directed for the defendant. Doll v. Insurance Co., 138 F. 705, 708, 71 C. C. A. 121 (N. J. 1905); McClain v. Provident etc., Society, 110 F. 80, 49 C. C. A. 31, distinguished.

If any disease confined Keatley to his bed, or seriously affected his physical condition, for the time being only, it would be a material fact, requiring disclosure, according to the established doctrine in Pennsylvania.

The following cases were cited: Lutz v. Insurance Co., 186 Pa. 527, 40 A. 1104 (1898); Hartman v. Insurance Co., 21 Pa. 466; Murphy v. Insurance Co., 205 Pa. 452, 55 A. 19; Smith v. Insurance Co., 196 Pa. 314, 316, 319, 46 A. 426 (1900); Meyers v. Woodmen, 193 Pa. 470, 474, 44 A. 563 (1893); Wall v. Society, 179 Pa. 355, 366, 36 A. 748 (1897); Society v. O'Hara, 120 Pa. 256, 260, 13 A. 932; Baldi v. Insurance Co., 24 Pa.Super. Ct. 275, 290, 292; Carson v. Insurance Co., 1 Pa.Super. Ct. 572, 577; Association v. McDaniel, 25 Ind.App. 608, 57 N.E. 645, 648; Boland v. Association, 74 Hun. 385, 26 N.Y.S. 433, 444; Baumgart v. Woodmen, 85 Wis. 546, 549, 55 N.W. 713; Jeffrey v. Golden Cross, 97 Me. 176, 53 A. 1102; Insurance Co. v. Schmidt (Ky.) 93 S.W. 1055; Insurance Co. v. France, 91 U.S. 510, 23 L.Ed. 401.

The court below erred, not only in submitting to the jury the several questions already indicated, but in the unqualified use of the phrases "at the time of making his application" and "at the time he made his application." Baldi v. Insurance Co., 24 Pa. Super Ct. 275, 292 (1904); Rondinella v. Insurance Co., 24 Pa. Super Ct. 293, 302 (1904); Connell v. Insurance Co., 16 Pa.Super. Ct. 520, 529 (1901); Beard v. Royal Neighbors, 53 Or. 102, 99 P. 83, 19 L. R. A. (N. S.) 798, 17 Ann. Cas. 1199.

The doctrine established by the Pennsylvania cases, as well as by those of other jurisdictions, with respect to the question, "When and by what physician and for what complaint were you last attended?" or "When and for what complaint did you last consult a physician?" does not relate to a condition of health, or mean that it was requisite or proper to consult a physician about any particular disorder. The question of disease is wholly separate and distinct from the question of consultation. Society v. O'Hara, 120 Pa. 256, 260, 13 A. 932; Baldi v. Insurance Co., 24 Pa.Super. Ct. 275, 290, 292; Caruthers v. Insurance Co. (C. C.) 108 F. 487, 491; Roche v. Lodge, 21 A.D. 599, 601, 47 N.Y.S. 774; Insurance Co. v. McTague, 49 N. J. Law, 587, 592, 9 A. 766, 60 Am. Rep. 661; Insurance Co. v. Arhelger, 4 Ariz. 271, 36 P. 895, 896; Beard v. Royal Neighbors, 53 Or. 102, 99 P. 83, 19 L. R. A. (N. S.) 798, 17 Ann. Cas. 1199; Dwyer v. Insurance Co., 72 N.H. 572, 575, 58 A. 502; Insurance Co. v. Schmidt (Ky.) 93 S.W. 1055; Association v. Edwards, 159 F. 53, 54, 86 C. C. A. 243; McDermott v. Woodmen, 97 Mo.App. 636, 71 S.W. 833, 838.

Upon the point of an apparent contradiction in the testimony, the following cases are cited: Association v. Edwards, 159 F. 53, 54, 86 C. C. A. 243; Meyers v. Woodmen, 193 Pa. 470, 474, 44 A. 563; Jeffrey v. Golden Cross, 97 Me. 176, 53 A. 1102; Hubbard v. Association, 100 F. 719, 723, 726, 40 C. C. A. 665; Boland v. Association, 74 Hun. 385, 26 N.Y.S. 433, 444.

ARGUMENT ON LAW BY COUNSEL FOR DEFENDANT IN ERROR.

Practically all of the contentions of the plaintiff in error depend upon the construction and application to be placed upon and given to section 1 of the Pennsylvania statute of June 23, 1885, which was pleaded by the plaintiff below.

The purpose of this statute has been judicially determined by the Supreme Court of Pennsylvania, in the case of Hermany v. Life Association, 151 Pa. 17, 24 A. 1064.

This case is law in Pennsylvania.

In the case of Life Association v. Miller, 92 F. 63, 34 C. C. A. 211, the Circuit Court of Appeals for the Fourth Circuit, considering this statute and one exactly like it in Maryland, said: "We have examined the two recent cases in the Supreme Court of Pennsylvania on this subject to which our attention was called, of Lutz v. Insurance Co., 186 Pa. 527, 40 A. 1104, and March v. Insurance Co., 186 Pa. 629, 40 A. 1100, 65 Am. St. Rep. 887, in which the act of the twenty-third of June, 1885 (P. L. 134), * * * is further considered. * * * We do not see anything in either of these decisions which changes or materially alters the doctrine laid down in the case of Hermany v. Association, supra, so far as affects this case. * * *"

The case of Insurance Co. v. Mechanics' Savings Bank, 72 F. 413, 418, 19 C. C. A. 286, 38 L. R. A. 33, 70, had this particular statute under consideration.

If William J. Keatley made any "misrepresentation or untrue statement," there are two points involved:

First. Was it material to the risk? Second. If it was immaterial to the risk, was it made in good faith?

Most of the cases hereinafter cited involve both points. Cushman v. Insurance Co., 70 N.Y. 77, ...