Turner v. The Pacific Mutual Life Insurance Company of California

• Decision Date: 08 February 1933
• Docket Number: 5807
• Citation: 52 Idaho 672,20 P.2d 210
• Parties: JOSEPH JAMES TURNER, Respondent, v. THE PACIFIC MUTUAL LIFE INSURANCE COMPANY OF CALIFORNIA, Appellant
• Court: Idaho Supreme Court

20 P.2d 210

52 Idaho 672

JOSEPH JAMES TURNER, Respondent, v. THE PACIFIC MUTUAL LIFE INSURANCE COMPANY OF CALIFORNIA, Appellant

No. 5807

Supreme Court of Idaho

February 8, 1933

INSURANCE-ACTION ON POLICY-FRAUD-ORAL EVIDENCE-QUESTIONS FOR JURY.

1. Insured's admission that he told physician of cause of previous illness, which was unknown to him until after medical examination and delivery of health policy issued on application stating that he had no previous illnesses, did not bar recovery thereon, but was merely circumstance for jury's consideration in issue of fraud.

2. Oral evidence is admissible to prove that insured told truth to insurer's agent or medical examiner, failing to record correct answers in application for policy.

3. Oral evidence that insured told truth to insurer's agent or medical examiner, failing to record correct answers in application for policy, presented question for jury.

4. Insured is not estopped to recover on health policy because of false answers to questions in attached application, unless he knew they were false.

5. Whether insured was estopped to assert truth of his negative answer to question in application for health policy as to previous illnesses by retention of policy, with attached application, after learning of incorrect answers recorded by insurer's medical examiner, without notifying insurer held for jury.

APPEAL from the District Court of the Third Judicial District, for Ada County. Hon. Charles E. Winstead, Judge.

Action by plaintiff to recover under a life, health and accident insurance policy and cross-action by defendant to cancel the policy. Judgment for plaintiff. Affirmed.

Judgment affirmed. Costs to respondent. Petition for rehearing denied.

Richards & Haga, for Appellant.

Representations as to the prior state of health of an applicant for insurance and as to consultations with or treatments by physicians, and previous hospital confinements, are always material, and if they are false they necessarily avoid the policy. (Keeton v. Jefferson Standard Life Ins. Co., 5 F.2d 183, 187; 4 Cooley's Briefs on Insurance, 2d ed., p. 3268; 37 C. J 463; Mutual Life Ins. Co. v. Hilton-Green, 241 U.S. 613, 36 S.Ct. 676, 60 L.Ed. 1202.)

An applicant for insurance is presumed to have read the application for the policy before he signed it and to be cognizant of all matters therein contained, and he is estopped to deny either that he failed to read the application or the policy when delivered to him. (New York Life Ins. Co. v. Fletcher, 117 U.S. 519, 6 S.Ct 837, 29 L.Ed. 934, 939; Hayes v. Automobile Ins. Exch., 126 Wash. 487, 218 P. 252, and authorities cited below.)

Retention of a policy of insurance by the insured, containing a copy of the written application, is an approval by the insured of the application, and even if the answers to the application were correctly given by the applicant and were falsely or incorrectly written by the agent or medical examiner of the company, such retention of the policy by the insured without notifying the insurer makes the insured a participant in the fraud or mistake and his failure to promptly notify the insurer is bad faith and fatal to the policy. (New York Life Ins. Co. v. Fletcher, 117 U.S. 519, 6 S.Ct. 837, 29 L.Ed. 934, 938, 939; Bollard v. New York Life Ins. Co., 98 Misc. 286, 162 N.Y.S. 706; affd., 228 N.Y. 521, 126 N.E. 900.)

Hawley & Worthwine, for Respondent.

The jury passed upon the materiality of the alleged misrepresentations of respondent and found that they were not material. (Rasicot v. Royal Neighbors of America, 18 Idaho 85, 108 P. 1048, 138 Am. St. 180, 29 L. R. A. (N. S.) 433; Cunningham v. Penn Mutual Life Ins. Co., 152 La. 1023, 95 So. 110; Metropolitan Casualty Ins. Co. v. Cato, 113 Miss. 283, 74 So. 114.)

Knowledge to the defendant's medical examiner was knowledge to the defendant, and it is estopped from asserting any defense, and testimony showing knowledge is not a variance by parol of the written contract. (C. S., secs. 5008, 5009, 5012, 5014, 5019; Mabee v. Continental Casualty Co., 37 Idaho 667, 219 P. 598, 37 A. L. R. 348; Allen v. Phoenix Ins. Co., 14 Idaho 728, 95 P. 829; Russell v. New York Life Ins. Co., 35 Idaho 774, 209 P. 273; 32 C. J. 1333; 14 R. C. L. 1174; 37 C. J. 502.)

GIVENS, J. Budge, C. J., Morgan and Holden, JJ., and Babcock, D. J., concur.

OPINION

GIVENS, J.

October 7, 1929, appellant issued to respondent its so-called "Non-Cancellable" income policy, providing indemnity for loss of life or time through accidental means, or loss of time by sickness.

July 3, 1930, appellant sought to cancel the policy because of claimed misstatements in the written application and medical examination attached to the policy and made part of it, and this suit was instituted to recover $ 900 with interest, for total loss of time due to sickness from April 14 to September 15, 1930.

Both appellant and respondent have discussed the word "Non-Cancellable" on the face and in the body of the policy, and whether there is a distinction between "Non-Cancellable" and "incontestible."

The policy provides that "This policy includes the endorsements and attached papers, if any, and contains the entire contract of insurance except as it may be modified by the Company's classification of risks or premium rates . . . .," which latter incidents are in no way involved herein.

"Non-Cancellable" is not defined in the policy, and in view of the conclusion reached, it is unnecessary to discuss or consider the "Non-Cancellable" feature.

Appellant alleged in the answer and cross-complaint that respondent falsely answered question 15, part I of the application, as to whether respondent had ever had any bodily infirmity; questions 5F and 5G of part II of the application, which asked if he had ever had liver, kidney or bladder disease, etc., or colic, gravel, etc., to which questions respondent answered "No"; question 6, part II, which inquired whether respondent had given full information about each disease mentioned in question 5, to which he answered "Yes"; and question 7, part II, which asked what injuries, illnesses and treatments or consultations with physicians he had had during the seven years preceding the application, with particulars of each, to which he answered "None," alleging that such statements were material to the risk, and relied upon by the company in issuing the policy.

The issue of fraud was tried before a jury, which returned a verdict for respondent, and the question of cancelation was presented to the court for decision, who made findings of fact and conclusions of law to the effect that there was no fraud on the part of respondent in answering the questions, and refused to cancel the policy.

Respondent's evidence was to the effect that he told Dr. Forney, the examining physician, that in February, 1929, he was taken to the hospital in Boise, where he was examined by Dr. Stone, who also called Dr. Pittenger into consultation but that neither of the doctors told him what was the matter with him; that he did not know what was the matter with him at that time. That he told Dr. Forney to call Dr. Stone, get the necessary information, and then fill in the answers. Appellant's witnesses, Burford and Dr. Johnson, testified that respondent told them when he was in the hospital in San Francisco, suffering from the illness for which indemnity is sought, that he had had a kinked ureter in February, 1929.

While respondent admitted having told Dr. Johnson in 1930 that he had had a kinked ureter in February, 1929, the record discloses that the first time he knew what he was suffering from was January or February, 1930, when Dr. Laubaugh told him that he had a kinked ureter. Thus respondent did not know at the time of the medical examination or the delivery of the policy October 7, 1929, that such was the case, and thus it was merely a circumstance to be taken into consideration by the jury in their consideration of the case, particularly with reference to the retention of the policy hereafter discussed.

The majority rule is that oral evidence is admissible on the part of the insured to prove that he told the truth to the agent or medical examiner, but that the agent or medical examiner failed to record the correct answers. (Bullock v. New York Life Ins. Co., 182 Minn. 192, 233 N.W. 858; Blades v. Farmers' & Bankers' Life Ins. Co., 116 Kan. 120, 225 P. 1082; American Bankers' Ins. Co. v. Hopkins, 67 Okla. 150, 169 P. 489; Simmons v. Washington Fidelity Nat. Ins. Co., 136 Ore. 400, 299 P. 294; Mid-Continent Life Ins. Co. v. Parker, 181 Ark. 213, 25 S.W.2d 10; Suravitz v. Prudential Ins. Co. of America, 244 Pa. 582, 91 A. 495, L. R. A. 1915A, 273; Panopoulos v. Metropolitan Life Ins. Co., 96 Pa. Super. 415; 32 C. J., pp. 1333, 1334, sec. 601; 4 Couch on Insurance Law, sec. 842u, p. 2784 et seq.) Thereby a question is presented for the jury (Panopoulos v. Metropolitan Life Ins. Co., supra; Suravitz v. Prudential Ins. Co. of America, supra; Farm v. Royal Neighbors of America, 145 Minn. 193, 176 N.W. 489; Lynch v. Germania Life Ins. Co., 132 A.D. 571, 116 N.Y.S. 998; American Bankers' Ins. Co. v. Hopkins, supra; Mutual Life Ins. Co. v. Boucher, 83 Okla. 42, 200 P. 534; 33 C. J., sec. 866, p. 134; 4 Couch on Insurance Law, sec. 889j, p. 3042 et seq.), and the jury and the court have herein found as a fact on competent and admissible evidence that respondent told the truth, thus removing the ground of falsity of statement as avoiding the policy.

Appellant contends, however, that retention of the policy to which the application was attached is an approval by insured of the application, making him a participant in the fraud or mistake, and his failure to notify the insurer is fatal to the policy,...