Union Indemnity Co. v. Dodd

• Decision Date: 24 September 1927
• Docket Number: No. 2623.,2623.
• Citation: 21 F.2d 709,55 ALR 735
• Parties: UNION INDEMNITY CO. v. DODD et al.
• Court: U.S. Court of Appeals — Fourth Circuit

55 ALR 735, 21 F.2d 709 (1927)

UNION INDEMNITY CO. v. DODD et al.

No. 2623.

Circuit Court of Appeals, Fourth Circuit.

September 24, 1927.

Frank H. Atwill and Alexander H. Sands, both of Richmond, Va. (Sands, Williams & Lightfoot, of Richmond, Va., on the brief), for plaintiff in error.

Hiram M. Smith, of Richmond, Va. (Pollard & Smith and LeRoy R. Cohen, Jr., all of Richmond, Va., on the brief), for defendants in error.

Before PARKER and NORTHCOTT, Circuit Judges, and ERNEST F. COCHRAN, District Judge.

NORTHCOTT, Circuit Judge.

This is a writ of error to a judgment of the District Court of the United States for the Eastern District of Virginia, in a suit at law by Abner Francis Dodd and Mabel K. Dodd, plaintiffs, against the Union Indemnity Company, a Louisiana corporation, for recovery of indemnity under an accident insurance policy. The plaintiff, Abner Francis Dodd, resided at Emporia, Va., and was in the insurance business, and shortly before the issuance of the accident insurance policy to him he became the agent of the defendant company, and on January 4, 1926, made out an application to the company, for a policy. The policy was at once issued to him and contained the following provision:

"In consideration of the agreements and statements in the application, a copy of which is indorsed hereon and made a part hereof, and of $100 premium, the company insures the plaintiff for the principal sum of $30,000 and a weekly indemnity of $100 for the term of 12 months, against the effects of bodily injuries caused directly, solely and independent of all other causes by accidental means, and which shall result in immediate and continuous disability."

And the signed application contains the following:

"I hereby apply for the policy to be based upon the following representations of facts. I understand and agree that the right to recover under any policy which may be issued upon the basis of this application shall be barred in the event that any one of the following statements material either to the acceptance of the risk or to the hazard assumed by the company is false, or in the event that any one of the following statements is false and made with the intent to deceive."

There were 21 questions answered by Dodd, as applicant for insurance, and among them questions 14 and 15, which questions and answers were as follows:

"14. My average weekly earnings exceed the total single weekly indemnity under all policies which I have or have applied for, except as follows: Ans. No exceptions.

"15. I have never received indemnity for any accident or sickness except as follows: Ans. 1918 — Employers' Liab. — Dislocated shoulder — Optional Indem."

On March 9, 1926, Dodd was injured by having a part of his foot shot off; the accident occurring, as claimed by him, while cleaning a shotgun, the gun being accidentally discharged. The defendant company, at the trial, defended on the ground that Dodd had injured himself intentionally, and on the further ground that, in the application, Dodd had made false representations as to material facts, and that therefore the policy was void.

Upon trial, the insurance company moved the court to instruct a verdict for the defendant, which motion was overruled, and the jury found for the plaintiffs. Thereupon, the defendant below moved the court to set aside the verdict of the jury, which motion the court sustained as to the plaintiff, Mabel K. Dodd, but overruled as to the plaintiff, Abner Francis Dodd, and gave judgment in favor of said Abner Francis Dodd for $15,000, the amount assessed by the jury, from which final judgment of the court the Union Indemnity Company sued out this writ.

For the purpose of convenience, Dodd, the defendant in error, will be referred to here as plaintiff, and the Indemnity Company, plaintiff in error, will be referred to as the defendant, as they were in the court below.

It is admitted that, if the policy was valid, $15,000 was the amount of the indemnity to be paid for the loss of a foot. The defendant claimed, at the trial, that the amputation of the entire foot was unnecessary. Upon this point the evidence was conflicting, and the matter was properly submitted to the jury, which found for the plaintiff.

At the time of the issuance of this policy to the plaintiff, section 4220 of the Virginia Code of 1919 was in effect, and was as follows:

"All statements * * * in any application for a policy of insurance shall be deemed representations and not warranties, and no statement in such application * * * shall bar a recovery upon a policy of insurance, or be construed as a warranty, anything in the policy to the contrary notwithstanding, unless it be clearly proved that such answer or statement was material to the risk when assumed and was untrue."

There are many questions raised in this case that were doubtful and upon which the evidence was conflicting. The defense made, that the shooting was intentional, not accidental, was strongly contested pro and con, and was properly left to the jury under a charge of the court, manifestly correct on this point.

Again, with respect to the answer to question 14, concerning the plaintiff's weekly earnings, which in gross did exceed the weekly indemnity fixed in the policy, but which, after deducting office expenses, only amounted to little more than one-half of the weekly indemnity, we are of the opinion that there was such uncertainty as to what is meant by average weekly earnings that there was a serious doubt as to the truth or falsity of the answer. While it can readily be seen that a company would hesitate to issue a policy providing for a weekly indemnity in excess of the net earnings of the insured, thereby offering an inducement for malingering, yet the company itself formulated and propounded this question, and it should be construed strictly against it. The rule is well settled, and needs no citation to support it, that in case of an ambiguity all questions of construction are decided strictly against the insurance company. There is, however, no necessity for any rule of construction, where there is no ambiguity or uncertainty.

Nor do we think that the learned trial judge was in error when he sustained the motion to set aside the verdict as to Mabel K. Dodd.

A point was presented as to the materiality of the answer to question 21, where the applicant stated that he had not, for seven years prior to the date of the application, received medical or surgical attention, except that in January, 1918, he was treated for dislocated shoulder, lasting for three weeks. It developed at the trial that he had received medical attention on March 9, 1919, for ruptured shoulder; in January, 1923, for the grippe; in April, 1923, for measles; in June, 1921, for boils; and in February, 1924, for injury to his back. In view of our holding in this opinion as to the materiality, as a matter of law, of the answer to question 15, we do not deem it necessary to decide the point raised as to the answer to this question 21.

This brings us to what we deem to be the vital point in the case, plaintiff's answer to question 15 above set out. This question must, of course, be considered in the light of the Virginia statute.

Statutes of this character are mandatory, and control the nature and terms of the contract into which the parties have entered, and cannot be set aside by the company, even with the consent of the assured. Equitable Life Assurance Society v. Pettus, 140 U. S. 226, 11 S. Ct. 822, 35 L. Ed. 497; New York Life Insurance Co. v. Cravens, 178 U. S. 389, 20 S. Ct. 962, 44 L. Ed. 1116.

Subject to the limitation imposed by the Virginia statute, the application was made a part of the policy. "Where the entire application is made by express words a part of the policy, it is entitled to the same consideration as if it had been inserted at large in that instrument. The policy and application together, therefore, constitute the written agreement of insurance; and, in ascertaining the intention of the parties, full effect must be given to the conditions, clauses and stipulations contained in both instruments." 7 Encyc. of U. S. S. C. R. 96, and cases there cited.

When statutes of this character have been construed by the state courts, such construction is followed by the federal courts. "The interpretation of a state statute by the state courts with respect to its application to policies issued by a foreign insurance company is binding on the Supreme Court of the United States." New York Life Ins. Co. v. Cravens, supra; See, also, Washburn & Manufacturing Co. v. Reliance M. Insurance Co., 179 U. S. 1, 21 S. Ct. 1, 45 L. Ed. 49; Iowa Life Insurance Co. v. Lewis, 187 U. S. 335, 23 S. Ct. 126, 47 L. Ed. 204.

Upon the question of whether the materiality of a representation was a question for the court, or for the jury, the Virginia court has said: "Whether a representation is made and the terms in which it is made are questions of fact for the jury; but, when proved, we are of opinion that its materiality is a question for the court." Metropolitan Insurance Co. v. Hayslett, 111 Va. 107, 68 S. E. 256. This...