Western & Southern Life Ins. Co. v. Quinn

• Decision Date: 17 November 1908
• Citation: 130 Ky. 397,113 S.W. 456
• Parties: WESTERN & SOUTHERN LIFE INS. CO. v. QUINN.
• Court: Kentucky Court of Appeals

113 S.W. 456

130 Ky. 397

WESTERN & SOUTHERN LIFE INS. CO. v. QUINN.

Court of Appeals of Kentucky.

November 17, 1908

Appeal from Circuit Court, Jefferson County, Common Pleas Branch Third Division.

"To be officially reported."

Action by Mary Quinn against the Western & Southern Life Insurance Company. From a judgment for plaintiff, defendant appeals. Reversed, with directions.

James Quarles, for appellant.

T. A McDonald, Wm. McKee Duncan, and C. C. McMahan, for appellee.

BARKER J.

When Michael J. Quinn died in 1906, there was an insurance policy on his life issued by the appellant company for $1,000 payable to his wife, Mary Quinn. After the death of the insured, the company denied its liability under the policy because it claimed that in the application for insurance among the questions propounded to the applicant was whether or not he had ever applied to any other company for insurance and been rejected or postponed, to which he answered "No," that this answer was material and was untrue. After interviewing the widow, she and the appellant company agreed upon a compromise of the claim, by which it paid to her the sum of $750 in full of her claim under the policy in question. The company owed her $116 on another policy, and this was not in dispute. Thereupon it paid to the appellee the sum of $866 in full settlement of both of her claims against it, and the following receipt was issued:

"Form 25.

"Claimant's Receipt. $866.00. Compromise Settlement.

"Louisville, Ky. April 26, 1906.

"Whereas the Western and Southern Life Insurance Company, of Cincinnati, Ohio, issued its policies 32776 and 10289A on the life of Michael J. Quinn, and whereas certain differences and disputes exist as to the liability of said company under said policies: Now, for the purpose of compromising and settling the said disputes and differences, the sum of eight hundred and sixty-six dollars has this day been paid to me, receipt of which I hereby acknowledge in full satisfaction, settlement and discharge of all liability of said company under said policies and the same is now herewith surrendered.

"[Signed] Mary Quinn.

"Witness:

"[Signed] M. J. Brady.

Alex Altsman.

George A. Boissard."

After nearly nine months had expired from the date of this receipt, this action was instituted by the widow to recover the balance of $250 alleged to be owing her under the policy which had been compromised, and alleging that the compromise had been obtained by fraud, misrepresentation, and deceit. The company demurred to the petition because it did not allege the payment, or tender back, to the insurance company of the amount received by the plaintiff under the compromise. This general demurrer was overruled by the court, and then the company answered, denying the fraud. Upon a trial of the case before a jury a verdict was returned in favor of the plaintiff for the sum of $250. Thereupon the defendant entered a motion for a judgment non obstante veredicto, which was overruled. It also filed a motion for a new trial, which was overruled.

The evidence showed without question that prior to the application of Michael J. Quinn for the policy in dispute he had applied to another company for insurance, and had been rejected, and that his answer in the application for the policy under discussion, that he had not been rejected, was untrue, but it did not certainly appear that Quinn had been informed of his rejection. Undoubtedly, if the question was material and the answer untrue, no recovery could have been had under the policy, whether the applicant knew it was untrue or not. Provident Saving Life Association v. Dees, 120 Ky. 285, 86 S.W. 522; Provident Saving Life Association v. Whayne, 93 S.W. 1049, 29 Ky. Law Rep. 160; Mutual Life Insurance Company v. Thompson, 94 Ky. 255, 22 S.W. 87; Union Central Life Insurance Co. v. Lee, 47 S.W. 614, 20 Ky. Law Rep. 839; American Aid Society v. Bronger, 91 Ky. 406, 15 S.W. 1118. Certainly it could not be said that with this fact existing there was not a question of the liability of the company about which reasonable men might differ. This being so, the dispute was one which the parties might compromise. Where such a compromise has taken place, it is immaterial that it should afterwards transpire that one or the other of the parties to the settlement was right. One of the parties to a disputed question of law must always be right; and, if the mere fact that it subsequently developed that one party was right and the other wrong may upset a compromise about it, there could be no basis of compromise of proposed litigation. The rule is that, if there be a question between parties about which reasonable men might well differ as to the outcome, they may adjust it themselves by way of compromise, and this will be upheld by the courts. Mitchell's Heirs v. Long, 5 Litt. 72; American Mutual Aid Society v. Bronger, 91 Ky. 406, 15 S.W. 1118; Creutz v. Hiel, 89 Ky. 429, 12 S.W. 926; Morgan v. Hodges, 89 Mich. 404, 50 N.W. 876, 15 L. R. A. 438; Gray v. United States S. & L. Co., 116 Ky. 967, 77 S.W. 200; Taylor v. Patrick, 1 Bibb, 168; Fisher v. Mays' Heirs, 2 Bibb, 448, 5 Am. Dec. 626.

We are of opinion that the question between appellant and appellee as to the liability of the former under the policy was one about which reasonable men might entertain a substantial doubt; and, this being so, the compromise cannot be said to have been without consideration. The evidence fails entirely to show the slightest fraud or imposition practiced by the company or its agents upon the appellee. As to this, we can accept her own statement. The company had proposed to compromise...