Zeidel v. Connecticut General Life Ins. Co.

• Decision Date: 11 June 1929
• Docket Number: No. 5858.,5858.
• Citation: 44 F.2d 843
• Parties: ZEIDEL v. CONNECTICUT GENERAL LIFE INS. CO.
• Court: U.S. District Court — Western District of Pennsylvania

44 F.2d 843 (1929)

ZEIDEL v. CONNECTICUT GENERAL LIFE INS. CO.

No. 5858.

District Court, W. D. Pennsylvania.

June 11, 1929.

Charles Margiotti and S. C. Puglise, both of Punxsutawney, Pa., and S. V. Albo, of Pittsburgh, Pa., for plaintiff.

Reed, Smith, Shaw & McClay, P. K. Motheral, and Carl Glock, all of Pittsburgh, Pa., for defendant.

McVICAR, District Judge.

This is an action on a life insurance policy by the beneficiary. The jury returned a verdict for the full amount of the plaintiff's claim. The case is now before us on defendant's motion for a new trial.

Plaintiff, at the trial, offered in evidence the policy of insurance, dated December 1, 1926, in the sum of $5,000; evidence of the payment of the premium thereon at the date of issue, and one year subsequent thereto; the death of the insured; proof of death to the defendant; and the refusal of the defendant to pay the insurance — this made out a prima facie case in favor of the plaintiff. Defendant then offered in evidence (which was uncontradicted) that the insured, in his application, which is a part of the policy, represented that he had never been on a restricted diet; that he had never had jaundice; that he had no medical advice within the period of five years preceding the date of the policy excepting treatment for a cold; that these representations were false; that they were known by the insured to be false; and that defendant, relying thereon, issued the policy upon which this action was brought. If the case had ended here, defendant would have been entitled to binding instructions. Mutual Life Insurance Co. v. Hilton-Green, 241 U. S. 613, 36 S. Ct. 676, 60 L. Ed. 1202; New York Life Insurance Co. v. Wertheimer (D. C.) 272 F. 730; Lutz v. Metropolitan Life Insurance Co., 186 Pa. 527, 40 A. 1104; Murphy v. Prudential Insurance Co., 205 Pa. 444, 55 A. 19; McEntee v. New York Life Insurance Co., 79 Pa. Super. Ct. 457; Martin v. Prudential Life Insurance Co., 83 Pa. Super. Ct. 509; March v. Metropolitan Life Insurance Co., 186 Pa. 629, 40 A. 1100, 65 Am. St. Rep. 887.

Plaintiff offered evidence in rebuttal that the agent of defendant, who solicited the insurance, knew that the aforesaid representations were false; that it was his duty to communicate the same to his principal, and with this knowledge the policy was issued and the premiums paid. Defendant offered evidence in sur rebuttal to the effect that the agent did not know the representations were false. The court submitted the question to the jury, whether the falsity of the said representations were known to defendant's agent before the issuance of the policy, and the receipt of the premiums paid thereon, and instructed the jury that, if they found this issue in favor of the plaintiff, it would be their duty to render a verdict in her favor, providing the circumstances were not such as would reasonably lead the insured to believe that the agent would not communicate his knowledge to the defendant. Defendant, in his motion for a new trial, alleges that the court erred in refusing its point for binding instructions, except as to the premiums paid, with interest.

Was there an equitable estoppel in favor of the plaintiff? The answer to this question depends upon whether the agent's knowledge was chargeable to his principal. In 21 Ruling Case Law, 843, it is stated: "While the knowledge of an agent is ordinarily to be imputed to the principal, it would appear now to be well established that there is an exception to the construction or imputation of notice from the agent to the principal in case of such conduct by the agent as raises a clear presumption that he would not communicate the fact in controversy, as where the communication of such a fact would necessarily prevent the consummation of a fraudulent scheme which the agent was engaged in perpetrating, or when the person claiming the benefit of the knowledge or notice or those whom he represents collude with the agent to cheat or defraud the principal."

In Gunster v. Scranton, etc., Co., 181 Pa. 327, 37 A. 550, 59 Am. St. Rep. 650, the rule is stated in the syllabus as follows: "An exception to the general rule that notice to the agent is notice to the principal arises in case of such conduct by the agent as raises a clear presumption that he would not communicate the fact in controversy, as where the agent acts for himself in his own interest and adversely to that of the principal."

In United Security Life Insurance & Trust Co. v. Central National Bank, 185 Pa. 586, 40 A. 97, 98, Justice Mitchell of the Supreme Court, said: "The rule * * * is founded on the duty of the agent to communicate all material information to his principal and the presumption that he has done so; but no agent who is acting in his own antagonistic interest, or has committed a fraud by which his principal is affected, can be presumed to have disclosed such fraud. It would be contrary to all experience of human nature, on which presumptions are founded."

The latter case is cited, with approval, in National Union Fire Insurance Co. v. Mellon National Bank, 276 Pa. 212, 119 A. 910.

In the case of Mutual Life Insurance Co. v. Hilton-Green, 241 U. S. 613, 36 S. Ct. 676, 680, 60 L. Ed. 1202, supra, the Supreme Court, in its opinion, said: "The general rule which imputes an agent's knowledge to the principal is well established. The underlying reason for it is that an innocent third party may properly presume the agent will perform his duty and report all facts which affect the principal's interest. But this general rule does not apply...