Zeilman v. Cent. Mut. Ins. Assn.

• Citation: 22 S.W.2d 88
• Decision Date: 02 December 1929
• Docket Number: No. 16436.,16436.
• Court: Court of Appeal of Missouri (US)
• Parties: HENRY ZEILMAN, RESPONDENT, v. CENTRAL MUTUAL INS. ASSOCIATION, APPELLANT.<SMALL><SUP>*</SUP></SMALL>

22 S.W.2d 88

HENRY ZEILMAN, RESPONDENT, v. CENTRAL MUTUAL INS. ASSOCIATION, APPELLANT.^*

No. 16436.

Kansas City Court of Appeals. Missouri.

December 2, 1929.

Appeal from Circuit Court of Cole County. — Hon. Henry J. Westhues, Judge.

REVERSED.

John P. Peters and E.M. Zevely for respondent.

Irwin & Bushman for appellant.

BLAND, J.

This is an action on a life insurance policy or "certificate of membership" dated July 7, 1924, and in the sum of $1,000. The insurance was written by the defendant upon the life of Gertrude Zeilman, the wife of plaintiff. The insured died and defendant refused to pay the loss resulting in this suit for $875, the sum of $125 having been paid upon the loss by way of settlement and discharge but which plaintiff claims was merely a partial payment upon the loss. There was a verdict in favor of plaintiff in the sum of $875 and interest amounting to $21.87½. Defendant has appealed.

The answer denied liability upon the policy on the ground of misrepresentation and breach of warranty on the part of the insured made in procuring the policy, and that the insured concealed from the insurer material matters concerning her health and physical condition. The answer also pleaded a release wherein plaintiff was paid the sum of $125 in full settlement of his claim against the defendant arising under the policy. Tender back of the premium was made by defendant.

Defendant is an assessment company organized under the laws of Missouri with its head offices in Jefferson City.

The facts show that there was no medical examination of insured when the policy was taken out but that one Griffin, an agent of defendant, took insured's application for the policy at the insured's home in Osage County on June 9, 1924; that the insured at that time had tuberculosis and had suffered therefrom and prior to February 16, 1924, and that she died on December 25, 1924, of this disease.

The application contained the following:

"I further agree that if accepted as a member of the Association that I warrant the truth of the answers given to the following questions: ...

"Q. When were you last sick? A. January 27, 1924.

"Q. Are you diseased in any way? A. No.

"Q. What is the nature of your disease? A. No.

"Q. Are you in good health? A. Browncites," (meaning thereby Bronchitis).

There is no question but that the answers to these questions constituted a warranty that the insured was in good health when her application was signed with the exception that she suffered from bronchitis. As there is no question but that she was suffering from tuberculosis at the time she signed the application, from which she died, there was a breach of warranty (State ex rel. v. Allen, 310 Mo. 378), unless the defendant is now estopped to urge the same upon account of the following facts:

Plaintiff testified that he was present at the time the application was taken and signed; that when the question in the application "Are you in good health?" was reached insured told Griffin that she was in poor health; that she had bronchitis and lung trouble; that Griffin said he had nothing to say "as long as she was able to do her own work and could get around." Plaintiff testified that she was then doing her own work; that she was then under the care of doctors but Griffin was told of this. Later he testified that she told Griffin that she had bronchitis and bad health; that the witness "guessed" that insured saw the answers put down but he could not say whether she read the application or not, although she could read; that he did not know whether the application had anything in it in regard to tuberculosis; that Griffin wrote all the answers and insured signed the application.

The parties do not agree as to what the record shows in reference to whether insured knew that she had tuberculosis at the time she signed the application. It is admitted that plaintiff was so informed by a doctor but he testified that he did not believe it. Insured was advised by a doctor in the previous March that "she had weak lungs like tuberculosis ... weak lungs and likely to run into tuberculosis." However, it is immaterial to the point now being discussed whether insured knew she had tuberculosis as she knew she was under the care of a doctor for lung trouble that was likely to run into tuberculosis.

Does the failure of Griffin to insert the information that insured gave him estop defendant from insisting upon a breach of the warranty contained in the application? The rule in reference to this matter is well stated in 32 C.J., pp. 1333, 1334:

"Where the facts have been truthfully stated to its agent but by his fraud, negligence or mistake are misstated in the application, the company cannot, according to the generally accepted rule, after accepting the premium and issuing the policy, set up such misstatements in the application in avoidance of its liability, where the agent is acting within his real or apparent authority, and there is no fraud or collusion upon the part of the insured." [See also Andrews v. Bulldog Auto Fire Ins. Ass'n of Chicago, 291 S.W. 508, 510, and cases therein cited; Cagle v. Ins. Co., 78 Mo. App. 431.]

However, in order for this rule to be brought into play it must appear that the insured did not know what was in the application when she signed it. In other words that she neither read the application after it was made out nor saw the answers inserted therein. It thus appears that in order for the defendant to be estopped there must have been some concealment or deception practiced by Griffin upon the insured. [Thomas v. Modern Woodmen of Am., 218 Mo. App. 10.] It therefore, was incumbent upon plaintiff to show that the insured was ignorant of the fact that the application did not contain the information she had given Griffin when she signed it. [Modern Woodmen of Am. v. Angle, 127 Mo. App. 94, 115; Andrew v. Bulldog Auto Fire Ins. Ass'n of Chicago, 258 S.W. 714, 716; Golding v. Modern Woodmen of Am., 213 Mo. App. 171, 194.]

As before stated, plaintiff testified that he could not remember whether or not insured read the application. Under the circumstances the contention of the defendant that its instruction in the nature of a demurrer to the evidence should have been sustained, is well taken.

We have examined the case of Rissler v. American Central Ins. Co., 150 Mo. 366, and like cases cited by defendant and find them not controlling here. In the Rissler case it was held that the circumstances did not amount to fraud on the part of the insured. In that case the agent assured the applicant that certain things were not material and those things were of such a character that the insured might have well believed what the agent said about them but no reasonable person would believe that such a serious ailment as lung trouble for which the applicant was under the care of a physician and which might lead to the disease of tuberculosis would not be material to the company when passing upon a life insurance application, even though the agent told the victim otherwise in view of the fact that she was able to get around and do her own work. A reasonable person being so informed by the agent would know that he was making a misstatement which was probably influenced by his interest in the commission he would receive were the policy issued, or some other interest adverse to that of the company. If insured read the application after it was made out or saw the answers inserted therein and knew that it did not disclose what she had told Griffin, that is to the effect that she was suffering from lung trouble then, under the circumstances, the conduct of the insured amounted to collusion, under the latest decision of the Supreme Court. [See Emery v. N.Y. Life Ins. Co., 295 S.W. 571.] This is not a question of whether or not the insured neglected to mention the existence of facts about which no inquiry was made, but inquiry was expressly made in the application as to the condition of her health and whether she had any disease, and her answers were by the terms of the application made warranties. As there was a breach of warranty in this...