Aetna Life Insurance v. Millar

Burke, J., delivered the opinion of the Court. This is the defendant’s appeal from a judgment rendered against it in the Superior Court of Baltimore City. The suit was in assumpsit, and was based upon a health benefit ⁶⁸⁹ certificate issued by the appellant'to William J. S. Millar, the plaintiff. The declaration alleged that the defendant, in consideration of the sum of sixty dollars paid by the plaintiff to it, issued to him the policy or certificate sued on,whereby it agreed to pay to the plaintiff certain sums of money according to a schedule of operations attached to the policy, and a further sum for each week during the disability of the plaintiff resulting from illness.

It further alleged that on the second day of July, 1908, the plaintiff was operated on for a disability mentioned in the schedule, to wit, Mastoiditis, and was disabled from performing his usual business duties for a period of thirteen weeks. It also alleged that the plaintiff had given the defendant notice of said illness and operation according to the requirements of the policy, and had in all other respects performed all the obligations imposed upon him by the contract of insurance; but that, the defendant had refused to pay him the amount due him under the policy. The amount claimed was three hundred and seventy-five dollars. ■ To this declaration the defendant interposed the general issue pleas, and two special pleas, numbered three and four. The third plea alleged that the plaintiff in his application for the policy mentioned in the declaration made the statement that he had not received medical attention within two-years preceding the making of the application, which statement the plaintiff warranted to be time; that that statement was made a part of the contract of insurance and was relied' upon by the defendant; that in fact the plaintiff had received medical attention within two years preceding the making-of the application, as he well knew.

It further averred that these facts constituted a breach of warranty as to a matter material to the risk, and avoided the policy. The fourth plea is similar to the third, with one exception.' It omits the allegation found in the third plea, that the untrue statement alleged to have been made was knowingly made by the plaintiff. The plaintiff joined issue upon the first and second ⁶⁹⁰ pleas and replied to the third and fourth. The replication denied the plaintiff having received medical attention within the period mentioned, and averred that no statement contained in his application for insurance constituted a breach of warranty as to a matter material to the risk and in avoidance of the policy.

Issue was joined upon these replications and the ease proceeded to trial, resulting in a verdict and judgment for the plaintiff for the full amount claimed. The issues raised under the third and fourth pleas, viz, the falsity and materiality of the statements set out in these pleas, present the only real questions in the case. The record contains two hills of exception—one relates to the ruling of the Court upon a question of evidence, and the other to its action on certain prayers and special exceptions filed by the defendant. At the conclusion of the whole case the Court granted two prayers on behalf of the plaintiff, and granted the defendant’s second prayer.

It overruled the defendant’s special exception to the plaintiff’s first aud fourth prayers, which were the ones granted, and refused the defendant’s first, third, fourth, fifth, sixth and seventh prayers. This action of the Court is presented for review by the second exception. The jury were instructed by the plaintiff’s first prayer that if they found that the defendant executed the policy of insurance referred to in the evidence and delivered the same to the plaintiff, and that the plaintiff paid to the defendant all premiums payable thereon, and complied with all the undertakings and stipulations to be performed •on his part in said policy; and if they further found that during the term mentioned in said policy the plaintiff was operated on for the disability referred to as Mastoiditis in the schedrde attached to the policy, and further found that said disability was not contracted within fifteen days after noon on the day of the date of the policy and was disabled from prosecuting any and every kind of business pertaining to his occupation for a period of thirteen weeks, as testified to; and further found that said plaintiff exhibited and ⁶⁹¹ delivered to the defendant notice of said illness and operation and proper and sufficient proof of the same within two months from the termination of said thirteen weeks and before the bringing of this suit, then the plaintiff tvas entitled to recover, unless the jury found from the evidence that the application for the policy on the part of said plaintiff contained some misrepresentation or untrue statement of facts not made in good faith by said applicant, or unless the jury found that said application contained some misrepresentation or untrue statement on some matter material to the risk. By the plaintiff’s fourth prayer the jury were told that if they found the facts set forth in the plaintiff’s first prayer, and further found that .the plaintiff informed the agent of said company that he had on one occasion an earache concerning which he had consulted a physician, but that he had received no treatment or medicine from said physician, and that the agent advised the plaintiff -that the statement in the application, to wit, “I have uot received medical attention within the past íavo years except as herein stated,” did not refer to such consultation, and that the agent filled in the Avord “Xo,” and that the plaintiff, relying upon the statement of the agent of the defendant, signed the application, belicA'ing said conclusion “Xo” to be the truthful answer to the statement, then their verdict should be for the plaintiff.

The jury were told by the defendant’s second prayer that if they found that the plaintiff contracted the disease mentioned in the eAudence and therein described as Mastoiditis, and that said disease Avas contracted by the plaintiff prior to the issuance of the policy of insurance sued on in this case, or if they found that said disease Avas contracted within fifteen days after the issuance of the policy, then the verdict of the jury must be for the defendant. The defeiidant.’s rejected prayers will be noticed later. The correctness of these instructions must be determined by the facts disclosed by the record, and those facts, so far as they bear upon the ⁶⁹² issues raised, by the pleadings, will now be stated. The policy, which is contained in the record, recites that the defendant, in consideration of the premium of sixty dollars and of the statements in the schedule of warranties indorsed thereon, which statements the policy declares the plaintiff warrants to be true, insured the plaintiff for the term of one year from the 15th day of June, 1908, commencing and ending at 12 o’clock noon, standard time; first, against disability or death resulting directly and independently of all other causes from bodily injuries. &c.; and secondly, against disability from illness as defined in the policy.

The illness from which the plaintff suffered is not excepted by the terms of the policy; but by section 22 of the policy it is provided that insurance does not cover disability resulting from any disease contracted within fifteen days from noon of the day the policy is dated. The surgical operation performed upon the plaintiff is within the terms of the policy. The application of the plaintiff, which, is made a part of the policy, contains the following statement: “I have not received medical attention within the past two years, except as herein stated. Eo.” This statement the defendant insists'was false and material, and avoids the policy.

The statement must be treated as a warranty, but its legal effect is modified‘and controlled by the statute of this State'ttpon the subject. In Monahan v. Mutual Insurance Company, 103 Md. 155 , we said: “There is a broad and material distinction between a warranty and a representation. A representation is not a part of the contract, but is collateral thereto, while, a warranty is a part of the contract. In consequence of this, while the falsity of a representation is not a ground for avoiding the contract, unless material to the risk, a warranty as to any fact will preclude an inquiry as to the materiality of that fact. ■ 16 Am. and Eng.

Ency. of L. 932. The legislation of many of the States, including Maryland, has modified the harsh rule respecting warranties in this class of contracts, and has swept away a group ⁶⁹³ of merely technical objections to a recovery on life insurance policies (Md. Cas. Co. v. Gehrmann, 96 Md. 648 ) by declaring that “whenever the application for a policy of life insurance contains a clause of warranty of the truth of the answers therein contained, no misrepresentation or untrue, statement in such application, made in good faith by the applicant, shall effect a forfeiture or be a ground of defense in- any suit brought upon any policy of insurance issued upon the faith of such application, unless such misrepresentation or untrue statement relate to some matter material to the risk.” Section 196, Art. 23, Code of 1904. What is a matter material to the risk is ordinarily and generally for the jury to determine.

Under the pleadings and evidence, the controverted questions presented at the trial were, first, the good faith .of the plaintiff in making the statement complained of; secondly, was the statement false; thirdly, did it relate to some matter material to the risk; and fourthly, was the disease from which the plaintiff suffered contracted within fifteen days from noon of June 15th, 1908, the date of the policy? The lower Court in the instructions granted •submitted these questions to the finding of the jury. In this it followed the general and ordinary rule. It is ordinarily the province of the jury to determine the falsity and materiality of the misrepresentation, and the burden is upon the defendant to satisfy the jury of the truth of these defenses.

Where the had faith of the applicant, or the falsity and materiality of the misrepresentation is shown by clear, and uncontradicted evidence, the Court may so rule as a matter of law; but where the evidence upon these questions is conflicting or doubtful they should be submitted to the jury. Fidelity Mutual Life Insurance Company v. Ficklin, 74 Md. 173 ; Dulaney v. Fidelity Company, 106 Md. 17 ; Mutual Life Insurance Company v. Rain, 108 Md. 353 ; Bankers' Life Insurance Company v. Miller, 100 Md. 1 : Maryland Cas. Co. v. Gehrmann. 96 Md. 634 . ⁶⁹⁴ We hare examined the evidence in the light of the principles stated, and find no error in any of the rulings of which the appellant can justly complain. It is to be noticed that it is not pretended that the plaintiff was afflicted by any trouble except the ear trouble mentioned in the evidence, and it was' upon the nature and extent of this one trouble alone that the defendant relied under the warranties contained in the contract of insurance to defeat a recovery.

This is important to be borne in mind, in that some of the defendant’s prayers, which will be presently noticed, attempted to import into the case a consideration of other disabilities of which there was no evidence. To have permitted this would have tended to mislead the jury. The plaintiff prior to May, 1908, had been a healthy man, and had never suffered from any serious sickness. In the early part of May of that year he was attacked by an earache caused, as he supposed, by a cold. lie called in his family physician, Dr. A. K. Bond.

Dr. Bond testified as follows as to the plaintiff’s previous health, and the nature of the ti*ouble for which he treated him: “Mr. Millar has been a strong man; he has been a healthy man; I have attended in his family; I don’t know that I have given him any treatment, certainly for nothing serious, and on the llth of May, 1908, as I learned from my books, he called on me to see me concerning the ear trouble; I paid him six visits, and that lasted according to my book from the llth to the 33rd of May, 1908; now the nature of that trouble was such that it was very deceptive ; I