Globe Reserve Mutual Life Insurance v. Duffy

McSherry, J., delivered the opinion of the Court. On the fourth of August, 1886, the Globe Benefit Reserve Mutual Life Insurance Company of Baltimore City, issued a policy upon the life of Moses Mason, and a few days thereafter the assured assigned the policy to the appellees. On the twenty-eighth of September following Mason died. Proofs of death were furnished, but the company refused to pay the insurance, and this suit was thereupon instituted.

The only questions arising on the pending appeal are presented by the prayers for instructions to the jury, and the principal one of these is brought before us by the fourth instruction given at the instance of the appellees. It is in these words: “The plaintiffs pray the Court to instruct the jury that if any of the answers in the application for insurance of Moses Mason were written down by the agent or examining physician of the defendant, and were known to such agent or physician to be inaccurate or untrue, then, if the jury believe that the said Moses Mason was an ignorant colored man, the untruth of such answers will not vitiate the policy of insurance, unless the said Moses Mason and the said agent or physician fraudulently combined together to defraud the defendant.” ³⁰⁰ It appears by the record that the medical examiner wrote down the answers to the various questions upon the printed application, and amongst the answers given it was stated that Mason had no pulmonary and no kidney trouble. This application was signed by Mason, and was the basis upon which the policy was issued. The medical examiner testified to the truth of these answers.

The company offered evidence tending to prove that Mason had, when he signed the application, and for some years prior thereto, had had both pulmonary and kidney trouble, from which he died in less than two months after the date of the policy. In this state of conflicting evidence the instruction under review was granted. If the medical examiner was the agent of the company, it surely requires no argument to show that it was not within the scope of his authority to mislead and deliberately impose upon his principal. His agency, from the very nature of the case, was confined to eliciting the truth, and did not extend to substituting falsehood therefor.

He was not an agent to procure false answers, but true ones. It cannot be supposed that the company clothed him with authority to perpetrate a fraud upon itself. Notwithstanding this is so, there are many cases in which, to prevent fraud and gross injustice, an insurance .company is estopped, on grounds of the highest public policy, to object that the statements made by its agents beyond the scope of their authority are false. But there must be no complicity on the part of the assured: because, if false answers be written in the application by the agent with the knowledge of the assured, the latter becomes an accomplice and both perpetrate a fraud upon the company.

In such a case it is obvious that a recovery could not be permitted upon a policy thus procured. And so, where false answers have been written by the agent without the knowledge of the assured, but the latter has the means at hand to discover the false ³⁰¹ hood and negligently omits to use them, he will be regarded as an instrument in the perpetration of the fraud, and no recovery could be had upon the policy. New York Life Ins. Co. vs. Fletcher, 117 U. S., 519 ; Ryan vs. World Mutual Life Ins.

Co., 41 Conn., 168 ; Lewis vs. Phœnix Mutual Life Ins. Co., 39 Conn., 100 . If the assured be neither an accomplice nor an instrument, and be imposed upon without fault on his own part by the agent of the company, his beneficiary will be entitled to recover, notwithstanding the statements are inaccurate or untrue. Keystone Mut.

Ben. Association vs. Jones, 72 Md., 363 . Where the assured is either an accomplice in the fraud or an instrument in its perpetration, it is perfectly manifest that a recovery founded upon a policy procured by such means would permit the beneficiary to reap the fruits of the misdeeds of others. It would be no answer to say that the agent of the company was as deeply implicated in the fraud as the assured; for in the one case the conspiracy of both, and in the other the misconduct of the agent and the inexcusable negligence of the assured, induced the insurer to assume a risk that would not otherwise have been written.

The insurer in both instances would be made the victim of the bad faith of the assured, if a recovery were allowed. But the broad' principle which precludes one from taking advantage of his own wrong, would equally interpose to prevent the insurer from relying upon the false statements made by his own