Loving v. Mutual Life Insurance

Obbutt, J., delivered the opinion of the Court. The Mutual Life Insurance Company of New York, on September 9, 1919, issued to Arthur Loving a life insurance policy providing for the payment of ten thousand dollars to his estate in the event of his death from natural causes, and of double that amount if the insured died ás a result of bodily injuries through external violent and accidental means within sixty days from thei injury. Attached to the policy, as a part of the contract, was the application made by the insured, which contained these provisions: “All the following statements and answers, and all those that I make to the company’s medical examiner, in continuation of this application, are true, and are offered to the company, as an inducement to issue the proposed policy” * * * and “I agree that no agent or other person except the president, vice-president, a, second vice-president, a secretary or the treasurer of the company has power on behalf of the company to make, modify or discharge any contract of insurance, to extend the time for paying a premium, to waive any lapse or forfeiture or any of the company’s rights or requirements, or to bind the company by making any promise respecting any benefits under any policy issued hereunder or by accepting any representation or information not contained in this application.” In the statements made to the medical examiner, the insured said that he was in good health, that he had never raised or spat blood, that he had never been under treatment at any “asylum, cure, hospital or sanitarium,” that he had never ¹⁷⁶ suffered from any illness, injury or disease other than “minor complaints.” About May 22nd, 1920, Loving accidentally ran into an open door, striking it with his breast with sufficient force to throw him to the floor. After recovering from the imme*diate effects of the blow, he went to his house, where he had a profuse hemorrhage and a physician was called, but the injured man failed to improve, and on May 29th died from what was said to be traumatic pneumonia.

Letters of administration were taken out on his estate by the appellant in this case, and she demanded of the appellee payment of the amount of insiirance stipulated in the policy. The insurance Company declined to make such payment, on the ground that statements of material facts made by the insured to the eompany’s medical examiner were untrue, but it tendered a return of the premium, which was refused. The appellant thereupon brought this action in the Superior Court of Baltimore City. The declaration contains a count for money paid, for money received, and for money due on accounts stated, and two special counts on the policy, in one of which the amount claimed is $10,000, on the theory that death was due to natural causes, while in the other $20,-000 is asked, on the theory that death was due to bodily injury through external and accidental violence.

The defendant- in its pleas raised the defences that (1) false and fraudulent warranties and representations- inducing the contract were made by the insured; (2) that statements and representations of facts material to the contract which were untrue were made % the insured; (3) that death did not- result from bodily injury received after the date of the policy, through external, violent and accidental means within sixty days after the injury. A trial of the issues, tendered before a jury in the Superior Court of Baltimore City, resulted at the close of the whole case in an instructed verdict for the defendant, and from the judgment on that verdict this appeal was taken. ¹⁷⁷ The most important question presented by the appeal is whether the effect of certain statements and representations, made by the insured in his application, of facts, said to be material to the contract, bars a recovery on the policy. Attached to the policy, and by its terms made a part of it, was a statement by the insured that the “following questions and answers and all those I make to the company’s medical examiner in continuation of this application are true, and are offered to the company as an inducement to issue the proposed policy.” Following this statement were fifteen questions and answers numbered from one to fifteen, relating lo the insured’s] history, occupation, family, dependents, other insurance, and certain stipulations exempting the; company from liability in the event of death within one year as a result of certain designated contingencies, and an agreement that no person, other than certain officials of fhe insurer, had the power to make, modify or discharge; the contract, to waive any of the company’s, rights, or to bind it by any promise respecting any benefits under the policy, or by accepting any representations, or information not contained in tbe application. This part, of the application was signed by the insured, and then followed a series of questions numbered sixteen to thirty-seven inclusive, asked by the medical examiner, and the answers thereto, also signed by the applicant, who certified as to them “that each and all of the aforegoing* statements and answers, were read by mo and are fully and correctly recorded by the medical examiner.” Included in this series of questions and answers arc the following, which are material to this inquiry. “16.

What is your full name? Arthur Loving. “17. What illness, diseases, injuries or surgical operations have you had since childhood? Nothing blit minor complaints. “18.

State every physician or practitioner who has prescribed for or treated you, or whom you have consulted in the past five years. Dr. A. V. Leonard, Baltimore, August 11, 1919; cold in head. ¹⁷⁸ “19. Have you stated in answer to question 17 all illnesses, diseases, injuries or surgical operations which you have had since childhood? (Ans.

Yes or No.): ' Yes. “20. Have you stated in answer to question 18 every physician and practitioner consulted during the past five years and dates of consultations? (Ans. Yes or No.) : Yes. * * * “27.

Have you ever raised or spat blood? No. =1= * * “32. Have you ever been under treatment at any asylum, cure, hospital or sanitarium? No.” The plaintiff, having proved the policy and the cause of death, closed her ease.

The defendant then offered evidence which showed that, on March 25th, 1915, the insured was received at the Eudowood Sanitarium, an institution for the treatment of tuberculosis,' and remained there until February 1, 1916. He was at that time suffering from pulmonary tuberculosis iu both lungs, and went there to be treated for that disease, and while there he was treated by Doctor Martin E. Sloan. He was also attended by Dr. J. Albert Chatard in November, 1911, for an attack of tubercular pneumonia, and it was upon bis advice that he went to Eudowood for treatment. At the time of his discharge the disease was arrested, but not eradicated.

This testimony was undisputed and imcontradicted, and in part was corroborated by the plaintiff, who testified that- she went with her husband when be was taken to Eudowood, and visited him while he was a patient there. The uncontradicted testimony therefore showed (a) that Loving in his application for insurance had said that lie had never had any illness or disease other than minor complaints, that every physician who had prescribed for or treated him within five years was Dr. A. V. Leonard, and that he had not ever been under treatment in any asylum, cure, hospital or sanitarium, while (b) he had suffered from pulmonary tuberculosis, he had within five years been treated ¹⁷⁹ for that disease by Drs. Chatard and Sloan, and he was under treatment at the Eudowood Sanatarium for tuberculosis from March, 1915, to February, 1916. Since the statements to the company’s medical examiner, made by,the insured in reference to these matters., in his application for insurance, as an inducement to the company to issne the policy of insurance for which he applied, are in direct conflict-with the actual facts as shown by the unconTradieted testimony, we must assume that they were untrue.

And if such untrue statements as to matters within the iviiowledge of the insured were material to the contract of insurance, the insured was not entitled to recover on the policy, under the law as recognized in this State. That is, the concurrence of the two elements, the falsity of the statements and their materiality to the contract in respect to which they were made constituted a complete defence to any action on the contract. Mor can there be any reasonable doubt, that, the representations were material to the contract. Certainly, in any application for life insurance, nothing would likely receive more consideration or weight than the fact that the insured had at any time been afflicted with so fatal and Tenacious a disease as tuberculosis.

And since error in any diagnosis is possible, tbe questions asked of the insured were designed to elicit such information as, taken together with the physical examination, would reduce the possibility of error to the narrowest limits possible, and therefore questions relating to the insured’s, history in connection Avith this disease must he regarded as material. While it may be possible that the physician, who diagnosed the insured’? earlier illness as tuberculosis., was mistaken, and while it is possible that, although he went to Eudowood for treatment for that disease, he did not have it, it is not probable that if the insurance company had known that within less than four years, in the opinion of two physicians who attended him at different times, he was suffering from tuberculosis, and had been for about ten months an inmate of a sanitarium, undergoing treatment, for that disease, it would have issued the ¹⁸⁰ policy. The issue in such a case is uot whether the applicant for insurance had, either at or before the time of tlie application, actually had the disease, but whether he concealed from the insurer, knowingly or inadvertently, facts known to him of such probative force and value that, in all reasonable probability, it would have accepted them as sufficient proof that he had been afflicted with it. These principles have frequently been recognized and applied by this Court in actions of the same character as the one before us.

In Met. Life Ins. Co. v. Jennings, 130 Md. 625 , the Court said: “This Court has said a number of times that ordinarily it is the province of the jury to determine tlie' falsity and materiality of the representations made in an application for an insurance policy and the burden is upon the defendant to satisfy the jury of the truth of these- defenses, but where the falsity and materiality of the representations are shown by clear, convincing and uncontradicted evidence the Court may so rule as a matter of law. Fidelity Mutual Life Insurance Association v. Ficklin, 74 Md. 173 ; Dulany v. Fidelity and Casualty Company, 106 Md. 17 ; Mutual Life Insurance Co. v. Rain, 108 Md. 353 ; Bankers Life Insurance Company v. Miller, 100 Md. 1 ; Maryland Casualty Co. v. Gehrmann, 96 Md. 634 ; Aetna Life Insurance Co. v. Millar, 113 Md. 693 ; Mutual Life Insurance Co. v. Mullan, 107 Md. 463 ; Forwood v. Prudential Insurance Co., 117 Md. 259 ,” and in Mutual Life Ins.

Co. v. Mullan, 107 Md. 467 , it was said: “The court below by granting the defendant's 12th prayer informed the jury, ‘that in considering the question of materiality of any of the answers in the application, they were to consider, not what disease, if any, caused the death of the insured, but the effect that said answers might have had in procuring the issuance of the policy by the defendant, and if the jury should find that any answer was incorrectly given by the insured which materially affected the risk assumed by the defendant in issuing the policy, then regardless of the causes that finally produced the death of the insured, under the pleadings in the case the verdict must- be ¹⁸¹ for the defendant.’ As there is no appeal from the Oonrt’s ruling in regard to this prayer, it is not before us for review, and becomes the law of this case. We deem it only proper to say, however, that we consider the prayer substantially correct.” The underlying error in the appellant’s contention, and one which pervades the entire argument in her behalf, is that, in order to present a complete defence on the ground of misrepresentations to an action on an insurance policy, it must appear that the misrepresentations were false and fraudulent and material, and that therefore good faith is necessarily an issue. That proposition, however, is not sound, and was expressly repudiated by this Court in Bankers’ Ins. Co. v. Miller, 100 Md. 6 , where it is. said: “The better authorities agree that a material misrepresentation made by an applicant for life insurance in reliance on which a policy is, issued to him avoids the policy whether it be made intentionally or through mistake and