Phoenix Life Ins. Co. v. Raddin
120 U.S. 183 (1887)

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U.S. Supreme Court

Phoenix Life Ins. Co. v. Raddin, 120 U.S. 183 (1887)

Phoenix Life Insurance Company v. Raddin

Argued December 20-21, 1886

Decided January 31, 1887

120 U.S. 183

ERROR TO THE CIRCUIT COURT OF THE UNITED

STATES FOR THE DISTRICT OF MASSACHUSETTS

Syllabus

Answers to questions propounded by insurers in an application for life insurance, unless they are clearly shown by the form of the contract to have been intended by both parties to be warranties, to be strictly complied with, are to be construed as representations, as to which substantial truth in everything material to the risk is all that is required of the applicant.

Where upon the face of an application for life insurance, a direct question of the insurers appears to be not answered at all, or to be imperfectly answered, the issue of the policy without further inquiry is a waiver of the want or imperfection of the answer, and renders the omission to answer more fully immaterial.

A policy of life insurance stated that it was issued and accepted by the assured upon certain express conditions, one of which was that

"if any of the declarations or statements made in the application for this policy, upon the faith of which this policy is issued, shall be found in any respect untrue, this policy shall be null and void."

The application contained a

Page 120 U. S. 184

number of printed questions "to be answered by the person whose life is proposed to be insured," and "declared that the above are fair and true answers to the foregoing questions," and that it was agreed by the applicant "that this application shall form the basis of the contract for insurance," "and that any untrue or fraudulent answers or any suppression of facts" should avoid the policy. One of those questions was:

"Has any application been made to this or any other company for assurance on the life of the party? If so, with what result? What amounts are now assured on the life of the party, and in what companies?"

To this question the applicant answered, "$10,000, Equitable Life Assurance Society." A policy of that society was in fact the only other existing insurance. Held that the answers were not warranties, but representations, and that the issue of a policy, without further inquiry, was a waiver of the right of the insurers to require further answers as to the particulars mentioned in the question and estopped them to set up that the omission, though intentional, to disclose unsuccessful applications for additional insurance was material, and avoided the policy.

A bill of exceptions should not contain the whole charge of the court to the jury, but should only state distinctly the several matters of law excepted to.

A bill of exceptions cannot be sustained to an instruction or to a refusal to instruct in matter of law without showing that there was evidence to which the instruction given or refused was applicable.

The acceptance by insurers of payment of a premium after they know that there has been a breach of a condition of the policy is a waiver of the right to avoid the policy for that breach.

Where the declaration in an action on a policy of insurance alleges that the consideration of the contract was the payment of a certain premium at once and of future annual premiums, and the policy given in evidence is expressed to be made "in consideration of the representations made in the application for this policy" and of the sums paid and to be paid for premiums, and the application contains no promise or agreement of the assured, there is no variance.

This was an action at law to recover upon a policy of life insurance issued by the plaintiff in error. Verdict for the plaintiff below, and judgment on the verdict. The defendant below sued out this writ of error. The case is stated in the opinion of the Court.

Page 120 U. S. 186

MR. JUSTICE GRAY delivered the opinion of the Court.

This was an action brought by Sewell Raddin, and prosecuted by his administrator, upon a policy of life insurance dated April 25, 1872, the material parts of which were as follows:

"This policy of assurance witnesseth that the Phoenix Mutual Life Insurance Company of Hartford, Conn., in consideration of the representations made to them in the application for this policy and of the sum of one hundred and fifty-two dollars and ten cents to them duly paid by Sewell Raddin, father, and of the semiannual payment of a like amount on or before the twenty-fifth day of April and October in every year during the continuance of this policy, do assure the life of Charles E. Raddin, of Lynn, in the County of Essex, State of Massachusetts, in the amount of ten thousand dollars for the term of his natural life."

"This policy is issued and accepted by the assured upon the following express conditions and agreements,"

namely, among

Page 120 U. S. 187

others, that

"if any of the declarations or statements made in the application for this policy, upon the faith of which this policy is issued, shall be found in any respect untrue, this policy shall be null and void."

The application was signed by Sewell Raddin, both for his son and for himself, and contained twenty-nine printed "questions to be answered by the person whose life is proposed to be insured, and which form the basis of the contract," three of which, with the written answers to them, and the concluding paragraph of the application, were as follows:

"10. Is the party addicted to the habitual use of spirituous liquors or opium?"

"No."

"28. Has any application been made to this or any other company for assurance on the life of the party? If so, with what result? What amounts are now assured on the life of the party, and in what companies? If already assured in this company, state the No. of policy."

"$10,000, Equitable Life Assurance Society."

"29. Is the party and the applicant aware that any untrue or fraudulent answers to the above queries, or any suppression of facts in regard to the health, habits, or circumstances of the party to be assured, will vitiate the policy, and forfeit all payments thereon?"

"Yes."

"It is hereby declared that the above are fair and true answers to the foregoing questions, and it is acknowledged and agreed by the undersigned that this application shall form the basis of the contract for insurance, which contract shall be completed only by delivery of policy, and that any untrue, or fraudulent answers, any suppression of facts, or should the applicant become as to habits so far different from

Page 120 U. S. 188

condition now represented to be in as to make the risk more than ordinarily hazardous, or neglect to pay the premium on or before the day it becomes due, shall and will render the policy null and void and forfeit all payments made thereon."

It was admitted at the trial that all premiums were paid as they fell due, that Charles E. Raddin died July 18 1881, and that at the date of this policy he had an endowment policy in the Equitable Life Insurance Society for $10,000, which was afterwards paid to him.

One of the defenses relied on at the trial was that the answer to question 28 in the application was untrue, and that there was a fraudulent suppression of facts material to the insurance, because the plaintiff, by his answer to that question, "$10,000, Equitable Life Assurance Society," intended to have the defendant understand that the only application which had been made to any other company for assurance upon the life of his son was one made to the Equitable Life Assurance Society, upon which that society had issued a policy of $10,000, whereas in fact the plaintiff, within three weeks before the application for the policy in suit, had made applications to that society, and to the New York Life Insurance Company, for additional insurance upon the son's life, each of which had been declined. The defendant offered to prove that the two other applications were made and declined as alleged, and that the facts as to the making and the rejection of both those applications were known to the plaintiff, and intentionally concealed by him at the time of his application to the defendant, and upon these offers of proof asked the court to rule that the answer to question 28 was untrue, and therefore no recovery could be had on this policy; second, that there was a suppression of facts by the plaintiff, and therefore he could not recover; and, third,

"that the answer to question 28 must be construed to be an answer to all the clauses of that question, and as such was misleading, and amounted to a concealment of facts which the defendant was entitled to know, and the plaintiff was bound to communicate. "

Page 120 U. S. 189

But the court excluded all the evidence so offered, declined to give any of the rulings asked for, and ruled

"that, if the answer to one of the interrogatories of question 28 was true, there would be no breach of the warranty; that the failure to answer the other interrogatories of question 28 was no breach of the contract, and that if the company took the defective application, it would be a waiver on their part of the answers to the other interrogatories of that question."

The jury having returned a verdict for the plaintiff in the full amount of the policy, the defendant's exceptions to the refusal to rule as requested and to the rulings aforesaid present the principal question in the case.

The rules of law which govern the decision of this question are well settled, and the only difficulty is in applying those rules to the facts before us.

Answers to questions propounded by the insurers in an application for insurance, unless they are clearly shown by the form of the contract to have been intended by both parties to be warranties, to be strictly and literally complied with, are to be construed as representations, as to which substantial truth in everything material to the risk is all that is required of the applicant. Moulor v. American Ins. Co.,111 U. S. 335; Campbell v. New England Ins. Co., 98 Mass. 381; Thomson v. Weems, 9 App.Cas. 671.

The misrepresentation or concealment by the assured of any material fact entitles the insurers to avoid the policy. But the parties may by their contract make material a fact that would otherwise be immaterial, or make immaterial a fact that would otherwise be material. Whether there is other insurance on the same subject and whether such insurance has been applied for and refused are material facts, at least when statements regarding them are required by the insurers as part of the basis of the contract. Carpenter v. Providence Washington Ins. Co., 16 Pet. 495; Jeffries v. Life Ins. Co., 22 Wall. 47; Anderson v. Fitzgerald, 4 H.L.Cas. 484; Macdonald v. Law union Ins. Co., L.R. 9 Q.B. 328; Edington v. Aetna Life Ins. Co., 77 N.Y. 564, 100 N.Y. 536.

Where an answer of the applicant to a direct question of

Page 120 U. S. 190

the insurers purports to be a complete answer to the question, any substantial misstatement or omission in the answer avoids a policy issued on the faith of the application. Cazenove v. British Equitable Assurance Co., 29 Law Journal (N.S.) C.P. 160, affirming 6 C.B.N.S. 437. But where upon the face of the application a question appears to be not answered at all, or to be imperfectly answered and the insurers issue a policy without further inquiry, they waive the want or imperfection in the answer and render the omission to answer more fully immaterial. Connecticut Ins. Co. v. Luchs,108 U. S. 498; Hall v. People's Ins. Co., 6 Gray 185; Lorillard Ins. Co. v. McCulloch, 21 Ohio St. 176; American Ins. Co. v. Mahone, 56 Miss. 180; Carson v. Jersey City Ins. Co., 43 N.J.Law 300; 44 N.J.Law 210; Lebanon Ins. Co. v. Kepler, 106 Penn.St. 28.

The distinction between an answer apparently complete, but in fact incomplete and therefore untrue, and an answer manifestly incomplete and as such accepted by the insurers may be illustrated by two cases of fire insurance, which are governed by the same rules in this respect as cases of life insurance. If one applying for insurance upon a building against fire is asked whether the property is encumbered, and for what amount, and in his answer discloses one mortgage when in fact there are two, the policy issued thereon is avoided. Towne v. Fitchburg Ins. Co., 7 Allen 51. But if to the same question he merely answers that the property is encumbered without stating the amount of encumbrances, the issue of the policy without further inquiry is a waiver of the omission to state the amount. Nichols v. Fayette Ins. Co., 1 Allen 63.

In the contract before us, the answers in the application are nowhere called warranties or made part of the contract. In the policy, those answers and the concluding paragraph of the application are referred to only as "the declarations or statements upon the faith of which this policy is issued," and in the concluding paragraph of the application, the answers are declared to be "fair and true answers to the foregoing questions," and to "form the basis of the contract for insurance." They must therefore be considered not as warranties which

Page 120 U. S. 191

are part of the contract, but as representations collateral to the contract and on which it is based.

The 28th printed question in the application consists of four successive interrogatories, as follows:

"Has any application been made to this or any other company for assurance on the life of the party? If so, with what result? What amounts are now assured on the life of the party, and in what companies? If already assured in this company, state the No. of policy."

The only answer written opposite this question is "$10,000, Equitable Life Assurance Society."

The question being printed in very small type, the answer is written in a single line midway of the opposite space, evidently in order to prevent the ends of the letters from extending above or below that space, and its position with regard to that space, and to the several interrogatories combined in the question, does not appear to us to have any bearing upon the construction and effect of the answer.

But the four interrogatories grouped together in one question, and all relating to the subject of other insurance, would naturally be understood as all tending to one object -- the ascertaining of the amount of such insurance. The answer in its form is responsive not to the first and second interrogatories, but to the third interrogatory only, and fully and truly answers that interrogatory by stating the existing amount of prior insurance, and in what company, and thus renders the fourth interrogatory irrelevant. If the insurers, after being thus truly and fully informed of the amount and the place of prior insurance, considered it material to know whether any unsuccessful applications had been made for additional insurance, they should either have repeated the first two interrogatories or have put further questions. The legal effect of issuing a policy upon the answer at it stood was to waive their right of requiring further answers as to the particulars mentioned in the 28th question, to determine that it was immaterial, for the purposes of their contract, whether any unsuccessful applications had been made, and to estop them to set up the omission to disclose such applications as a ground for avoiding the policy. The insurers, having thus conclusively

Page 120 U. S. 192

elected to treat that omission as immaterial, could not afterwards make it material by proving that it was intentional.

The case of London Assurance v. Mansel, 11 Ch.D. 363, on which the insurers relied at the argument, did not arise on a question including several interrogatories as to whether another application had been made, and with what result, and the amount of existing insurance, and in what company. But the application or proposal contained two separate questions -- the first whether a proposal had been made at any other office, and if so where; the second whether it was accepted at the ordinary premium, or at an increased premium, or declined, and contained no third question or interrogatory as to the amount of existing insurance and in what company. The single answer to both questions was "Insured now in two offices for

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