Mutual Life Ins. Co. v. Hilton-Green - 241 U.S. 613 (1916)
U.S. Supreme Court
Mutual Life Ins. Co. v. Hilton-Green, 241 U.S. 613 (1916)
Mutual Life Insurance Company v. Hilton-Green
Argued December 9, 1915
Decided June 12, 1916
241 U.S. 613
Material representations in an application for life insurance which are incorrect, if known to be untrue by the assured when made, and nothing else appearing, invalidate the policy issued by the insurer relying on such representations without further proof of actual conscious design to defraud.
The general rule, which imputes an agent's knowledge to the principal, does not apply when the third party knows there is no foundation for the ordinary presumption, and he is acquainted with circumstances plainly indicating that the agent will not advise the principal. The rule imputing agents' knowledge to the principal is intended to protect those exercising good faith, and not as a shield for unfair dealing.
While § 2765 Florida Statutes undertakes to designate as agents of insurance companies certain persons in fact acting for such companies in some particulars, it does not fix the scope of their authority as between the company and third persons, and does not raise special agents with limited authority into general ones with unlimited power. One consciously permitting an application containing material misrepresentations to be presented by subordinate agents to officers of a life insurance company, under circumstances which he knows negatives any probability of the actual facts being revealed, and later accepting policies which he knew were issued in reliance upon statements both false and material, can claim nothing under such policies. An applicant for insurance should exercise toward the company the same good faith which he may rightfully demand from it; the relationship demands fair dealing by both parties.
211 F. 31 reversed.
The facts, which involve the construction and effect of an application for life insurance policy containing false statements, and the liability of the company issuing policies in reliance thereon, are stated in the opinion.