Where a policy of life insurance contains the following
conditions, to-wit:
"This policy is issued by the company and accepted by the
assured on the following
express conditions and agreements,
which are a part of the contract of insurance:"
"
First. That the statements and declaration made in the
application for said policy, and on the faith of which it is
issued, are in all respects true and without the suppression of any
fact relating to the health or circumstances of the insured
effecting the interest of the company:"
And the further condition:
"That in case of the violation of the foregoing condition, . . .
this policy shall become
null and void."
Any answer untrue in fact, and known by the applicant for
insurance to be so, avoids the policy irrespective of the question
of the materiality of the answer given to the risk.
Accordingly, where, in a suit against an insurance company, the
plea alleged that the party insured, by his application for a
policy, in answer
Page 89 U. S. 48
to a question asked of him by the insurance company, whether he
was
"married or single," made the false statement that he
was
"single," knowing it to be untrue; that in reply to a
further question whether
"any application had been made to any
other company? If so, when?", answered
"
'No,' whereas in fact, at the time of making such false
statement, he knew that he had previously made application for such
insurance and been insured in the sum of $10,000 by another
company, a demurrer to the plea was held bad, though the plea
did not aver that the information on the questions to which that
false answers were made 'affected the interest of the company,' or
in other words, was material to the risk."
Jeffries, administrator of Kennedy, sued the Economical Life
Insurance Company, of Providence, Rhode Island, in the court below,
alleging that on the 19th of October, 1870, the said company issued
a policy of insurance upon the life of the deceased for $5,000;
that Kennedy died in August, 1871, and that notice had been given
to the company of his death, payment of the amount of insurance
demanded and refused.
The policy, which the declaration set out at length, contained
the clauses following,
viz.:
"This policy is issued by the company, and accepted by the
insured and the holder thereof, on the following
express
conditions and agreements, which are part of this contract of
insurance:"
"1st. That the statements and declarations made in the
application for this policy, and on the faith of which it is
issued, are in all respects true, and without the suppression of
any fact relating to the health or circumstances of the insured,
affecting the interests of said company."
"6th. That in case of the violation of the foregoing conditions,
or any of them, . . . this policy shall become null and void."
The plea averred:
"That the policy was issued and accepted, on the following
express conditions and agreements contained in it and made part
of the contract of insurance, to-wit, that the statements and
declaration made in the application for the policy, and on the
faith of
Page 89 U. S. 49
which it was issued, were in all respects true, and without the
suppression of any fact relating to the health or circumstances of
the assured
affecting the interests of the defendants, and
upon the further condition that in case of the violation of the
aforesaid condition, among others, the policy should become null
and void."
"That the said Kennedy did violate the first condition in this,
that the statements and declarations made by him in his application
for the said policy, were not in all respects true, but were false
in the following respects, to-wit:"
"1st. That in the application for the policy, and on the faith
of which the same was issued, in answer to the question therein
asked of him as to whether he was married or single, he stated that
he was single, whereas in fact he was married, having a wife then
living, as he well knew."
"2d. That in the application for the policy, and on the faith of
which it was issued, in reply to the question therein asked of him,
'
Has any application been made to any other company; if so,
when?' he answered
'No,' whereas in fact, he had,
prior thereto, to-wit, in April, 1870, applied for insurance upon
his life, to the Mutual Life Insurance Company of New York, and had
been insured therein in the sum of $10,000, as at the time of
making the said answer, he well knew."
To this plea the plaintiff demurred, but the court overruled the
demurrer, and entered judgment for the company. From the judgment
so entered, the present writ of error was brought.
The demurrer admitting that the statements made in the
application were false, the question in the case, of course, was
this: "Was the plea bad because it did not aver also, that the
false statements were material to the risk?"
Page 89 U. S. 52
MR. JUSTICE HUNT delivered the opinion of the Court.
The contention in opposition to the judgment is this: that the
plea does not aver that the false statements made by the assured
were material to the risk assumed. Is that averment necessary to
make the plea a good one?
It is contended, also, that the false answers in the present
case were not to the injury of the company, that they presented the
applicant's case in a less favorable light to himself than if he
had answered truly. Thus, to the inquiry are you married or single,
when he falsely answered that he was single, he made himself a less
eligible candidate for insurances than if he had truly stated that
he was a married man; that although he deceived the company, and
caused it to enter into a contract that it did not intend to make,
it was deceived to its advantage, and made a more favorable bargain
than was supposed.
This is bad morality and bad law. No one may do evil that good
may come. No man is justified in the utterance of a falsehood. It
is an equal offense in morals, whether committed for his own
benefit or that of another. The fallacy of this position as a legal
proposition, will appear in what we shall presently say of the
contract made between the parties.
We are to observe, first, the averment of the plea that Kennedy,
in and by his application for the policy of insurance, in answer to
a question asked of him by the company, whether he was "
married
or single?" made the false statement that he was "single,"
knowing it to be untrue; that in reply to a further question
therein asked of him by the company, whether
"any application
had been made to any other company? If so, when?" answered
"No," whereas in fact, at the time of making such false
statement, he well knew that he had previously made application for
such insurance, and been insured in the sum of $10,000 by another
company.
Page 89 U. S. 53
We are to observe, secondly, the averment that the statements
and declarations made in the application for said policy, and on
the faith of which it is issued,
are in all respects true,
and without the suppression of any fact relating to the health or
circumstances of the insured affecting the interests of the
company.
We are to observe also that other clause of the policy, in which
it is declared that this policy is made by the company and accepted
by the insured, upon the express condition and agreement that such
statements and declarations are in all respects true. This applies
to all and to each one of such statements. In other words, if the
statements are not true, it is agreed that no policy is made by the
company, and no policy is accepted by the insured.
The proposition at the foundation of this point is this, that
the statements and declarations made in the policy shall be
true.
This stipulation is not expressed to be made as to important or
material statements only, or to those supposed to be material, but
as to all statements. The statements need not come up to the degree
of warranties. They need not be representations even, if this term
conveys an idea of an affirmation having any technical character.
Statements and declarations is the expression; what the applicant
states and what the applicant declares. Nothing can be more simple.
If he makes any statement in the application it must be true. If he
makes any declaration in the application it must be true. A
faithful performance of this agreement is made an express condition
to the existence of a liability on the part of the company.
There is no place for the argument either that the false
statement was not material to the risk or that it was a positive
advantage to the company to be deceived by it.
It is the distinct agreement of the parties, that the company
shall not be deceived to its injury or to its benefit. The right of
an individual or a corporation to make an unwise bargain is as
complete as that to make a wise bargain. The right to make
contracts carries with it the right to determine
Page 89 U. S. 54
what is prudent and wise, what is unwise and imprudent, and upon
that point the judgment of the individual is subject to that of no
other tribunal.
The case in hand affords a good illustration of this principle.
The company deems it wise and prudent that the applicant should
inform them truly whether he has made any other application to have
his life insured. So material does it deem this information that it
stipulates that its liability shall depend upon the truth of the
answer. The same is true of its inquiry whether the party is
married or single. The company fixes this estimate of its
importance. The applicant agrees that it is thus important by
accepting this test. It would be a violation of the legal rights of
the company to take from it its acknowledged power, thus to make
its opinion the standard of what is material, and to leave that
point to the determination of a jury. The jury may say, as the
counsel here argues, that it is immaterial whether the applicant
answers truly if he answers one way,
viz., that he is
single or that he has not made an application for insurance.
Whether a question is material depends upon the question itself.
The information received may be immaterial. But if under any
circumstances it can produce a reply which will influence the
action of the company, the question cannot be deemed immaterial.
Insurance companies sometimes insist that individuals largely
insured upon their lives, who are embarrassed in their affairs,
resort to self-destruction, being willing to end a wretched
existence if they can thereby bestow comfort upon their families.
The juror would be likely to repudiate such a theory on the ground
that nothing can compensate a man for the loss of his life. The
juror may be right and the company may be wrong. But the company
has expressly provided that their judgment, and not the judgment of
the juror shall govern. Their right thus to contract, and the duty
of the court to give effect to such contracts, cannot be
denied.
Of the authorities in support of these views, a few only will be
mentioned. In
Anderson v. Fitzgerald, [
Footnote 1] Fitzgerald
Page 89 U. S. 55
applied to an insurance office to effect a policy on his life.
He received a form of proposal containing questions required to be
answered. Among them were the following: "Did any of the party's
near relatives die of consumption or any other pulmonary
complaint?" and "Has the party's life been accepted or refused at
any office?" To each of these questions the applicant answered
"No." The answers were false. F. signed the proposal and a
declaration accompanying, by which he agreed "that the particulars
above mentioned should form the basis of the contract." The policy
mentioned several things, which were warranted by F., among which
these two answers were not included. The policy also contained this
proviso: that
"if anything so warranted shall not be true, or if any
circumstance material to this insurance shall not have been truly
stated, or shall have been misrepresented or concealed, or any
false statement made to the company in or about the obtaining or
effecting of this insurance,"
the policy should be void. On the trial before Mr. Justice Ball,
he charged the jury
"that they must not only be satisfied that the various false
statements were false in fact, and were made in and about effecting
the policy, but also that such false statements were material to
the insurance."
A bill of exceptions was tendered, on the ground that the jury
should have been directed
"that if the statements were made in and about effecting the
insurance and such statements were false in fact, the defendants
were entitled to a verdict, whether such statements were or were
not material."
The exceptions were argued in the Court of Exchequer, where
judgment was ordered for the plaintiff on the verdict. A writ of
error was brought in the Court of Exchequer Chamber, where the
judgment was affirmed by a majority of seven to three. The writ of
error to the House of Lords was then brought. Mr. Baron Parke, Mr.
Baron Alderson, Mr. Justice Coleridge, Mr. Justice Wightman, Mr.
Justice Erle, Mr. Justice Creswell, Mr. Baron Platt, Mr. Justice
Talfourd, Mr. Justice Williams, Mr. Baron Martin, and Mr. Justice
Crompton attended.
Opinions were delivered by Mr. Baron Parke, the Lord
Page 89 U. S. 56
Chancellor, Lord Brougham, and Lord St. Leonards, all concurring
in reversing the judgment, on the ground that the question of the
materiality of the statements should not have been submitted to the
jury. This case was decided upon facts almost identical with the
one before us, and presented the precise question we are
considering. The counsel for the defendants asked for a ruling,
that if the statements were untrue, the defendants were entitled to
a verdict, whether they were or were not material. This was
refused, and the judge charged that to entitle the defendants to a
verdict, the statements must not only be false, but material to the
insurance. This was held to be error, and the judgment was
reversed.
Cazenove v. British Equitable Assurance Company,
[
Footnote 2] is a familiar
case, and was decided in the same way. This case was affirmed in
the Exchequer Chamber in 1860. [
Footnote 3]
Many cases may be found which hold, that where false answers are
made to inquiries which do not relate to the risk, the policy is
not necessarily avoided unless they influenced the mind of the
company, and that whether they are material is for the
determination of the jury. But we know of no respectable authority
which so holds, where it is expressly covenanted as a condition of
liability that the statements and declarations made in the
application are true, and when the truth of such statements forms
the basis of the contract.
The counsel for the insured insists that policies of insurance
are hedged about with so many qualifications and conditions, that
questions are propounded with so much ingenuity and in such detail,
that they operate as a snare, and that justice is sacrificed to
forms. We are not called upon to deny this statement. The present,
however, is not such a case. The want of honesty was on the part of
the applicant. The attempt was to deceive the company. It is a
Page 89 U. S. 57
case, so far as we can discover, in which law and justice point
to the same result, to-wit, the exemption of the company.
Judgment affirmed.
JUSTICES CLIFFORD and MILLER dissenting.
[
Footnote 1]
4 House of Lords Cases 483, 487.
[
Footnote 2]
6 Common Bench, N.S. 437;
and see Duckett v. Williams,
2 Crompton & Meeson 348.
[
Footnote 3]
6 Jurist, new series, 826, 1860;
see also Price v. Phoenix
Insurance Co., 17 Minn. 497.
