#### BLACKWELL v. FIRESIDE MUT. LIFE INS. CO.

No. 2453.

Court of Appeal of Louisiana. First Circuit.

Dec. 29, 1942.

Stafford & Pitts, of Alexandria, for appellant.

Durrett & Hardin, of Baton Rouge, for appellee.

OTT, Judge.

The suit is to recover on a policy for $1,000 issued by the defendant company on *66the life of Jessie Thibeau, who died on October 16, 1939. The policy was issued on July 11, 1938, without a medical examination of the deceased insured. The claim is resisted on the ground that the insured gave false answers in her application for the insurance relative to her health and medical treatment.

After admitting the issuance of the policy and the death of the insured, the defendant set up as a defense that the contract of insurance was void and never took effect for the reason that the deceased stated in her application that she was in good health and had never been afflicted with cancer; that as a matter of fact, she had been operated on in the Charity Hospital in New Orleans on June 23, 1938, just two weeks before the application was signed, and her breast had been removed; that her death in October, 1939, resulted from a recurrence of this cancer. It is alleged that the failure of the insured to disclose the true condition of her health and the fact that she had just previously undergone an operation for cancer were wilful and fraudulent misrepresentations; that the premiums on the policy were paid by the husband of the plaintiff, the beneficiary under the policy, when they both knew, as well as the assured, that the policy' was obtained through fraudulent misrepresentations.

The trial judge rendered a judgment in favor of plaintiff for the amount of the policy, interest and cost, and the defendant has appealed.

The application for the insurance was taken by the local agent of the company in Baton Rouge, W. A. Cotten, who has resided in that City for about forty five years and had been representing the defendant company for some eight years. He was well acquainted with T. H. Blackwell, the husband of the plaintiff and a brother-in-law of the deceased insured (the latter being a sister of the plaintiff). Blackwell had a policy in the company himself, and he had assisted the local agent in contacting prospects, the agent making periodic calls on Blackwell in order to collect the dues on his policy.

A month or so before the application was signed by Miss Thibeau, she was at the place of business of her brother-in-law, Blackwell, when the agent called to collect dues from Blackwell on his policy. The agent tried to get Miss Thibeau to take out a policy at that time, but- she refused, stating that she was not able to pay the dues and that she had been sick. Blackwell at the same time tried to get two other men in his shop interested in taking out a policy in Cotten’s company, but they could not be interested.

Miss Thibeau had been working at Keans’ Laundry until February, 1938, at which time she quit work there, apparently on- account of the illness which she later referred to when the agent tried to get her to take out a policy at Blackwell’s shop. She went to the Charity Hospital where her right breast was removed on June 21, 1938, and, according to the hospital report, she was taken home by her relatives on July 6th, the report concluding “condition improved.” She lived with her mother and a sister (not the plaintiff) on South Sixteenth Street in Baton Rouge, and on the day after she came back from the Charity Hospital the agent went to the place where she was staying and wrote the application for the insurance which she signed. There is some difference in the testimony as to whether Blackwell suggested to the agent that he go out and get Miss Thibeau’s application, or whether the agent went to see her of his own accord; also whether or not plaintiff was present when the application was made out and signed (the preponderance of the evidence tending to show that she was not present).

The agent testified that at the time he took the application from Miss Thibeau her appearance did not indicate that she was sick or an invalid, even though she had just returned from the Hospital where the aboved mentioned operation was performed. All answers to the questions in the application were written by the agent, as he says, from answers given by the applicant from the questions asked her. On the question of whether the applicant now has or has had various diseases, including cancer, the answer is, “No”. In answer to the question whether or not she had ever undergone a surgical operation, the answer is “operated on for female trouble in 1932”. She answered that she was in good health and free from bodily disease; as to the question for what ailments she had consulted a physician in .the last two years, the answer is, “None”. In answer to the question, “Have you fully recovered from last illness?” the answer is, “Yes”. And she answered that she had not consulted a physician in the last two years.

*67 Obviously, the above answers •were untrue. Whether or not they were willfully given with the intent to deceive and defraud depends very much on the importance that the applicant attached to them and her purpose in not giving all the facts, as well as her knowledge of the serious nature of her complaint and whether or not she actually believed that the ■operation she had undergone had corrected her trouble. Answers in an application for life insurance may be knowingly untrue and yet not fraudulent. Cunningham v. Penn Mutual Life Ins. Co., 152 La. 1023, 95 So. 110. In justice to the deceased as. to her possible lack of knowledge of the serious nature of her complaint, it is shown that she was not told that she had a cancer, besides, at the time the application was signed, according to the testimony of the agent who took it, there was nothing about her appearance to indicate that she was suffering from any serious disease. While she died from the effect of the disease which was lurking in her body at the time the application was signed, yet she lived for more than a year thereafter.

However, if it is conceded that the defendant has proved that the insured willfully concealed her condition and the facts pertaining to her medical treatment with the purpose of deceiving and defrauding the company, this defense is not available to the insurer to defeat recovery under the policy if the provisions of Act 97 of 1908, as amended, are to be applied to this case as these provisions have been interpreted and applied by the courts under similar situations in other cases. The appropriate part of this act provides that where a life insurance policy is written without medical •examination by a physician, it shall be presumed that the company writing the policy has waived its right to claim a forfeiture based on the ground that the assured did not make true answers in the application as to the health, habits or occupation of the applicant, whenever it appears that the agent of the company knew, or might have ascertained with reasonable diligence the true condition of the applicant’s health, habits or occupation.

The defendant contends that the above act does not apply in this case for the reason that it is an insurance corporation organized on the assessment plan under Act 20, 2nd E. S. of 1935, Section 9 of which act, in providing for the kind of policies which may be issued by companies organized thereunder, requires such companies to pay the sum of money agreed to be paid upon the happening of the contingency specified therein, unless the contract shall have been avoided by fraud, or by a breach of its conditions. Act 97 of 1908, as amended, applies to all policies of life insurance issued in this state, unless the insurer writing such a policy is specially exempted from .the provisions of the said act by some other statute. McBride v. Acme Industrial Life Ins. Society, 179 La. 701, 154 So. 741; Sheridan v. Thibodaux Benevolent Ass’n, 19 La.App. 762, 773, 134 So. 360; 141 So. 488. There are only two classes of insurers issuing policies or certificates of life insurance which are exempt from the provisions of Act 97 of 1908. These are industrial life insurance companies, which are permitted to set up fraud as a defense, if the insured is required to sign an application and the misrepresentations are wilful and conceal facts as to the ill-health of the assured at the time of the application. Act 160 of 1934 and Act 144 of 1936, as amended by Act 140 of 1938 (the former act apparently was passed because of the decision of the Supreme Court in the McBride case, supra, holding that industrial life policies were governed by the act of 1908. See Succession of Ryan v. Life & Casualty Ins. Co., La.App., 198 So. 522). The other class of life policies exempted from the provisions of the 1908 act are fraternal beneficiary policies issued under Act 256 of 1912.

The statute under which the defendant insurance company was organized and is doing business authorizes it to avoid the payment of the policy on the happening of the contingency on the ground of fraud or breach of the conditions of the contract but makes no reference to the waiver provided for in the act of 1908, and indicates no intention to relieve the insurer operating under the assessment plan of the provisions of this general law affecting life insurance companies in general. There are other frauds and breaches of contract which will serve as a defense on a policy contract besides those relating to untrue statements of the insured in regard to his health, habits and occupation.

Having reached the conclusion that Act 97 of 1908, as amended, applies to this case, and in view of the fact that the agent had ample opportunity to ascertain the true condition of the applicant’s health, the defendant company is now estopped from *68setting up as a defense to avoid payment of the policy the alleged misrepresentations of the insured in her application. Her condition certainly could have and would have been ascertained from a medical examination by a physician. There are numerous physicians in Baton Rouge, and there was no reason for the defendant to issue the policy without a medical examination, unless it was willing to rely on the information obtained from the application alone and take chances on the condition of the applicant’s health. The agent had been informed by the assured only a month or two before the application was signed that she had been sick and was unable to take out a policy. So far as the record shows, neither the agent nor the company made any effort whatever to find out anything about the health of the assured before issuing the policy other than what was contained in the application. If the conduct of the agent and the company could be termed reasonable diligence in ascertaining the condition of the applicant’s health, the act of 1908 might as well be taken off the books, as an agent could write out an application and make no further effort to ascertain the condition of the applicant’s health but rely solely on the statements in the application, and then, if those statements proved to be untrue and fraudulent, permit the insurer to avoid the policy for fraud.

The cases cited by counsel for the defendant involved industrial policies where, by the special statutes already referred to, the insurer is permitted to set up fraud as a defense where a signed application is required and *the*misrepresentations are shown to be willful. Those cases are not applicable here where it is conceded that the defendant is not an industrial company. The cases are too numerous to cite holding that where a policy is issued without a medical examination and the agent, by the use of reasonable diligence, could have ascertained the condition of the assured’s health by a medical examination, the insurer is precluded from claiming- the right to avoid the policy for false statements regarding the health of the insured in the application. An appropriate and rather similar case on this point to the present case is that of Eagan v. Metropolitan Life Insurance Co., 181 La. 16, 158 So. 575, which we think supports our conclusions in the present case.

For the reasons assigned, it is ordered that the judgment appealed from be and the same is hereby affirmed at the cost of the defendant in both courts.

DORE, Judge

(dissenting).

*The facts and circumstances of this case,*as I see them, are as follows:

During about the middle of May, 1938, Mr. W. A. Cotten, an agent of the defendant, called at the business place of Mr. T. H. Blackwell, plaintiff’s husband and brother-in-law of the decedent, the decedent being a sister of plaintiff, for the purpose of collecting the premium due on a policy defendant had issued to Mr. Blackwell. During that call Mr. Cotten saw Miss Thibeau and offered to sell her a policy of insurance, which she refused, stating that she recently had been sick and that she was unemployed and could *not*pay the premiums. Mr. Blackwell then volunteered to assist in the payment of the premiums if the policy would be issued, and Miss Thibeau stated that she would consider the matter. Mr. Cotten testifies that at that time from all outward appearances Miss Thibeau was in perfect health and had recovered from any illness she might have had, believing that she had been suffering from a cold or some other minor ailment and not from any serious malady. This is not refuted.

On June 21, 1938, Miss Thibeau was admitted to the Charity Hospital at New Orleans, where her case was diagnosed as cancer of the right breast, and on June 23, 1938, her right breast was removed, the post operative diagnosis being malignant cancer. She remained in the hospital until July 6, when she was taken to Baton Rouge by relatives.

On July 7, the day after Miss Thibeau’s return to Baton Rouge, Mr. Cotten called at Mr. Blackwell’s place of business, at which time Blackwell asked if Miss Thi-beau’s application had been written, and Cotten answered: “No, I am going out this afternoon.’’ That afternoon Mr. Cot-ten called at the home of Miss Thibeau, *and in the presence of*plaintiff and another lady, wrote Miss Thibeau’s application for insurance, consisting in part of the following questions and answers:

> “5. Have you ever undergone a surgical operation?” Answer: “Operated on for female trouble in 1932.”

> *69“6. Are you now in good health and free from all bodily ailments and diseases ?” A. * “Yes”.

> *“7.*For what ailment did you consult a physician in the last two years ?” A. “None”.

> “8. Have you fully recovered from last illness?” A. “Yes”.

> “9. Give name and address of physicians consulted during last two years.” A. “None”.

Miss Thibeau also signed the following: “I hereby warrant that the statements and answers to the above questions are true and correct to the best of my knowledge. I understand that the policy applied for, to be issued when my membership is accepted, will not be in force until delivered to me while I am in good health.”

The policy was issued on July 11, 1938, and presumably delivered to Miss Thibeau a few days thereafter. Copy of the application is endorsed on the back of the policy and forms a part thereof. The policy was offered in evidence by the plaintiff without reservation.

Miss Thibeau died on October 16, 1939, and defendant refused to honor the policy on her life for the reason that her death was due directly to a recurrence of the cancer from which she was suffering at the time of the execution of the application and the issuance of the policy, and that therefore she was not in sound bodily health at the time of application and the delivery of the policy, all contrary to her representations and warranty.

It is obvious that Miss Thibeau, her sister, the plaintiff herein, and her sister’s husband, Mr. Blackwell, who admits paying some of the premiums on the insurance policy, if not all, deliberately concealed Miss Thibeau’s condition, including the serious operation which she had undergone, from defendant’s agent, Mr. Cotten, and to me it seems clear that this concealment of material fact was made for the purpose of obtaining the policy, which they well knew could not be obtained but for such concealment. The majority opinion implies that Mr. Cotten had sufficient knowledge of Miss Thibeau’s condition to have been put on guard and to have ascertained with reasonable diligence the true condition of her health. In my opinion, such is not the case, because on both occasions when Mr. Cotten interviewed Miss Thibeau from all outside appearance she was in good health, and Miss Thibeau’s remark during the first interview to the effect that she had been sick and was unemployed was not sufficient to warn Mr. Cot-ten that she was suffering from any serious malady. It is claimed that Miss Thibeau was never informed that she was suffering from cancer, but even so, being a mature woman, formerly married, she must have known that an operation for the removal of 'her breast indicated a serious condition which should not have been concealed from the agent if she were acting in good faith.

It is significant to note, also, that while Miss Thibeau’s mother was still living, as well as another sister or sisters, she names Mrs. Blackwell, whose husband paid the premiums, as sole beneficiary under the policy.

In view of the foregoing facts and circumstances, I am convinced that the policy involved herein was obtained through deliberate misrepresentations constituting fraud and should therefore be decreed to be a nullity.

With reference to Act 97 of 1908, as amended, it is my understanding of the act that it only applies when the health of the applicant was known to the agent or when the agent should have ascertained, with reasonable diligence, the true condition of applicant’s health, all based on the principle that knowledge of the agent is knowledge of the principal. I cannot believe, however, that the statute bars the plea of fraud in the vitiation of a contract such as in this case where deception and concealment were deliberately practiced upon the agent.

The defendant company was organized under Act 20 of the 2d Extra Session of 1935, a portion of which reads as follows:

> “* * ***Every policy or certificate hereafter issued by any corporation, association or society authorized under this Act, shall have plainly printed in red ink on the first page thereof the words ‘Assessment Plan’, and shall specify the sum of money which it promises to pay upon each contingency insured against, which shall not be in excess of Five Thousand Dollars ($5,000.00), and the number of days after receipt of proof of the happening of such contingency in which such payment shall be made. Upon the occurrence of such contingency, *unless the contract shall have*
>       *70
>       *been voided by fraud,*or by breach of its *conditions, the*corporation, association or society shall be obliged to the beneficiary for such payment at the time and to the maximum amount specified in the policy or certificate.” § 9. (My italics.)

This portion of the act, in my opinion, shows that the contract can be voided on account of fraud.

For these reasons, I respectfully dissent from the opinion of the majority.