Case Name: National Life & Accident Ins. Co. v. Green
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 1941-06-14
Citations: 191 Miss. 581
Docket Number: No. 34629
Parties: National Life & Accident Ins. Co. v. Green.
Judges: 
Reporter: Mississippi Reports
Volume: 191
Pages: 581–604

Head Matter:
National Life & Accident Ins. Co. v. Green.
(In Banc.
June 14, 1941.
Suggestion of Error Overruled Sept. 22, 1941.)
[2 So. (2d) 838.
No. 34629.]
Joseph E. Brown, of Natchez, for appellant.
Luther A. Whittington, of Natchez, for appellee. •
Joseph E. Brown, of Natchez, for appellant, in reply.
Argued orally by Joseph E. Brown, for appellant, and by L. A. Whittington, for appellee.

Opinion:
Alexander, J.,
delivered the opinion of the court.
Suit was brought and judgment obtained by appellee as plaintiff upon a life insurance policy issued upon the life of her brother, Albert Green. The policy contains the following provisions: "(3) . . . Except as herein provided, if the insured is not alive or is not in sound health on the date hereof . . . the Company's full liability shall be discharged by the payment of the sum of the premiums received hereunder. (4) This policy contains the entire agreement between the Company and all parties in interest . . ."
To the declaration the defendant pleaded the general issue and made tender of the premiums paid with interest thereon. It filed also notice of special affirmative matter to the effect that insured was not in sound health at the time the policy was delivered but was suffering from tubérculo,sis, wherefore no obligation was assumed under the policy except as to return of premiums paid. Counter notice was filed by plaintiff denying that insured was of unsound health when the policy was issued and further ' ' that the defendant is now estopped to make such defense because it delivered the policy of insurance to the deceased, and whatever right it had by reason of the condition of the health of the deceased was waived by the delivery of the policy."
Brief for appellant discloses that the counter notice was based upon Code 1930, Section 5174, which is as follows: "All life insurance companies doing business in the state of Mississippi shall deliver to the insured with the policy, certificate or contract of insurance in any form a copy of the insured's application, and in default thereof said life insurance company shall not be permitted in any court of this state to deny that any of the statements in said application are true."
Insured's application for the insurance was introduced in evidence and it shows that the applicant represented that he was in sound health and that he had never had tuberculosis. Upon the issue as to the truth of these allegations there was considerable testimony. On behalf of the plaintiff the trial court instructed the jury that if the insured was not at the time the policy was issued, and for many months prior thereto, suffering from tuberculosis they should find for the plaintiff. However, the following instruction No. 3 was also given for plaintiff: "The Court instructs the jury for the plaintiff that if they believe from a preponderance of the evidence in this case that no medical examination was required in the writing of the policy of insurance in question on the life of Albert Green, and that the insurance was written by the defendant upon the recommendation of their agent, C. W. Campbell; and if they further believe from the evidence that the agent for the defendant, C. W. Campbell, had opportunity to observe the physical condition and the health condition of the insured, and further took his application for the insurance, and in good faith, after observing the insured, Albert Green, and after receiving answer to the questions propounded to the said Albert Green, believed the said Albert Green was a fit subject for insurance and recommended that the defendant issue a policy to him, and if the jury further believe that at the time the said policy was issued and delivered by the agent for the defendant to the said Albert Green, that the said agent of the defendant had opportunity to observe the physical condition and health of the said Albert Green, and in good faith believing him to be in good and sound health, delivered said policy to him; and if they further believe that the said Albert Green did not knowingly make any false representations to the said agent in procuring said insurance, and that he was acting in good faith in procuring said insurance, then and in such event it is the duty of the jury to find for the plaintiff, and your verdict should be 'We, the jury, find for the plaintiff.' " It is true that the defendant in order to meet the theory of this instruction was allowed a charge involving the bad faith of the applicant, yet a party may not be estopped to assert a correct theory because he has been compelled to take defensive measures in kind against one which is erroneous.
The following instruction No. 2 requested by the defendant was refused: ' ' The Court instructs the jury for the defendant that if you believe by a preponderance of the evidence in this case that Albert Green, at the time of the issuance of the policy, was not in sound health and was suffering from a disease tending materially to shorten his life, then it is your sworn duty to return a verdict for the defendant."
In view of Code 1930, Section 5174, above quoted, the defendant was estopped to deny that any of the statements in the application were true. However, it did not ground its defense upon the falsity of the representation in the application but upon the express provision in the policy itself set out above. That it was entitled so to do is clearly shown in Metropolitan Life Ins. Co. v. Scott, 160 Miss. 537, 134 So. 159, 161, where it was held that "One evident purpose of the statute requiring the delivery to the insured' of a copy of the application is to exclude or eliminate from the contract an application, a copy of which is not delivered to the insured with the policy, and to render ineffective any defenses or at tempted defenses based upon anything contained in such application, but it does not follow that a failure to incorporate in or attach to the policy a copy of the application will preclude the company from relying on any defenses available to it under the terms of the policy. In the policy here involved there is no language or provision indicating a purpose or attempt on the part of the appellant company to make anything found in the application a part of the contract. The policy was complete in itself, and purports to contain in plain language all the terms, conditions, and stipulations of the contract, and we do not think the company is precluded from relying on the express conditions and stipulations appearing on the face of the policy, by reason of the fact that the application contained representations or stipulations in reference to the same subject-matter. When the company chose to ignore the statements and representations appearing in the application, and incorporated in the policy in plain terms the conditions and stipulations upon which its validity should rest, and the policy was accepted by the insured as constituting a contract, it had the right to make any defenses it might have under the terms of the policy, without reference to such application. ' '
This brings us to a consideration of the effect of the policy proviso that if the insured is not in sound health on the date of the policy the full liability of the company will be discharged by payment of the sum of premiums received. It is not helpful to discuss whether this provision is in the nature of a warranty, Cooley's Briefs on Insurance, vol. 4, p. 3007, or a condition precedent, Couch, Cyclopedia of Ins. Law, vol. 4, p. 2833. In any event, it is a provision which effectively limits recovery under the policy and is part of the contract between the parties. Such is its language and import and we are impotent to impair its literal effect by invoking rules of construction available only to resolve ambiguity. Even though it be placed in the contract for the benefit of the insurer, it is binding upon the insured. ' The issue is not fraud of the applicant, but breach of the condition. Such a limitation upon the liability of the defendant is a proper subject of contract, and is binding upon the insured. Mutual Life Ins. Co. v. Vaughan, 125 Miss. 369, 88 So. 11; National Life & Acc. Ins. Co. v. Hugger, 158 Miss. 686, 131 So. 75. In the former case, the Court said [125 Miss. 369, 88 So. 13] : "The provision in the policy is that the proposed policy should not take effect unless the policy should have been delivered to, and received by, the insured during the continuance of good health. The question is then to be determined whether the applicant was in good health at that time. ' ' See, also, Co-operative Life Ass'n v. Leflore, 53 Miss. 1, 16; New York Life Ins. Co. v. Gresham, 170 Miss. 211, 154 So. 547; 37 C. J. pp. 400; 404; Couch, op. cit. supra.
The issue which should have been submitted to the jury by the instructions is not the good faith of the applicant or of the agent but whether there existed that condition — sound health — upon which the obligation of the defendant rested. 37 C. J., p. 400. It was error to give the third instruction for the plaintiff and to refuse the second instruction for the defendant.
Reversed and remanded.
On Suggestion of Error.
Roberds, J.,
delivered the opinion of the court on suggestion of error.
Counsel for the appellee urged on the appeal, and again urges on the suggestion of error, that the policy provision, ". . . if the insured is not in sound health on the date hereof . . . full liability shall be discharged by the payment of the sum of the premiums hereunder," means "a change in the condition of the health (for the worse) from the date of the acceptance of the application to the date of the actual delivery of the policy"; and he cites in support of that contention Fidelity Mutual Life Ins. Co. v. Elmore, 111 Miss. 137, 71 So. 305, and New York Life Insurance Co. v. Smith, 129 Miss. 544, 91 So. 456. That was the construction placed upon the provisions involved in those cases. Counsel might also have cited New York Life Insurance Co. v. Rosso, 154 Miss. 196, 122 So. 382, to the same effect. But those cases are quite different from the case at bar. In all three of those - cases there was an examination of the applicant by a doctor and the policies were issued after and upon the result of such examination. In the case at bar there was no examination. The policy was issued upon the statements of the applicant. This is a fundamental and vital distinction. The examining doctor is the agent of the insurer. The knowledge gained by him is imputed to the insurer. New York Life Insurance Co. v.' Smith, supra. Therefore, in such case, the insurer determines through its own agent the insurability of the applicant. It thereby establishes that status, and, on the condition so established through its own agent, appointed for the purpose, it accepts the risk. Under such circumstances it is but fair, reasonable, and logical to say the parties mean the insurance shall be issued and become effective unless the applicant is in worse health upon delivery of the policy than when the examination is made. 37 C. J., sec. 78, pp. 404, 405; Chinery v. Metropolitan Life Insurance Co., 112 Misc. 107, 182 N. Y. S. 555.
Also the particular wording of each provision may produce a different meaning. In the Elmore case, for illustration, the phrase was "continued good health." The word "continued" naturally carried a meaning of comparative health as between the time of the examination and date of delivery of the policy.
Again, in these three cases there were provisions in the applications, or policies, or both, that statements made by the applicants were representations and not warranties in the absence of fraud, which left open for proof the question of good faith and fraud.
In the case at bar the application is not considered. No copy of it was attached to the policy or delivered to the insured. It is not a question of contradicting the state ments in the application. The provision is in the policy itself. It is not a question of fraud. Good health, as defined by the cases, is a question of fact; it is a condition precedent to liability, except for return of the premiums.
The case of National Life & Accident Ins. Co. v. Hugger, 158 Miss. 686, 131 So. 75, cited in the original opinion, is exactly in point — like provisions, apparently identical appellants; no medical examinations. To sustain the suggestion of error we would have to overrule that case.
In Murphy v. Metropolitan Life Insurance Co., 106 Minn. 112, 118 N. W. 355, 356, a case very similar to the one at bar the Court used this language:
"It is clear from the language of the policy that the defendant's promise of insurance was not absolute, but conditional, and that the existence of life and sound health in the insured on the date of the policy is the condition upon which the promise is made. It is the fact of the sound health of the insured which determines the liability of the defendant, not his apparent health, or his or any one's opinion or belief that he was in sound health." For collection and discussion of cases see 17 L. R. A. (N. S.) 1144-1151, and 43 L. R. A. (N. S.) 725.
It is but natural that the risk is greater without than with, an examination. The State of Mississippi recognizes that. The State has an interest in the solvency of insurance companies doing business in Mississippi. Therefore, we find the law of this State prohibiting insurance companies from issuing policies, without examination, to a greater amount than five thousand dollars ' ' on any one life in any year." Chap. 205, Laws Miss. 1940, p. 376. Before the enactment of that statute the limit was twenty-five hundred dollars. Section 5158, Code of 1930.
No question of actual knowledge, if any, of insurer when the application was taken of unsound health of applicant is presented on this appeal.
Suggestion of error overruled.