Court Opinion

ID: 9448435
Source: CourtListenerOpinion
Date Created: 2023-08-03 23:35:55.788322+00
Date Added: 2024-06-11T17:31:26.025607
License: Public Domain

TUTTLE, Chief Judge
(dissenting).
With deference to the views of my colleagues, I must dissent. I am utterly unable to understand how or why a federal court should attempt, by what appears to me to be judicial fiat, to fashion a public policy for the state of Texas, a state that has never been known to be one that was callous to the interests of policyholders as against the insurers— *91that will inevitably invite the worst types of deception and fraud. Moreover, I am unable to distil from the opinion of the majority exactly what the public policy of Texas now is touching on the making of false statements or false swearing if such dishonesty does not occur in connection either with the application for the policy or in the formal proofs of loss.
Here, after the plaintiffs had filed suit on this floater policy seeking a recovery for the alleged loss of jewelry, Marianne Vernon, one of the plaintiffs, alleged to be the owner of $27,000 worth of the jewelry, filed a sworn affidavit to the effect that there had been no theft and that the claim of theft was a trumped-up claim in which she and her parents, the other insureds, had participated. Based on this affidavit the Insurance Company then filed its answer denying liability. Thereafter, attaching this affidavit to its motion, it moved for a summary judgment, to which, at the time, in the light of the pleadings and affidavits, it would clearly be entitled. In response to this motion for summary judgment, however, Marianne swore again, this time saying that what she had previously sworn to was false. She thereupon reasserted her claim against the Insurance Company. We take it, therefore, that the principal assured, that is the owner of the substantial loss claimed, is a self-confessed perjurer, since in the majority opinion it is stated that Marianne’s second affidavit is sufficient to satisfy the Texas requirements of an affidavit. She has sworn that she swore falsely when she told the Company by affidavit that she had “cooked up” the entire story of theft in order to save her boy friend from some unexplained trouble.
The trial judge, himself an experienced Texas judge, held, as I think he was required to do, that either Marianne’s false affidavit that there had been no theft was a violation of the warranty against false swearing “before or after the loss” or the subsequent affidavit, in which she undertook to recant the earlier one, was false by the very nature of things, and that this would then be a violation of the warranty against false swearing.
As I understand the majority opinion, it is based on the general proposition that since the Texas statutes have provided that an insurance company may not rely upon untrue or false answers or statements made in the application or contract for insurance unless it is shown upon trial that the matter or thing represented was material to the risk or actually contributed to contingency or event upon which the policy became payable, and since it has also enacted a provision depriving an insurance company of a defense based upon a contract provision voiding a policy for false statements made in proofs of loss unless it is shown upon trial that the false statement was fraudulently made, misrepresented a fact material to the liability of the insurer, and actually misleading the insurer, these statutory provisions “bespeak the public policy of Texas in insurance matters.” The opinion then seems to say that since the plain meaning of the words of the provision taken in their broadest possible scope would avoid the policy in the event of “any falsely sworn statement by the insured, made at any time, under any circumstances, to any person or entity” would be an absurd construction, then it follows that this concededly false affidavit touching on the very question as to whether a loss had occurred, an affidavit admittedly knowingly and intentionally made by the assured, cannot be relied upon by the insurance company as a defense to the suit. The opinion does not tell us why. It simply says that, construed in the most literal and broadest possible scope “the provision in question would be invalid and void as contrary to the public policy of Texas.”
The opinion then says, “We conclude that the provision does not extend to every false swearing, but only to those within the scope allowed by the public policy of the state. It does not extend to the affidavits made by Marianne Vernon, after denial of liability by Aetna and after action on the policy had commenced.” This, it seems to me, is pure *92¡Rating and nothing more. The opinion then concludes with the statement, “It is apparent from what we have said that the mere fact of making inconsistent statements does not establish fraud or attempted fraud under the policy as a matter of law.” The fact is that we do not have here “a mere fact of making inconsistent statements”; we have here an admittedly false affidavit, which by its very nature might affect the insurance company’s investigation of whether or not an actual loss had occurred and whether or not it would be liable on the policy.
Realizing, out of the deepest respect which I hold for my distinguished colleagues, that I may read something more in the language of the opinion than is intended, I must nevertheless reject as erroneous and, I sincerely believe, as damaging to the entire fabric of the law, the characterizing of this open, blatant, perjury as a “mere fact of making inconsistent statements.”
From some place outside the record the majority finds a basis for making the statement that the two kinds of false statements expressly referred to in the Texas statutes, “are the only kinds of statements, in the vast majority of cases, which the insured will ever make to the insurer, and are by far the most important which can be made.” The truth is that these statutes do not touch upon false statements that may be made by an insured during the insurance company’s investigation of the loss, or the insurance company’s investigation as to whether there has been a theft. Although I have no more justification in speculating as to what kind of statements the insured is apt to make than has the majority in its estimate, it would seem to me that in at least an appreciable number of cases false statements impeding a fair investigation of the claimed loss by the company might be not only the largest in number but the most material and that they would also be the kind the legislatures and the courts would be most alert to prevent, and yet the majority opinion now holds that an agreement by an assured not to make false statements in connection with an investigation of a loss by an insurance company on pain of forfeiture of the policy, is against the public policy of the state of Texas.
I think this Court paid its respects to the kind of reasoning by which such public policy would be established by what we said in the case of Chaachou v. American Central Insurance Company, 5 Cir., 241 F.2d 889, where we said at page 892:
“The contract does not spell out that it is only false swearing, misrepresentation, concealment or fraud which is successful that avoids the policy. Nor is there any reason why any such condition should be read into it. Clearly, in the absence of a statute, the law, which is founded on truth and justice, will not regard it as unsound that a person has lost, the benefit of the contract by wilful, immoral, dishonest acts which the contract itself condemns.
“Moreover, if the law out of some misgivings about the forfeitures, were to require that the insurer demonstrate that it had been misled to its prejudice by the fraud, the policy provision would both be virtually worthless and put a premium on dishonest dealings by the assured. For if, by its own investigation, inspired perhaps by suspicions of the assured’s efforts to misrepresent, the-insurer satisfied itself that a fraud had been attempted and declined to-pay, such a rule would mean that the-assured’s claim would then stand as-though no dishonest acts whatsoever had been practiced. The mendacious assured, surveying the possibilities- and contemplating prospective tactics and strategy in the handling of' his claim, would sense immediately-that vis-a-vis himself and the underwriter, there be no risk at all in his-deceit. If it worked, he would have his money and, at worst, could be-compelled to disgorge only by affirmative suit by the insurer if the fraud' *93were discovered in time to be legally or practicably effective. If it didn’t work — if, before consummation, fraud was detected — he would suffer no disadvantage whatsoever. It would be an everything-to-win, nothing-to-lose proposition.
“Additionally, such a rule would cast the underwriter in a role for which it is unsuited and in a process which the general good, out of long experience, considers best performed by government machinery. Convinced, as here by its own investigation of the claim, of dishonest acts by the assured, it would then have to undertake the talks of segregating truth from untruth, ferreting out the honest from the dishonest, choosing the right from amongst the wrong with all or much of the factual material coming from one now considered to be morally unreliable.
“The public interest is not furthered by these likely consequences of reading into the contractual language this burden nowhere expressed. A judge-made policy which thus gives advantage to dishonesty will retard, not accelerate, the orderly adjustment of insurance losses. If the insurer, from the strong language of the contract interpreted in equally plain terms by the law, is entitled to assume that the assured is dealing honestly and fairly, asserting only that which in good faith is believed to be the substantial truth of the matter, the claim can be handled in a spirit and atmosphere of confidence. If, on the other hand, the insurer must realize that fraud is significant only if it is finally successful, that the slate is wiped clean if its own investigation uncovers the assured’s cozening, the setting may then become one of the hostile antagonism, reluctance and apprehension forcing more, not less, litigation.”
Although in the Chaachou case this Court was construing the law of Florida, the situation was the same because there is no statute in Florida touching on the matter, nor, as conceded by the majority here, is there any statute of Texas touching this situation.
Moreover, I think the Texas case of Modern Order of Praetorians v. Davidson, Tex.Civ.App., 203 S.W. 379, establishes the law of Texas for the proposition that unless the Texas insurance laws themselves outlaw a defense as being against the public policy of that state, the courts have no power to do so. In that case the insured sought to rely upon the Texas statute above referred to touching upon false representations in an application for insurance. However, the Court of Civil Appeals of Texas decided that the statute applied only to stock companies and not to “fraternal insurance.” The opinion of the court said, “In the absence of a statute to the contrary, false representations in an application for insurance, which the applicant warrants to be true, will avoid the policy, without reference to the materiality of such statements.” The court said that the failure of the Texas statute to include fraternal insurance as being covered by the stated public policy left the defense open in a suit on a fraternal insurance policy without requiring it to prove the materiality of the false statements made. In the light of such a policy as announced by the Texas courts, it seems that we are going far afield indeed in fashioning a policy, even though not fully articulated in this opinion, to the effect that a provision against false swearing occurring after loss, is void under the public policy of the state of Texas.
I would affirm the order of the trial court dismissing the complaint on summary judgment.