Court Opinion

ID: 5806931
Source: CourtListenerOpinion
Date Created: 2022-01-12 18:39:09.074495+00
Date Added: 2024-06-11T08:42:44.646824
License: Public Domain

Lane, J. (dissenting).
The deceased, Dr. Louis E. Schaefer, an internist, had purchsed $200,000 worth of life insurance from Marvin S. Sterling, between the years 1960-1964. Sterling then induced Schaefer to purchase $200,000 worth of life insurance from the defendant Provident Mutual Life Insurance Company, the company for which he was then acting as agent, and Schaefer canceled his older policies. The new *107policies were purchased in 1967. At that time, the older policies (taken out with an insurance carrier other than Provident) were no longer subject to contest in the event of suicide or in the event there was a material misrepresentation in the policy application. Within two years after the purchase of the Provident policies, Schaefer died, apparently a suicide.
The plaintiff, Justine Schaefer Tannenbaum, was the wife of the deceased and the named beneficiary under the Provident policies. Provident refused to honor the policy.
The amended complaint alleged three causes of action. The first is against Provident only and seeks recovery by plaintiff as a beneficiary under the policy. The second cause of action seeks equitable relief estopping Provident from disclaiming liability on the grounds of Schaefer’s misrepresentations, since he was fraudulently induced to take the policies by Sterling as an agent of Provident. The third cause of action, against both Provident and Sterling, alleges fraud and deceit in that Sterling induced the change of policies by making invalid cost comparisons.
Provident’s defense in refusing to honor the policy was based upon the suicide of Schaefer within two years of issuance of the policy and upon material misrepresentations which he made as to his medical history in his insurance policy application. Sterling urged that the complaint did not state a cause of action against him and, in any event, his liability is limited to commissions received.
The jury returned a verdict in favor of the plaintiff against the defendants on the first and third causes of action, and the court found in favor of the plaintiff on the second cause of action, which requested equitable relief.
At trial, it was conceded that Schaefer made misstatements as to his mental condition. He omitted in his application the fact that the had been under psychiatric care for a paranoid reaction and under treatment for diabetes mellitus. The medical guide used by Provident to determine if it would accept certain applicants as insureds indicated that applicants who had a "paranoid reaction” within two years of the application would be denied insurance coverage.
It is unnecessary to analyze whether or not Sterling as agent of Provident fraudulently induced Schaefer to surrender his old policies in favor of the new ones since, even were this to be true, the judgment in favor of the plaintiff should nonetheless be reversed and the complaint dismissed.
*108"Misrepresentation in an answer, by affirmation of an untruth or by suppression of the truth, is material where it !substantially thwarts the purpose for which the information is demanded and induces action which the insurance company might otherwise not have taken. ’ The test is whether 'failure to state the truth where there was duty to speak prevented the insurance company from exercising its choice of whether to accept or reject the application upon a disclosure of all the facts which might reasonably affect its choice,’ The question is 'not whether the company might have issued the policy even if the information had been furnished; the question in each case is whether the company has been induced to accept an application which it might otherwise have refused.’” (Geer v Union Mut. Life Ins. Co., 273 NY 261, 271.)
While it is true that occasionally the issue of materiality of a misrepresentation or even its very existence may be for the triers of the facts (Giuliani v Metropolitan Life Ins. Co., 269 App Div 376), the undisputed misrepresentations here made must be found to be material misrepresentations as a matter of law, since it was clear that, had the medical history been revealed, the application would have been rejected (Leamy v Berkshire Life Ins. Co., 39 NY2d 271; Vander Veer v Continental Cas. Co., 34 NY2d 50).
In the case at bar, no claim is made that Schaefer’s misrepresentation was induced by fraud and, in any event, no showing was made that plaintiff as beneficiary relied on the* fraud allegedly perpetrated on Schaefer. The material misrepresentation by Schaefer operated as an efficient supervening cause and therefore damages cannot flow from any fraud allegedly perpetrated by Sterling or Provident.
Accordingly, the judgment of the Supreme Court, Bronx County, entered May 7, 1974, in favor of the plaintiff after a jury trial, should be reversed on the law and the complaint dismissed. The appeal from the order dated September 27, 1974, denying the motion of the defendant Sterling to set aside the verdict, should be dismissed as academic.
Kupferman, J., concurs with Lupiano, J.; Capozzoli, J., concurs in result only; Stevens, P. J., and Lane, J., dissent in an opinion by Lane, J., as to appeal from judgment entered May 7, 1974.
Judgment, Supreme Court, Bronx County, entered on May 7, 1974, modified, on the law, to the extent of setting aside the jury verdict against defendants on the third cause of action *109and dismissing said cause of action and as so modified, the judgment is affirmed. Plaintiff-respondent shall recover of defendant-appellant Provident Mutual Life Insurance Company of Philadelphia one bill of $60 costs and disbursements of these appeals.
Appeal from order, Supreme Court, Bronx County, entered on September 27, 1974, unanimously dismissed as moot.