Court Opinion

ID: 7056178
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:06:34.126905+00
Date Added: 2024-06-11T16:11:59.214396
License: Public Domain

Dissenting Opinion.
Myers, J.
I concur in the result reached in the majority opinion, on the ground of election by appellant after notice of the alleged false answer, but I am impelled to dissent from so much of the opinion as, in effect, holds that even though a contract of insurance is procured by fraud of the insured, and the insurer is in ignorance, and the risk attaches, the premium must be returned where the defense is interposed in an action at law upon the policy. The rule may be otherwise in ease of a suit in equity to cancel the policy upon the ground of the requirement that the moving party shall do equity. The ground of the distinction between suits in equity and actions at law on the policy has been lost sight of, and much confusion has thereby arisen.
It seems to me no answer to say when there is an action on the policy the contract becomes noneffective from the beginning, and hence no risk attaches. That depends on whether there is a discovery, so that there may be ground for an election to rescind, for until discovery some risk necessarily attaches, even though it should not be the full risk contracted for, and, in .addition, the fact that there is a necessary expense in procuring the contract. It is not wholly unilateral. Some risk necessarily attaches as an element of non-discovery itself, and from the fact of issuance of the policy, but the contract is none the less fraudulent, though there be no discovery, and so long as any risk attaches it becomes, in effect, a wagering contract, and it seems to me in such case, even though there is discovery of the fraud, there should be no recovery of the premium. This court has held that as long as any risk attaches there can be no recovery of premiums, on the ground that there can be no apportionment of the risk. American, etc., Ins. Co. v. Bertram (1904), 163 Ind. 51, 64 L. R. A. 935; Continental Life Ins. Co. v. Houser *659(1887), 111 Ind. 266; Standley v. Northwestern, etc., Ins. Co. (1884), 95 Ind. 254. The Appellate Court has held the same. American Mut. Life Ins. Co. v. Mead (1906), 39 Ind. App. 215; Metropolitan Life Ins. Co. v. Bowser (1898), 20 Ind. App. 557; Metropolitan Life Ins. Co. v. McCormick (1898), 19 Ind. App. 49, 65 Am. St. 392.
If it be said that it is a wagering contract on the part of the insurer, then the law should leave the parties where they place themselves. It seems to me that any other rule invites wagering contracts, deception and perjury, and that a wise public policy Avould be subserved in the rule I suggest, which has been held by many of the courts. Taylor v. Grand Lodge, etc. (1905), 96 Minn. 441, 105 N. W. 408, 3 L. R. A. (N. S.) 114; Ronald v. Mutual, etc., Life Assn. (1892), 132 N. Y. 378, 30 N. E. 739; Thompson v. Travelers Ins. Co. (1903), 11 N. Dak. 274. 91 N. W. 75; Stringham v. Mutual Ins. Co. (1904), 44 Or. 447, 75 Pac. 822; Blaeser v. Milwaukee, etc., Ins. Co. (1875), 37 Wis. 31, 19 Am. Rep. 747; Georgia Home Ins. Co. v. Rosenfield (1899), 95 Fed. 358, 37 C. C. A. 96; United States Life Ins. Co. v. Smith (1899), 92 Fed. 503, 34 C. C. A. 506; Lewis v. Phoenix, etc., Ins. Co. (1872), 39 Conn. 100; Hoyt v. Gilman (1811), 8 Mass. 336; Metropolitan Life Ins. Co. v. McTague (1887), 49 N. J. L. 587, 9 Atl. 766, 60 Am. Rep. 661; 2 Joyce, Insurance §1406.
The rule of requiring the return of premiums paid, applies in ease of suits in equity to cancel the policy, and not in actions at law upon the policy, and is asserted in numerous well-reasoned cases which' seem to me to declare the true rule. United States Life Ins. Co. v. Smith, supra; National Mut. Fire Ins. Co. v. Duncan (1908), 44 Colo. 472, 98 Pac. 634, 20 L. R. A. (N. S.) 340; Provident Sav., etc., Soc. v. Whayne’s Admr. (1908), 131 Ky. 84, 93 S. W. 1049; Venner v. Sun Life Ins. Co. (1889), 17 Can. S. C. 394.
It can scarcely be questioned that although the contract provides that fraud shall render the policy void, it is universally held not to be void, but voidable at the election of *660the insurer, and for that reason alone a risk attaches, subject to be defeated at the election of the insurer, and hence the reason for the rule of requiring tender of the premiums when equity is appealed to to cancel the policy, while on the other hand, when an action is brought at law on the policy, the insurer may stand on his legal defense, and the law leaves the insured where he has placed himself by his own fraud, from which he is not permitted to take advantage, or speculate upon the fact of his having paid money on a contract rendered fraudulent by his own conduct.