Court Opinion

ID: 5590815
Source: CourtListenerOpinion
Date Created: 2022-01-11 02:09:09.022891+00
Date Added: 2024-06-11T08:36:26.381521
License: Public Domain

Gilbert, Justice,
dissenting. This action upon a policy of life insurance in the amount of $2000 was brought in the city court of Carrollton by Mrs. Edna K. Yates against John Hancock Mutual Life Insurance Company. Yerdict and judgment were rendered for the plaintiff. Motion for a new trial was made by the insurance company, and overruled. The case was taken to the Court of Appeals, where the judgment of the trial court was affirmed. Motion for a rehearing was denied. The case is now before this court on certiorari. The policy involved was a New York contract, having been applied for, issued, and delivered in the State of New *222York. The first premium was paid by the insured, Hannon. Harlin Yates, in the State of New York, he being then a citizen and resident of that State. The insured died in the State of New York, and proofs of death were made in that State. The application for insurance was in writing and print, executed by the insured on May 2, 1932, and a copy of the application was physically attached to the policy, which was dated May 12, 1932. The insured entered a New York hospital on May 29, 1932, where he died of cancer on June 23, 1932. The insurance company denied liability, and offered to return the premium paid, upon the ground that material misrepresentations had been made by the insured in his application for insurance, as follows: (a) That the insured had falsely stated that he was in good health, (b) That he had falsely stated that he had not, within the past five years, had medical advice for any disease or disorder, (c) That at the time of the delivery of the policy he was not in sound health, (d) That he falsely stated that he had never had cancer or tumor, (e) That he had falsely stated that he had never had or been treated for indigestion. The insurance company also pleaded and introduced in evidence section 58 of the insurance laws of New York (Laws of 1906, c. 326), hereinafter quoted; also two decisions of the court of last resort of New York, interpreting and construing the said statute and which are referred to later herein. The proof of death shows that in April, 1932, prior to the date of the application, the insured was treated by a physician in New York City for a disease or disorder diagnosed as secondary anemia; and this evidence is uncontradicted. He was also treated by the same doctor on four occasions at the office of the same doctor. The proof of death shows that he died at the New York Hospital on June 23, 1932, of cancer of the intestine, and that the insured first began to show symptoms of this disease in March, 1932. Over objection of the company the plaintiff sought to prove a waiver against the company, by certain testimony of the insured’s wife that he had informed the agent that he had indigestion. The insurer contends that the contract sued on was a New York contract, that its validity is and should be governed by the law of New York, that on account of the material misrepresentations as above set forth and as made in his written application the company was not liable on the contract, that the same was void and unenforceable, and that no parol evidence of waiver was com*223petent or admissible. The Georgia Court of Appeals held that under the New York law the company was not liable,; but it also held that under the law of Georgia, where the agent of the insurance company incorrectly records the answers of the applicant to questions propounded in the application as to matters material to the risk, after being informed by the applicant as to the facts, the agent’s actual knowledge will be imputed to the insurer, and it will be held to be estopped from asserting the invalidity of the policy because of such incorrect statements as to material matters. The Georgia Court of Appeals also held that “The materiality of representations made by the insured in his application, under the laws of Georgia, is a question for the jury to decide. The manner in which this question shall be determined, being a matter affecting the remedy only, and not the validity, form, or effect of the contract, is to be controlled by the lex fori, and not by the lex loci contractus.” The insurance company contends that the Court of Appeals erred in holding as above stated; and numerous assignments of errors are contained in the. petition for certiorari, but it is not necessary to set them out in detail, as they axe all based on the contention that the statutes and decisions of the State of New York, rather than those of Georgia, should determine the effect of alleged false statements made in the application for insurance, the case being tried in the courts of this State.
“The validity, form, and effect of all writings or contracts axe determined by the laws of the place where executed.” Code of 1933, § 102-108. It is not disputed, and it was so held in the opinion of the Court of Appeals, that the law just quoted applies to the interpretation of the contract involved in the present case. But it is contended by the plaintiff and sustained by the Court of Appeals that as to the remedy for enforcing a right under the contract the lex fori, in this case the law of Georgia, should govern. With these abstract principles of law I readily concur; but as to the application of the lex fori in the present case I must respectfully differ. The basis of my dissent is that before there can be an application of the lex fori there must exist an antecedent right which is capable of enforcement by what is termed adjective or remedial law. The lex fori can apply only with reference to remedies. The lex loci contractus applies with reference to substantive rights. Or, as is often stated, “ Substantive law creates, defines, and regulates rights, as *224opposed to adjective law, which prescribes the method of enforcing rights or obtaining redress for their invasion.” 7 Words and Phrases (3d Series), 249. In the present case the substantive right, if any, in the plaintiff would be the right to recover on the policy of insurance which was issued to her deceased husband and in which she was made the beneficiary. In other words, is the contract of insurance valid, or is it void for reasons stated? The adjective law would be that which prescribes the suitable procedure and remedies to enforce such substantive right as may exist at law. Consequently it is necessary first to determine whether the insurance company has by contract placed itself in such a position that it is liable to the plaintiff. What do we find? The law of New York is that "Every policy of insurance issued or delivered within the State on or after the first day of January, 1907, by any life-insurance corporation doing business within the State, shall contain the 'entire contract between the parties, and nothing shall be incorporated therein by reference to any constitution, by-laws, rules, applications, or other writings, unless the same are endorsed upon or attached to the policy when issued; and all statements purporting to be made by the insured shall, in the absence of fraud, be deemed representations and not warranties. Any waiver of the provisions of this section shall be void.” It has been held as to the substantive law, in Minsker v. John Hancock Life Ins. Co., 254 N. Y. 333 (173 N. E. 4), and Travelers Ins. Co. v. Pomerantz, 246 N. Y. 63 (158 N. E. 21), that "The law of New York is that when a life-insurance policy is delivered to the insured, he must read it (or have the same read to him), and the application forming a part thereof; and if the application does not contain correct answers to the questions asked by the agent of the insurer, the insured is under a duty to so inform the insurer and have the same corrected, and when he fails to do this a recovery will not be permitted in an action on the policy by the beneficiary against the insurer, even though the insurer’s agent was informed of the facts and incorrectly recorded the answers of the applicant.” (Italics mine.) The Court of Appeals recognized' this substantive law of New York, and further held: "In this case it is undisputed that the insured visited a physician four times during April, 1932, prior to his death in June of that year, when he was suffering from indigestion,-and that the application shows that the question as to whether he had *225received medical advice during the past five years was answered in the negative. Under the New York law, as pronounced in the above decisions, a recovery could not be had by the beneficiary on this policy.” The above statement and the principle have not been questioned by this court. It necessarily follows that, the plaintiff having no substantive right to enforce, the question of remedial right does not arise. It seems to me that to assert to the contrary would be to contend for a legal fallacy: If the plaintiff has a right under the New York law, she has that right in Georgia. If under the law of New York the plaintiff has no right, she has no right in Georgia. In this instance both contracting parties resided in New York, the contract was signed in New York, the contract was delivered in New York, and the insured died in New York. From the premise above stated it follows, not only as a matter of logic but of law, that if the plaintiff has no right she has no remedy.
But while recognizing the New York law as controlling the validity of the contract, and recognizing the lack of sirbstantive right in the plaintiff under the New York law, the position taken by the majority seems to be tantamount to saying: No right exists in New York, but we are finding the plaintiff a right in Georgia by resorting to an adjective law which provides that in Georgia a jury may pass upon the materiality of misrepresentations; and if it found that such misrepresentations are not material, the plaintiff will have a right to recover, • notwithstanding that under a proper construction of the policy he would have no right either in New York or in Georgia. It seems to me that such a ruling would be 'illogical and unsupported by reason. The court would be over-leaping settled law in an effort to give a right which otherwise can not be seriously insisted upon. The basis of the view of the majority of the court, of the alleged right of the plaintiff to maintain an action in Georgia in the present case, seems to be the decision in Massachusetts Benefit Life Association v. Robinson, 104 Ga. 256 (supra). It will be found upon examination, however, that the cited case is not authority for the position taken, and that there is nothing in that case contrary to the fundamental requirement that for the application of adjective law there must exist an antecedent right under substantive law.. Quite consistently a defendant may in some case be held to the principle of lex fori while at the same .time being afforded the benefit of lex loci contractus. But the order *226of the application of the two is a very vital factor. As to the right of the plaintiff to recover, it must first be determined how he stands when the lex loci contractus is also put upon him. If he is found without any substantive right, the inquiry necessarily ends. If, on the contrary, he is found to have a substantive right, then and then only does the lex fori come into operation. In other words, the latter is subordinate to the first; or, simply stated, no right, no remedy, the converse of the legal maxim, “Ubi jus ibi remedium,” where there is a right there is a remedy. There is nothing in the Massachusetts Benefit Life Association case which suggests that the lex fori could be applied so far as to permit a holding that a life-insurance company, under a contract executed in New York, may be liable in Georgia notwithstanding that the contract expressly provides for non-liability upon mere false statements of the insured in reference to his physical condition and without reference to the materiality of the misrepresentations. A void contract can not legally be enforced anywhere. If the New York law and the terms of the policy had not made the policy void under the circumstances of the case, certainly the lex fori would govern in an investigation of the materiality of the misrepresentations; and in Georgia, in case of conflicting evidence on that point, the question would be decided by a jury. Mr. Justice Cobb, in the Massachusetts case, stood fast to the principle that a substantive right in a party under a contract executed in another State must be protected in Georgia. His remarks as to the lex fori were in reference to the question whether or not the policy should be held to be reinstated, not with reference to any statements made in the antecedent application for insurance, but with reference to the application for reinstatement. The right of the plaintiff being protected because of the clause which made the policy incontestable after three years, the statements made in the application for reinstatement were immaterial, not with reference to their own falsity, but as to whether they should overthrow a substantive right which had accrued to the insured by reason of three years having elapsed and the policy being thereby rendered incontestable. The lex fori was resorted to only on the question of reinstatement, and because Mr. Justice Cobb regarded it as a procedural phase of the case; and whether or not this court agree with him as to it being procedural, it is inescapable that the lex fori was applied on the sole *227theory that the inquiry was procedural or remedial. It necessarily follows that what was said is not applicable to the facts of the present case, where the defense of the insurance company is not barred, but where the right of the plaintiff is barred, by the terms of the contract. On the other hand, if it be said that he was laying down a general principle that he meant to be 'applied to the question of materiality of misrepresentations in an antecedent application for a policy of insurance, the non-liability under which could be set up, as distinguished from the case of the defendant in the Massachusetts Benefit Life Association case under a policy which was held incontestable by its terms, then what was said is not binding upon this court and is mere obiter.
It’is stated in the majority opinion that “Georgia has no such law as the New York statute of 1906. By this last enactment and construction of the court of last resort of New York, the courts are to determine the materiality of all representations made by the applicant for life insurance. By the law of Georgia, the jury are to determine the materiality of such statements as may be made by the applicant for life insurance.” It must be remembered that the New York statute was not passed with reference to procedural rights such as are involved in the language just quoted. It was to afford a substantive right to life-insurance companies, by providing that the policy shall contain the entire contract between the parties, thus eliminating any oral statements not reduced to writing and incorporated in the policy. Obviously this is independent of any question whether a jury or the ‘court should pass upon the question of materiality of misrepresentations. It is not, by itself or in connection with the two New York decisions hereinbefore mentioned, a subject-matter of comparison with the law of Georgia that a jury shall, where the evidence is conflicting, pass upon such a question. Being so, I do not think there is involved any question of whether the law of New York may be said to be given extraterritorial effect as to adjective or remedial law. As to a contract executed in another State, it is- provided in the Code of 1933, § 102-108, that “The validity, form, and effect of all writings or contracts are determined by the laws of the place where executed.” The provisions of the New York law above referred to relate to “the validity, form, and effect” of the contract of insurance under consideration, and therefore to such as is comprehended in the Code *228section just quoted. -For the reasons above given I am of the opinion that the judgment of the Court of Appeals should be reversed.
But, aside from the reasons above given, I am impelled by other considerations to dissent from the majority opinion. It is provided in the Code, §§ 56-820, 56-821: “Every application for insurance shall be made in the utmost good faith, and the representations contained in such application shall be considered as covenanted to be true by the applicant. Any verbal or written representations of facts by the insured to induce the acceptance of the risk, if material, must be true, or the policy shall be void. If, however, the party shall have no knowledge, but shall state on the representation of others, bona fide, and shall so inform the insurer, the falsity of the information shall not void the policy.”' In § 56-822 it is provided: “A failure to state a material fact, if not done fraudulently, shall not void the contract; but the wilful concealment of such a fact, which would enhance the risk, shall void the policy.” In Phillips v. New York Life Insurance Co., 173 Ga. 135, 138 (159 S. E. 696), it was said: “‘Where an applicant for life insurance wilfully conceals from the insurer the fact of a previous illness, such concealment will avoid the policy if the disease was of such a character as to enhance the risk.’ Ætna Life Insurance Co. v. Conway, 11 Ga. App. 557 (75 S. E. 915). ‘A material representation in an application for life insurance is one that would influence a prudent insurer in determining whether or not to accept the risk, or in fixing the amount of the premium in the event of such acceptance.’ Lee v. Insurance Co., 158 Ga. 517 (123 S. E. 737). It was held in Mutual Life Insurance Co. v. Bolton, 22 Ga. App. 566 (96 S. E. 442): ‘Representations made in an application for insurance which is attached to and made a part of the policy are considered as covenanted to be true by the applicant, and the policy will be voided by any variation which changes the nature, extent, or character of the risk. Any material representa-, tion of facts by the assured, to induce the acceptance of the risk, will void the policy if untrue; and while failure to state a material fact will not void a policy unless such failure be fraudulent, a wilful concealment of such a'fact, which would enhance the risk, will void the policy.’” It is beyond peradventure that, under the evidence, the insured was bound to know of his physical ill health, and that he sought and obtained medical advice, all of which facts were *229denied in his antecedent application for the policy of insurance of which-it was expressly made a part. Neither can it be reasonably contended that a man of his apparently good education, an executive of a tire company, did not know that such facts were very material to the risk-assumed by the company. The truth and materiality of representations 'are generally questions for the jury; but where all the testimony relating 'to a question of fact excludes every reasonable inference but one, the issue becomes an issue of law for determination by the court. Empire Life Insurance Co. v. Jones, 14 Ga. App. 647 (3) (82 S. E. 62); Mutual Life Insurance Co. v. Bolton, supra; Phillips v. New York Life Ins. Co., supra; New York Life Insurance Co. v. Hollis, 177 Ga. 805 (2), 807 (171 S. E. 288). In the case last cited it was held by six Justices: “Under the evidence a finding was demanded that the reinstatement of the policy which had lapsed for nonpayment of a premium should be set aside and canceled, because obtained by untrue answers to questions contained in the application, and because the misrepresentation was as to material facts.” It was said, as to a misrepresentation: “If she had had merely headaches and had been treated for those headaches by a physician, the insurance company should have been informed of the fact by a truthful answer to the question contained in her application. A misrepresentation as to whether the insured had been attended by a physician, whether for a headache or other ailment, was material, because the company would, upon being informed that she had been treated many times for headache, have had the right to investigate and ascertain for itself how serious was the ailment for which she had been treated.” In the same way, the insurance company in the present case had the right to know of the indigestion for which the insured had been treated, and to investigate and determine what other or -more serious ailment might have been the cause of it. The evidence in this case demanded a finding that the misrepresentations were material; and the court should have so found, and erred in referring the matter to the jury.
But it is urged that the wife testified that she was present when the application was taken and signed, and that she heard the insured inform the agent of the company of the fact that he had visited a physician because of indigestion; and it is contended that notice to the agent was notice to the insurance company. In con*230sidering the admissibility of such testimony, I do not think that it is really pertinent to consider the principle of lex fori. It is one thing to resort to that principle when there is a case before the court which admits of explanation of a written contract, and quite another to invoke it when the contract by its express terms shows a vested right in the insurance company. That right in the present case was to be free from liability on the basis of the contract. I can not, therefore, concur in any decision which deprives a party of such a right by an unwarranted resort to the principle of lex fori. Having such a vested right, the insurance company had a substantive right which this State is bound to protect. It was well stated long ago by Chief Justice Taney, in Bronson v. Kinzie, 1 How. 311, 315, 317 (11 L. ed. 143): “Whatever belongs merely to the remedy may be altered according to the will of the State, provided the alteration does not impair the obligation of the contract. But if that effect is produced; it is immaterial whether it is done by acting on the remedy or directly on the contract itself. In either case it is prohibited by the constitution. . . It was to maintain the integrity of contracts, and to secure their faithful execution throughout this Union, by placing them under the protection of the constitution of the United States. And it would but ill become this court, under any circumstances, to depart from the plain meaning of the words used, and to sanction a distinction between the right and the remedy, which would render this provision illusory and nugatory; mere words of form, affording no protection, and producing no practical result.” What could be the purpose of the testimony of the insured’s wife but to seek to overcome this constitutional protection of the vested right in the insurance company, to wit, the right to be free from liability in case the insured made any untrue statements in the written application and failed to call the attention of the company to the untruths recorded by the agent when the policy was delivered to the insured? The introduction of the wife’s testimony was unwarranted and plainly for the purpose of bringing about some sort of implied waiver or estoppel against the insurer. It is in violation of the constitutional provision as to each State giving full faith and credit to the public acts, records, and judicial proceedings in every other State as provided in article iv, sec. 1, of the Federal constitution. “A State statute is a public act within the meaning of the full faith and *231credit clause of the Federal constitution.” Bradford Electric Light Co. v. Clapper, 286 U. S. 145 (52 Sup. Ct. 571, 76 L. ed. 1026, 82 A. L. R. 696), and cit.
The New York statute which vests the insurance company with the right to be free from liability under the circumstances of this case is, therefore, a public act which this State is bound to protect in its judicial determinations. To permit the wife of the insured to introduce oral testimony to negative the written statements made in the application for insurance would be subversive of the principle above discussed. Nor, under the contract, would notice to the agent bind the principal even if it were true that the applicant had told the agent that he had been troubled with indigestion. The insurance law became a part of the contract of insurance, and, as said above, in sec. 58, e. 326, of the law of New York it was provided that the policy shall contain the entire contract. In Minsker v. John Hancock Mutual Life Insurance Co., supra, it was held, in reference to the aforesaid act/ that a recovery would not be permitted on the ground that the medical examiner incorrectly stated the applicant’s answers, or because the insured was unable to read or neglected to read the policy. The agent who took the application likewise had no authority to waive any of the conditions of the policy, and any statement to the agent contrary to those in the written application would not bind the company. As to the limitations of an agent’s power, as decided by this court, see Hutson v. Prudential Insurance Co., 122 Ga. 847 (50 S. E. 1000); Vardeman v. Penn Mutual Ins. Co., 125 Ga. 117 (54 S. E. 66, 5 Ann. Cas. 221); Bank of Commerce v. N. Y. Life Insurance Co., 125 Ga. 552 (54 S. E. 643); Rome Industrial Insurance Co. v. Eidson, 138 Ga. 592 (75 S. E. 657), and cit.; Reliance Life Ins. Co. v. Hightower, 148 Ga. 843, 845 (98 S. E. 469); New York Life Insurance Co. v. Patten, 151 Ga. 185 (106 S. E. 183); Davis v. Metropolitan Life Ins. Co., 161 Ga. 568 (131 S. E. 490); Darby v. Mutual Benefit Life Insurance Co., 165 Ga. 516 (141 S. E. 410). Eliminating the testimony of the wife of the insured, there was no conflict in the evidence, and it demanded a finding that the insured made false and fraudulent statements in his written application, and that they were very material to the risk assumed. For the reasons above given, I am of the opinion that the judgment of the Court of Appeals should be reversed.
*232There is nothing in Mechanics Ins. Co. v. Mutual Asso., 98 Ga. 262, or Johnson v. Ætna Insurance Co., 123 Ga. 404, 406 (supra), hich in any way conflicts with the principles contended for in this dissent. In the Johnson case it was expressly recognized that “It has also been held that where a policy contained a stipulation identical with the one in the present case, limiting the power of any agent of the company to make a waiver for the company, and providing that any waiver, to be valid, must be endorsed in writing on the policy, the insured can not in an action on the policy excuse his failure to comply with the conditions of the contract.” (Citing.)
Mr. Justice Hutcheson concurs in this dissent.