Court Opinion

ID: 9459133
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:11:29.809831+00
Date Added: 2024-06-11T17:36:02.076476
License: Public Domain

ROBB, Circuit Judge,
dissenting:
The question presented is whether on the pleadings and affidavits there was any issue of material fact which required a trial. Viewing the record in a light most favorable to Mrs. Blair, I think the District Court properly awarded summary judgment to the insurance company.
Mrs. Blair contends that her husband signed the application for insurance before it was completed; that he answered all questions truthfully and in good faith; that the insurance agent recorded on the application answers in part contrary to the true, full and correct answers given by Mr. Blair; and that the agent, without giving Mr. Blair an opportunity to read the application, forwarded it to the insurance company for approval.
As a matter of law, these contentions are irrelevant because twenty months before he died Mr. Blair received the insurance policy with a copy of the completed application attached. (Appellant’s App. at 1.) I think the sound doctrine is that an insured is bound by misstatements or omissions appearing in an application attached to the policy and returned to him. This rule has been applied in many cases; see for example: New York Life Ins. Co. v. Fletcher, 117 U.S. 519, 6 S.Ct. 837, 29 L.Ed. 934 (1886); Mutual Life Ins. Co. v. Hilton-Green, 241 U.S. 613, 36 S.Ct. 676, 60 L.Ed. 1202 (1916) ; Layton v. .New York Life Ins. Co., 55 Cal.App. 202, 202 P. *1365958 (1921); Minsker v. John Hancock Mut. Life Ins. Co., 254 N.Y. 333, 173 N. E. 4 (1930); Metropolitan Life Ins. Co. v. Alterovitz, 214 Ind. 186, 14 N.E.2d 570 (1938); Hein v. Family Life Ins. Co., 60 Wash.2d 91, 376 P.2d 152 (1962); Paxton v. Lincoln Income Life Ins. Co., 433 S.W.2d 636 (Ky.1968); Marine v. Allstate Ins. Co., 12 Ariz.App. 229, 469 P.2d 121 (1970); Smith v. Republic National Life Ins. Co., 13 Ariz. App. 228, 475 P.2d 518 (1970).
In New York Life Ins. Co. v. Fletcher, 117 U.S. 519, 6 S.Ct. 837, 29 L.Ed. 934 (1886), the Supreme Court held in circumstances similar to those in this case that the insured had a duty to read the application and was bound by it. In an opinion by Mr. Justice Field, the Court said:
It would introduce great uncertainty in all business transactions if a party making written proposals for a contract, with representations to induce its execution, should be allowed to show, after it had been obtained, that he did not know the contents of his proposals, and to enforce it, notwithstanding their falsity as to matters essential to its obligation and validity.
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Assuming that the answers of the assured were falsified, as alleged, the fact would be at once disclosed by the copy of the application, annexed to the policy, to which his attention was called. He Would have discovered by inspection that a fraud had been perpetrated, not only upon himself but upon the company, and it would have been his duty to make the fact known to the company. He could not hold the policy without approving the action of the agents and thus becoming a participant in the fraud committed. The retention of the policy was an approval of the application and of its statements. The'consequences of that approval cannot after his death be avoided. 117 U.S. at 529, 534, 6 S.Ct. at 842, 844.
Two Maryland cases, Commercial Casualty Ins. Co. v. Schmidt, 166 Md. 562, 171 A. 725 (1934), and Metropolitan Life Ins. Co. v. Samis, 172 Md. 517, 192 A. 335 (1937), also express the rule and the reasoning that we ought to follow. In the Schmidt case the court held:
Taking the testimony on behalf of the plaintiff as true, it must be assumed that the agent urged the insurance upon him, and filled in the application for it, and, for the increased or final policy now sued on, foisted on his company an application other than one which the plaintiff signed; that the plaintiff did not know, of the making of the false answers because he did not see those in the original forms of application to his company, and did not read the final policy containing them after he had received it. He knew, however, as he must have known, that he was procuring insurance against disability from accident or loss of health, and he did receive the policy, which directed his attention to the application, held it, and paid no attention to it during thirteen months subsequently, and as a consequence was not aware of the falsity in the representations as to his condition, on which the policy was procured. This court is unable to see any ground for distinguishing the case from the earlier cases in which the plaintiff was held to have become a participant by his neglect to perceive and correct the fraud. 166 Md. at 571-572, 171 A. at 729.
The court reached a similar conclusion in the Samis case. As the ^Supreme Court had done in the Fletcher case (117 U.S. at 531-533, 6 S.Ct. 837), the Maryland court quoted with approval from Ryan v. World Mut. Life Ins. Co., 41 Conn. 168, 172 (1874): “[t]he law requires that the insured shall not only *1366in good faith, answer all interrogatories correctly, but shall use reasonable diligence to see that the answers are correctly written. It is for his interest to do so, and the insurer has a right to presume that he will do it. He has it in his power to prevent this species of fraud and the insurer has not.” 172 Md. at 526,192 A. at 339.
The provisions of D.C.Code § 35-203 (1967), passed in 1901, also have an important bearing on the responsibilities of the policyholder.1 That statute requires an insurance company to include with the issued policy a copy of the application made by the insured, so as to set forth the whole contract. “The purpose of the provision is that the insured shall be furnished with a copy of the application, upon the representations in which the validity of the policy and its binding force may be made to depend.” Metropolitan Life Ins. Co. v. Burch, 39 App.D.C. 397, 405 (1912).
In Minsker v. John Hancock Mut. Life Ins. Co., 254 N.Y. 333, 173 N.E. 4 (1930), the New York Court of Appeals, interpreting a similar statute, faced a situation almost identical to the one confronting us. The court had held in Sternaman v. Metropolitan Life Ins. Co., 170 N.Y. 13, 62 N.E. 763 (1902), that an insurance company, given truthful answers which would make a policy void, could not escape liability under the policy when those answers were not correctly recorded in the policy or application. The legislature subsequently passed a statute that in effect required the company to attach a copy of the application to the policy delivered to an insured. Applying this statute in the Minsker case, the New York court unanimously held:
The statutory rule superseded the court-made rule. . . . When an insured receives a policy, it is his duty to read it or have it read, and, if an application incorporated therein does not contain correct answers to the questions asked by the medical examiner it is his duty to have it corrected. In such circumstances a recovery will no longer be permitted because the medical examiner incorrectly recorded the applicant’s answers or because the insured was unable to read or neglected to read the policy. Minsker v. John Hancock Mut. Life Ins. Co., 254 N.Y. 333, 337-338, 173 N.E. 4, 5 (1930).
Rulings so interpreting similar statutes have been made in other jurisdictions. The effect of these decisions is that in a case such as the one at bar the doctrine of equitable estoppel may not be invoked against the insurance company. Metropolitan Life Ins. Co. v. Alterovitz, 214 Ind. 186, 14 N.E.2d 570 (1938); Gillan v. Equitable Life Assurance Soc., 143 Neb. 647, 10 N.W.2d 693 (1943); Comer v. World Ins. Co., 212 Or. 105, 318 P.2d 916 (1957). The rationale is that “[t]he relationship demands fair dealing by both parties.” Mutual Life Ins. Co. v. Hilton-Green, 241 U.S. 613, 624, 36 S.Ct. 676, 680 (1916); Note, 35 So.Cal. L.Rev. 506, 510-11 (1962).
The policy reflected in these judicial decisions and legislative pronouncements is grounded in the reality of business transactions. It recognizes that the insured “ ‘ . . . has it in his power to prevent this species of fraud and the insurer has not.’ ” Metropolitan Life Ins. Co. v. Samis, 172 Md. 517, 526, 192 A. 335, 339 (1937). It prevents collusion between agents and those seeking insurance. Id. “It protects the company from paying unjust and fraudulent claims, and at the same time protects honest policyholders from paying in*1367creased premiums on account of payments to dishonest and fraudulent policyholders.” Metropolitan Life Ins. Co. v. Alterovitz, 214 Ind. 186, 14 N.E.2d 570, 577 (1938). On the other hand, in my judgment the rule espoused by the majority abandons a long and sound line of precedent and ignores the effect of D.C.Code § 35-203 (1967) which establishes duties and responsibilities in insurance transactions. It overlooks the ability of the policyholder to prevent a fraud, and introduces uncertainty into business relationships.2
Mr. Blair received his insurance policy and application on May 20, 1968 and held them without protest until his death one year and eight months later. (Appellant’s App. at 1.) The application mentions some medical treatment for the insured, but it contains no reference to his treatment for high blood pressure, hypertension and obesity, even though several questions were clearly designed to elicit such information. This is patent falsification and would have been noticed in even the most cursory reading of the application. This falsification “materially affected the acceptance of the risk or hazard assumed by the company” within the meaning of D. C.Code § 35-414 (1967). In my view the insured, as a matter of law, had a duty to read the policy and application and to inform the company of such false or omitted statements about his medical history. D.C.Code § 35-203 (1967). His failure to do so made him “a participant in the fraud” and thereby voided his policy. New York Life Ins. Co. v. Fletcher, 117 U.S. 519, 534, 6 S.Ct. 837, 29 L.Ed. 934 (1886).
I dissent.

. “Each life insurance company, benefit order, and association doing a life insurance business in the District of Columbia shall deliver with each policy issued by it a copy of the application made by the insured so that the whole contract may appear in said application and policy, in default of which no defense shall be allowed to such policy on account of anything contained in, or omitted from,, such application. (Mar. 3, 1901, 31 Stat. 1294, eh. 854, § 657; June 30, 1902, 32 Stat. 534, oh. 1329.)” D.C.Code § 35-203 (1967).

. Heake v. Atlantic Oas. Ins. Co., 15 N.J. 475, 105 A.2d 526 (1954) and John Hancock Mutual Life Ins. Co. v. Schwarzer, 354 Mass. 327, 237 N.E.2d 50 (1968), cited by the majority, may be distinguished on the facts. Thus in the Heake case Chief Justice Vanderbilt said that “[t]he result might be different . if the application had been attached to the policy where such documents frequently are to be found . . . .” 15 N.J. at 484, 105 A.2d at 531. In the Schwarzer case the court observed that “[e]ven if [the insured] had read the application with the policy she would not necessarily have been informed of a defect.” 354 Mass, at 331, 237 N.E. at 53.