Court Opinion

ID: 9653877
Source: CourtListenerOpinion
Date Created: 2023-08-23 17:57:44.742884+00
Date Added: 2024-06-11T18:13:03.165450
License: Public Domain

KENYON, Circuit Judge
(dissenting).
My firm conviction that the trial court was right in directing a verdiet for the defendant in this case forces me to dissent from the opinion of the majority. The motion to direct a verdiet was on the ground that the applicant made material misrepresentation’s in answering question 10 of the-application. I think the assigned reason of the motion is immaterial if the judgment below was in fact a right one. Stipcich v. Insurance Co., 277 U. S. 311, 48 S. Ct. 512, 72 L. Ed. 895.
The insured received from defendant three policies of life insurance, aggregating $25,-000. Applications were signed on July 27, 1928. The policies were dated August 11, 1928, and were delivered to insured on August 21, 1928. The insured died on November 18, 1928. Insured had $7,000 of insurance on his life prior to these policies.
The policies provided in article 10 that statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties. In my judgment there was no absence of fraud in this matter. The evidence seems overwhelming that the whole performance was an ingenious fraud practiced upon the insurance company, and hence the statements were not merely representations. However, that is not of controlling importance. The applications for the policies contained as stated in the majority opinion questions and answers, the important ones being 9 and 10. The application contained the following:
“I hereby certify that the above answers and statements are made by me, that they are correctly and fully recorded by the Medical Examiner, and that no material circumstance or information has been withheld or omitted concerning my past and present state of health and habits of life.
“Dated at, El Dorado Arkansas,, this 27, day of July 1928.
“In presence of L. L. Purifoy, M. D. Proposed Insured must sign here ‘John Hawkins Wharton.’ ”
I refer to some of the evidence. Mrs. Goodwin, who conducted the Purifoy-Mayfield Clinic, testifies that, in the late winter of 1927 or early spring of 1928, the insured came to the clinic in company with his brother (Dr. Wharton); that she made pictures of his urinary tract and 'examined a specimen of his urine; that Dr. Wharton directed her to make X-ray picture of the urinary tract; that insured came to the clinic alone quite frequently and left specimens of urine on different occasions; that she made these examinations for a week or ten days and made the reports to Dr. Wharton; that the next time Dr. Wharton was there was the 22d or 23d of August, 1928; that he brought a specimen for the urinalysis test; that a report on that was made to Dr. Mayfield, and within a day or two insured went to Hot Springs. These tests showed a very bad condition of the-kidneys and bladder, to which reference is hereinafter made.
Dr. Wharton testified as to the general examinations of his brother, the insured, of the making of X-ray pictures of his brother’s urinary tract; that he took him to the clinic the first time he was there; that his brother brought Mrs. Goodwin specimens for analysis of his urine several times, and that Mis. Goodwin was acting for him in making these urinalyses; that his brother told him of having blood in the urine. Dr. Wharton testified there was no doubt that insured had consulted him as a physician during the five-year period. The evidence shows he doetored him for kidney and bladder trouble, and that he was troubled about his brother’s condition right up to the time the policies were issued.
The question involved is not alone the knowing false answers to questions 9 and 10. but whether insured fraudulently withheld material information from the insurance company as to his past or present condition of health. As to the alleged false answers, it is of course true that material false statements in an application for insurance as to consulting a physician relieve an insurance company from liability if the insured knew that the statements were false. New York Life Ins. Co. v. McCarthy (C. C. A.) 22 F.(2d) 241; *45Security Life Ins. Co. of America v. Brimmer (C. C. A.) 36 F. (2d) 176; Bankers’ Reserve Life Co. v. Matthews et al. (C. C. A.) 39 F. (2d) 528.
Question 9 is as follows:
“Have you consulted a physician or practitioner for or suffered from any ailment or disease of: * * *
“e. Stomach, Intestines, Liver, Kidneys, or Bladder?
“Yes, Appendicitis, 1 attack, Date? 1913, Duration? 1 month. Severity? Acute. Results? Appendectomy — without drainage— Recovery.”
Did the term appendicitis give any information as to his kidney or bladder trouble? Is the answer to question 10 any fairer or more honest? He was asked in 10 if he had been treated by any physician or practitioner not named above. He said, “No.” No physician was named above, and the evidence shows he had consulted his brother frequently, and he consulted other physicians about the time the policy was issued, though perhaps shortly thereafter. He had had many examinations in the five months preceding that time at the Purifoy-Mayfield Clinic. Why did he not say so in answer to interrogatory 10 ? Why did he not tell about the examinations of his blood and urine by Mrs. Goodwin? It cannot be said that his brother was not another physician than referred to in question 9, because there was no particular physician referred to in 9. The answer to 10 is therefore clearly false, though both answers show a considerable cunning in the effort to conceal the truth as to insured’s physical condition. These answers conveyed no information to the company as to his real condition, which he must have known. All he disclosed was that he had been treated for appendicitis. It was a partially true answer, which may be more deceptive than a falsehood. Truth may be concealed, as well as revealed, by language. The purpose of the application was to secure facts as to his physical condition. He carefully.and ingeniously concealed them. How can it be said that no material fact was knowingly withheld from the insurance company by the insured as to the condition of his health? This relationship demanded good faith both from the insured and from the insurance company. The Supreme Court in Mutual Life Insurance Co. v. Hilton-Green, 241 U. S. 613, 624, 36 S. Ct. 676, 680, 60 L. Ed. 1202, said: “Beyond doubt an applicant for insurance should exercise toward the company the same good faith which may be rightly demanded of it. The relationship demands fair dealing by both parties.” The same point is stressed in Stipcich v. Metropolitan Life Insurance Co., 277 U. S. 311, 48 S. Ct. 512, 72 L. Ed. 895; and in Adler v. New York Life Ins. Co., 33 F.(2d) 827, 832, this court says: “Also, the evidence leaves no doubt of the materiality of the matters concealed. In addition, it is difficult to imagine an honest frame of mind in an applicant who thinks it would be immaterial for an insurer to know that he had been under practically continuous treatment for more than two years immediately preceding and at the time of the application.” The language of this court in Mutual Life Ins. Co. of New York v. Hurni Packing Co., 260 F. 641, 645, is interesting: “A chief part of any insurance company’s business is a discrimination in selecting risks lest the natural and average losses may be exceeded. The purpose of the inquiries made as to prior consultations or treatments-by physicians is to furnish to a life insurance company the information, either that the applicant has had continuous prior good health or the names of the practitioners consulted, so that the company may decide what further inquiries should be made in view of such disclosures. That such consultations were for what seemed to the applicant or his physician but trivial ailments is beside the question. It is the materiality to the company’s investigation and decision as to acceptance of the risk that is involved.. Inquiries as to prior attacks necessitating the attendance of physicians may disclose information not to be found by the medical examiner’s own efforts. The history of the patient may be quite essential to supplement a physical examination.”
Could anything be conceived more untruthful in an application, in view of all the facts, than a statement that nothing was concealed from the company concerning the insured’s past and present state of health ? Eor seven months prior to the application he had been consulting his brother, a physician, and having prescriptions given him. Albumin and pus in the urine are not small or trivial matters, as are sometimes referred to by the courts. They are more than colds and headaches, they are symptoms of incipient Bright’s disease, and a man associating so closely with a doctor brother as this insured did and in constant communication with him must have known his condition. It is contrary to human nature to think it was not fully discussed between them. On his first visit to Mrs. Goodwin’s laboratory in the early spring of 1928, she found albumin, blood, and pus cells in his urine. Was not *46the company in any semblance of fair treatment entitled to know this before issuing policies for $25,000 ?. She reported to Dr. May-field on the 23d or 24th of August, almost exactly the date of the policies, that her tests then showed a heavy increase of albumin. Was a man in this condition a well man on August 22d When the policies were given ? If the insurance, company had known of the first examination and the pus and the blood in the urine, would it have issued the $25,000 of policies on the life of the man who had taken only $7,000 of insurance when he was well? After the discovery at the second examination that the albumin had greatly increased over what it was at the first examination, the insured with his $25,000 policies, which he could not have secured except by deceiving the insurance company, went to Hot Springs, Ark.,for treatment, and within three months died from Bright’s disease, the very thing that the evidence -shows -he had when the policies were issued. Was there no deception' practiced upon the company? The testimony of his own brother, naturally somewhat reluctantly given, condemns the transaction. Insured consulted him within three days preceding the applications for the policies. If that fact had been disclosed in the applications, would any policies have been issued? In Stipcich v. Metropolitan Life Ins. Co., 277 U. S. 311, 322, 48 S. Ct. 512, 515, 72 L. Ed. 895, the Supreme Court said: “But the respondent’s answer sets up that certain answers given in the written application as to the insured’s recovery from his earlier illness, its--recurrence, and with respect to consultation of -physicians, were false and known by him to be false when he signed the application. It is now suggested that Stipcich in his application made a positive misrepresentation regarding a visit to a physician the day before he applied for insurance. If that were clearly established we would consider it necessary to affirm the judgment below, although we think the rulings on which it was based erroneous.”
My mind is unable to reach any other conclusion than that the insured made false answers to interrogatories 9 and 10 of the applications, and that he knew they were false; that his statement that no material circumstance or information had been withheld or omitted concerning his past and present state of health was absolutely false and known by him to be false. Prom the evidence it is also apparent that he was not in good health on the date of the delivery of the policies and that he. knew he was not in good health. It was his duty to make that fact known to the company. This whole transaction smacks of fraud. "When insured was well he needed only $7,000 of insurance; when marked for death by Bright’s disease he secured $25,000 more by fraudulently concealing from the insurance company his true condition. No one would claim that these policies would have been issued if the company had known his true condition of health. It was his business to tell it the truth. He did not do so. Why then should his beneficiaries profit by this fraud? Appellant is not entitled to recover as a matter of law. It seems to me the trial court on this record could not have permitted a verdict for plaintiff to stand, and hence did right in instructing a verdiefc,