Mutual Life Insurance v. Leaksville Woolen Mills, 172 N.C. 534 (1916)

Nov. 22, 1916 · Supreme Court of North Carolina
172 N.C. 534


(Filed 22 November, 1916.)

1. Appeal and Error — Issues—Trials.

Issues- submitted to the jury for their determination of the matters involved arising from the pleadings' and evidence are not reviewable on appeal when they are so framed that the parties have opportunity to present thereunder every material phase of their contention.

2. Insurance — Witnesses—Policyholders—Interest.

Where a policy of life insurance is sought to he set aside for material misrepresentations made by the insured in answering the questions contained in his application therefor, testimony of a physician, a policyholder, affecting the alleged misrepresentations, is not objectionable on account of interest, the interest to disqualify being that in the result of the action; and such as he has, if any, falls under the doctrine of, cLe minimis non curat lex.

3. Insurance, Life — Application—False Representations — Material Representations — Contract—Judgment. *

Where the application made by the insured for a policy of life insurance declares that the statements the applicant makes below are true and offered to the company as an inducement to issue the proposed policy, and following the questions and his answers, he certifies that he has read them, and that they are fully and correctly recorded, and there *535is no evidence that the company or its agents were aware of any facts to the contrary, all of the misrepresentations made as to the prior attendance of physicians, disease, surgical operations, and the like, are deemed material; and where their falsity has been established by the verdict of the jury, a further issue finding they were not material should be set aside and the policy declared invalid as a matter of law, with judgment accordingly, but upon condition that the company return the payments for premiums thereon it has received, with interest.

4.Same — Opinion—Questions for Jury.

Where the applicant for a policy of life insurance declares his answers to the questions asked in his application are material and true, and it is made to appear that he has therein misrepresented facts relating to disease, attendance of physicians, and surgical operations performed on him, the matters so misrepresented are material under the contract of the parties, they must have been known to the applicant at the time, and do not call for the exercise of his opinion, requiring the jury to pass upon an issue as to whether the deceptions were intentional, or made by mistake in good faith, or otherwise.

Two civil- actions consolidated and tried as one at February Term, 1916, of Superior Court of KocKingham, before 'Webb, J., upon these issues:

1. Did J. Sanford Patterson represent in bis application for tbe insurance policies sued on tbat be bad bad no illnesses, diseases, injuries, or surgical operations since cbildbood, except fracture of tbe femur in 1885 ? Answer: “Yes.”

2. Was tbe said representation true? Answer: “No.”

3. Did said J. Sanford Patterson represent in bis application for tbe insurance policies sued on tbat be bad not been prescribed for or treated by or bad consulted any physician or practitioner in tbe past five years before tbe date of said application? Answer: “Yes.”

4. "Was tbe. said representation true? Answer: “No.”

5. Did tbe said J. Sanford Patterson in said application for tbe insurance policies sued on represent, in answer to tbe inquiry in tbat behalf, that be bad stated all illnesses, diseases, injuries, or surgical operations which be bad bad since cbildbood? Answer: “Yes.”

6. Was said representation true? Answer: “No.”

■ 7. Did said J. Sanford Patterson, in answer to an inquiry in tbat behalf, state tbat be bad named every physician and practitioner consulted by him in five years next previous to tbe said application, with dates of consultation? Answer: “Yes.”

8. Was said representation true? Answer: “No.”

9. Did Dr. W. E. Eeaves. on or about 29 July, 1913, perform surgical operations on said J. Sanford Patterson for ethmoiditis and maxillary sinusitis? Answer: “Yes.”

*53610. Did Dr. W. 0. Banner, on or about 15 May, 1909, perform a surgical operation on the said J. Sanford Patterson for polypus? Answer': “Yes.”

11. Did the said J. Sanford Patterson consult Dr. W. P. Reaves, a physician, within five years prior to the date of his application for the policy sued on? Answer: “Yes.”

12. Did the said J. Sanford Patterson consult Dr.- C. W. Banner, a physician, within five years prior to the date of his application for the policy sued on? Answer: “Yes.”

13. Were the said representations material to the risks applied for to be assumed? Answer: “No.”

• Upon motion of plaintiff, the court set aside the finding on the thirteenth issue and held as matter of law that the representations were material, and rendered judgment cancelling the two policies of insurance upon return of the premiums paid thereon, with interest. Defendants appealed.

James H. Pou, II. R. Scott, King & Kimball for plaintiff.

Pharr & Bell, Ivie & Trotter, Lindsay Patterson for defendants.

Beown, J.

The purpose of the action is to cancel two policies of insurance issued by plaintiff upon the life of James S. Patterson, one for the benefit of his estate and the other for the Leaksville Woolen Mills.

The principal question- presented upon this appeal relates to the effect of the statements made by the insured in his applications for the insurance. It is contended that these statements constituted a part of the contract, were material to the risk, and, being untrue, void the policies.

The defendants excepted to the issues and tendered others. It is well settled that the discretion of a trial judge in settling issues is not reviewable, provided they are so framed that the parties have opportunity to. present every material phase of their contentions. Cunningham v. R. R., 139 N. C., 427; Redmond v. Mullenax, 113 N. C., 505.

The issues submitted present every controverted fact necessary to a decision of the case, while those tendered by defendants are very general in their terms and not so well calculated to focus the minds of the jurors upon the exact facts alleged on one side and denied on the other as those submitted by the judge.

The defendants excepted to the testimony of Dr. Sweeney upon the ground 'that he is a policy-holder in plaintiff company and James S. Patterson is insane. The testimony of witness is material and relates to transactions with Patterson in regard to the applications for the *537policies. He is not so “interested in tbe event of the action” as to disqualify him. The interest which disqualifies is a legal and pecuniary interest, Jones v. Emory, 115 N. C., 163, and it must be in the event of the action. Bunn v. Todd, 107 N. C., 266; Mull v. Martin, 85 N. C., 406; Helsabeck v. Doub, 167 N. C., 205.

The rights of the witness as a policy-holder were not affected, so far as the evidence discloses, by the result of this action. His policy was subject to forfeiture for nonpayment of premiums and to many other contingencies usually provided in such instruments. He had no' interest in the event of this action, or, if so, it is so infinitesimally small as to be impossible of ascertainment, and comes within the maxim, Be minimis non curat lex.

It is unnecessary to discuss the many other exceptions relating to the evidence, as we think they are without merit and unimportant in the view we take of the ease. The facts are practically undisputed and the verdict of the jury upon the issues submitted could not well have been otherwise.

Before either of the policies were issued the insured signed an application which contained the following language: “All the following statements and answers, and all those that I make to the company’s medical examiner in continuation of this application, are true and are offered to the company as an inducement to issue the proposed policy. I especially waive, on behalf of myself and of any person who shall have or claim any interest in any policy issued hereunder, all provisions of law forbidding any physician or other person who has attended or examined me, or who may hereafter attend or examine me, from disclosing any knowledge or information which he thereby acquired.”

The application contained a report to be made by the medical examiner. The questions were to be propounded by him. to the applicant and answered by the latter.

At the end of the statement to the medical examiner is the following certificate of the insured:

I certify that each and all of the foregoing statements and answers were read by me, and are fully and correctly recorded by the medical examiner. Jahes SaNfoRd PattersoN.

Upon the faith of this application and these answers, and on the report of the medical examiner, plaintiff issued and delivered the policies in August, 1913, and the defendants paid the first premium.

There is no evidence whatever that plaintiff or its agents knew of any facts contrary to those stated by insured in his application.

*538Tbe jury found tbat tbe representations alleged to have been made by tbe insured were made by bim to plaintiff’s medical examiner, and tbat eaeb and every of said statements were untrue. Tbe jury found tbat on or about 29 July, 1913, Dr. W. P. Reaves performed a surgical operation on insured for etbmoiditis and maxillary sinusitis; and tbat on or about 15 May, 1909 (witbin tbe period of five years), Dr. W. C. Banner performed a surgical operation on tbe said insured for polypus; and tbat tbe insured did consult Drs. Reaves and Banner.

It appears in tbe evidence of defendants’ witness tbat tbe insured is now in tbe .State Hospital in a hopeless condition brought about by a chronic disease of long standing.

Tbe court committed no error in setting aside tbe verdict upon tbe thirteenth issue and rendering judgment upon tbe other findings for plaintiff.

Tbe materiality of tbe representations is not open to dispute. It does not depend upon inferences drawn from facts and circumstances to be proved, in which event tbe question is one for tbe jury. A different rule prevails where tbe representations are in tbe form of written answers made to written questions. In such ease tbe questions and answers are deemed to be material by tbe acts of tbe parties to tbe contract. McEwen v. Life Ins. Co., 139 Pac., 242. It is not necessary tbat tbe misrepresentation should be intentional. “Tbe company is entitled to have tbe policy canceled on bringing suit witbin tbe proper time, especially where, even though tbe misrepresentation was not intentional, tbe policy when delivered plainly discloses tbe untruthfulness of tbe representation.” Life Ins. Co. v. Houpt, 113 F. R., 572; New York Life Ins. Co. v. Fletcher, 117 U. S., 519.

This case is cited with approval by this Court in Alexander v. Ins. Co., 150 N. C., 538.

Tbe most recent decision on this point is the case of Mutual Life Ins. Co. of New York v. Hilton-Green and others, decided by tbe Supreme Court of tbe United States, and reported in tbe Supreme Court Reporter Advance Sheets, vol. 36, No. 16,. pages 624 to 728, where tbe identical questions here were asked and tbe policy invalidated. Mr. Justice McReynolds, speaking for tbe Court, said: “Considered in tbe most favorable light possible, tbe above quoted incorrect statements in tbe application are material representations, and, nothing else appearing, if known to be untrue by assured when made, invalidate tbe policy without further proof of actual conscious design to defraud.”

In tbat case there was verdict and judgment against tbe insurance company in tbe court below, which was reversed.

Tbe same doctrine is laid down in Jeffries v. Ins. Co., 22 Wall., 47. There tbe Supreme Court of tbe United States said: “Tbe proposition *539at tbe foundation of this point is this, that tbe statements and declarations made in tbe policy shall be true. There is no place for argument either that tbe false statement was not material to tbe risk or that it was a positive advantage to tbe company to be deceived by it. . . . Tbe company deems it wise and prudent that tbe applicant should inform them truly whether be has made any other application to have bis life insured. . . . Tbe same is true of its inquiry whether .the party is married or single. Tbe company fixes this estimate of its importance. Tbe applicant agreed that it is thus important by accepting this test. It would be a violation of tbe legal rights of tbe company to take from it its acknowledged power thus to make its own opinion tbe standard of what is material, and to leave that point to tbe determination of a jury. Tbe jury may say, as tbe counsel here argues, that it is immaterial whether tbe applicant answers truly if be answers one way, namely, that be is single, or that be has not made an application for insurance. Whether a question is material depends upon tbe question itself. Tbe information received may be immaterial. But if under any circumstances it can produce a reply which will influence tbe action of tbe company, tbe question cannot be deemed immaterial.”

Tbe same Court in tbe case of Ætna Life Ins. Co. v. France, 92 U. S., 512, said: “We decided in tbe case of Jeffries v. Ins. Co. that tbe question of materiality of tbe answer did not arise; that tbe parties bad determined and agreed that it was material; that their agreement was conclusive on that point; and that tbe only questions for tbe jury were, first, was tbe representation made? second, was it .false?”

Tbe same doctrine is laid down in Mouler v. Ins. Co., 111 U. S., 335; Ins. Co. v. Roddin, 120 U. S., 189; Ins. Co. v. Moore, 231 U. S., 543; May on Ins., sec. 181.

Tbe decisions of this Court are in conformity with tbe decisions above referred to. In Bryant v. Ins. Co., 147 N. C., 184, this Court held that tbe answers to specific questions like those asked here are material as a matter of law. Gardner v. Ins. Co., 163 N. C., 367; Alexander v. Ins. Co., 150 N. C., 536; Schas v. Ins. Co., 166 N. C., 55; Powell v. Ins. Co., 153 N. C., 124 and 128; Hardy v. Ins. Co., 167 N. C., 22; Lummus v. Ins. Co., 167 N. C., 654.

Nothing herein contravenes tbe well settled doctrine that where a question is asked which must be necessarily answered by an opinion, tbe mistake of tbe applicant in answering such question, made honestly and in good faith, will not avoid tbe policy. This is not so, however, where tbe questions asked relate to facts within' tbe knowledge of tbe applicant and not within tbe knowledge of tbe company, and where *540tbe questions and answers are material. In sucb case the applicant must answer truthfully. The purpose of such questions is twofold: first, to elicit information, which the company regards important; second, to give the sources from which the company may obtain further information. The parties themselves have made these questions and answers material. Their materiality depends not only upon their own purport, but upon the fact that the contracting parties have agreed that the written application containing these questions and answers is the basis upon which the contract of insurance shall be made or refused.

No error.