86 F.2d 780 | 5th Cir. | 1936
Bankers Life Company brought a bill in the District Court against Albert W. Sone and his wife Anne L. Sone to cancel a policy of life and disability insurance issued to Sone on- May 8, 1933, in which the wife was beneficiary, principally on the ground that the application stipulated that no liability should be incurred under the policy until delivered to- the insured and paid for by him during his lifetime and good health, and that he was not then or since in good health but was suffering with syphilis. The respondents by cross-bill sought a decree establishing the policy because the insurer knew or was put on enquiry as to the truth when it issued the policy, and especially when it received the second premium on Dec. 8, 1933, and waived any right to repudiate the policy on such ground, and sought a recovery of disability benefits because of a nervous breakdown of the insured in August, 1933, which resulted in his insanity. The insured was represented by guardian ad litem. On evidence which is in no serious conflict the court made findings of fact and entered a decree setting up the policy and ordering payment of the disability benefits. The insurer’s appeal attacks both conclusions.
The application is attached to and made a part of the policy. It represents that the
The agreement that no liability shall be incurred under a policy until delivered to the insured while in good health is a valid one and not contrary to the insurance statutes of Texas. The insured’s ignorance of his disease does not validate the policy. Wright v. Federal Life Ins. Co. (Tex. Com. App.) 248 S.W. 325; Southern Surety Co. v. Benton (Tex.Com.App.) 280 S.W. 551. See, also, Person v. Ætna Life Ins. Co. (C. C.A.) 32 F. (2d) 459, and New York Life Ins. Co. v. Wertheimer (D.C.) 272 F. 730. The District Court found that Sone was not in good health but had syphilis when the policy was issued and delivered, but that he did not know it, and that his answers in his medical examination were bona fide, but that from them the insurance company knew or was so put on inquiry that it was bound to know that his failing sight, not being due to accident or injury, was due to disease, probably syphilis, and because of this knowledge, actual or imputed, there was a waiver of that agreement or an election to insure notwithstanding. The finding of Sone’s ignorance and good faith is well supported, but we do not agree that the company knew that Sone was not in good health or suspected that he was not. The evidence shows that eyesight may fail because of syphilis or other serious infection, but not that such things are the only causes. In view of Sone’s statements that he was in good health, that he had never had syphilis, and that a blood test had been negative, we think the company could reasonably insure him as in good health. The- evidence is express that the company would not have insured one afflicted with syphilis, and that the premium so far as it was for the life insurance was at the usual rate for good health risks, and so far as for accidental death and disability was increased only because of the greater danger of accident to a man of bad eyesight. We do not find a sufficient basis in the facts to show a waiver at the inception of the insurance contract of the term of it under discussion. But we agree with the trial court that a waiver or estoppel arose from the receipt of the premium in the following December under the circumstances that then existed. Sone’s mental health had failed in addition to the trouble with his eye. An attending physician had advised the company that his condition might be due to paresis. The company suspected syphilis, necessarily of long
But it was confirmed as written. The estoppel goes no further than to prevent a denial that the policy is in force. We do not think that its ratification widens its coverage. Palumbo v. Met. Life Ins. Co. (Mass.) 199 N.E. 335; Dees v. Natl. Casualty Co., 17 Tenn.App. 183, 66 S.W.(2d) 603. Provisions have been held waived in some state courts by the acceptance of first or subsequent premiums when such facts existed and were known to the company as rendered the policy wholly inoperative under those provisions, on the ground that it cannot be supposed that it intended to take the money for nothing.
Nor do we think that increasing the lump premium because of the defective eye and the increased risk of accident due to that extended the disability insurance to cover the unknown cause of the eye trouble and a disability by reason of it arising not from a loss of eyesight but a Joss of mind. It is well known that a partly blind person is more liable to accidents which might cause death or disability than is a person with good eyes, and it was reasonable to agree on a higher premium for that increased risk. But, as the policy was worded, it remained as true as though the premium had not been increased that injury and disease causing disability must originate after the date of the policy to come within its coverage. A disability by reason of then existent syphilis and not due to defective eyesight is not covered nor intended to be.
Mrs. Sone can by paying the premiums maintain the life insurance. Perhaps the company’.s repudiation of the policy in July, 1934, has excused prompt payment of them since that date. But she is not entitled to the disability benefits decreed to her. The decree is set aside and the cause remanded, with direction to enter a decree establishing the policy but denying disability benefits, with costs to the defendants on the original bill and to the petitioner on the cross-bill. The appellant recovers costs of this appeal.
Judgment reversed..
The federal courts enforce the policy as written unless reformed for accident, mistake or fraud. Northern Assurance Co. v. Grand View Building Ass’n, 183 U. S. 308, 22 S.Ct. 133, 46 L.Ed. 213, and cases following it.