176 Ind. 654 | Ind. | 1911
Lead Opinion
Appellee, being the beneficiary in a policy of insurance issued by appellant on the life of her husband, brought this action, following his death, against appellant to recover thereon. From a judgment for appellee this appeal is prosecuted, and error on the part of the trial court in overruling appellant’s motion for a new trial is relied on for a reversal. Under this assignment of error, it is contended that the verdict was not sustained by the evidence and that the court erred in giving and refusing to give instructions.
The allegations of the third paragraph are identical with the second, except that the false statements alleged therein were in regard to former applications made by the insured for insurance in other companies and rejections by them. Appellee replied specially to the third paragraph of answer, admitting that the statements of the insured set forth therein were false, but averring that appellant had knowledge of their falsity before it issued the policy and received the premium thereon.
It is not contended by counsel for appellant that the evidence does not sustain a verdict for appellee on the general issue, or that on such issue there was any error in giving or refusing to give instructions. Appellant’s whole defense proceeds on the theory that its second and third paragraphs of answer were good, and that the evidence given thereunder made a ease entitling it to a verdict.
These answers were not good. They fail to allege that appellant, upon discovering the alleged fraud, took any steps to rescind the contract, by tendering back or offering to return the premium paid by insured or otherwise. No evidence was given or offered that appellant had done this. It is conceded that it had not, and it is contended that it was not necessary for it to do so.
The contract of insurance involved provides that fraudulent and untrue statements, such as those pleaded, shall render the policy void, and work a forfeiture of all premiums paid by insured.
The rule, as settled by the decisions of the courts of this State, is that contracts of insurance with such provisions are not rendered absolutely void by a breach of warranty, or byj
Answers to a complaint to recover on a policy in such cases must, to be sufficient, allege the facts showing the condition, its breach, and the election to avoid or rescind the contract. And to defeat a recovery by reason thereof proof must be made of the facts so alleged.
Dissenting Opinion
Dissenting Opinion.
I concur in the result reached in the majority opinion, on the ground of election by appellant after notice of the alleged false answer, but I am impelled to dissent from so much of the opinion as, in effect, holds that even though a contract of insurance is procured by fraud of the insured, and the insurer is in ignorance, and the risk attaches, the premium must be returned where the defense is interposed in an action at law upon the policy. The rule may be otherwise in ease of a suit in equity to cancel the policy upon the ground of the requirement that the moving party shall do equity. The ground of the distinction between suits in equity and actions at law on the policy has been lost sight of, and much confusion has thereby arisen.
It seems to me no answer to say when there is an action on the policy the contract becomes noneffective from the beginning, and hence no risk attaches. That depends on whether there is a discovery, so that there may be ground for an election to rescind, for until discovery some risk necessarily attaches, even though it should not be the full risk contracted for, and, in .addition, the fact that there is a necessary expense in procuring the contract. It is not wholly unilateral. Some risk necessarily attaches as an element of non-discovery itself, and from the fact of issuance of the policy, but the contract is none the less fraudulent, though there be no discovery, and so long as any risk attaches it becomes, in effect, a wagering contract, and it seems to me in such case, even though there is discovery of the fraud, there should be no recovery of the premium. This court has held that as long as any risk attaches there can be no recovery of premiums, on the ground that there can be no apportionment of the risk. American, etc., Ins. Co. v. Bertram (1904), 163 Ind. 51, 64 L. R. A. 935; Continental Life Ins. Co. v. Houser
If it be said that it is a wagering contract on the part of the insurer, then the law should leave the parties where they place themselves. It seems to me that any other rule invites wagering contracts, deception and perjury, and that a wise public policy Avould be subserved in the rule I suggest, which has been held by many of the courts. Taylor v. Grand Lodge, etc. (1905), 96 Minn. 441, 105 N. W. 408, 3 L. R. A. (N. S.) 114; Ronald v. Mutual, etc., Life Assn. (1892), 132 N. Y. 378, 30 N. E. 739; Thompson v. Travelers Ins. Co. (1903), 11 N. Dak. 274. 91 N. W. 75; Stringham v. Mutual Ins. Co. (1904), 44 Or. 447, 75 Pac. 822; Blaeser v. Milwaukee, etc., Ins. Co. (1875), 37 Wis. 31, 19 Am. Rep. 747; Georgia Home Ins. Co. v. Rosenfield (1899), 95 Fed. 358, 37 C. C. A. 96; United States Life Ins. Co. v. Smith (1899), 92 Fed. 503, 34 C. C. A. 506; Lewis v. Phoenix, etc., Ins. Co. (1872), 39 Conn. 100; Hoyt v. Gilman (1811), 8 Mass. 336; Metropolitan Life Ins. Co. v. McTague (1887), 49 N. J. L. 587, 9 Atl. 766, 60 Am. Rep. 661; 2 Joyce, Insurance §1406.
The rule of requiring the return of premiums paid, applies in ease of suits in equity to cancel the policy, and not in actions at law upon the policy, and is asserted in numerous well-reasoned cases which' seem to me to declare the true rule. United States Life Ins. Co. v. Smith, supra; National Mut. Fire Ins. Co. v. Duncan (1908), 44 Colo. 472, 98 Pac. 634, 20 L. R. A. (N. S.) 340; Provident Sav., etc., Soc. v. Whayne’s Admr. (1908), 131 Ky. 84, 93 S. W. 1049; Venner v. Sun Life Ins. Co. (1889), 17 Can. S. C. 394.
It can scarcely be questioned that although the contract provides that fraud shall render the policy void, it is universally held not to be void, but voidable at the election of