140 N.Y.S. 211 | N.Y. Sup. Ct. | 1913
This action was brought upon a policy of insurance issued February 24, 1911, upon the life of Leon B. Kasprzyk, for the benefit of his mother. The insured died June 29, 1911, from pulmonary tuberculosis as a primary cause and laryngeal tuberculosis as a contributing cause. The defense is based on misrepresentations
The policy provides that it is issued “in consideration of the application for this policy, a copy of which application is hereto attached and made a. part hereof, and of the payment of the semiannual premium,” etc., and that “all statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties.” In the application, which was signed by the insured, it was agreed:
“That the foregoing statements and answers and also the statements and answers 'to the medical examiner are correct and wholly true and that they shall form the basis of a contract of insurance if one be issu'ed.”
A careful examination of the record discloses proofs sufficiently conclusive that certain of the answers given by the insured to the medical examiner and embodied in the application were not only not correct, but that, on the contrary, they were untrue, and the policy was obtained by material misrepresentations. It appears that, although the insured stated in his application that he had had but two brothers and one sister, and that one of the brothers had died of brain fever, and the other of a cause unknown to him, as a matter of fact both of these brothers had died of consumption, and that nine other brothers and sisters had died before attaining the age of 3% years; that the insured stated that the name of the physician who last attended him was Dr. Fronczak, who had attended him for “nose bleed” four months before the application was made, and that he had not been under the care of any physician within two years other than as stated, and that he was then in sound health, whereas as a matter of fact he had been attended by Dr. Urbanski, for laryngitis on January 24, 1911, a month before the policy was issued.
Moreover, if it were the law that an insurance company could not defend a policy on the ground of misrepresentation, unless it could show actual knowledge on the part of the applicant that the statements were false, then it is plain that it would be impossible for it to protect itself and its honest policy holders against fraudulent and. improper claims. It would be wholly at the mercy of any one who wished to apply for insurance, as it wo'uld be impossible to show actual fraud except in the extremest cases. It could not rely on an application as containing information on which it could act. There would be no incentive to an applicant to tell the truth.
Warranties, as distinguished from misrepresentations, no longer exist in this state. Insurance Law (Consol. Laws 1909, c. 28) § 58. Misrepresentations must be as to material facts, and, if such material facts are misstated,' the policy is void, and this not because of fraud, but because the company did not' have the truth before it on vital matters when it undertook the risk. This doctrine as now recognized by statute is wholly equitable. A company should not be permitted" to defend on technicalities, but it is entitled to fair treatment and protection. The nature of the business must be recognized, and insurance must be written in the only practicable way in which it can be done. The company must get its information principally from the applicant,
“Representations as to a material matter which are false in fact avoid the policy, although not fraudulently made.”
And again at pages 805 and 806:
“Misrepresentations defeat a policy so far, and only so far, as they are material to the contract; and misrepresentation is material in such sense when hnowledge of the truth as to the fact misstated might reasonably influence the company in determining whether or not to enter into the contract as made. The company may, however, make any fact material by specifically inquiring about it and providing in the contract that the answer of the applicant shall be warranties. Therefore, falsity in -the statements in the policies or in the application which are made warranties will avoid the insurance without regard to the materiality- of such statements to the risk.”
The language just quoted states the general law apart from the statute above referred to, and clearly indicates that the difference between a representation and a warranty is as to the subject-matter of the statement being material to the risk, and not as to any question of knowledge on the part of the applicant.
At page 800 of the same article it is said:
“The effect of the falsity of material or fraudulent statements, which do not constitute warranties, is to render the policy voidable at the company’s option.”
In Hadcock v. Osmer, 153 N. Y..604, 47 N. E. 923, the court states the rule as follows:
“Where a party represents a material fact to be true to his personal knowledge, as distinguished from belief or opinion, when he does not know whether it is true or not, and it is actually untrue, he is guilty of falsehood even if he believes it to be true; and if the statement is thus made with the intention that it shall be acted upon by another, who does so act upon it to his injury, -the result is actionable fraud.”
In the case of Armour v. Transatlantic Eire Insurance Company, 90 N. Y. 450, at page 455, Judge Rapallo says:
“It is not necessary, in all cases, in order to sustain a defense of misrepresentation in applying for the policy, to show that the misrepresentation was intentionally fraudulent. A misrepresentation is defined by Phillips to be where a party to the contract of insurance, either purposely or through negligence, mistake, or inadvertence, or oversight, misrepresents a fact which he is bound to represent truly (Phil. Ins. § 537), and he lays down the doctrine that it is an implied condition of the contract of insurance that it is free from misrepresentation or concealment, whether fraudulent or through mis*216 take. If the misrepresentation induces the insurer to enter into a contract which he would otherwise have declined, or to take a less premium than he would have demanded had he known the representation to be untrue, the effect as to him is the same if it was made through mistake or inadvertence, as if it had been made with a fraudulent intent, and it avoids the contract. An immaterial misrepresentation, unless in reply to a specific inquiry, or made with a fraudulent intent, and influencing the other party, will not impair the contract. But if the risk is greater than it would have been if the representation had been true, the preponderance of authority is to the effect that it avoids the policy, even though the misrepresentation was honestly made. Phillips on Ins. §§ 537-542; Wall v. Howard Ins. Co., 14 Barb. 383."
See, also, Bacon on Benefit Societies & Life Insurance (3d Ed.) § 210. Under the title “Difference between Warranty and Representation” (Id. § 196) it is said:
“Representations to insurers before or at the time of making a contract are a presentation of the elements upon which to estimate the risk proposed to be assumed. They are the basis of the contract; its foundation, on the face of which it is entered into. If wrongly presented, in any way material to the risk, the policy that may be issued thereupon will not take effect. To enforce it would be to apply the insurance to a risk that was never presented.”
;
' In the case of Campbell v. Mutual Life Insurance Company, 98 Mass. 381, on page 396, it is held, in substance, that the effect of a misrepresentation which is not fraudulently made depends entirely on its being material to the risk. Misrepresentations go to the substantial b.asis on which the policy is written. The court says:
“An untrue statement or denial of a material fact, preceding or contemporaneous with the contract of insurance, prevents the policy that is based upon it from taking effect as a contract whether the statement was made ignorantly and in good faith or otherwise.”
The whole matter is summed up in Cooley’s briefs on the Law of Insurance, vol. 2, p. 1166, where it is said:
“It is a well-settled rule, supported by abundant authority, that, where the insurer is induced to enter into a contract by a misrepresentation as to material facts, the policy will he avoided whether the misrepresentation was made willfully,' with intent to deceive, or through an innocent mistake.”
The misrepresentations made in the application for the policy here under consideration were of facts; they were not* mere matters of opinion. All of them were material to the risk, and the result of them was the issuance of a policy on a risk entirely different from the one which the appellant thought it was undertalcing; and the policy is
In the case at bar there is no question but that misrepresentations by the insured on vital points were shown by uncontradicted evidence. This being so, the motion for a direction of a verdict should have been granted.
The judgment appealed from is reversed, and a new trial granted, with costs to the appellant to abide the event.