McDonald v. Metropolitan Life Insurance

38 A. 500 | N.H. | 1894

In receiving the application the agent clearly represented the defendants. Eastman v. Association, 65 N.H. 176. Whether in filling it up he technically represented them or the plaintiff is not important. In either case, the defendants cannot set up the false description of the risk against the plaintiff as a warranty. And the reason for this is, that it would be a fraud on their part to hold him to the truth of the representation which he did not in fact make, and of whose falsity they must be deemed to have had notice.

By issuing the policy the defendants ratified the agent's action in taking the application, and became chargeable with his knowledge of the plaintiff's business; and by receiving the subsequent premiums, collected by their agents with full knowledge of the business, they continued to be chargeable with such knowledge so long as they accepted the premiums. This estops them from taking to themselves the benefit of the false representation without responsibility for it. They cannot adopt that part of the agent's acts beneficial to them, and reject the rest. "With the benefit they must accept the burden." Eastman v. Association, supra; Rader's Adm'r v. Maddox, 150 U.S. 128. They are bound to repudiate the agent's acts in toto, or not at all. The contract must stand or fall as an entirety.

As a corollary from the preceding propositions, the termination of the contract by the defendants did not forfeit to them the premiums already paid upon it. But this is so for another reason, to which no exception can with fairness be taken. No fraud is imputable to the plaintiff. On the contrary, the facts show that both parties acted in good faith, and were alike deceived by the agent. By his fraudulent conduct the plaintiff was unwittingly placed in the position of making a false representation for the purpose of securing a valuable contract which, upon a truthful statement of his occupation, could not have been obtained; and by that representation the defendants were induced to consummate the contract, and subsequently to terminate it. "When both the insured and the insurer are deceived by fraudulent acts of an agent . . . if both parties acted bona fide, the policy should be canceled and the premiums returned." N. Y. Life Ins. Co. v. Fletcher, 117 U.S. 519. In such a case, the insurer cannot take advantage of a provision of the policy that "whenever, for any cause, this policy shall terminate, all premiums paid shall be forfeited to the company," because, in the language of Miller, J., in Ins. Co. v. Wilkinson, 13 Wall. 222, 233, it "would be an act of bad faith and of the grossest injustice and dishonesty." See, also, McKee v. Phoenix Ins. Co.,28 Mo. 383, — 75 Am. Dec. 129, 230.

In the absence of any forfeiture, it is instinctively manifest that when such a contract is terminated by the insurer from a cause like the one disclosed by this case, the insured should have some compensation or return for the money already paid on the contract. He has an equitable and, in our opinion, a legal right to have this amount restored to him, subject to a deduction for the value of the insurance enjoyed by him during the existence of the policy, — in other words, he is entitled to have the equitable value of his policy (N. Y. Life Ins. Co. v. Statham, 93 U.S. 24,33, 34); and this he may recover in an action for money had and received, which is an equitable action and may, in general, be maintained whenever the defendant has money belonging to the plaintiff which in equity and good conscience he ought to refund to him.

The objection that the action should have been brought in the wife's name, is of little practical consequence. If the objection is well taken, she may be substituted as plaintiff by amendment. Boudreau v. Eastman,59 N.H. 467. An inspection of the policy, however, shows the plaintiff, and not his wife, to have been the party to the contract with the defendants. It was made upon his application; it was issued to him as the assured; the premiums were paid by him; and it was his interest in his own life that supported the policy. The fact that the policy was for the benefit of his wife did not make her the assured, but merely the person designated by agreement of the parties to receive the proceeds of the policy upon the death of the assured. As such, she had the equitable interest in the policy, but not the title to support an action at law upon it in her own name against the defendants, or for the recovery of the premiums paid by her husband. Campbell v. N.E. Mutual Life Ins. Co., 98 Mass. 381, 389,400, 401.

Case discharged.

All concurred.