141 S.W. 541 | Tex. App. | 1911
The application for insurance made by Baker contained, among others, the following stipulations and provisions: "I hereby agree that I am in sound mental and physical condition and that the foregoing answers and statements, whether written by my own hand or not, together with the answers and statements made or to be made to the medical examiner in the continuance of this application are warranted to be full, complete, and true, and shall, together with all the agreements hereinafter made, form the basis for any certificate or membership issued thereon. It is agreed by myself and binding upon all parties who may hereafter become interested that if any statement in this application, or to the medical examiner, or in any certificate of health that may be hereafter given, or in the proofs of loss or death by which any certificate or membership issued thereon mature, is untrue said certificate shall be null and void and all rights, title and interest in and to the same as well as the rights of my heirs and beneficiaries to the benefits and privileges accruing to members of the association in good standing shall be forfeited. In addition to the above provisions, I hereby agree that I will be governed and this contract shall be controlled by the laws, rules, and regulations enacted by the Supreme Lodge, United Benevolent Association, and the rules and regulations which may be adopted by the Supreme Lodge of the Association governing said association now in force or that may hereafter from time to time be enacted by said Supreme Lodge, or submit to the penalties therein contained." It was further stipulated in the application as follows: "It is hereby agreed that all the foregoing statements and answers made to the medical examiner are warranted to be true and are offered to the United Benevolent Association as a consideration of this contract." The certificate sued on recited that it is "issued in consideration of representations, warranties and agreements contained in applications which shall be deemed as of legal binding effect. Any failure, default, concealment of facts, or subtle deception will render this contract null and void." It further recited that settlement of claim based thereon "will be made in accordance with the constitution, laws, and rules of the association now in force or that may at any time hereafter be enacted." The constitution and laws (article 35) among other things provide: "Every beneficiary member who shall have been duly elected and obligated or initiated into a subordinate lodge and stood the necessary medical examination of the subordinate and Supreme Examiner is entitled * * * to a beneficiary certificate * * * according to his application and the recommendations of the medical examiners. * * * Said certificate, however, shall be subject to all requirements and qualifications contained therein and these laws and as recited in the application." Article 60 of the constitution and laws of the appellant reads as follows: "Any person who shall secure a membership and certificate in this association through false and fraudulent statements or through any misstatement or concealment of any fact which would in any degree have affected the decision of the medical examiners when passing upon his application shall have his certificate canceled, and in case of his death before discovery by the executive committee of such fraud, his beneficiaries or heirs shall not be entitled to receive anything except the money actually paid by the member to the Supreme Lodge, with legal interest thereon." The appellant offered in evidence the following agreement of counsel: "It is agreed that the supreme officers of the defendant, including the supreme president, supreme secretary, supreme medical examiner, and executive committee had no notice and knowledge of the fact that the deceased, C. T. Baker, had had syphilis, or been treated for same at any time, until after the date of his death, and that defendant is a fraternal beneficiary association as alleged." Dr. J. L. Cooper, supreme medical examiner for the appellant, testified that in passing upon the application he discovered nothing which indicated that the applicant had ever been afflicted with or treated for syphilis. "I accepted his answers as given in that application as true, and so assumed. I approved his application for $1,000. I had no information other than the application as to the physical condition or previous history of the deceased. * * * If it had come to my knowledge that C. T. Baker had been treated for syphilis within less than five years prior to the date of his application, I certainly would not have approved his application."
Section 8 of an act passed by the first *543
called session of the Thirty-First Legislature (chapter 36) defining and regulating fraternal benefit associations as amended contains the following provision: "All benefit certificates shall from the date of their issuance be noncontestable on account of any statement or representation made by said applicant for membership, either in his application or otherwise, or his medical examination, unless such representation shall be material to the risk assumed, and the burden of proof shall be upon the defendant to affirmatively establish such defense." See Acts 1909, 2d Called Sess. p. 443. It is evident that the trial judge based his ruling upon the conclusion that the misrepresentation made by Baker, the insured, concerning his previous syphilitic affection, was not material to the risk assumed, because the testimony failed to show that his death was attributable to that disease. While the court finds as a fact that the paralysis of which Baker died was not caused by syphilis, there is very strong evidence to the contrary. But that issue is of no importance if it sufficiently appears that this previous affection was such as might reasonably have been considered a menace to the prolongation of Baker's life, and that had it been revealed the application would have been rejected by the appellant. The question is: What is meant by the words "risk assumed," as used in the statute? Webster defines "risk" as the "chance of encountering hazard, or peril, or exposure to such a chance; hazard, danger; degree of exposure to loss or injury; an obligation or contract of insurance on the part of the insurer." Black in his Law Dictionary thus defines "risk" in insurance law: "The danger, or hazard, of a loss of the property insured; the casualty contemplated in a contract of insurance; the degree of hazard." We know of no reason why the statutory signification of the word "risk" should be different from that given by the above authorities. In contracts of life insurance the insurer agrees, in consideration of the payment of stipulated premiums, at stated intervals, to pay to a named beneficiary a specific sum upon the death of the insured. The particular risk is assumed at the time this contract is made, and its magnitude is determined from the sum of all the perils which then menace the prolongation of the life of the insured, and those which may reasonably be expected to arise in the course of time. The risk of insuring the life of one afflicted with a malignant and incurable disease is considered much greater than that of insuring the life of a perfectly healthy individual without any trace of inherited disorders; yet the latter may be the first to die. The risk, then, is measured when the contract is made, not when death occurs. It may also be said that in another sense the expression "risk assumed" should be regarded as referring to the contract of insurance itself, and that any matter which was material to be considered in the making of that contract, or which if known would have prevented either party from executing it upon the terms agreed on, should properly be considered as material to the risk assumed. This construction is, we think, supported by the weight of authority in other states having laws similar to our own. In the state of Pennsylvania there is a statute which provides that, whenever the application for the policy of life insurance contains a clause of warranty, no misrepresentation or untrue statement made in good faith shall avoid the policy, unless it relates to some matter material to the risk. In construing that provision of the statute the court of last resort in Pennsylvania took occasion to pass upon the very question here involved. In Murphy v. Prudential Ins. Co.,
The Supreme Court of Texas, in the case of Fidelity Mutual Life Association v. Harris,
A statute of Massachusetts provides that no representation or warranty made in the negotiation of a contract of insurance shall be deemed material to defeat the policy unless made with actual intent to deceive, or unless the matter misrepresented or made a warranty increased the risk. In the case of Brown v. Greenfield Life Association,
In the case of Jeffrey v. United Order, etc.,
The foregoing authorities all construe the language, "material to the risk assumed," and other equivalent expressions, as referring to those matters which enter into and materially affect the burden assumed in the making of the contract of insurance. Why should the courts of this state hold differently? There appears to us no good reason for so doing. If the Legislature of this state had intended to confine the materiality of matter affecting the risk assumed to such as caused, or contributed to cause, the death of the insured, it could easily have placed that intention beyond doubt. The testimony is uncontradicted that the disease which Baker concealed materially affected him as a subject of insurance, and that had he disclosed the truth would have caused the rejection of his application.
In this state of the record, we think the judgment of the trial court should be reversed, and the judgment here rendered for the appellant; and it is, accordingly, so ordered.