146 Tenn. 589 | Tenn. | 1922
delivered the opinion of the Court.
The original hill in this case was filed by the insurance company for the purpose of avoiding and canceling a life insurance policy issued by it on or about July 22, 1920, to the defendant’s intestate, Gregson, payable to his personal representative, for $5000, upon the ground that in the application for the policy the deceased made false and fraudulent representations material to the risk.
The cross-complainant has appealed and assigned the action of the chancellor as error.
It is conceded that on the 22d of July, 1920, the complainant issued a $5000 policy to M. Q. Gregson, payable to his administrator, and that he died November 19, 1920, before the bill in this case Avas filed. Proper proofs of death were furnished to the insurance company and payment thereof demanded. The insurance company refused to pay the policy and tendered a return of the premium to the administrator and made written request for the surrender of the policy, setting forth that certain misrepresentations had been macle in the application for the policy. The administrator refused to surrender the policy, but demanded its payment. The original bill Avas filed within the contestable period of one year as provided in the policy.
The contest is based upon certain questions and answers . appearing in the application for the policy, to wit:
“What, if any, is your daily habit in the use of tobacco and alcoholic stimulants — Tobacco? No. Stimulants? No.
*592 “During the past two years what has been your monthly average in the use of — -Wines? No. Malt liquors? No.
“During the past five years how often have you used any of these to excess, and, if so, date of last excess or intoxication? Date? None.”
It is conceded by counsel for the complainant — and that result would follow whether conceded or not — if the answers given to the questions as above indicated were true, then the complainant must fail in this action and it would be liable for the face of the policy. But it is asserted that there is evidence in the record to show that these answers were false and that the parties are concluded by the finding of the chancellor that the answers were false, and at all events the preponderance of the evidence is that way. On the other hand, the administrator contends that the chancellor did not find as a fact that the answers were false, but that he only found that the deceased for many years prior to signing the application was accustomed to and in the habit of taking intoxicating liquors, and had on some occasions been to some extent under the influence thereof, and that the existence of such facts were not sufficient to entitle the insurance company to avoid the payment of the policy. As stated in the brief filed on behalf of the administrator, the insistence is — “That in order for the insurance company to avoid the policy involved herein, on the ground that the deceased misrepresented the facts touching his use of intoxicating liquors prior to the date on which he signed the application for said policy, that it be affirmatively and positively shown that the deceased continuously and excessively indulged in the use of intoxicating liquor to the extent that his use thereof had become habitual. It was not enough for the insurance
The soundness of this contention is controverted by the insurance company, who, conceding that the misrepresentations were not made with actual intent to deceive, as was found by the chancellor, asserts that every fact which is untruly stated must be regarded as material, and therefore, being untrue, entitles the insurance company to avoid the policy.
The question at issue is admittedly governed by our Insurance Act of 1895, found in Shannon’s Code at section 3306, which provides: “No written or oral misrepresentation or warranty therein made in the negotiations of a contract or policy of insurance, or in-the application therefor, by the assured or in his behalf, shall be deemed material or defeat or void the policy or prevent its attaching, unless such misrepresentation (or warranty) is made with actual intent to deceive, or unless the matter represented increase the risk of loss.”
There being no contention here by the insurance company that the answers to these questions were made with actual intent to deceive, it remains to inquire, first, whether the answers were true or false, and, secondly, if false, whether the matter represented therein “increases the risk of loss.”
“That the deceased, Gregson, was at the date of his signing the application, at the date he accepted the policy, and for many years prior thereto, accustomed to and in the habit of taking intoxicating liquors, and had on some occasions been to some extent under the influence thereof, according to the testimony of Derrington, Hicks, J. H. Riley, and other witnesses for the company, including Roy Riley; and the testimony of the widow of the deceased, in which she is commended, who frankly says that he was like other men, in that he took a drink sometimes, .but she had never seen him when he could not go until on or after the 7th day of August, 1920, after which time she says that it seemed to get on his nerves more than before; and that his answers to the questions in his application touching his habit in the use of liquors was not true; but that such answers, under all of the proof of the cause, were not made for the purpose of defrauding the insurer, since he was not anxious to obtain the insurance, but the court acting as court and jury is forced to the belief that such answers were made more to conceal the facts of his use of intoxicating liquor as a matter of general information among his business association; which is accordingly ordered, adjudged, and decreed.”
It is argued with much plausibility by learned counsel that the fact that the deceased was accustomed to and in the habit of taking intoxicating liquors, and had on some occasions been to some extent under the influence thereof, is not a finding that the answers given by the deceased
The argument adopts a very limited and technical interpretation of the findings of the chancellor. When it is said that one is accustomed to and in the habit of using alcoholic stimulants, it may well be insisted that this is a daily habit. Certainly it cannot be said that he does not have any monthly average, and when it is said that one on occasions had been to some extent under the influence of intoxicating liquors it naturally negatives the idea that
It is contended that the evidence does not show nor can it be inferred from the finding of fact by the chancellor that the deceased had formed a habit of drinking intoxicating liquor to such an extent as to affect his health or
“It was not the purpose-of the statute to make a further change in’ the common law, as set forth in such decisions, so as to require that the matter misrepresented should be one that contributed to the hazard after issuance of the policy, that is, by the death of the insured, in order to make the policy invalid. . . . The common-law rule, in this country and in England, undoubtedly was and is that, if an applicant falsely state that he had not previously made another application or been examined for any other insurance upon which a policy had not been issued, the matter was so material that the policy was avoided when the statement was not expressly made the subject of a warranty and was deemed to be a mere representation.”
There were three considerations stated in that case making the matter developed by such questions and answers material. In the first place, a truthful answer would have put the company upon guard and enabled it to make inquiries and further physical examination, and might have induced an outright declination. In the second place,. the company was entitled to act upon the judgment of other insurance companies. In the third place, the company could judge of the applicant’s anxiety for insurance, and
“It cannot be that the matter misrepresented should necessarily relate to the hazard of loss by the death of the insured. Such a construction might prevent the company’s rescinding the contract because of a misrepresentation that actually induced the contract, in an action begun promptly after the making of the application and the issuance of the policy. What Avill not avail to ‘void the policy.’ under the statute, it seems equally will not ‘prevent its attaching,’ as a contract. We cannot adopt the harsh and radical construction that the legislature meant to deprive the insurer of the right to rescind the policy contract for inducing fraud. The phrase ‘increases the risk of loss’ is, in our view, the same as that appearing in numerous other statutes, ‘increases the risk,’ and both alike include the risk of loss involved in the issuance of the policy.”
It is quite true that the court, in the Dibrell Case, was not dealing with information relative to the applicant’s state of health where the answers might well be said to be but an expression of opinion rather than the statement of a fact. Nevertheless, the same principle must obtain in determining Avhether a misrepresentation increased the risk of loss. We approved, in the Dibrell Case, the rule of law as stated by the supreme court of North Carolina in Schas v. Equitable Life Insurance Co., 166 N. C., 55, 81 S. W., 1014, as follows:
“Every fact which is untruly stated or wrongfully suppressed must be regarded as material, if the knowledge or*600 ignorance of it would naturally and reasonably influence the judgment of the underwriter in making the contract at all, or in estimating the degree or character of the risk, or in fixing the rate of premium. . . . It is not necessary, as said in Fishblate’s case, that the act or conduct of the insured, which was represented by him in the application, should have contributed in some way or degree to the loss or damage for which the indemnity is claimed. Whether it was material depends upon how, if at all, it would have influenced the company in the respect we have just stated. The determining factor, therefore, in such case is whether the answer would have influenced the company in deciding for itself, and im its own interest, the important question of- accepting the risk, and what rate of premium should be .charged. The questions generally are framed Avith a view to estimating the longevity of the applicant, and any answer calculated to mislead the company in regard thereto should be considered as material.”
This statement of the rule of law was deemed to have been approved by this court in Hunter v. Guaranty Co., 129 Tenn., 572, 167 S. W., 692, and First National Bank v. Fidelity & G. Co., 110 Tenn., 10, 75 S. W., 1076, 100 Am. St. Rep., 765.
But it is argued that this rule of law is not applicable where the information relates to mere matters of opinion, such as it is contended the information given in this policy was, and in support of this contention the administrator relies upon the cases Hale v. Sovereign Camp W. O. W., 143 Tenn., 555, 226 S. W., 1045, K. of P. v. Cogbill, 99 Tenn., 28, 41 S. W., 340, Rand v. Life Assurance Society, 97 Tenn., 291, 37 S. W., 7, and other similar cases. These cases are not authority for the contention made. The
But in the Hale Case the court was dealing with the truthfulness or falsity of the answer given by the applicant for the insurance, and it was concluded from the evidence that the opinions given by the applicant were trifling things in no way contributing to his death, and hence could not be treated as false representations nor as material to the risk of loss, since they were of a character that would not reasonably and naturally influence the underwriter in passing upon the application. It was not intended by the court to overrule the recognized principle that a false representation which would naturally and reasonably influence the insurer and induce him to decline the application would be material. Trifling matters such as appeared in that case and in the Cogbill Case were deemed insufficient to justify that conclusion. In that case .the insured replied in the negative to a question as to whether or not he had consulted or been attended by a physician for any disease or injury during the past five years, and it was contended that this was a false statement. The
In other words, the court found from this evidence that the answers were not really false, being merely matters of opinion and the sickness being trifling in their nature. Quite a different result would have followed if the evidence had established the answers to be false and of a nature calculated naturally and reasonably to influence the insurer’s action upon the application.
So in the Cogbill Case the language quoted was used to support the correctness of the instructions given by the trial court to the jury in their determination as to whether the answer was true or false. The question was whether the insurance was procured by false representation or fraudulent concealment, and the applicant was asked if he was in good health, whether he had consulted a physician for bilious fever, and being asked whether he had
In the Rand Case the question for determination was whether the representations made to the medical examiner were true or false, and the jury responded that they were true. Being true, of course the insurance company could not avoid the payment of the policy. The jury was told, in determining the question of whether they were true, that a mere temporary ailment of the kind named will not constitute the diseases named, as contemplated in the questions and answers given; but before any temporary ailment can be called a disease, it must be such as to indicate a vice in the constitution, or be so serious as to have some bearing at least on the general health and continuance of life, or such as according to common understanding would be called a disease. These questions were, therefore, proper matters for consideration by the jury in de
As was said by the court in Blackman v. Casualty Co., 117 Tenn., 585, 103 S. W., 785:
“The substance of these decisions is that where the statement is one concerning the existence or nonexistence of a given fact, there can be no recovery, if the matter be not truly stated, whether such failure to state with truth and correctness be the result of fraud or of innocent mistake; but that, if the statement be as to a matter of opinion merely, a lack of accuracy will not cause a forfeiture of insurance, if such statement was made honestly and after the exercise of due diligence to learn the truth of the matter so represented; it was further held that a statement concerning one’s bodily condition with respect to obscure or undeveloped disease would be a mere matter of opinion, and that the insured would not be responsible for a misrepresentation as to such a matter, unless he had reason to believe that the misrepresentation was false.”
In that case the fact was that the insured had no knowledge that he ivas in the incipient state of nephritis; he supposed that he had merely a cold. Therefore it could not be said that the applicant had given a false answer to the question which implied that he was not suffering from this particular disease.
Thus it will be obseryed that in these cases the court was dealing with instructions being given the jury in determining the question of the truthfulness or falsity of the statements contained in the application, and not directly ivith the question of whether a false statement of the character indicated would be material, within the meaning of the statute which in effect makes the representations warranties where they increase the risk of
Rone of our cases justify the contention that no misrepresentation with respect to any matter that did not directly-or indirectly contribute to the death of the insured can be considered as increasing the risk of loss. Of course, the matter represented in the Dibrell Case did not enter into the death of the insured as a contributing cause, either directly or indirectly but it was, nevertheless, material and increased the risk of loss within the meaning of our statute, for the reason that it was information which would naturally and reasonably have influenced the judgment of the insurer with respect to the application. The principle is just as applicable to the situation presented here as in that case, and, as was said by the court in that case:
“When the jury replied that the matter of former examinations or applications had in fact been misrepresented, the other question of whether it increased the risk of loss was 'one of law.”
When the court found in this case that the answers made by the applicant with respect to the extent of his use of intoxicating liquors were false, then they did increase the risk of loss within the meaning of our statute, if the matter itself was reasonably and naturally calculated to effect the insurer’s judgment. Whether the matter represented did or did not contribute to the cause of death or impair the health of the applicant was a material matter for the determination of the question of the truthfulness or falsity
It is not to be left to the insurance company to say after a death has occurred that it would or would not have issued the policy had the answer been truly given. It is true the practice of an insurance company with respect to particular information may be looked to in determining whether it would have naturally and reasonably influenced the judgment of the insurer, but no sound principle of law would permit a determination of this question merely upon the say so of the company after the death has occurred. The matter misrepresented must be of that character which the court can" say would reasonably affect the insurer’s judgment. No misrepresentation of a mere trifling-instance in the applicant’s health, or the giving of a wrong opinion about the state of his health, if he might honestly be mistaken about it and not fully appreciate the dangers incident to the affliction, will render the statement false or avoid the policy, merely because an insurance company may say that it would not have issued the policy otherwise.
In this case it is established that the applicant was an habitual user of intoxicating liquors. Certainly true answers to the questions asked would -have indicated that to the insurer. It is well known that the habitual use of intoxicating liquors is calculated to impair the health; it weakens the resisting power of a man’s constitution, if it does not directly cause disease. More than that, when he becomes intoxicated or uses liquor to excess he is liable to be less careful in guarding his health; he subjects himself to risks and hazards that a sober-man does not incur.
We conclude, therefore, from the facts found in this case, under the rules of law stated as being applicable thereto, the insurance company was entitled to have this policy -canceled. The chancéllor so held, and there was no error in his action,