Fitzpatrick v. Hartford Life & Annuity Insurance , 56 Conn. 116 ( 1888 )

Pardee, J.

For the purposes of this case it may be said that on July 16th, 1881, the defendant issued a policy of insurance upon the life of Alice Galliger for the sum of $2,000. In her application, which by agreement was made a part of the contract, she stated that she was a widow, when in fact she had a husband, but during several years had lived apart from him. On January 8th, 1884, she assigned her interest in the contract of insurance to Mary E. Fitzpatrick, the plaintiff, a distant relative, in consideration of the promise of the latter, made with the consent of her husband, to give the insured a home and food and care in sickness, and notified the defendant of the assignment and the consideration upon which it was made. In the spring of 1885 the insured became unable to work, and thereafter was mostly with the plaintiff, who supported and cared for her until her death in February, 1886, paying her medical and other expenses.

Upon this part of the ease the charge to the jury was to this effect:—that if they found that the assignment was made upon the consideration stated by the plaintiff, namely, that she was to give the assignor a home, and was made in good faith and not as a mere pretext and cover, it is good, and the plaintiff may recover.

The plaintiff offered evidence tending, to prove, and claimed to have proven, that on July 20th, 1885, she went to the defendant’s office for the purpose of asking whether in case of the death of the insured the husband could claim any part of the sum which would then become payable. She spoke to Mr. Ball, its secretary and manager, and told him that she wished to inquire about Alice Galliger’s insurance; he referred her to Mr. Preston, a clerk. The latter took from their place Alice Galliger’s application for the insurance, and her notice to the defendant of the assignment of the policy to the plaintiff. He looked at the application and asked where Alice Galliger was born; the plaintiff replied, in Ireland, and added that- Alice’s husband was then living, but had during many years lived apart from her; and asked him if the fact that the husband was living would make any difference with the company; whether he could claim any part of the sum insured, in case of the death of his wife. Mr. Preston told her that it was a matter of indifference to the company whether the husband was or was not living, and that if living he could not make any trouble about it. At this time the plaintiff was ignorant of the fact that Alice Galliger had stated in her application that she was a widow. Subsequent to this conversation the defendant made two assessments upon the policy and received payment thereof from the plaintiff.

Upon this part of the case the court charged the jury to this effect: that if they should find the facts to be as claimed by the plaintiff as to the information given by her to the defendant, and as to the subsequent reception by it of assessments made upon the policy, it had estopped itself from taking advantage of the misstatement of Alice Galliger that she was a widow'made in her application; that it had waived its right to insist upon a forfeiture therefor anqj. cannot now set it up. The plaintiff had a verdict.

The following reasons are assigned by the appellant as grounds of appeal:—

1. That the court erred in charging the jury, upon the question of estoppel against setting up the defense that Alice Galliger in her application represented herself as a widow when she had a husband then living, as follows: “If you believe the story of the plaintiff as claimed here by her, if you believe that what she says took place in that office at the time did .in fact take place as she claims it, and that this company with this information subsequently made these two' assessments, which she paid, they are estopped from making this claim now; they have waived their right to insist upon this forfeiture and cannot now set it up.”

2. That upon the question whether the plaintiff had any insurable interest in the life of the insured, the court erred in charging the jury as follows :—“ If you find that this assignment was made upon the consideration stated by the plaintiff, that she was to give this woman a home, and that it was made in good faith, and not as a mere pretext and cover, the assignment is good, and she may recover upon it. Whether it was made in good faith or not, and whether it was not a mere pretext and cover to a wagering policy, a speculation that the law condemns, is for you to say; that is, the good faith of it. So far as the last question is concerned, there is no legal objection to this arrangement on the ground that this woman has no insurable interest in the life of Mrs. Galliger^ If, therefore, you find that this arrangement was entered into upon the consideration stated by the plaintiff, and was entered into by her and Mrs- Galliger in entire good faith, as she claims, then your verdict, if you are satisfied on the other points of the case, ought to be for the plaintiff.”

For the purposes of this case Mr. Ball, the secretary and manager, was the corporation. The plaintiff in speaking to him spoke to it. His act of referring her to Mr. Preston was an act of substitution of the latter for himself, which he might lawfully do. It was a declaration to her that she might make her intended communication to the latter and when so made it would avail her as fully as if made to himself. Therefore whatever the plaintiff said to Mr. Preston, as a matter of law was said to Mr. Ball and to the corporation.

If she communicated any fact to Mr. Preston of importance, affecting either her own or the rights of the company, and he omitted to communicate it to Mr. Ball, all effects of such omission are to be borne by the corporation. The plaintiff desired and undertook to communicate such a fact directly to the corporation; it preferred to receive and compelled her to make such communication indirectly; it thereby assumed and must bear all risk of failure in the method adopted.

The question arising upon these facts is well stated in the defendant’s brief, as follows :—“ No estoppel is claimed to arise from any express contract or waiver, but it rests on the assumption that after the officers of the company bad been informed of the falsity of the statement in the application, they with that knowledge elected to waive the defect and to treat the policies as valid by laying and collecting assessments upon the policy.” The defendant, previous to ' entering into the contract of insurance, required the applicant to make written answers to certain questions. By agreement this writing became a part of the contract and was retained of course in its possession. Whenever the company exercises any power reserved to it under that contract, which exercise may in any manner affect the position or rights of the insured, at every such moment the law compels it to have in mind ‘all provisions of the contract and interprets every act as being done with reference to them. If in acting the corporation substitutes the measure of recollection which it may happen to possess for the full measure which the law requires of it, and harm ensues, it must bear the burden ; not the insured. And when it and the insured are at any time jointly considering the rights of the parties under the contract, and the latter communicates to it a fact of importance ; a fact which would authorize it to exercise its right to terminate the contract; a fact indeed which would compel it to decide whether it would exercise or waive that right, then, as a matter of law, that fact is always thereafter in the mind of the corporation; always present in the contract, always to be taken into account, and always to have the fullest legal force, when it is exercising a power reserved in the contract in a matter which may affect the right of the insured. The law imputes knowledge of the terms of the contract to the plaintiff. It will not hear her say that she has not read them ; nor, having read, that she had forgotten. What it will not permit to the party who has entered into one contract only, it will not permit to one who has entered into many. The latter must enlarge his power of recollection in proportion as he multiplies his contracts.

Moreover, it would be impossible to state a number within which the defendant must remember and beyond which it may forget. No principle can be supported by a foundation which is uncertainty itself. In Morrison v. Odd Fellows Mut. Life Ins. Co., 59 Wis., 162, an action upon a life policy, the defense was the misstatement bjr the insured in his application as to his age. He answered by proving that at a time considerably subsequent to the taking out of the policy in suit he took a second one from the defendant in which his age was stated correctly. It replied that it did not know of the misstatement; but the court required it to remember both statements, and therefore to have the error in mind when making subsequent assessments upon the first.

In Bevin v. Conn. Mut. Life Ins. Co., 23 Conn., 244, the defendant had received information by parol, before it issued a policy applied for, that the applicant intended to go to California from the Atlantic coast overland; and after issuing the policy had like information that he had done so. It received premiums. Held to be estopped from taking advantage of the written warranty by the assured that he would not go across the country. The company was held to the parol information.

In Goodwin v. Dean, 50 Conn., 517, the plaintiff took a mortgage of real estate in 1867; the defendant as scrivener drew, witnessed and took the acknowledgment of it. The grantee withheld the deed from record until 1877. In 1876 the defendant took and recorded a mortgage of the same real estate. The plaintiff claimed that, his mortgage, although unrecorded, was in equity entitled to precedence of that of the recorded mortgage to the defendant, because the latter had knowledge of the plaintiff’s mortgage. Held that the law would not presume that the defendant, at the time he took his own mortgage, continued to have the knowledge of the prior mortgage which he had nine years before. And the head-note is as follows: “A case of this sort, where the knowledge was merely casual, and with nothing to impress the fact upon the mind, is very different from a case where there is a duty upon the party to' remember, or the notice is of a fact affecting his interests.” This last supposed case is precisely the one at bar. It is the legal duty of a party to remember the terms of his contracts; and the fact which was stated to the defendant affected one of its contracts upon a vital point, and was stated by the other party to that contract. In the quoted case the defendant had knowledge, as a by-stander, that two strangers had made a contract. He was without interest in it. Ho rule of law required him to remember the fact nine years. And this court said: “The plaintiff’s argument assumes that the defendant’s.case"depends upon the presumption that he had forgotten the circumstance. It is not a mere question of forgetfulness; the question is whether he had forgotten anything that he ought to have remembered. Unless he was under some obligation to remember he is not chargeable with negligence in not remembering. The law imposed no duty upon him and his interests did not require it. If, while contemplating taking a mortgage on this property, he had been informed that the plaintiff's mortgage was still' outstanding,' it would have been his duty to remember it. Due regard to his own interests and to the rights of others required him to remember it, and the law might properly impute knowledge to him; because the law1 supposes that a man will act with due regard to his own interests, and requires him to act with due regard to the rights of others.”

In Wing v. Harvey, 5 DeGex, Macn. & G., 265, the agent of a life insurance company knew that a person upon whose life it had issued a policy was living beyond prohibited limits. The company was required to have that fact in its remembrance when it subsequently accepted a premium from him.

In Ellis v. Insurance Co. of N. America, 32 Federal Reporter, 646, the defendant had consented to the assignment of a policy to the purchaser of the property insured. Neither party then had knowledge of the fact that the vendor had violated the terms thereof. Held that the defendant could not set up this fact by way of defense. It had in effect said to the assignee that the policy would be good in his hands; and if said either in ignorance or forgetfulness, the consequences are upon itself,, not upon the party who had the right to rely upon its declaration. Here is an estoppel because of something done in ignorance. In the ease at bar the defendant not only assented to the assignment of the policy, but it subsequently demanded and accepted premiums upon it; a most emphatic declaration that the policy was good in the hands of the assignee; it demanded premiums, not in ignorance but simply in forgetfulness.

If the fact thus stated bears upon two or mope provisions of the contract; if the plaintiff in stating it had knowledge of one only, yet having been stated the law applies it with equal force to each, because knowledge of both is in the mind of the corporation always. The question turns upon its knowledge, not upon the plaintiff’s ignorance.

Therefore the law, operating upon the facts, puts the corporation in this position:—the original applicant made a false representation in procuring the insurance; the, contract was voidable at its pleasure upon knowledge of the falsehood; but, upon such knowledge, it might elect to keep it in force and reap the attendant advantages. But in doing this and in notifying the insured of such election by subsequently demanding premiums it forfeits the right of avoidance and is held to have entered into a new contract upon a truthful application.

The law, for the protection of human life, will not permit the purchase of a wagering policy; will not permit a person to buy insurance upon the life of another unless he has reasonable ground for believing it to be for his pecuniary interest in some degree that the insured life shall continue; or that there should be tie of blood, or marriage actual or expected. In some jurisdictions the law forbids the transfer of a policy except to a person who has such an interest in the life insured as would have authorized the procurement of the policy.

But we think the weight of argument is in favor of permitting the owner of a contract of life insurance which has the sanction of the law, to sell it upon the most advantageous terms, having the world for a market, provided it is an honest exchange of property and not a mere cover for a wagering transaction. In countless instances and under many forms the law has sanctioned contracts which of necessity must have resulted in pecuniary profit to one person if another had soon died. The danger to human life from this source has not yet become sufficiently appreciable to provoke the condemnation of these. There is no good reason why the law should condemn an entire class of contracts great in number, no more dangerous to life and of equal capacity for good. The rule of law governing all other contracts would seem to be the proper one for these—to uphold those which are honest and beneficial, and annul all which are proven to be covers for fraud.

The-solicitude of the law is for the life of the insured. Upon the record Alice Gilliger was a laboring-woman, living apart from her -husband and childless. If with her chose in action she could purchase from a distant relative a home and food for life, with care in sickness, we are unable to see why the law should forbid it. She was willing to trust her life in the keeping of that relative. We cannot see why the law should be more solicitous for her than she for herself.

In Conn. Mut. Life Ins. Co. v. Schaefer, 94 U. S. R., 457, the head-note is—“ Any person has a right to procure an insurance upon his own life and assign it to another, provided it be not done by way of cover for a wager policy.” And in Ætna Life Ins. Co. v. France, 94 U. S. R., 561, the court says :—“ As held by us in the case of Conn. Mut. Life Ins. Co. v. Schaefer, any person has a right to procure an insurance on his own life and to assign it to another, provided it be not done by way of a cover for a wager policy.” In the subsequent case of Warnock v. Davis, 104 U. S. R., 775, the expressions to the effect that the law permits a transfer only to a person who has an insurable interest in the life insured,, were doubtlessly occasioned by the belief that the contract under consideration was a wager. For, in the case of N. York Mut. Life Ins. Co. v. Armstrong, 117 U. S. R., 591, Mr. Justice'FiELD, returning to the subject, says:—“ A policy of life insurance without restrictive words is assignable by the insured for a valuable consideration equally with any other chose in action, when the assignment is not made to cover a mere speculative risk and thus evade the law against wager policies; ” citing Warnock v. Davis, supra.

This rule prevails in Massachusetts, New York and Rhode Island; also in England. Mutual Life Ins. Co. v. Allen, 138 Mass., 24; Valton v. Nat. Fund Life Ins. Co., 20 N. York, 32; Rawls v. Am. Mut. Life Ins. Co., 27 id., 282; Clark v. Allen, 11 R. Isl., 439; Ashley v. Ashley, 3 Simons, 149. In Lemon v. Phoenix Mut. Life Ins. Co., 38 Conn. 294, this court said:—“A question was made before us that Miss Lemon had not an insurable interest in Mr. Peterson’s life. If she had undertaken to obtain, and had obtained, an insurance on his life, that question might have arisen. But surely Mr. Peterson had an insurable interest in his own life, and he obtained the insurance on it, and we know of no law to prevent him from making thé policy payable, in-case of' his death, to the person to whom he was affianced; and if such policy is delivered as a gift to the party to whom it is payable, we know no law to prevent such a gift from becoming effectual.”

In Cunningham v. Smith's Admr., 70 Penn. St., 450, a person paid for insurance upon his own life from money furnished him by another, and assigned the policy to that other in pursuance of an agreement made before it was taken. In sustaining the assignment the court said, in effect, that the assignee might have had such an interest in the life insured as would have enabled him to insure it in his own name, although this was doubtful; but the insured had an interest in his own life, and if he was willing to insure himself with the money of another and to assign his policjr to him, there is no principle of law which can prevent such transaction.

There is no error in the judgment complained of.

In this opinion Park, C. J., and Carpenter, J., concurred.