Plympton v. Dunn , 148 Mass. 523 ( 1889 )

Holmes, J.

This is an action upon a note given for the first year’s premium of a policy of life insurance issued to the defendant. The defendant sets up that the agent employed to get the insurance wrote a different answer from that which he made to one of the questions in the application; that, by reason of the false answer, the insurance company was not bound by the policy; and that therefore he had a right to avoid the note. The defendant’s evidence is, that he received the policy on May 19, 1886, but did not look at it or discover the error for a month; that he was then at home sick, but, as we understand the exceptions, did not remain so until the bringing of the action, on November 5, 1886; that after August 18, 1886, when the note was payable, it was indorsed to the plaintiffs, who made a demand on the defendant; that he refused to pay, saying that the policy was “no good”; but that the defendant did not offer to return the policy, or notify the insurance company that he wished to rescind the contract, until November, 1887, after this action was brought, and nearly a year and a half after his discovery of the facts.

The policy is not set forth in the bill of exceptions. We assume, in favor of the defendant, that the insurance company would have had a right to avoid it upon discovery of the false representations, and that, if they had done so, they would have avoided the note also. Frost v. Saratoga Ins. Co. 5 Denio, 154. On the other hand, they would have had the right to affirm it, had they been so minded. Oakes v. Manufacturers’ Ins. Co. 135 Mass. 248, 249. What would have been the effect upon the note of their doing so before the defendant elected to rescind, we need not consider.

There is no. doubt that the issuing of a voidable policy may be sufficient consideration to support a premium note. Stiff v. Keith, 143 Mass. 224. Holt v. Ward Clarencieux, 2 Strange, 937. It was not, however, the consideration contemplated in the bargain between the parties, and although, if the defendant were suing or otherwise insisting upon the policy, he would hold it subject to the burden of the false representation, (Draper v. Charter Oak Ins. Co. 2 Allen, 569, 572,) we assume in his favor that, as he did not make the representation in person, the case may be regarded as one of mutual mistake, and that he would have had a right to rescind on the day he received the policy, had he then discovered the error.

But the case is of a nature to require the extremest diligence on the part of the insured, if he means to rescind. Every day that elapsed after the defendant discovered, or ought to have discovered, the error, without notifying the company, he was receiving the benefit of the policy. To be sure, the company might discover the falsity of the statement, but it might not, and the defendant could not be allowed to speculate on that chance. By his silence he left the company bound, so far as they knew, and in a position in which, if he had died, they might have paid the loss in ignorance of any defence. To accept the benefit of a contract after you have notice of your right to rescind it, is to affirm it, especially when, as here, the benefit accepted, and the corresponding risk imposed upon the company, are of a kind “ that never can be cured in a rational sense ” by a subsequent surrender of the policy. Metcalf v. Williams, 144 Mass. 452. See Reynolds v. Pitt, 19 Ves. 134, 140; Green v. Bridges, 4 Sim. 96, 101; Mactier v. Osborn, 146 Mass. 399, 401.

We are of opinion that the jury should have been instructed that the offer to return the policy, in November, 1887, was not made within a reasonable time. Bassett v. Brown, 105 Mass. 551, 557. Exceptions sustained.