Geer v. Union Mutual Life Ins. Co. , 273 N.Y. 261 ( 1937 )

The decedent, George H. Geer, applied for and obtained from the defendant two life insurance policies in 1932. His application contained the following questions and answers, photostatic copies of which were attached to the policies:

"5. Have you ever had, or been told by a physician you had — (underline any disease had)

* * * * * * *

"B. Cough or Hoarseness (Chronic or Persistent), Asthma, Spitting of Blood, Pleurisy, Pneumonia, or any Disease of the Respiratory Organs?

"B. No.

* * * * * * *

"D. Diarrhoea, Dysentery, Dyspepsia (chronic), Jaundice, Liver Disease, Colic (severe), Gallstones, Fistula, Peritonitis, Ulcer of stomach or bowel, or any disease of the Abdominal Organs?

"D. No.

* * * * * * *

"M. Have you had any treatment within the last five years at any dispensary, hospital or sanatorium? If yes, give dates, duration, name of ailment and name of institution.

"M. No. Right mastiodictomy — 9 yr. ago — Syr. Memorial Hospital — complete recovery few weeks. Dr. T.H. Halstead, Syracuse, N Y

* * * * * * *

"Give name and address of each physician consulted by you during the past ten years, and cause for consultation. Dr. N.G. Darling, 31 North State St. Chicago, Ill. Nervousness."

The policies contained a two-year incontestable clause but before the expiration of the period the insured died as the result of inhaling carbon monoxide gas. The plaintiff, the beneficiary under the policies, brought actions upon them. The insurance company set up as a defense that the insured had had consultations with physicians which were not revealed in the application. The plaintiff waived her right to claim the physician-patient privilege and permitted the introduction of evidence of such consultations with physicians and on her own behalf introduced evidence to show that in 1932 the insured had twice consulted a Dr. Spire at his home and the doctor had diagnosed the malady as mere nervousness; that in 1928 he had visited Dr. Spire and that at that time the doctor thought the insured had paratyphoid and sent him to a hospital; that an X-ray and other tests were taken but the results were negative and that the hospital charts do not show symptoms of paratyphoid; that in the course of his 1928 visit the insured had told Dr. Spire that he had had influenza during the previous year.

The trial court submitted to the jury the question whether the omissions from the answers in the application were material to the risk. The jury returned a verdict in favor of the plaintiff. The County Court and the Appellate Division have affirmed the judgment entered thereon and the Appellate Division has granted leave to appeal to this court.

The appellant maintains that the omissions in the answer are material as a matter of law and that, therefore, the complaint should have been dismissed.

Section 58 of the Insurance Law (Cons. Laws, ch. 28) provides that unless a copy of the application is attached to the policy it shall not be incorporated therein by reference and that all statements purporting to be made by the insured although attached to the policy shall in the absence of fraud be deemed representations and not warranties. A false warranty ipso facto vitiates the policy whether or not it is material. (See EasternDistrict P.D. Works, Inc., v. Travelers Ins. Co., 234 N.Y. 441,449; 63 A.L.R. 846.) It is argued, however, that any omission in an answer to a question concerning consultation with physicians is material as a matter of law. Such a rule would lead to manifest injustice. Under it a policy could be vitiated because the insured had forgotten a visit to the doctor many years earlier for the treatment of a slight cold, or failed to disclose a consultation with a physician which had revealed that the insured was in good health. Unless the insured kept a detailed diary or journal he would never be certain that a casual visit to a physician might not be availed of to set his policy aside. Nor does the rule contended for by the defendant accord with the law of decided cases. Omissions or misrepresentations concerning health or visits to a physician are not conclusively presumed to be material except under special circumstances. (4 Couch, Cyclopedia of Insurance Law, § 885-e; 4 Cooley's Briefs on the Law of Insurance [2d ed.], pp. 3301, 3394 et seq.; Genung v.Metropolitan Life Ins. Co., 60 App. Div. 424; Higbie v.Guardian Mutual Life Ins. Co., 53 N.Y. 603; Murphy v. UnionCentral Life Ins. Co., 255 N.Y. 617; Eastern District P.D.Works, Inc., v. Travelers Ins. Co., 234 N.Y. 441; Nowak v.Brotherhood of American Yeomen, 249 N.Y. 78.) Thus in Jenkins v. John Hancock Mut. Life Ins. Co. (257 N.Y. 289, at p. 293), this court said: "It is a strict but humane ruling that when the insurer asks the applicant to say merely whether he has consulted a physician for any disease or disorder not enumerated in the list, the insured, if in good health at the time, need not recall his visits for medical advice for such minor ills as constipation or common cold in the head, which are readily relieved by simple remedies and do not impair his general health." Similarly inTravelers Ins. Co. v. Pomerantz (246 N.Y. 63, at p. 68) this court said: "The words `deformity' or `infirmity' as used in connection with applications for insurance are, of course, construed to mean deformities or infirmities of such a substantial character as, if known, would have been liable to deter an insurer from issuing a policy. (Eastern District P.D.Works, Inc., v. Travelers Ins. Co., 234 N.Y. 441, 453, 454.) The same principle must be true respecting medical or surgical attention. The attention to which reference is made in statement 12 must be not for a trivial indisposition but for some substantial illness, sickness, injury or disease. * * *."

It is argued that where an insurance company by specific questions requests information, any untrue representation or concealment in the answer, however innocent, is material as a matter of law, and that the test is not whether the insurance company would have issued the policy if it had been apprised of the truth, but whether it had an opportunity to exercise its choice upon a disclosure of all the facts. The cases in which it has been held that failure to mention colds or other minor ailments did not vitiate the policy properly are based, it is asserted, not on the theory that the misrepresentation was material, but on the ground that the questions were not intended to elicit such information.

To restate the contention, as I understand it, it is this: An insurance company is entitled to exercise its will freely in determining whether to issue an insurance policy, that for this reason it may ask questions in its application blank; that by asking these questions, it signifies that it will consider the answers in determining whether to issue the policy; and that, therefore, any misrepresentation in the answer, however innocently made, is material as a matter of law. Just how far does this go? Suppose the application should ask the insured whether he had ever suffered from a common cold. By asking the question, has it made the answer material as a matter of law? Or suppose the question concerning consultation with physicians concludes with the phrase "whether concerning a cold or any ailment no matter how slight." Surely it could not be argued that such a question was not intended to elicit answers concerning common colds, constipation or other minor ailments. The answer, therefore, would be material as a matter of law.

Section 58 of the Insurance Law bars such a ruling. It was enacted for the benefit of the insured, and expressly provides that statements in an insurance policy "shall in the absence of fraud be deemed representations and not warranties." A misrepresentation, as noted above, does not invalidate a policy unless it is material. It is argued that merely by asking a specific question, the insurance company can make the answer thereto material. This would enable insurance companies to destroy completely the efficacy of section 58. By asking specific questions, they could change in effect the replies which the statute states shall be deemed representations into warranties.

The contention that answers to questions in the application concerning health are material as a matter of law, is based upon the theory that if an insurance company evinces interest in the subject it thereby becomes material. That is not the true test. To use the words of Judge, later Chief Justice, TAFT, "A fair test of the materiality of a fact is found, therefore, in the answer to the question whether reasonably careful and intelligent men would have regarded the fact, communicated at the time of effecting the insurance, as substantially increasing the chances of the loss insured against." (Penn Mut. Life Ins. Co. v.Mechanics Sav. Bank Trust Co., 72 Fed. Rep. 413, at p. 429.) Cases there are which have applied other tests, but the test quoted is supported, it is submitted, by the better reasoned authorities. (Ward v. Standard Acc. Ins. Co., 30 Fed. Rep. [2d] 328; Miller v. Maryland Casualty Co., 193 Fed. Rep. 343;Goff v. Mutual Life Ins. Co., 131 La. 98; McCaffrey v.Knights Ladies of Columbia, 213 Penn. St. 609; Howell v.American Nat. Ins. Co., 189 N.C. 212; Lee v. MetropolitanLife Ins. Co., 158 Ga. 517; Etter v. National Life Acc.Ins. Co., 228 Ky. 399; Standard Acc. Ins. Co. v. Walker,127 Va. 140. See Eastern District P.D. Works, Inc., v. TravelersIns. Co., 234 N.Y. 441, 453; Columbia Ins. Co. v. Lawrence, 35 U.S. [10 Pet.] 507, 516, per STORY, J.; McLanahan v.Universal Ins. Co., 26 U.S. [1 Pet.] 170; Hancock v. Knightsof Security, 303 Ill. 66, 71; Mutual Benefit Life Ins. Co. v.Miller, 39 Ind. 475, 486; 3 Joyce on The Law of Insurance [2d ed.], § 1892; 4 Couch, Cyclopedia of Insurance Law, § 829. See, also, N.Y. Firemen Ins. Co. v. Walden, 12 Johns. 513, per Chancellor KENT.)

The Judicial Committee of the Privy Council recently has had occasion to pass on a case precisely in point. That case arose in the Province of Ontario, which at that time had a statute equivalent to our section 58. The language of the opinion inMutual Life Ins. Co. v. Ontario Metal Products Co. ([1925] App. Cas. 344), a case in which the insured failed to state that he had consulted a doctor who had prescribed hypodermic injections of a tonic and that such hypodermic injections had been made at the doctor's office irregularly over a period of three years, is so apposite that I quote at length: "The main difference of judicial opinion centers round the question what is the test of materiality? MIGNAULT, J., thought that the test is not what the insurers would have done but for the misrepresentation or concealment, but `what any reasonable man would have considered material to tell them when the questions were put to the insured.' Their Lordships are unable to assent to this definition. It is the insurers who propound the questions stated in the application form, and the materiality or otherwise of a misrepresentation or concealment must be considered in relation to their acceptance of the risk. On the other hand, it was argued that the test of materiality is to be determined by reference to the questions; that the Insurance Company had by putting the question shown that it was important for them to know whether the proposer had been in the hands of a medical man within five years of his application, and, if so, to have had the opportunity of interviewing such medical man before accepting the risk. The question was therefore, they contended, a material one, and the failure to answer it truthfully avoids the contract. Now if this were the true test to be applied there would be no appreciable difference between a policy of insurance subject to s. 156 of the Ontario Insurance Act, and one in the form hitherto usual in the United Kingdom. All of the questions may be presumed to be of importance to the insurer who causes them to be put, and any inaccuracy, however unimportant in the answers, would, in this view, avoid the policy. Suppose, for example, that the insured had consulted a doctor for a headache or a cold on a single occasion and had concealed or forgotten the fact, could such a concealment be regarded as material to the contract? Faced with a difficulty of this kind, the appellants' counsel frankly conceded that materiality must always be a question of degree, and therefore to be determined by the Court, and suggested that the test was whether, if the fact concealed had been disclosed, the insurers would have acted differently, either by declining the risk at the proposed premium or at least by delaying consideration of its acceptance until they had consulted Dr. Fierheller. If the former proposition were established in the sense that a reasonable insurer would have so acted, materiality would, their Lordships think, be established, but not in the latter if the difference of action would have been delay and delay alone. In their view, itis a question of fact in each case whether, if the mattersconcealed or misrepresented had been truly disclosed, they would,on a fair consideration of the evidence, have influenced areasonable insurer to decline the risk or to have stipulated fora higher premium" (pp. 350, 351, 352). (Italics interpolated.)

The defendant relies upon several cases containing language which, when taken out of its context, seems to support the argument that all misrepresentations or omissions concerning health and consultations with physicians are material as a matter of law. An examination of these cases reveals that they involve special circumstances which readily distinguish them, and that the language contained in them is not intended to cover all cases of misrepresentation or omission.

In Minsker v. John Hancock Mut. Life Ins. Co. (254 N.Y. 333) the insured answered in the negative questions asking whether he had been treated in a hospital or other institution. The insurance company showed that actually he did receive medical advice on three different occasions within a few months before the application was signed, and that he had been ill and attended a clinic. Thereupon counsel for the petitioner, relying upon the privilege granted by section 352 of the Civil Practice Act, objected to the admission of evidence concerning the illnesses or diseases for the treatment of which the physicians had been consulted. This court concluded that where it is shown that the insured had had consultations with physicians which he failed to reveal in his application, and the beneficiary refuses to permit the admission of evidence concerning the maladies treated, the omission is material as a matter of law. The same question was involved in Travelers Ins.Co. v. Pomerantz (246 N.Y. 63). In that case it was pointed out that the insurance company had produced evidence sufficient to show that the facts concerning which the misrepresentations were made were such as, if fully known, might have deterred it from accepting the insured as a risk. Once it was shown that the insured had failed to disclose that he had consulted physicians, and the privilege arising from his relation to his physicians was asserted whereby the insurance company was prevented from disclosing the diagnoses and nature of the treatment, the plaintiff could not be heard to claim that a prima facie case of materiality had not been made out. The cases of Anderson v.AEtna Life Ins. Co. (265 N.Y. 376) and Keck v. MetropolitanLife Ins. Co. (238 App. Div. 538; affd., 264 N.Y. 422) also involved a refusal to waive privilege on the part of the beneficiary or the insured. Obviously the courts could not permit the insured or the beneficiary to argue that the omission or misrepresentation was not material while he prevented the insurance company from showing its materiality. Statements inNowak v. Brotherhood of American Yeomen (252 N.Y. 465) were dicta intended to allude to the situation just discussed.

In the case at bar the plaintiff waived the privilege and permitted the admission of all evidence concerning the consultations of the insured with the physician. The question of materiality under such circumstances must be considered and the evidence analyzed. It must be dealt with upon the trial as is any other question of fact. The evidence might reveal that the insured was suffering from some disease of so serious a nature that the court could decide as a matter of law that it was material. It might be shown that the omission was of a condition so trivial as to justify holding as a matter of law that it was not material. Or the evidence might reveal that the ailment fell within that intermediate zone between materiality and immateriality which would make the question one of fact for the jury. (4 Couch, Cyclopedia of Insurance Law, § 885e; 4 Cooley's Briefs on the Law of Insurance [2d ed.], pp. 3301, 3394et seq.; 3 Joyce on Insurance [2d ed.], § 1898; Sebring v.Fidelity-Phenix Fire Ins. Co., 255 N.Y. 382; Genung v.Metropolitan Life Ins. Co., 60 App. Div. 424; Miller v.Maryland Casualty Co., 193 Fed. Rep. 343. See Maryland Ins.Co. v. Rugan's Admr., 10 U.S. [6 Cranch] 338, per MARSHALL, Ch. J.)

Are the ailments revealed in the case at bar of such a serious nature that it must be held as a matter of law that they are material? It does not seem to me that they are. There was no direct proof that the insured had ever had influenza. There was merely the statement by the doctor that the insured had told him that he had suffered from the disease. In addition, the record contains evidence that except during an epidemic period, influenza is merely a severe cold and there is no showing upon this record that it amounted to more than the latter. Nor is it material as a matter of law that the insured mistakenly thought he was ill and consulted a doctor and it turned out to be merely nervousness. As to the para-typhoid, Dr. Spire stated that he thought the insured had para-typhoid. The tests taken, however, returned a negative result and the symptoms shown by the hospital charts do not reveal para-typhoid. A jury might very well find that the insured never suffered from that disease. Moreover, para-typhoid does not seem to be a serious disease, there apparently never having been a case of mortality therefrom. It is submitted that the trial judge properly submitted the question of materiality to the jury.

The judgments in favor of the plaintiff should be affirmed, with costs.

CRANE, Ch. J., O'BRIEN, HUBBS and LOUGHRAN, JJ., concur with LEHMAN, J.; FINCH, J., dissents in opinion in which RIPPEY, J., concurs.

Judgments reversed, etc.