Cohen v. Penn Mutual Life Insurance , 48 Cal. 2d 720 ( 1957 )

SPENCE, J.

Plaintiff sued as beneficiary to recover on a policy of insurance issued by defendant on the life of her deceased husband. After a verdict in plaintiff's favor, defendant unsuccessfully moved for a judgment notwithstanding the verdict and judgment was entered on the verdict. Defendant appeals, claiming principally that its motion should have been granted because of the deceased’s misrepresentations and concealment of material facts in stating his medical history. Since the record sustains defendant’s position on this point, other alleged errors need not be considered.

There is no conflict as to the material facts. On September 10, 1949, the deceased, a 32-year-old physician, applied to defendant for the insurance policy. He answered the following questions, among others, in his application:

“4. (a) When did you last consult or receive treatment for your health from any physician, surgeon or practitioner? 10 years ago.

“4. (d) State name of every other physician, surgeon or practitioner who has attended or treated you or whom you have consulted for any reason or ailment, serious or not serious, within the past 5 years. (Give all dates and details.) None.

“4. (e) Are you in good health? Yes.

“5. Have you ever had a health or physical examination? (Give dates, reasons, and names and addresses of persons who made examinations.) U.S. Army induction 1944.

“6. (c) Have you ever had a special heart study or an electrocardiogram? No.

“6. (d) Have you ever been in a clinic, hospital, sana-

torium or asylum for observation, treatment or diagnosis? No.

“8. Has there been any suspicion of, or have you ever had or been treated for any of the following diseases or ailments :

“(d) Palpitation of heart, shortness of breath, pain in chest, abnormal pulse, any disease of the heart or blood vessels or a high blood pressure? No.

“11. Have you ever had any illness, disease, operation or injury other than as stated by you above? (If so, give full particulars, date, duration, severity, etc. of each. Use reverse side if necessary.) See Details. Nothing other than usual childhood diseases.”

Deceased certified that these answers were full, complete and true, and he agreed that they should form a part of the contract of insurance. Thereafter a doctor selected by defendant examined the deceased and reported his condition as satisfactory. The policy was issued September 19, 1949; the application therefor was attached thereto; and together, they constituted the entire contract between the parties. The insured died of a heart attack while giving a lecture on June 1, 1950. The autopsy established the cause of death as “coronary arteriosclerosis, severe,” with “old occlusion of left circumflex coronary artery. Subtotal occlusion of left anterior coronary artery. Anterior myocardial sear. Visceral congestion, moderate.”

Proofs of death were filed with defendant and upon investigating the claim, defendant discovered the following facts relating to the deceased’s induction into, and discharge from, the Army: That following application for a commission with the Army Medical Corps in 1943, the deceased was examined by Army doctors on seven separate occasions between October 1 and October 20 of that year, and that these examinations showed that he had a heart murmur, unstable blood pressure or intermittent hypertension and tachycardia or rapid pulse; that during this same period of 1943, the deceased had also had a special heart study by X-ray and an electrocardiogram —the latter being “definitely abnormal,” in the opinion of one expert pointing to the coronary arteriosclerosis found at the autopsy, and according to another expert “suggestive of heart disease”; that in January, 1944, the deceased accepted a commission stating “Waiver is granted for unstable blood pressure, tachycardia, systolic apical murmur on physical examination report dated October 1, 20, 1943”; that following an examination of the deceased in the fall of 1944, the Army report stated: “Blood pressure this examination is of the same order as previously”; that thereafter on October 12, 1944, and preliminary to entering on active duty, the deceased executed a waiver acknowledging under oath that he had hypertension; and that in January, 1947, the deceased was relieved from active duty following a discharge in November, 1946, stating that he was “incapacitated for general or limited service” because of “hypertension.” Defendant further discovered that in late 1947 or early 1948, the deceased, while an intern at the Michael Reese Hospital in Chicago, had been examined at the hospital because of abdominal pain.

It indisputably appeared from defendant’s witnesses that the policy to the deceased was issued in reliance on the truth of his representations in his application for insurance; that had the facts disclosed by the Army examination been known to defendant the policy would not have issued; that under defendant’s standard practice, electrocardiogram, abnormal pulse records, and abnormal blood pressure readings are referred to home office doctors for review; that if the deceased had truthfully stated his medical history, a full investigation would have been made, and that defendant does not insure applicants with pulse and blood pressure readings such as those of the deceased at the time of his Army examinations. All the expert witnesses, both plaintiff’s and defendant’s, agreed that in order to determine the physical condition of a person under examination, it is essential that he tell the truth about his medical history.

Where an applicant for insurance is asked generally whether he has had or been treated for any disease or ailment, the failure to mention minor or temporary indispositions is not material to the risk and will not avoid the policy. (Ransom v. Penn Mutual Life Ins. Co., 43 Cal.2d 420, 427 [274 P.2d 633] ; Pierre v. Metropolitan Life Ins. Co., 22 Cal.App.2d 346, 349 [70 P.2d 985].) But the rule is otherwise when the applicant is asked specific questions as to his medical history, and false answers thereto will vitiate the contract. (McEwen v. New York Life Ins. Co., 187 Cal. 144, 146-147 [201 P. 577]; Iverson v. Metropolitan Life etc. Co., 151 Cal. 746, 749 [91 P. 609, 13 L.R.A.N.S.] ; San Francisco Lathing Co. v. Penn M. L. Ins. Co., 144 Cal.App.2d 181, 186-187 [300 P.2d 715] ; Pierre v. Metropolitan Life Ins. Co., supra, 22 Cal.App.2d 346, 349.) It has been specifically held that misrepresentations as to heart symptoms render an insurance policy unenforceable. (California-Western States etc. Co. v. Feinsten, 15 Cal.2d 413, 423-424 [101 P.2d 696, 131 A.L.R 608] ; Whitney v. West Coast Life Ins. Co., 177 Cal. 74, 80-81 [169 P. 997] ; Robinson v. Occidental Life Ins. Co., 131 Cal.App.2d 581, 585-586 [281 P.2d 39] ; Parrish v. Acacia Mut. Life Ins. Co., (Dist.Ct.Cal.) 92 F.Supp. 300, 302-303, aff. 184 F.2d 185.) Where false representations as to material matters have been made, the existence of a fraudulent intent to deceive is not essential. (Telford v. New York Life Ins. Co., 9 Cal.2d 103, 105 [69 P.2d 835].)

Section 334 of the Insurance Code provides: “Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries.” Within the purport of this rule, the deceased was bound in good faith to communicate the material facts in the application for insurance. (Ins. Code, § 332.) The fact that defendant put the questions in writing and asked for written answers was itself proof that it deemed the answers material. (O’Connor v. Grand Lodge A.O.U.W., 146 Cal. 484, 494-495 [80 P. 688]; Maggini v. West Coast Life Ins. Co., 136 Cal.App. 472, 475-476 [29 P.2d 263] ; McEwen v. New York Life Ins. Co., 23 Cal.App. 694, 697-698 [139 P. 242].) While the misrepresentations need not have any causal connection with the death of the insured, the nature of the misrepresentations here strikingly reflect the materiality of the information withheld.

Although failure of an applicant to disclose a physical condition of which he is ignorant will not affect the policy (Travelers Ins. Co. v. Byers, 123 Cal.App. 473, 481 [11 P.2d 444]) and a layman might reasonably be excused if, in disclosing information, he failed to understand the meaning of certain medical terms and for that reason omitted some fact in his medical history (Ransom v. Penn Mutual Life Ins. Co., supra, 43 Cal.2d 420, 426), this is not such a case. Here the deceased was himself a doctor, he knew his medical history with regard to his heart condition, and he coneededly must have understood the terms used in the insurance application and the significance of his answers. Pie knew that within two years of making his application with defendant, he had been in the hospital for the purpose of diagnosis of abdominal pain and had consulted doctors in connection therewith; he knew that while in the Army he had had a special heart study by X-ray; he knew what an electrocardiogram was and that while in the Army, one had been made of his heart action; he knew that tachycardia meant rapid pulse and that hypertension meant high blood pressure; and he knew beyond any possible dispute that the Army had concluded that he suffered from tachycardia and high blood pressure, for his Army commission so stated and he had acknowledged the hypertension under oath. Yet in his application, the deceased denied all of these specific facts. While in Ransom v. Penn Mutual Life Ins. Co., supra, 43 Cal.2d 420, 427, it was indicated that the failure to disclose a normal electrocardiogram could be excused because obviously it did not affect the risk, here the electrocardiogram whose existence the deceased concealed was not normal but “suggestive of heart disease.” In short, the medical history which the deceased submitted pictured a risk entirely different from that in fact involved. (Parrish v. Acacia Mut. Life Ins. Co., supra, 92 F.Supp. 300, 303.)

Plaintiff argues that the Army findings of hypertension and rapid pulse as part of the deceased’s heart symptoms might be regarded as isolated instances which had completely disappeared by the time of his examination by the doctor selected by defendant upon deceased’s application for insurance, in view of said doctor’s failure to report any findings of heart trouble as of September, 1949, and the fact that prior to death in 1950, there was evidence that the deceased was apparently in good health and was then leading an active life. She further cites certain medical testimony in the record indicating that certain heart damage to the deceased could have occurred within the last three months of the deceased’s life. In refuting plaintiff’s arguments, defendant refers to the testimony of its expert witnesses that the autopsy examination indicated that the decedent had been suffering from arteriosclerosis “for many years,” and the concession of plaintiff’s cardiologist that he was unable to say how long the deceased might have had heart disease before his death. However, these considerations are not of controlling importance. Bather, the issue was whether the deceased had concealed his medical history concerning his heart and circulatory condition in making his application to defendant. Defendant had a right to know all that the deceased knew relating to the specific questions contained in the insurance application. (Robinson v. Occidental Life Ins. Co., supra, 131 Cal.App.2d 581, 585.) The importance which defendant attached to these answers, from both the appraisal of risk and the inquiry aspects (Ins. Code, §334), was emphasized by its inquiry not only as to whether the applicant had the particular disease but whether he had “any suspicion of . . . abnormal pulse, any disease of the heart or blood vessels or a high blood pressure.” This was plain warning that defendant would investigate any suspicious or doubtful circumstances which the answers might indicate. Nor does it matter what the deceased might personally have believed about his heart condition and its lack of substantial character. Defendant did not ask on the application for merely his evaluation of his physical condition, but also for a truthful statement of his medical history. (California-Western States etc. Co. v. Feinsten, supra, 15 Cal.2d 413, 423; Telford v. New York Life Ins. Co., supra, 9 Cal.2d 103,108.) Defendant was entitled to determine for itself the matter of the deceased’s insurability, and to rely on him for such information as it desired “as a basis for its determination to the end that a wise discrimination may be exercised in selecting its risks.” (Robinson v. Occidental Life Ins. Co., supra, 131 Cal.App.2d 581, 586.)

Plaintiff claims that defendant waived the fraud in the deceased’s answers. To this point she first argues that the right to information may be waived by a failure to inquire as to facts which “are distinctly implied in other facts of which information is communicated.” (Ins. Code, § 336.) This argument is untenable for it cannot be said that the fact that the deceased consulted doctors and was diagnosed in a hospital for abdominal pain within two years of his insurance application is “distinctly implied” in his answer that his last consultation with doctors was “10 years ago”; or that the fact that he had been examined repeatedly by Army doctors is “distinctly implied” in his answer that he was examined only once, “U.S. Army induction 1944”; or that the fact that he had had an electrocardiogram is “distinctly implied” in his answer that he had not had one; or that the fact that he had stated under oath that he had hypertension is “distinctly implied” in his answer that there had never “been any suspicion of . . . high blood pressure.”

Plaintiff next argues that defendant waived the fraud by failing to search out the Army records when it was on notice that deceased had taken an Army induction examination. Because of the difficulty and the time consumed in obtaining military records, defendant customarily did not endeavor to obtain them unless the applicant’s answers provided a reason for so doing. If the applicant’s answers indicated a service connected disability or an examination which showed defects, defendant would request the applicant to produce his health record from the Army before processing the application. Specifically, the deceased’s denial of an electrocardiogram, abnormal pulse records, and high blood pressure readings indicated that there was no need for defendant’s search of the Army’s findings. This is not like the situation involved in Turner v. Redwood Mutual Life Assn., 13 Cal.App.2d 573 [57 P.2d 222], cited by plaintiff, where the insured disclosed an illness but failed, in good faith, to describe it with complete accuracy. It was held that since the illness was disclosed and the attending doctor identified as the source of any further information wanted, the insuranee company waived the misstatement in its issuance of a policy and could not claim fraud. But here the deceased denied any medical history at all bearing on the specific questions relating to his heart condition. In short, the deceased, like the insured in Parrish v. Acacia Mutual Life Ins. Co., supra, 92 F.Supp. 300, 302, “denied having the very symptoms that might have, if properly followed up and known to the defendant, indicated an unfavorable heart condition.” It was not incumbent upon defendant to assume the falsity of the statements in deceased’s application. (Robinson v. Occidental Life Ins. Co., supra, 131 Cal.App.2d 581, 585.)

Plaintiff finally contends that since defendant framed its pleadings on the basis of actual fraud—listing the deceased’s false representations, claiming that they were made by the deceased for the purpose of deceiving defendant, and that defendant, without knowledge of their falsity, relied thereon in issuance of the policy (Civ. Code, § 1572)—the issue of the deceased’s actual intent was tendered as a question of fact for the jury’s determination. In this connection, plaintiff also refers to defendant’s admission in the course of the trial that it was claiming “actual fraud,” a “direct deception upon the contract.” But such added factor in defendant’s alleged ground for avoiding the insurance policy does not militate against its right to prevail, as a matter of law, on its claim that concealment of a material fact, whether intentional or unintentional, vitiates an insurance policy. (Ins. Code, § 331.) In line with this latter proposition, defendant at the outset of the case submitted an instruction stating that the “presence of an intent to deceive is not essential,” which is a correct statement of the law. (Telford v. New York Life Ins. Co., supra, 9 Cal.2d 103, 105.) The allegation of an actual intent to deceive may be regarded as mere surplusage, unnecessary to prove and unessential to defendant’s right to refuse payment on the insurance policy. It in nowise prejudiced or misled plaintiff in the presentation of her case. (Gates v. General Casualty Co. of America, 120 F.2d 925, 927; see also Pigeon v. W. P. Fuller & Co., 156 Cal. 691, 699 [105 P. 976] ; Demetris v. Demetris, 125 Cal.App.2d 440, 443 [270 P.2d 891]; Karsh v. Haiden, 120 Cal.App.2d 75, 83 [260 P.2d 633]; Alonso v. Hills, 95 Cal.App.2d 778, 784 [214 P.2d 50].) Suffice it to say here that the uncontradicted evidence shows that, as a matter of law, the deceased, by false answers, misrepresented and concealed material facts, and that defendant in its dealings with him did not waive such, deception in issuing its insurance policy to him. Under such circumstances, defendant’s motion for a judgment notwithstanding the verdict should have been granted. (McEwen v. New York Life Ins. Co., supra, 187 Cal. 144,147; Whitney v. West Coast Life Ins. Co., supra, 177 Cal. 74, 81; Pierre v. Metropolitan Life Ins. Co., supra, 22 Cal.App.2d 346, 349; Maggini v. West Coast Life Ins. Co., supra, 136 Cal.App. 472, 479-480; Parrish v. Acacia Mut. Life Ins. Co., supra, 92 F.Supp. 300, 303.)

The judgment and the order denying the motion for judgment notwithstanding the verdict are reversed, with directions to enter judgment for defendant.

Shenk, J., Traynor, J., and McComb, J., concurred.