Maryland Casualty Co. v. Gehrmann , 96 Md. 634 ( 1903 )

On April 6th, 1901, Charles Gehrmann of A., brought suit against the Maryland Casualty Company of Baltimore City, a corporation, upon a policy issued by it to him, and insuring him in the amount of a principal sum of five thousand dollars in event of death resulting from external, violent, and accidental means, ocurring during the continuance of the policy, and in the amount of twenty-five dollars weekly indemnity, for a period not exceeding one hundred and four consecutive weeks, against bodily injuries sustained in like manner, and continuously and wholly disabling and preventing him from performing any and every kind of duty pertaining to his occupation as business manager of a lace manufactory.

On March 22d 1900, during the continuance of this policy, and while the plaintiff was crossing the street, after leaving an electric car, he fell upon the track and seriously injured his right knee, resulting immediately and continuously in complete disability within the terms of the policy. No question is made to the happening of the accident, or the extent of the injury, but defense is made on other grounds which will be stated later.

The plaintiff claimed the stipulated weekly indemnity from March 22d 1900, to March 22d 1902, being 104 weeks, but the Court restricted recovery to April 6th, 1901, the date of bringing the suit. The only exception taken, was to the ruling on the prayers, and the verdict and judgment being for the plaintiff, the defendant has appealed.

The policy states upon its face that the insurance was made in consideration of twenty-five dollars, and "of the warranties made in the application for this policy, copy of which is endorsed on the back hereof." Looking to this copy, and to the original which is embraced in the record, it appears that in answer to a question put therein, the plaintiff stated he had never received indemnity for any accident except from the Standard Company, and in answer to another question, that he was in sound condition mentally and physically, whereas he testified in chief that in 1865 he received a blow on the right knee which for two days gave him some trouble but no longer, and that afterwards his leg was as strong as ever; and he admitted upon cross-examination that he had received about fifteen years before from the United States Company, an indemnity of $205 for an accident. The alleged falsity of the two answers referred to, are claimed to be breaches of warranty avoiding or forfeiting the policy. The answer to the first question was admittedly untrue in fact, whether made deliberately or inadvertently, but the falsity of the other answer is a matter of inferences dependent upon the view taken of the testimony relating to it.

Dr. Steel, the plaintiff's family physician for twenty-two years, says that he saw the leg when attending him for other ailments, and that it was perfectly sound, though slightly curved; that after curvature a leg is just as sound as before, and the bone absolutely healthy and good. Dr. Blake, who was called in consultation after the accident of March 22nd, said the plaintiff's leg was deformed, but not diseased or unsound, though he also said that after curvature a bone is more likely to set up inflammation in case of an accident by a blow or fall; and both these physicians said this leg had never been broken. Dr. Brinton, chief sergeon for the defendant company, saw the leg the day after the accident and said such a leg was more liable to inflammation from any accident than a normal leg, and that plaintiff told him the curvature was caused by a fracture 25 or 30 years before, though this was denied by the plaintiff in rebuttal; Dr. Brinton also said on cross-examination that when he looked at the leg he knew it had never been broken.

Dr. Trimble, the local surgeon of the defendant company, saw the leg on May 19th, and said that he did not consider that plaintiff when insured was in sound physical condition for work which would require him to walk a great deal, or to stand on his legs to work as a policeman, for instance, must do.

Upon this testimony, plaintiff offered eight prayers, of which only the fifth, sixth and eighth were granted, and defendant offered ten, of which only the third and tenth were granted.

The plaintiff's 5th prayer was to the effect that if the jury found the representations as to physical soundness, and as to the receipt of indemnity against accident, were made in good faith, then the burden was on the defendant to show that these representations were false and material to the risk of insurance. The plaintiff's 6th prayer placed upon the defendant the burden of proving physical unsoundness at the time of making application for insurance, and the 8th prayer stated the measure of damages, in event of finding for plaintiff, to be $25 per week from the date of the accident to the date of bringing suit.

Of the defendant's granted prayers, the 3rd was that plaintiff could not recover unless the injuries complained of, independently of all other causes, continuously and wholly disabled him from prosecuting his occupation, and the tenth was, that as the statement of the plaintiff that he had received no indemnity for accident except from the Standard Company, was admittedly untrue, though warranted to be true, the verdict must be for defendant if the jury found such untrue statement related to a matter material to the risk of the insurance.

Of the defendant's rejected prayers, the 1st, 2d 6th and 7th sought to take the case from the jury; the 7th, because there was no legally sufficient evidence to warrant recovery; the 1st, because it did not appear that the injury complained of, independently of all other causes, continuously and wholly disabled the plaintiff; the 2nd, because the uncontradicted evidence showed that defendant was not in sound condition physically when the application for insurance was made, and the 6th, because the uncontradicted evidence showed that plaintiff had received indemnity for accident other than that received from the Standard Company.

The defendant's 4th prayer went upon the theory that the plaintiff warranted the truth of his statement that he was in sound physical condition, and that if this statement was not true in fact he could not recover, although made in absolute good faith.

The defendant's 5th prayer asserted that if plaintiff had a curvature of the leg which rendered it more susceptible to injury from a blow or fall, he could not recover unless the jury found his leg was an exception to this rule.

The defendant's 8th and 9th prayers asserted the measure of damages to be $25 per week from March 22d 1900, to May 11th, 1900, both these prayers being based upon evidence that on May 11th, 1900, plaintiff prematurely left his house and went upon the street, thereby bringing on a hemorrhage of the knee to which his subsequent disability must be attributed.

The main question in the case, and that upon which the correctness of most of the rulings of the lower Court depend, is whether the warranties made in an application for an accident insurance policy, are within the scope and operation of chapter 662 of the Acts of 1894, codified in Poe's Supplement to theCode, as sec. 142A of Art. 23. That section is as follows: "Whenever the application for a policy of life insurance contains a clause of warranty of the truth of the answers therein contained, no misrepresentation or untrue statement in such application, made in good faith by the applicant, shall effect a forfeiture or be a ground of defense in any suit brought upon any policy of insurance issued upon the faith of such application, unless such misrepresentation or untrue statement relate to some matter material to the risk." In granting the plaintiff's 5th and 6th prayers, and in rejecting the defendant's 1st, 2d 4th, 5th, 6th, 7th, 8th and 9th prayers, the Court acted upon the view that the case was governed by that section of the Code, and this we think is the correct view. There is no doubt that at common law the falsity of a warranty made in an application for an insurance policy, was a condition precedent to the legal existence of the policy, and defeated recovery, even though not material to the risk. As stated by LORD MANSFIELD in DeHahn v. Hartley, 1 Term Rep. 343, "There is a material distinction between a warranty and a representation. * * * It is perfectly immaterial for what purpose a warranty was introduced; but being inserted, the contract does not exist unless it be literally complied with." This is the law as stated in Kerr on Insurance, page 319, and Joyce on Insurance, par. 1964; and it was so held in this State in Mut. Ben. Association v. Wise, 34 Md. 597;Wineland v. Security Co., 53 Md. 297, and Fidelity Mut.Association v. Ficklin, 74 Md. 180.

But this rule was held to operate harshly and unjustly in many cases, and led the Legislature of Maryland, following the example of other States, to enact the Act of 1894, ch. 662, for the purpose of relaxing this rule and modifying the harshness of its operation, and, as said by the Supreme Court of Pennsylvania inLutz v. Metropolitan Co., 186 Pa. St. 527, in commenting upon a similar statute, "This Act has effected a wise and wholesome change in life insurance contracts, in sweeping away a class of merely technical objections to recovery."

It was earnestly and ably argued by defendant's counsel that it would appear upon a careful examination of all the legislation in this State relating to the various kinds of insurance contracts, that the Legislature never intended that sec. 142A should be applicable to accident insurance policies, and we have made such an examination; but without going into an analysis of this branch of the argument, we are of opinion that the question is concluded by sec. 32 of the Act of 1888, codified in Poe's Supplement as sec. 127 of Art. 23 of the Code, which in express terms declares that "any person, body politic or corporate, partnership or association, * * * making any engagement for the payment of any money, or other benefits in the event of sickness, accident, or death, or other contingency, * * * shall be deemed and taken to be a life insurance company within the meaning of thisarticle, and shall be subject to all the requirements of lawapplicable to said life insurance companies."

The will of the Legislature is here expressed in unambiguous terms. We have been furnished with no satisfactory reason for taking accident insurance companies out of its apparently designed operation, and the construction we have placed upon it is supported by the text writers, and by the best considered cases to which we have been referred upon the question.

Cook on Insurance, sec. 2, states the law thus: "Where the insurance is confined to accidental bodily injuries, and death resulting therefrom, it is commonly called accident insurance,which is however, merely a form of life insurance, and governedby the same general principles."

The 1st vol. of the 2nd ed. of Amer. and Eng. Enc. of Law, p. 785, says, "Accident insurance depends upon essentially the same principles as other kinds of insurance."

In Logan v. Fidelity and Casualty Company, 146 Mo. 114, it was held that section 5855, of Revised Statutes of 1889, declaring that suicide shall be no defense on a policy for the payment of so much money in case of death, or other contingencies stated, applies to policies issued by accident insurance companies as fully as to those issued by any other kind of life insurance companies. In that case the policy sued on, is identical in terms with the policy in this case. All the arguments urged in this case for defendant, were urged in that case and were full considered. A detailed history of the legislation of Missouri bearing upon the subject of life and accident insurance was given in the brief, in which it was argued that a class distinction was made between life and accident insurance, and the policies relating to such insurance, under separate articles appropriately entitled "Life Insurance," and "Insurance Other Than Life;" and that as each department was provided for by provisions and requirements peculiar to each, as a separate business venture, and as section 5855, first appeared in the department entitled "Life Insurance," that the provisions of that section related only to policies issued by life insurance companies as were treated of in that article. But the Court rejected this view, and after motion for reargument, overruled the motion, and adhered to the opinion.

The Court said: "The history of the legislation in this State furnishes no particular assistance in the matter of interpreting the meaning of section 5855. * * * It is the language of the section, and not its arrangement in the statute under one title or another, that must first be looked to to determine its meaning. * * * The real object of the section, as the clear terms of its language express, is to affect allpolicies of insurance on life, from whatever class, department, or line of insurance, the policy may be issued, or by whatever name or designation the company may be known. * * When a policy covers loss of life from external, violent and accidental means alone, why is it not insurance on life? Such a provision incorporated in a general life insurance company, admittedly would be insurance on life; then, why less insurance on life, because not coupled with provisions covering loss of life from usual or natural causes as well? * * * The mere addition of one or more features or elements in a contract of insurance on life, that may serve to give the policy or contract a particular designation in the business or insurance world, will not in the least divest the policy or contract of its chief character of insurance on life, or make the contract other than life insurance." The case before us is stronger than the Missouri case because there was in that State no statute similar to ours declaring that accident insurance companies shall be deemed life insurance companies, and shall be subject to all the requirements of law applicable to life insurance companies, The case ofTictin v. Fidelity and Casualty Company, 87 Fed. Rep. 543, decided in the United States Circuit for the Western District of Missouri, six months before Logan's case was decided, held that section 5855 of the Revised Statutes of that State did not apply to accident policies. But we prefer to adopt and follow the view of the State Court as the sounder and more salutary view.

Having determined that section 142A is applicable to this contract, the next question is whether the materiality of the alleged untrue statements, to the risk, is to be determined by the Court or by the jury, and under our own decisions there can be no doubt that question, in this case, is for the jury.

In Chew v. Bank of Baltimore, 14 Md. 299, JUDGE BARTOL said: "It is everywhere conceded that the materiality of the disclosure or concealment is a question of fact which must be submitted to the jury" and it was so held in Mut. Ins. Co. v. Deale, 18 Md. 50, and in Ficklin v. Fidelity Mut. Co.,74 Md. 184. There may be cases in which it would not be proper to submit this question to a jury, as in Lutz v. MetropolitanCo., 186 Pa. St., supra, where the plaintiff declared in his application that he had never had spitting or raising of blood, though the proof showed he had for a long time been subject to it, and that he died of consumption a year or two after the insurance was effected. But in that case while refusing to submit the question to the jury, the Court said: "Ordinarily questions of good faith and materiality are for the jury, and where it is doubtful whether the matter was material, the question of materiality must be submitted to the jury."

Applying these principles to the instructions now under consideration, it is clear without further discussion, that the defendant's 2d 4th, 6th and 7th prayers, all of which are based upon the theory that sec. 142A does not apply, were properly rejected. Its first prayer was also properly rejected because there was abundant evidence tending to prove that the disability of plaintiff was complete and continuous, and due to the injury complained of, independently of all other causes. Its fifth prayer was properly rejected, because a defective leg is not necessarily an unsond leg, and because susceptibility to inflammation from future accident is not present physical unsoundness.

Its eighth and ninth prayers were both properly rejected, because the doctrine of contributory negligence which they invoke is not applicable in this case. Cook on Insurance, sec. 49 and 51. Providence Life Ins. Co. v. Martin, 32 Md. 313.

The plaintiff's fifth and sixth prayers rest upon the theory that sec. 142A applies as we have determined it does, and there was no error in putting the burden of proof upon the defendant as they do. "The defense of forfeiture must be pleaded and proven by the insurer." Kerr on Insurance, p. 778. "The burden is upon him who claims a forfeiture to show that he is clearly entitled to it." Idem, 432; Kasten v. Interstate Casualty Co.,99 Wis. 73; Jones v. U.S. Mut. Accident Association, 92 Iowa 652; Mut. Ben. Life Ins. Co. v. Wise,34 Md. 597. No objection was made in the brief, or at the argument, to the granting of plaintiff's eighth prayer on the measure of damages, and we presume it was waived. Finding no error in the rulings of the Court, the judgment will be affirmed.

Judgment affirmed with costs above and below.

(Decided March 31st, 1903.)