Washington Fidelity National Insurance v. Burton ( 1932 )

Mr. Justice Butler

delivered the opinion of the Court.

Respondent sued in the municipal court of the District of Columbia to recover the amount of an insurance policy issued by petitioner December 12, 1927, on the life of her husband, who died May 22, 1929. The policy was delivered to the insured and all premiums were paid in the District of Columbia where he lived. Adequate proof of death, plaintiff’s demand for payment and defendant’s refusal to pay were conceded. The policy contained these provisions: “ This Policy constitutes the entire agreement between the Company and the Insured and the holder and owner hereof. ... If the Insured ... is not in sound health on the date hereof . . . the Company may declare this Policy void . . Section 657 of the District Code (Act of March 3, 1901, 31 Stat. 1294, as .amended by Act of June 30, 1902, 32 Stat. 534) provides: “ Each life insurance company, benefit order and association doing a life insurance business in the District of Columbia shall deliver with each policy issued by it a copy of the application made by the insured so that the whole contract may appear in said application and policy, in default of which no defense shall be allowed to such policy on account of anything contained in, or omitted from, such application.” The company did not deliver with the policy or otherwise a copy of an application therefor. Indeed, there was no evidence that any had been made. Defendant offered evidence to show that, at the date of the issue of the policy, the insured was not in sound health. Plaintiff objected on the ground that no copy of the application was delivered with the policy. The court, relying on the statute, sustained the objection and refused to permit defendant to interpose that defense and gave judgment for plaintiff. The Court of Appeals affirmed. 56 F. (2d) 300.

The sole question is whether § 657 was rightly construed.

The Court of Appeals assumed as a matter of common knowledge that life insurance polices are issued on written applications and that in this case one had been made by the insured. Without deciding whether that assumption is warranted, we shall consider the case as if it were shown that the assured applied in writing for the insurance in question. In the absence of a statute forbidding it, contracts of insurance may be made orally. Relief Fire Ins. Co. v. Shaw, 94 U. S. 574. There is no such prohibition in the District of Columbia. In § 657 the word “ policy ” and the phrase “ a copy of the application” plainly indicate that writings are meant (Trustees of the First Baptist Church v. Brooklyn Fire Ins. Co., 19 N. Y. 305, 308), and that the statute does not extend to oral applications. The construction generally put upon enactments like the one before us indicates that the principal if not the only purpose is that, if there be an application, a copy of it shall be attached to or otherwise delivered with the policy so that the documents showing the entire agreement shall be made available to the insured.^* That serves to guard the insured against misunderstanding as to his contract and, in case of controversy with the company, to protect him against surprise, inconvenience and danger of injustice liable to arise where the policy does not contain the entire agreement and refers for parts of it to applications or other papers. That purpose is reflected clearly by the clause that, in default of the required delivery of a copy of the application, no defense shall be allowed to such policy on account of anything “ contained in, or omitted from, such application." And the barring of such defenses is the only consequence declared to result.

Here the policy definitely declares that it constitutes the entire agreement between the parties. The defense interposed is based solely on one of its provisions and has no relation to the application. The section does not require written applications to be made or declare that, where one is made but not delivered with the policy, there shall be no defense based on the provisions of the policy itself. And no reason is suggested in support of a construction of the section that would prevent defense based on a provision of the policy even though a similar or the same provision were contained in an application. As this policy expressed the entire agreement defendant, notwithstanding its failure to deliver a copy of the application, was entitled to interpose such defenses- as would have been open to it if no application had been made. MacKinnon & Co. v. Mut. Fire Ins. Co., 89 Ia. 170, 173; 56 N. W. 423. Imperial F. Ins. Co. v. Dunham, 117 Pa. 460, 473; 12 Atl. 668. It follows that § 657 furnishes no support for the refusal of the trial court to permit defendant to show that the insured was not in sound health when the policy was issued.

Judgment reversed.

* MacKinnon & Co. v. Mut. Fire Ins. Co., 89 Ia. 170; 56 N. W. 423. Rauen v. Insurance Co., 129 Ia. 725; 106 N. W. 198. Kirkpatrick v. Accident Co., 139 Ia. 370; 115 N. W. 1107. Lenox v. Insurance Co., 165 Pa. 575; 30 Atl. 940. Washington Fire Relief Assn. v. Albro, 130 Wash. 114; 226 Pac. 264. Metropolitan L. Ins. Co. v. Scott, 160 Miss. 537; 134 So. 159.