Geer v. Union Mutual Life Insurance

The decedent in his application for insurance answered "No" to the question: "Have you had any treatment within the last five years at any dispensary, hospital or sanitorium;" and in answer to the direction, "Give name and address of each physician consulted by you during the past ten years, and cause for consultation," the decedent stated: "Dr. N.G. Darling, 31 North State Street, Chicago, Ill., Nervousness." The evidence shows that on October 4, 1928, the decedent visited Dr. Spire. Dr. Spire testified that according to notes made at that time, the decedent told him, "Returned from a long trip five days ago, had some coughing, felt bad the following day, took a laxative, has just a little hacking cough, his work takes him to large cities, has been nervous for the past six months, last April had influenza in Chicago. Has gained in weight past summer following that * * * illness." The physician examined the decedent at that time. He had a temperature of 102°. The physician treated him then but did not see him again till October 11th, one week later. Dr. Spire then sent him to the Syracuse General Hospital where he remained till October 26th. Dr. Spire diagnosed the decedent's ailment as para-typhoid and treated him for that ailment at the hospital, and after discharge from the hospital until December 17th, 1928, though the X-ray examination and the tests made at the hospital were negative and failed to show that the plaintiff was suffering from that disease. The hospital record, under the heading "Past History," states in part: "Felt badly and coughed. About Sept. 30/28 gradually became worse with no outstanding symptoms except cough and tired feeling. Had influenza in April/28 from which he never fully recovered." In 1932 the decedent again consulted Dr. Spire on two occasions. Then Dr. Spire diagnosed his ailment as nervousness.

Section 58 of the Insurance Law (Cons. Laws, ch. 28) provides that "all statements purporting to be made by the insured [in an application attached to the policy of life insurance] shall in the absence of fraud be deemed representations and not warranties." The effect of the statute is that a "misstatement, even though stated in the form of a warranty, if made in good faith and without this element of fraud passed into the same class as an ordinary representation and became a defense to the policy only if it was material. On the other hand, the effect of a misrepresentation was left unchanged by the statute. If material it constituted a defense although made innocently and without any feature of fraud; it was sufficient that it was material as an inducement for the issue of the policy, and was untrue." (Eastern District P.D. Works, Inc., v. Travelers Ins.Co., 234 N.Y. 441, 449.) Here, though the evidence conclusively establishes that the decedent in his application failed to disclose that he had consulted Dr. Spire or had been treated at a hospital within five years of the date of the application, the court submitted to the jury the question whether the decedent had in his application made a material misrepresentation. The jury decided that no material misrepresentation was made. The question presented is whether, upon the evidence, it conclusively appears that there was a material misrepresentation.

A life insurance company is free to choose the risks which it will assume. An applicant for life insurance is required to answer certain questions which are prepared for the purpose of facilitating the examination and appraisal by the company of the insurability of the risk. In effect the company states to the applicant that the answers to those questions are intended to guide the company in deciding whether to accept or reject the application. By posing the question the insurer has indicated "that it wanted to know the facts and that it intended and expected the applicant to speak the truth so that it might acquire information concerning them. Any misrepresentation which defeats or seriously interferes with the exercise of such a right cannot truly be said to be an immaterial one." (Travelers Ins.Co. v. Pomerantz, 246 N.Y. 63, 68.)

No method has been devised by which the processes of the human mind can be charted and the force of inducement mechanically measured. The materiality of a representation may then depend upon the idiosyncrasies or the individuality of the person who acts upon the representation, and often must be determined as a question of fact by the trier of the facts. Nevertheless at times, departure in a representation from an accurate statement of the truth may be so slight that we may confidently say that the difference could not affect decision of any reasonable person. Then as a matter of law the misrepresentation is not material. On the other hand, where an applicant for insurance has notice that before the insurance company will act upon the application, it demands that specified information shall be furnished for the purpose of enabling it to determine whether the risk should be accepted, any untrue representation, however innocent, which either by affirmation of an untruth or suppression of the truth, substantially thwarts the purpose for which the information is demanded and induces action which the insurance company might otherwise not have taken, is material as matter of law. The question in such case is not whether the insurance company might perhaps have decided to issue the policy even if it had been apprised of the truth, the question is whether failure to state the truth where there was duty to speak prevented the insurance company from exercising its choice of whether to accept or reject the application upon a disclosure of all the facts which might reasonably affect its choice. (Jenkins v. John Hancock Mut. Life Ins. Co., 257 N.Y. 289. Cf. Keck v. Metropolitan Life Ins. Co., 238 App. Div. 538; affd.,264 N.Y. 422.)

That does not mean that every failure to disclose each occasion upon which the applicant has visited or consulted a physician constitutes a misrepresentation, material or otherwise. A reasonable construction of a question in an application blank which calls for information about consultations with physicians or about medical treatments, may limit the scope of the question to consultations or treatments for ailments which are not trivial and exclude the applicant's "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." (Jenkins v. John Hancock Mut. Life Ins. Co., supra, p. 293. Cf. Travelers Ins. Co. v. Pomerantz, 246 N.Y. 63.) In such case the decision that failure to disclose a visit for medical advice creates no fatal infirmity in the policy of insurance thereafter issued rests upon construction of the application and determination that failure to disclose such a visit constitutes no suppression of the truth and, thus, no false representation that there had not been such a visit rather than upon determination that, though a false representation was made it was not material. True, the test of whether the ailments, for which medical advice or treatment was sought, were trivial, may be decisive in either view of the question, and there may in most cases be no occasion to draw such distinctions. As Judge FINCH points out, an applicant may hardly be expected to remember each occasion upon which he sought medical advice for a trivial ailment which passed away leaving no permanent effect; and a question in an application blank may not reasonably be construed as calling for information, which the person to whom the question is posed could not be expected to remember. That proposition is self-evident. Equally clear is the proposition that a failure by the applicant to disclose a visit which the applicant could not reasonably be expected to remember could not mislead the insurance company and, therefore, would not be a material misrepresentation. Thus in a case where the courts have held that the medical visit was for advice in regard to an ailment so trivial that an applicant was not called upon to remember or to give information concerning it, the courts have not always kept distinct, in word or thought, the grounds upon which failure to disclose information concerning medical visits might be regarded as inconsequential.

In this case the situation is quite different. We have an admission or statement made by the decedent to a physician whom he consulted in October, 1928, that the previous April he had an attack of influenza from which, it appears, he had not at that time recovered. We have conclusive proof that at that time the decedent was sent to a hospital where he remained for two weeks; that his physician diagnosed the decedent's ailment as para-typhoid and continued to treat him for almost two months after his discharge from the hospital, and that shortly before he signed the application, the decedent twice consulted the same physician for a nervous condition. It is quite possible, as Judge FINCH says, that none of the ailments for which the decedent consulted physicians and received hospital treatment permanently affected the decedent's health or made him a less desirable insurance risk. Even so, it can certainly not be said that the applicant could not reasonably be expected to disclose information about such consultation or hospital treatment. By no possible construction of the questions in the application blank can it be said reasonably that the question did not call for such information. Hence failure to disclose information called for by the question constitutes a representation that there had been no such consultation or hospital treatment. (Anderson v. AEtnaLife Ins. Co., 265 N.Y. 376, and cases there cited.) Thus in this case the only question is whether the representation, though false, was material to the risk as matter of law.

In Jenkins v. John Hancock Mut. Life Ins. Co. (supra, p. 293) we said that the question plainly indicated that "the insurer wished to know the details of any professional treatment * * * in order to decide whether it would issue a policy. The insurer did not make this a trivial inquiry, limited to cases where the patient was kept from work by the malady. It was made material to the risk. The insurer so determined and it was not for the insured to pass it over as trifling." To sustain the judgment in this case we must hold that though the insured might not "pass it over as trifling" the jury might do so.

Any decision that a misrepresentation is not material must of course be based upon a holding, as question either of law or of fact, that the departure from the truth was not a factor which deprived a person of freedom of action and did not induce a choice which otherwise might not have been made. In no case which has been called to our attention has a court of this or other jurisdiction enforced a policy where information demanded by an insurance company "in order to decide whether it would issue a policy" and which might reasonably be considered a factor in arriving at a choice has been withheld. The question in such case is not whether the company might have issued the policy even if the information had been furnished; the question in each case is whether the company has been induced to accept an application which it might otherwise have refused. "Any misrepresentation which defeats or seriously interferes with the exercise of such a right cannot truly be said to be an immaterial one." (TravelersIns. Co. v. Pomerantz, supra, p. 68.) There we held that proof of the withholding of information concerning medical consultations, though called for by a question in an application blank, requires in the absence of denial or explanation a finding of material misrepresentation.

That case has been followed in a number of later cases. Attempt is made to distinguish those cases on the ground that in all those cases the plaintiff, seeking recovery upon the policy, by claim of privilege arising from the relation of physician and patient, prevented the defendant from showing the nature of the ailment for which a physician was consulted, while here the plaintiff waived the privilege and invited disclosure. The fact that in those cases the plaintiff claimed the benefit of a privilege accorded by law, could, it is plain, not change the effect of a misrepresentation or shift the burden of showing that the misrepresentation was material. The only distinction, then, between those cases and the present case is that here the nature of the ailment is disclosed, while there it rested upon inference. The rule of law to be applied is the same in both cases. That rule is that where an applicant for insurance withholds information called for by question in an application blank, concerning medical advice for ailments which are not "mere temporary disorders having no bearing upon general health the inquiry was not to be passed over as trivial. It was made material to the risk." (Anderson v. AEtna Life Ins. Co.,265 N.Y. 376, 380.)

The salient features of the problem presented in this case are these: The insurance company did not agree that a jury might decide what risks the company should accept. It reserved that choice to itself, and in order to determine whether in a given case it should exercise that choice, it required certain information of each applicant. Here the applicant gave erroneous information, and the insurance company acted upon the information it received. If the truth had been disclosed it might perhaps have rejected the application or it might have accepted it. No person can say with any degree of certainty what action it would have taken, but it cannot be doubted that the erroneous statement deprived the company of its freedom of choice and that it acted upon a statement of facts which did not exist and if the truth had been disclosed, it might, reasonably, have acted differently. It follows then that the representation was material as matter of law.

Nothing said in this opinion should be construed as an approval of any argument that because the company by asking questions signifies that it will consider the answers in determining whether to issue the policy, it follows that any misrepresentation in the answer, however innocently made, is material as matter of law. To correct the misunderstanding apparent in the opinion of FINCH, J., I collate, though with new italics, what has been previously said on that point in this opinion. Misrepresentation in an answer, by affirmation of an untruth or by suppression of the truth, is material where it "substantially thwarts the purpose for which the information is demanded and induces action which the insurance company mightotherwise not have taken." The test is whether "failure to state the truth where there was duty to speak prevented the insurance company from exercising its choice of whether to accept or reject the application upon a disclosure of all the facts which mightreasonably affect its choice." The question is "not whether the company might have issued the policy even if the information had been furnished; the question in each case is whether the company has been induced to accept an application which it mightotherwise have refused."

There has never been any contention, dictum or decision in this court that if an insurance company evinces interest in the subject it thereby becomes material and no such contention is made in this opinion. The inquiry is "made material to the risk. The insurer so determined, and it was not for the insured to pass it over as trifling" (Jenkins v. John Hancock Mut. Life Ins.Co., 257 N.Y. 289); but innocent failure to give true answer to the "material" inquiry is itself material only where it "defeats or seriously interferes with the exercise of such a right [i.e., to accept or reject the application]." Such a misrepresentation cannot defeat or seriously affect the insurance company's right to reject the application where a disclosure of all the facts could not "reasonably" affect the choice of the insurer. Thus though the formulation of the test is somewhat different from that approved in Penn Mut. Life Ins. Co. v. Mechanics' Sav. Bank Trust Co. (72 Fed. Rep. 413) and Mutual Life Ins. Co. v.Ontario Metal Products Co., ([1925] App. Cas. 344), the test is essentially the same. Under each test materiality is a matter of degree and a misrepresentation through concealment of a fact in regard to a condition of health or physicians consulted, is material where it appears that a reasonable insurer would be induced by the misrepresentation to take action which he might not have taken if the truth had been disclosed.

In Mutual Life Ins. Co. v. Ontario Metal Products Co. (supra), which is said to be precisely in point, it appeared that the misrepresentation consisted in failure to disclose treatment for a temporary disorder which was not a disease, did not cause the applicant to lose a single day of work and was due only to overwork or lack of exercise. As said earlier in this opinion, the rule in this State is that where an applicant for insurance withholds information called for by questions in an application blank concerning medical advice for ailments which are not "mere temporary disorders, having no bearing upon general health the inquiry was not to be passed over as trivial. It was made material to the risk." (Anderson v. AEtna Life Ins. Co.,supra.) In all the cases cited in the opinion of FINCH, J., or in the brief of the respondents, the misrepresentation either did not refer to health or medical treatment, or referred to "mere temporary disorders having no bearing upon general health." None of them are inconsistent with what was said in the Anderson case or is said in this opinion.

The judgments should be reversed and the complaints dismissed, with costs in all courts.