Johnson v. New York Life Insurance Co.

May 16, 1932. The opinion of the Court was delivered by This action was brought by the plaintiff, as co-beneficiary, to recover under a policy of insurance alleged to have been issued by the defendant, New York Life Insurance Company, on the life of Leonard C. Johnson, her husband. Among other defenses, the company set up that the policy was void in its inception on account of fraudulent representations made by the insured to obtain the insurance. At the trial of the case defendant made a motion for a directed verdict on various grounds, one of which was, in effect, that the insured had consulted and been treated for alcoholism by at least two physicians within the five years preceding the date of the application; that, although the insurer was entitled to know this fact, the insured concealed it from the company and its medical examiner; and that such concealment rendered the policy void in its inception. The trial Judge overruled the motion, and the jury rendered a verdict for the plaintiff. Defendant appeals, assigning numerous errors, among them being the refusal to direct a verdict on the ground above set out.

We think the exception raising this point must be sustained. Part II of the application signed by the insured consists of a printed schedule of questions with the answers thereto written by the medical examiner in accordance with information given by the applicant. It contains the following:

"Q. How frequently, if at all, and in what quantity do you drink beer, wine, spirits, or other intoxicants? A. None.

"Q. How frequently, if at all, and in what quantity have you drunk any of them in the past? A. An occasional drink.

"Q. Have you within the last five years any of them to excess? A. No."

There are also questions as to whether insured had ever consulted a physician for, or suffered from, any ailment or disease of the brain, nervous system, heart, blood vessel, lungs, skin, etc., to all of which questions the defendant's answer was "No." Then follows this question: "Have you ever consulted a physician or practitioner for any ailment or disease not included in your above answers?" (There are further inquiries as to the name of the ailment or disease, number of attacks, date, duration, severity, results, and, if within five years, name and address of every physician or practitioner consulted.)

The answer to this question was that insured had suffered one mild attack of influenza, of ten days' duration, in 1918, and that he had been given two treatments with cold vaccine in 1928 and 1929, with good results, by Dr. Ritter.

The next question is: "What physicians or practitioners, if any, not named above, have you consulted or been examined or treated by within the past five years?" (Along with the name and address of any such physician or practitioner, and the date of and reason for consultation, examination, or treatment, and the results.) The answer was "None."

Appellant does not contend that the answers to the medical examiner's questions constituted warranties, but concedes that they were merely representations, and that, in order to avoid the policy, it must be shown that they were fraudulent. In this respect the case differs fromGambrill v. Insurance Co., 83 S.C. 236, 65 S.E., 231, in which it was held that a statement in the application that the insured had no medical or surgical treatment in five years, if untrue, avoided the policy, since in that case the truth of the statement was warranted by the applicant. Where a statement of fact in an application is only a representation, its mere falsity is not sufficient to avoid the policy, its materiality and the good faith of the applicant in making it being important considerations. Under the issues made in the case at bar, it would be necessary for the defendant to show that the statements in the application relied on to defeat the policy were untrue, that their falsity was known to the applicant, that they were material to the risk and relied on by the insurer, and that they were made with intent to deceive and defraud the company.

Let us examine the record with reference to these questions. The undisputed testimony shows that, during the five years immediately preceding the signing of the application, the insured had been treated by physicians for alcoholism on ten different occasions, on one of which he was confined to a hospital; that some of such periods of illness would last from one to four weeks; and that he was advised by one of the attending physicians to discontinue the use of alcohol as the physician thought it would ruin his health. It is inconceivable that, under the circumstances, the insured did not know that his answer to the question as to whether he had consulted a physician, etc., was untrue. The case is different in this respect from Rogers v. Insurance Co.,135 S.C. 89, 133 S.E., 215, 45 A.L.R., 1172, in which the question was whether the insured knew that he had suffered from cancer. One may well suffer from cancer without knowing it, and the evidence in that case was clearly susceptible of the inference that the insured did not know that he had that dread disease. In the case at bar the insured was treated on ten different occasions by physicians for alcoholism, which is a diseased condition of the system resulting from excessive drinking of alcoholic liquor. The facts clearly were of such nature that Johnson could not fail to know them when answering the question in the application as to his consultation of physicians — certainly they were of such nature that he would be conclusively presumed to know them. See Gambrill v. Insurance Co., supra.

As to materiality, a representation is material when the insured knows, or has reason to believe, that it will be likely to influence the insurance company either in fixing the amount of premium or in rejecting the risk altogether. Pelzer Manufacturing Co. v. Sun Fire Office,36 S.C. 213, 269, 15 S.E., 562; Stoney v. Union Insurance, Harp., 235. See, also, 32 C.J., 1288, where it is said: "A material matter is one which probably will affect the decision of the company as to the making of the contract or as to its terms." The testimony in this case shows beyond peradventure that the facts with reference to the applicant's consultation of physicians were material to the risk within these definitions and were relied upon by the insurer.

Finally, the intent with which representations or misstatements of facts are made is a thing that is locked up in the heart and consciousness of the applicant. It may be shown by his express words, or it may be deduced from his acts and the facts and circumstances surrounding the making of the misrepresentations, though on this question the mere signing of the application containing the answers alleged to be false is not conclusive. Huestess v. InsuranceCo., 88 S.C. 31, 70 S.E., 403. Under the circumstances of this case, we do not see how any reasonable inference as to the applicant's intent in making his answer to the questions under consideration could be drawn from the undisputed facts other than that he deliberately intended to deceive the company and thereby procure the insurance.

No question of waiver or estoppel is here involved, as there is no evidence tending to show that the soliciting agent or any other representative of the insurance company had any knowledge of the facts misrepresented by the applicant.

Attention is directed to the fact that the decision in this case rests solely upon the representations in the application as to the applicant's consultation with and treatment by physicians, and not at all upon the representations as to his drinking intoxicants. Plaintiff's counsel objected to testimony as to insured's drinking, on the ground that the answer contains no allegations of misrepresentations in that respect, and that the company would be limited to the particular misrepresentations pleaded. For the purposes of this appeal that point is conceded, but, in order to establish the materiality or immateriality of the representations as to insured's consultation with and treatment by physicians, it was proper to admit testimony showing the nature and extent of the ailment or disease for which the consultation and treatment were had.

We recognize that, ordinarily, the question of fraud in a case of this kind is for the jury, but we feel that this is one of those rare cases in which the undisputed facts can reasonably give rise to only one inference, namely, that the policy was procured by fraud. The trial Court should have directed a verdict for the defendant on that ground.

Under this view of the case it becomes unnecessary to consider any of the other questions raised by the appeal.

Reversed and remanded, with instructions that judgment be entered up for the appellant under Rule 27 of this Court.

MR. CHIEF JUSTICE BLEASE and MESSRS. JUSTICES COTHRAN and BONHAM concur.