McCollum v. New York Mutual Life Insurance

Macomber, J.

This action is brought upon 10 policies of insurance, of $5,000 each, issued by the defendant to William S. McCollum, December 22, 1885, the loss in each policy payable to his personal representatives. The defenses are; (1) Within two months after the issuing of the policies, and in the month of February, 1886, the defendant rescinded the contract of insurance, and offered to return to the insured the premium which he had paid upon each policy, upon the ground that the policies were secured by fraud; (2) a breach of warranty in the application for such insurance, wherein the insured represented that he had no other insurance upon his life at the time of application for these policies; (3) a breach of warranty in,the application, in that he represented that he had never before been attended by any physician for sickness; (4) that the insured committed suicide.

The attempt on the part of the company to rescind the contract of insurance in the month of February, 1886, was unsuccessful as a matter of negotiation, because the insured refused to accept the return of the premium and surrender the policies. What the result of an action in equity to accomplish the ob *250 jeet sought would have been it is not needful to pause to inquire. The several policies remained unrescinded and outstanding at the time of the death of the insured, which was caused by á pistol shot, on the 25th day of June, 1886.

It is claimed by the learned counsel for the appellant that this attempted rescission of the original contract before the death of the insured, and a refusal to pay the amount of insurance after his death to his personal repreientative, upon the ground that there was no contract of insurance outstanding, because the same had been secured by fraud, precludes the setting up of the defenses of a breach of warranty, both in respect to the matter of previous life insurance and the matter of being attended by a physician. In this contention we cannot concur with counsel. This case is clearly distinguishable from that of Brink v. Insurance Co., 80 N. Y. 118 , and other like cases. The case before us does not present a merely technical defense, as did the case of Brink v. Insurance Co., supra. The charge of fraud under which it was attempted by the defendant to repudiate the contracts two months after the issuing of the policies was not based upon any specified false or fraudulent representation or false warranty contained in the application, but arose from the conclusion arrived at by the company’s officers that through certain false representations the insured had been enabled to get a larger life insurance than, he was able to carry, and that his purpose was to relieve his own financial embarrassment by making reclamation upon this company. There is nothing in the selection of legal position by the company so taken which would preclude it from setting up any substantial defense upon the merits. The claim that there is no outstanding contract of insurance, but that the same had been rescinded for fraud, does not preclude the company from setting up a breach of warranty in case an action is brought upon the policy. There is no election of remedies which determines the rights of any party, as was the case of Insurance Co. v. Minch, 53 N. Y. 144 . We see nothing inconsistent, either as a matter of pleading or as a matter of substantial defense, in having denied the existence of the contract, and the setting up of the special defenses thereto growing out of a breach of warranty.

The insured answered “Ho” to the following question: “Are you now insured in any other company?.” It was shown that, at the time he made this answer, he held certificates of membership of insurance on his life for $3,000 in the Buffalo Life & Reserve Association, and for $2,500 in the Rochester Mutual Aid & Accident Association. This question was material to the risk, and called for important information. Of this there can be no question. It is argued, however, by appellant’s counsel, that such other life insurance was not in the regular and authorized insurance companies, but was in aid and accident associations, and that insurance in such last-named companies was not a breach of the warranty. But by chapter 175, Laws 1883, § 5, such companies are unquestionably life insurance companies. They have been so treated uniformly by the courts. Mayer v. Association, 42 Hun, 237 ; Sherman v. Com., 82 Ky. 102 .

It is insisted, however, on the part of the plaintiff, that the agent of the company was told by McCollum of the existence of these outstanding policies, and that the agent advised him that the question in the application did not refer to such associations. From this it is argued that the company itself is es-topped to deny the correctness of the advice so given by the agent, and the case of Grattan v. Insurance Co., 80 N. Y. 281 , is cited as an authority upon that proposition. In that case, and in all other cases preceding and succeeding it, where the rule here sought to be enforced was enunciated, the agent was acting palpably within the scope of his authority, and the company was, in each case, charged with responsibility for his acts. In the case before us the limitations of the powers of the agent were brought directly to the attention of the insured; for printed on the application signed by McCollum, and *251 on the back of each of the policies, was the following conspicuous notice: “Powers of Agents. Ho agent has power to bind the company by receiving any representations or information not contained in the application for this policy.” The expression of opinion, therefore, of the agent, that such prior insurance was not called for by the question, cannot justify the false answer made to the question put to the insured. Chase v. Insurance Co., 20 N. Y. 52 . We think that this alleged breach of warranty was established at the trial, and was a defense to the action.

The insured was also asked, by a question contained in the application: “Question. When were you last attended by a physician? Q. For what disease or ailment?” He answered those questions as follows: “Answer. He ver for sickness.” These questions also called for important information, which the insured was bound to give truthfully. This answer was made in the application, December 16, 1885. There was produced and put in evidence an application of the deceased made to the Buffalo Life & Reserve Association, dated Hovember 5, 1885, six weeks previous to the application made to this defendant, in which were the following questions and answers: “Question. When were you last attended by a physician? Q. For what disease? Q. Give name and residence of physician. Answer. Eight years ago; tonsilitis; Dr. Talbot, Suspension Bridge.” The absolute truth of the statement contained in the application made to this defendant was warranted by the terms of the contract, as follows: “It is hereby declared and warranted that all the statements and answers, as above made, are complete and true, and that they, together with this declaration and agreement, constitute an application to the Mutual Life Insurance Company of Hew York for a policy of insurance, and are offered as a consideration for the policy hereby applied for, ” etc. Ho other evidence of the truth or falsity of the insured’s answer to these questions in the application to the defendant was given. Even if the question was immaterial to the risk, yet the company was entitled to a truthful answer to it, and any untrue statement would vitiate the policy. Dwight v. Insurance Co., 103 N. Y. 344 , 8 N. E. Rep. 654; Foot v. Insurance Co., 61 N. Y. 571 ; Cushman v. Insurance Co., 63 N. Y. 404 .

It is argued, however, by counsel for the appellant, that tonsilitis is not a sickness, within the meaning of McCollum’s answer in the application for these policies. It is shown, however, by the testimony of Dr. Eddy, that tonsilitis is an inflammation of the tonsils, called by the common term “quinsy, ” and commonly results from a cold, and that a person who has had it is much more liable to have his throat affected by colds than he would otherwise be; that it is liable to make a man quite ill, and is oftentimes an indication of a scrofulous tendency. Ho effort was made at the trial to prove that the deceased was not in fact as ill as serious tonsilitis might cause him to be. But the deceased himself, who was a medical man, seems to have had no idea that tonsilitis was not a disease; for, in the question put to him in his application to the Buffalo Life & Reserve Association, he was asked when he was last attended by a physician, not for any mere ailment, but “for what disease.” His answer was: “Eight years ago; tonsilitis. ” The proof of these two false warranties, being wholly in writing, imposed upon the court the duty of deciding the same as matters of law, and precluded the court from submitting them to the consideration of the jury. Dwight v. Insurance Co., 103 N. Y. 342 , 8 N. E. Rep. 654. If we are right in these views, it becomes unnecessary to consider the evidence relating to the question whether or not McCollum committed suicide. Judgment and order should be affirmed. All concur.