National Union v. Arnhorst

Mr. Justice Windes delivered the opinion of the Court.

Appellant, a benefit insurance association, filed its bill December 23,1896, praying a decree declaring null and void and for a cancellation of its benefit certificate of insurance, issued May 16, 1895, to one of its members, Joseph Y. Arnhorst, in favor of appellee, his wife, as beneficiary, for the sum of $5,000. After a hearing before the chancellor the bill was dismissed for want of equity, from which decree this appeal was taken.

The bill alleges, and the proof shows, that when Arnhorst was examined for membership in the association as to his physical condition, personal and family history, by Dr. Johnstone, the medical examiner of the association, he was asked, among others, the following questions, and made the following answers, to wit: “ When did you last consult a physician % ” “Four and a half years ago.” “ What for % ” “ Acute bronchitis; two weeks ill; good recovery.” “ Give name and address of physician.” “ Dr. Eli McClelland, U. S. A., since deceased.” The bill further alleges that these answers were untrue, and known by Arnhorst to be untrue when made, and that they were made with intent to defraud the association.

The medical examination is on the same sheet of paper as Arnhorst’s application to become a member, and the answers are certified by him (he signing the certificate) to be correct.

The application, also signed by Arnhorst, contains the following statement: “ I do hereby consent and agree that any untrue statement made above or to the medical examiner, or any concealment of facts by me in this application, in regard to my health, habits or circumstances, or any suspension from or voluntary severing my connection with the order, shall forfeit the rights of nryself and my family or beneficiary to all benefits and privileges therein.”

The benefit certificate issued to Arnhorst, which is also signed by him, contains the following: “ This certificate is granted upon the express condition that all statements and representations made by the said member in his application for membership in said council .and all statements made to the medical examiner by him are true. The application of the member, a copy of which is hereto attached, is hereby made a part of this certificate.” * * * “I accept this certificate on the conditions herein named.”

The evidence also shows that the answers made by Arnhorst, as above detailed, were untrue—at least they did not contain the whole truth in relation to the matters inquired about by the medical examiner, in this, that it was shown by several witnesses that Arnhorst was, in September and December, 1893, and January, 1894, afflicted with what was termed by one of the physicians who attended him, gastroduodenitis, from which he suffered intensely; that hypodermic injections of opium, morphine and bismuth were used to relieve his sufferings; that during his illness he was treated by Drs. Mai and Appel, and that Dr. Mai at these times told Arnhorst the name of his ailment was gastroduodenitis, and appellee says Dr.- Mai also said at the second or third time he thought it was appendicitis, or • something similar.

There was evidence on behalf of appellee tending to show that on the first occasion Dr. Mai attended Arnhorst, he was only suffering from inflammation of the stomach, and that he was also mistaken in his diagnosis of Arnhorst’s trouble; also that the cause of his death, cancer, was in no way connected with or attributable to his condition at the time he was treated by Drs. Mai and Appel. We think this evidence was immaterial, for the reason the association was entitled to the full truth from Arnhorst at the time of his examination; his statements in his application and medical examination amounted to warranty, and had he told the truth, in all probability the benefit certificate would never have been issued to him.

Arnhorst died March 6, 1897, after having answered the bill and after his deposition had been taken. He testified that he did not read the whole application, but that he did not recollect whether the questions and answers of the medical examination were read to him or not, and that he was at liberty to examine the paper, if he had so desired, before he signed it. He also testified that to the question “ When did you last consult a physician 1 ” his answer was, “ I was attended by a physician within a year and a half, and again by one three years and a half,” but he did not testify as to what his answers were to the two questions following, “ What for i ” and “ Give name and address of physician.” He further testified that after he was treated by Dr. Mc-Clelland, he was also treated by Dr. Mai and two Doctors Appel, but the application and medical examiner’s report fail to show that either of these three physicians treated him, or for what they treated him.

That Arnhorst’s application was a part of the insurance contract between him and the association and his answers to the above questions put to him were warranties and must be truthfully answered in order that the contract of insurance bind the association is clearly the law, and fully established by the authorities, can not, in our opinion, be questioned. 3 Joyce on Ins., Secs. 1951, 1957, 1962, 1970, 1972, 1974, 1975, and cases cited; Bloomington Mut. Life, B. Ass’n v. Cummins, 53 Ill. App. 537 ; Morgan v. Bloomington Mut. Life B. Ass’n, 32 Ill. App. 81 ; Thomas v. Fame Ins. Co., 108 Ill. 91 ; Northwestern B. & Mutual Aid Ass’n v. Hall, 118 Ill. 169 .

If they are warranties, their materiality to the risk is immaterial, and the question of good faith and honesty of the insured is not important.

If the whole contract of insurance, including the application, medical examiner’s report and benefit certificate, when construed together, do not make the answers to these questions warranties, but simply representations, still they are certainly material to the risk, and must be substantially true in order to make the association liable. 1 Bacon on Ben. Societies, Sec. 212, 230a; Morgan case, supra; Cummins case, supra; Continental Life Ins. Co. v. Rogers, 119 Ill. 474 ; Cobb v. Covenant M. B. Ass’n, 153 Mass. 176 ; Metropolitan Life Ins. Co. v. McTague, 49 N. J. Law, 587.

Another reason why this insurance certificate should be declared void and surrendered for cancellation, is that (if these answers are material to the risk, and they certainly are) Arnhorst accepted the certificate knowing the misrepresentations made to the medical examiner, and retained it for more than a year and a half among his other valuable papers, where he frequently- saw it, and therefore must be charged with knowledge of what the answers were. By these acts he adopted and approved the answers, as written by the medical examiner, and appellee can not now claim any benefit from his contract based on his untruthful statements. The association had no knowledge that the statements were untrue until a few days before the bill was filed. New York Life Ins. Co. v. Fletcher, 117 U. S. 532 , and cases cited; American Ins. Co. v. Neiberger, 74 Mo. 167 ; Richardson v. Maine Ins. Co., 46 Me. 394 ; Goddard v. Monitor Ins. Co., 108 Mass. 56 .

The decree of the Superior Court is reversed, and the cause remanded, with directions to enter a decree granting the relief prayed in the bill.

Reversed and remanded with directions.