LANGDEAU v. JOHN HANCOCK MUT. LIFE INS. CO

Insurance, Life. Evidence. In an action on a policy of life insurance, where the defence was that certain representations made by the insured in his application for insurance were false and either were made fraudulently or were material to the risk and avoided the policy, the policy stated that it was issued "in consideration of the statements and agreements in the application herefor, which are hereby referred to, and as warranties made a part of this contract, and of the premium" named. The presiding judge under R.L.c. 118, § 73, admitted in evidence an application for insurance by the insured, containing the representations in question, of which a copy was attached to the policy, although a so called proposal for insurance upon the other side of the same paper was not included in the copy attached to the policy and was excluded by the judge. The portion of the contents of the paper of which the copy was annexed included the questions and answers attested by the medical examiner and the statement signed by the applicant that these questions and answers should form the basis and become a part of the contract of insurance, and all the material portions under the designation "proposal for insurance" on the other side of the paper were incorporated by repetition in the part called the "application," of which the copy was annexed, except that the name of the beneficiary, a brother of the insured, appeared only in the "proposal for insurance." The terms of the policy and of the application gave the insured the right to change the beneficiary from time to time by a notice in writing subject to the approval of the company. Held, that, as the omission of the name of the beneficiary in no way affected the right of the company to avoid the contract, the ruling of the judge admitting the application in evidence as part of the contract was correct.

In an action on a policy of life insurance by an assignee from the beneficiary named in the policy, if the contract of insurance was obtained by misrepresentations of the insured made with actual intent to deceive or if a matter misrepresented by him increased the risk, the plaintiff under R.L.c. 118, § 21, cannot recover on the policy.

In an action on a policy of life insurance dated in December, 1904, where it appeared that in the application of which a copy was attached to the policy the insured had answered in the negative the questions whether he used ardent spirits, wine or malt liquors, and whether he ever had used them to excess, the defendant, without objection from the plaintiff, introduced in evidence a record of a court in a city in another State showing that in 1898 the insured had pleaded guilty to a charge of drunkenness, had been found guilty and had paid the fine imposed, followed by testimony of numerous witnesses tending to prove habits of intoxication on the part of the insured and his use of intoxicating liquor to excess. Against the exception of the plaintiff the presiding judge admitted in evidence the record of the conviction of the insured in the police court of Chicopee in September, 1903, showing that he pleaded guilty to the crime of drunkenness and was fined $5, which he paid, and also admitted, subject to the plaintiff's exception, in answer to a question in regard to the use of intoxicating liquors by the assured the answer "He was a man, at that time, who was frequently under the influence of liquor on the street, especially Saturday afternoons and through Sundays. That would be his time of leisure." Held, that the evidence was admitted properly upon the issues of the falsity of the representations made by the insured and his knowledge that they were false.

In an action on a policy of life insurance where it appeared that in the application of which a copy was attached to the policy the insured represented that he never had been rejected for life insurance by the defendant or any other company, there was uncontroverted evidence that less than a month before his application to the defendant the insured had applied to another company for insurance and had been rejected, but there was no direct evidence that he had been informed of the rejection. Held, that it was a question for the jury whether under the circumstances disclosed by the evidence the insured should have drawn the inference that his proposal had been rejected.

In an action on a policy of life insurance it appeared that in the application of which a copy was attached to the policy the insured represented that he never had been rejected for life insurance by the defendant or any other company. The question in the application read, "Have you ever been rejected or postponed by this or any other company or society?" The plaintiff asked for an instruction that this question "should be construed as referring to rejection or postponement for insurance of the same class and kind as that applied for in said application." The presiding judge refused to give this instruction. Held, that the refusal was right, as the inquiry was not limited to any particular kind of contract, but was intended to elicit information upon the question whether insurance in any form had been refused upon the application of the insured.

BRALEY, J.

The answer among other defences specifically alleged that under the application the representations of the insured that he never used intoxicating liquors, or, if so, that he never had used them to excess, and that he had not been rejected or "postponed" by any other insurance company, or society, were false, and being either fraudulently made, or material to the risk, avoided the policy. R.L.c. 173, § 27. Kidder v. Order of the Golden Cross, 192 Mass. 326. The admissibility of these representations depends upon the correctness of the ruling, that the proposal for insurance formed no part of the application, a copy of which under R.L.c. 118, § 73, unless attached to the policy cannot be considered as forming a part of the policy or introduced in evidence. Considine v. Metropolitan Ins. Co. 165 Mass. 462. Johnson v. Mutual Ins. Co. of New York, 180 Mass. 407, 408. This requirement was not a rule either of construction or of evidence at common law, but "the object of the statute is to prevent companies from holding insured persons bound by a contract in writing of which they have no copy." Holden v. Prudential Ins. Co. 191 Mass. 153, 157. In the policy furnished, which purported to have attached a correct copy of the application, the proposal was wholly omitted, and only the questions and answers attested by the medical examiner, and the statement signed by the applicant that these questions and answers should form the basis and become a part of the contract of insurance were annexed. While an oral contract for insurance is valid, it is universally customary to embody the terms of the contract in the policy, which usually does not recite the conditions upon which it is issued, but incorporates them by a general reference to a separate paper, usually termed either the declarations or proposal or application of the party desiring insurance. Holmes v. Charlestown Mutual Ins. Co. 10 Met. 211, 214. When completed such negotiations are supposed to include all the essential terms of the proposed contract, of which they form a part, Scammell v. China Mutual Ins. Co. 164 Mass. 341, 342, and, although the general designation by which they are incorporated may vary according to the practice adopted by different companies, yet to ascertain the material provisions of the contract the inquiry is the same, namely: What did the insured offer to which reference is made, and how far has this offer been accepted by the company? Daniels v. Hudson River Ins. Co. 12 Cush. 423. Miles v. Connecticut Mutual Ins. Co. 3 Gray, 580. Harris v. North American Ins. Co. 190 Mass. 361.

Omitting all reference to memoranda which neither party contends to be material, these preliminary negotiations are found on the first and second pages of a paper referred to in the exceptions as exhibit "J." The first page purports to be a proposal for insurance "on the whole life plan" at a special weekly premium, signed by the insured, who is referred to under his signature as "the person to be insured," while the second page, signed by him as the "Applicant" is designated as an "Application for Insurance." In the policy this language is found: "in consideration of the statements, and the application herefor which are hereby referred to, and as warranties made a part of this contract, and of the premium . . . to be paid" upon the death of the insured if the policy is in force the company agrees to pay the amount of insurance to the beneficiary, if living, last nominated "whether in the proposal herefor, or in any written amendment thereto filed with, or approved by the company." It is manifest from a comparison of the contents of this paper, exclusive of the medical examination, that all the material portions designated as the proposal were by repetition incorporated in the part called the "application" which was made the basis of the contract, even if the name of the beneficiary appeared only in the proposal. When the insured received the policy with a copy of this application annexed he was put in possession of the entire contract with this exception, but as the exception in no wise affected any essential element of the contract upon which the right of the company to avoid it depended, and of which the insured was entitled to a copy, the statute was satisfied, and the ruling admitting the application in evidence as a part of the contract was correct.

Until the death of the insured his designation of a beneficiary, being subject to change with the consent of the insurer, was ambulatory and constituted a mere expectancy, but, there having been no appointment subsequent to the proposal, upon the happening of this event the interest of the plaintiff's assignor, who had been designated, became vested, and by assignment passed to the plaintiff. Tepper v. Royal Arcanum, 14 Dick. 321. Spengler v. Spengler, 20 Dick. 176. Hopkins v. Hopkins, 92 Ky. 324. Union Mutual Association v. Montgomery, 70 Mich. 587. Life Association v. Winn, 96 Tenn. 224. Martin v. Stubbings, 126 Ill. 387. Compare Rawson v. Milwaukee Mutual Ins. Co. 115 Wis. 641, 647. See also Pingrey v. National Ins. Co. 144 Mass. 374, 382; Central Bank of Washington v. Hume, 128 U.S. 195.

By reason of privity of title, if the insurance had been payable to the insured, upon suit by his administrator or executor the record evidence of his plea of guilty to the charge of drunkenness, made before the application was presented to the company, would have been competent. Noyes v. Morrill, 108 Mass. 396. Stockwell v. Blamey, 129 Mass. 312. Fellows v. Smith, 130 Mass. 378. But, while the plaintiff claims under the beneficiary, his right to recover like that of his assignor is derived from the insured, and rests upon the validity of the contract. R.L.c. 173, § 4. Andrews v. Turtle-Smith Co. 191 Mass. 461. Life Association v. Winn, ubi supra. Smith v. National Benefit Society, 123 N.Y. 85. Van Frank v. United States Masonic Benevolent Association, 158 Ill. 560. Connecticut Ins. Co. v. Hillmon, 188 U.S. 208. This contract was voidable by the company if fraudulently obtained either by misrepresentations made with actual intent to deceive, or if the matter misrepresented increased the risk. R.L.c. 118, § 21. Ring v. Phœnix Assurance Co. 145 Mass. 426. Durkee v. India Mutual Ins. Co. 159 Mass. 514.

If the insured used ardent spirits to excess his habits of inebriety were material upon whether he was an insurable risk. Rainger v. Boston Mutual Life Association, 167 Mass. 109. In support of its contention that the negative answers to the questions concerning this habit were false, without objection the defendant introduced the evidence of many witnesses, and a previous plea of guilty to a similar charge, which tended to prove that for a long time previous to the application the insured was addicted to habits of intoxication. It further appears that, as the evidence to which the exception was taken was within this period, it is not open to the objection of being so remote as to have no evidentiary value. The issue was the falsity of the representations, and this fact could be established only upon proof of habits of drunkenness shown by his conduct, of which he must be presumed to have had knowledge and to which if living he could have testified. Dolan v. Mutual Reserve Fund Association, 173 Mass. 197, 201. O'Connell v. Cox, 179 Mass. 250, 254. Swift v. Massachusetts Mutual Ins. Co. 63 N.Y. 186, 191. Smith v. National Benefit Society, ubi supra. Welch v. Union Central Ins. Co. 108 Iowa, 224. Sutcliffe v. Iowa State Traveling Men's Association, 119 Iowa, 220. Life Association v. Winn, ubi supra. Connecticut Ins. Co. v. Hillmon, ubi supra. Kelsey v. Universal Ins. Co. 35 Conn. 225. Asbury Ins. Co. v. Warren, 66 Maine, 523. R.L.c. 175, § 66.

If the unqualified answer to the seventeenth question as to previous insurance was untrue, and made with actual intent to deceive, the misrepresentation avoided the policy, and this question ordinarily is one of fact for the jury to determine under suitable instructions. Coughlin v. Metropolitan Ins. Co. 189 Mass. 538, 539, and cases cited. Mutual Benefit Ins. Co. v. Wise, 34 Md. 582. Towne v. Towne, 191 Ill. 478. While the evidence was uncontroverted that a short time before the policy in suit was issued the insured had made application to another company for insurance and had been rejected, there was no direct proof that he had been informed of the rejection, but, the representation being false, it was for the jury to say under all the circumstances disclosed by the evidence whether as a man of average capacity in the ordinary course of human affairs the insured should have understood that his proposal had been unfavorably acted on and should have drawn the inference that it had been rejected. American Union Ins. Co. v. Judge, 191 Penn. St. 484. In the instructions given, which adopted not only the fourteenth request of the defendant but the seventh request of the plaintiff, the jury were instructed correctly that unless they found constructive notice by which the insured was chargeable with such knowledge, this ground of defence could not prevail.

The plaintiff's eighth request was refused properly, as the inquiry was not limited to any particular kind of contract, but was intended to elicit information whether upon his application insurance in any form had been refused.

An exception to the further instruction that if the risk of loss was thereby increased the plaintiff could not recover, has not been argued, and must be treated as waived.

Exceptions overruled.