Livingston v. Insurance Co. , 115 S.C. 128 ( 1920 )

October 11, 1920. The opinion of the Court was delivered by The action is upon a contract of insurance, evidenced by a policy for $1.000, on the life of John F. Livingston. The defendant had a verdict, and the plaintiff has appealed from the judgment.

Let the exceptions be reported.

The charge of the Court amounted to a practical direction of the verdict, and that is the chief exception. The answer does not charge that the insured intended to deceive and defraud the company, nor does it recite circumstances from which that intent is reasonably inferable. The Court "ruled that no fraud was in the case." And though the appellant's counsel said at the bar that he had not conceded so much, only that he did not then or now charge fraud; yet neither by plea nor by proof is the issue of fraud presented. And it is bound to be so, for the agent who wrote the policy testified that he solicited the insured for four years before he secured a contract for $2,000, and that upon the agent's insistence $8,000 more was added to that. It is also in evidence that Mr. Livingston had in the same company a policy paid up some 20 years, and that he was a man of fine reputation.

The company's sole reason for rejecting the contract in issue lies in the single circumstance that the applicant answered "no" to the question: "Have you had any illness, or have you consulted any physician, in the last five years?" There was another question and answer pleaded in defense, one which asked if the applicant had ever had duodenal ulcer; but the appellant's counsel said at the bar that his chief reliance was on the answer to the question first above quoted, and especially to so much of it as inquired about consulting a physician; and we shall confine ourselves to that answer.

It is not contended by the defendant that the question and answer before quoted, by themselves alone, would avoid the policy. To accomplish that end reliance is chiefly had upon a stipulation in the policy. That stipulation, with irrelevant words omitted and the words in brackets supplied, reads thus:. "All statements [in the application] shall * * * be deemed representations and not warranties. * * * No such statement shall avoid this policy * * * unless it is contained in the written application."

The converse of the latter clause of that stipulation is that statements contained in the application shall avoid the policy. But there is no sense in such a stipulation; it is without meaning, and it must be read out of the contract. If the company meant to say that false statements in the application by the applicant should avoid the policy, it has not said so by expression or by necessary implication; it has said nothing like that. The applicant was not put on notice by the quoted stipulation that he must answer the questions correctly at the peril of a loss of his contract, and he never agreed to so much by the stipulation. If the applicant's answer was material to the risk, the applicant was not advised of it by the quoted stipulation and has not therein contracted about it, so that its materiality is irrelevant to the stipulation. But the defendant has also pleaded in defense to the action a declaration by the insured found in the application, and to the effect that the answer before quoted was "true," and that it should "form a part of the contract issued by the said company on my life." The testimony tends to show that the applicant had consulted a physician about two years before the answer was made. So that we come instantly upon the defendant's postulate that the applicant's unexplained and maybe inaccurate answer before quoted, though free from any taint of deceit, vitiates the contract of insurance. All the answers — and there were upwards of a half a hundred of them — were written by the hand of the soliciting agent or the examining physician; and the present contention even that any inaccurate and thoughtless answer thus made is fatal to the contract is ground for grave reflection. It is true that the counsel for defendant concedes that the challenged answer must be "material to the risk" in order to vitiate the contract. And that fetches us directly to that question, and we confine ourselves to it.

Whether the answer under consideration was "material to the risk" is a mixed question of law and fact.

The only testimony thereabout is that of the medical director, Dr. Muhlberg. He testified: "If any applicant states that he has consulted a physician within five years, our practice is to find out why he consulted a physician."

That is all.

The defendant has drawn the sword, and it must abide the practice of such. It has appealed to the letter of the contract; it must abide the letter of the testimony. It was bound to offer testimony tending to prove that in the instant case, had it known of the consultation, it would have "found out" the reason of the consultation; it did not do that. The witness did not say how he would "find out;" and he did not say that he would have rejected Dr. Gibbes' diagnoses and made one for himself; and, if he could say with any certainty what he "would have done," it would be hazardous to insurance contracts to make them depend upon what a person might have done under hypothetical circumstances. And at most, the issue of what the company "would have done" is one ordinarily for a jury, and not for a Court.

But we are satisfied that there is no testimony tending reasonably to prove that the instant answer was material to the risk, and that a verdict ought to have been directed for the plaintiff, and so much must yet be done.

The judgment is reversed.