Opinion
No. 30699.
October 2, 1933.
1. INSURANCE.
Ordinarily, insured may recover premiums paid, with interest, when insurance policy, though delivered, never took effect, but was invalid throughout.
2. INSURANCE.
Insured, guilty of actual fraud, involving moral turpitude, in procuring policy, cannot recover premiums paid.
3. INSURANCE.
Insured, whose untruthful answer as to number of fires he had before applying for fire insurance policy, avoided thereby, was made under mistaken belief that question referred only to fires covered by insurance, held not guilty of actual fraud barring recovery of premium paid.
APPEAL from the Circuit Court of Wilkinson County.
Fulton Thompson and R.H. and J.H. Thompson, all of Jackson, for appellant.
The general rule is that where a plaintiff has obtained a contract of insurance by fraud that a court of law will not intervene and lend its aid to enable him in obtaining a return of the premiums.
Security Mutual Life Insurance Company v. J.F. Little, 119 Ark. 498, 178 S.W. 418; 3 Joyce's "The Law of Insurance" (2 Ed.), 1406; American Mutual Life Insurance Company v. Mead, 39 Ind. App. 215.
The parties to this suit were not equally guilty, the appellant insurance company not being even charged with fraud; the fraud was only that of Cavin, the plaintiff and appellee; this fact has been adjudged by this court in appellee's suit on the policy.
Even in cases where the insurance did not go into force but where the insured was guilty of fraud, it has been held that the premiums paid by the insured are not recoverable.
Millers Manufacturers Insurance Company v. G.W. Parsons, 106 N.W. 485.
32 C.J., page 1232, paragraph 413.
"A right of action cannot arise out of fraud," is applicable to and should be applied to this case.
Broom's Legal Maxims (7th Am. Ed.), page 728; Western Union Telegraph Company v. McLaurin, 108 Miss. 273, 66 So. 739.
In the case at bar, the appellee was guilty of false pretenses in that he obtained the signature of the insurance company and the delivery of its policies by the misrepresentations and fraudulent statements contained in the application therefor.
Section 919 of the Code of Mississippi of 1930; Home Ins. Co. v. Cavin, 162 Miss. 1.
The insurance company was induced to issue the policy because of the false and fraudulent statements made by appellee and it was his own fault that the policies were held to be void and no fault of the appellant insurance company. A person cannot make his own illegal act the foundation of a legal right.
Harris v. Hartfield, 71 Ill. 298; 3 Joyce's "The Law of Insurance" (2 Ed.), par. 1406.
D.C. Bramlette, of Woodville, for appellee.
With all due respect opposing counsel's entire brief and argument is based on the allegation therein that appellee was guilty of fraud, which position, we respectfully submit is not warranted by the opinion of Division A of this Honorable Court, 162 Miss. 1, and we also respectfully submit that no such allegation was even made in appellant's special plea, which caused appellee to demur thereto; had appellant in such special plea charged appellee with fraud, necessarily, appellee would have filed a replication rather than a demurrer.
With all due respect opposing counsel apparently realizes that the very opinion on which their brief is based, cuts from beneath them, the very foundation stone of their argument, wherein they allege fraud against appellee which they fail to allege in their special plea and which was not even intimated against appellee in the said opinion.
The supreme court of Arkansas held that although the insured misstated his age and the policy was declared void, where there was no actual fraud, just as in the case before the court, the premiums paid by insured should be returned.
Deloach v. Ozark Mutual Life Association, 230 S.W. 268, 14 A.L.R. 921.
A recovery cannot be had where the certificate was obtained by actual fraud; that is, where there was a wilful purpose to deceive on the part of the insured or the applicant; but that premiums may be recovered in all other cases.
Taylor v. Grand Lodge, A.O.U.W., 96 Minn. 441, 3 L.R.A. (N.S.) 114, 105 N.W. 408; Insurance Co. v. Pyle, 44 Ohio St. 19, 58 Am. Rep. 780, at page 784.
Opposing counsel, with all due respect assume that innocent misinterpretation of a question in the application for insurance by appellee or falsity of an answer to a question therein by appellee, is the same as actual fraud on the part of appellee, but there is a wide distinction.
32 C.J. 1237 (411); Hellman v. National Council, 198 Mo. App. 308, 200 S.W. 698; O'Conner Trans. P. Co. v. Glens Falls Ins. Co., 204 App. Div. 56, 197 N.Y.S. 549.
Where an insurance company cancelled fire insurance policies, the insured was entitled to a return of its money.
Refuge Cotton Oil Co. v. Twin City Fire Ins. Co., 152 Miss. 522.
In a previous case, reported in 162 Miss. 1, 137 So. 490, appellee sued appellant insurance company for a loss by fire which had occurred during the apparent life of a policy theretofore issued and delivered by the company to the appellee. The company defended that action and showed that in the application for the insurance, appellee, in response to one of the questions propounded as a part of the application, had answered that he had experienced only one fire in the past when, in fact, he had had three other fires. Appellee explained that he had mistaken the import of the question, and understood from the agent who solicited the insurance, that the question had reference only to a fire or fires covered by insurance. The court held that the answer was untrue in fact, and that the mistake as to its meaning did not avail to save appellee from the consequent avoidance of the policy.
After the decision in that case, appellee sued the company in the case now at bar for a return of the premium paid, and the company defended on the ground that appellee had procured the policy by fraud, and that by reason thereof he could not maintain an action for the premium. By agreement, as that agreement has been construed by the parties, the record in the previous case was made a part, and in effect the principal part, of the record in this case, and the cause having been submitted to the trial judge, without a jury, he rendered judgment for the recovery of the premium, and the company has appealed.
Ordinarily, when a policy of insurance, although delivered, has never taken effect and has throughout been of no force or validity as against the ostensible insurer, the insured may recover the premium paid, with interest, for there the insurer has received something for nothing. One of the exceptions to this rule is that the insured may not recover the premium when he has been guilty of actual fraud in the procurement of the policy. This exception is founded upon the general principle that no man may maintain a demand arising out of his own wrong. In order, however, that the stated exception shall apply to an insured, who is seeking the recovery of the premium paid, his wrong in the procurement of the policy must be an actual wrong; a wrong or fraud which contains moral turpitude as a real ingredient. It is not enough to defeat him to show that the wrong charged against him is a legal fraud, but the insurer, in order to successfully defend the action for the return of the premium, must go further and show that the fraud was actual; was consciously intended so to be. See the cases cited and annotated, 26 C.J., p. 128 and 32 C.J., p. 1237. It may be added that there may be a case where the insured in making his application is so utterly without care, or so recklessly indifferent, as to the truth of his statements, that his conduct should be held tantamount to actual fraud, but that is not the case here.
The court did not decide on the former appeal that the insured had been guilty of actual fraud involving moral turpitude, nor does the record in that case, and here, when reviewed under the effect of the present judgment of the trial court, show anything more than legal fraud. An untrue answer was made which avoided the policy, but the answer, according to the effect of the judgment in the present case, was made under a mistake as to the exact information thereby sought, and without conscious purpose to wrongfully deceive or misrepresent.
Affirmed.