Opinion
No. 34629.
June 14, 1941. Suggestion of Error Overruled September 22, 1941.
1. INSURANCE.
An insurer which failed to deliver copy of application with life policy was not "estopped" from relying on express provision of policy that insurer should only be liable for amount of premiums paid if insured was not in sound health when policy was delivered, and from showing that insured was suffering from tuberculosis, notwithstanding that application represented that insured was in sound health and had never had tuberculosis and notwithstanding statute providing that insurer which fails to deliver copy of application with life policy shall not be permitted to deny any statement in application (Code 1930, sec. 5174).
2. INSURANCE.
A provision of life policy that insurer should only be liable for amount of premiums paid if insured was not in sound health when policy was delivered was valid and binding on insured, notwithstanding that such provision was placed in policy for benefit of insurer.
3. INSURANCE.
In action on life policy which provided that insurer should only be liable for amount of premiums paid if insured was not in sound health when policy was delivered, it was erroneous to give instruction authorizing recovery if insured and insurer's agent, in good faith, believed that insured was in sound health and to refuse instruction denying recovery if insured was not in sound health when policy was issued but was suffering from a disease tending materially to shorten his life (Code 1930, sec. 5174).
ON SUGGESTION OF ERROR. (In Banc. Sept. 22, 1941.) [3 So.2d 812. No. 34629.]1. INSURANCE.
Where an applicant for life insurance is examined by insurer's physician before issuance of policy, the physician is insurer's "agent," and knowledge gained by physician is imputed to insurer, and under such circumstances it is reasonable to hold that parties intend that insurance shall be issued and become effective unless applicant is in worse health upon delivery of policy than when examination was made.
2. INSURANCE.
Good health, as used in life policy provisions requiring that insured be in good health on date of policy, is a "question of fact" and a "condition precedent" to insurer's liability under policy, except for return of premiums.
3. INSURANCE.
Where life policy was issued upon applicant's statements and without examination of applicant by a physician, a provision in policy that if insured was not in sound health on date thereof insurer's liability should be discharged by payment of premiums received under policy could not be construed as meaning a change in condition of applicant's health for the worse, between date of acceptance of application and date of delivery of policy (Code 1930, sec. 5158 and as amended by Laws 1940, ch. 205).
McGEHEE, J., dissenting.
APPEAL from the circuit court of Adams county, HON. R.E. BENNETT, Judge.
Joseph E. Brown, of Natchez, for appellant.
Even though there was an issue to be submitted to the jury, the case should be reversed because the Court committed error in the instructions by instructing the jury, in effect, that guilty knowledge on the part of the insured was essential to the defense, and in instructing for the plaintiff, in effect, that it was sufficient simply that the agent and the insured acted "in good faith" in order to entitle the plaintiff to recover.
The policy provides in the third clause of the general provisions: "Except as elsewhere herein provided, if the insured is not alive or is not in sound health on the date hereof . . . the Company's full liability shall be discharged by the payment of the sum of the premiums received hereunder."
The provision as to sound health at the time of the issuance of the policy is in the nature of a warranty and condition precedent to any liability on the part of the Company beyond liability for the return of the premiums. The defense was based upon this provision and was not based upon any claim that the insured had fraudulently misrepresented the condition of his health. This identical policy provision was before the Supreme Court of the State of Alabama in the case of Champion v. Life Casualty Insurance Company, 141 So. 363, 25 Ala. App. 101.
But in no event was the appellant required to establish fraud or false representation by the insured. That the Court postulated this element as a requisite is apparent in Instruction No. 3 given the plaintiff, and in Instruction No. 2 refused the defendant. The second instruction given the defendant is in no wise different from the instruction refused the defendant except that it requires the jury to believe from the evidence that the insured "knew of such disease and knew that he was not then in sound health."
The appellant was entitled to its refused Instruction No. 2 which clearly stated the issue to the jury.
Whether the insured knew or did not know of the condition of his health, whether he believed or disbelieved, whether he despaired or hoped, was immaterial. The Court will observe that throughout the instruction the Court below was erroneously of the opinion that, in order to find for the defendant, the jury should believe that the insured knew of his illness, fraudulently concealed it from the appellant and fraudulently represented the condition of his health. This placed upon the appellant an unnecessary and unjustified burden and that element in the instructions of the Court below could have led to no other result than to mislead and confuse the jury.
Likewise, in Instruction No. 3 given the appellee, it was error for the Court to instruct the jury to find for the plaintiff if the agent took the application in good faith and had an opportunity to observe the insured. The instruction, in effect, tells the jury that if the agent had an opportunity to observe the insured and if the agent and the insured acted "in good faith," then the jury should find for the plaintiff. Under this instruction, the insured might have been afflicted with every disease known to medical science, have been in extremis, and yet, if he and the agent acted "in good faith," the jury were told to return a verdict for the plaintiff. This instruction was argumentative and was misleading and incorporated elements which were absolutely foreign to the issue; it completely left out the element which was vital to the issue and which was the issue itself: whether or not the insured was in unsound health. The jury were, in effect, told by the instruction that even though they most positively believed from the evidence that the insured was not in sound health at the time of the issuance of the policy, it was their solemn duty, nevertheless, to find for the plaintiff if they believed that the agent and the insured acted "in good faith." Luther A. Whittington, of Natchez, for appellee.
It is contended by the appellant that the lower court erred in giving the third instruction to the appellee.
We most respectfully submit to the Court that there is little difference, if any, in the principle of law announced in this instruction which was asked and given to the appellee in the Court below, and the second instruction, which reads as follows: "The Court instructs the jury for the defendant that if you believe by a preponderance of the evidence in this case that Albert Green, at the time of the issuance of the policy sued upon, was not in sound health and was on the contrary suffering from a disease tending materially to shorten his life, and that Albert Green knew of such disease and knew that he was not then in sound health, then it is the sworn duty of the jury to find for the defendant." Both the instruction complained of and the above instruction given to the defendant are addressed to the principle of law that fraud and misrepresentation knowingly practiced or made renders a contract invalid and unenforcible.
But now, in this Court, appellant says and complains that this principle of law is inapplicable to the issue in this case, to-wit: That if the insured was not in sound health at the time of the delivery of the policy, no obligation was assumed by the insurer under the policy, regardless of whether the insured knew or did not know that he was in unsound health.
Moreover, it will be noted by the Court that in the special plea, the appellant went beyond the above provision in the policy in that it pleaded not only that the insured was of unsound health and suffering from tuberculosis at the time of the delivery of the policy, but it specifically pleaded "that at the time of and many months prior to the issuance of the policy sued on" the insured was not in sound health but was suffering from tuberculosis. This defense and special plea at least laid the predicate for a claim of misrepresentation and fraud in procuring the insurance.
In order to establish fraud and misrepresentation sufficient to avoid a policy, it is necessary to allege and prove that the misrepresentation or false statements about the condition of the health of the insured were knowingly made by the insured and were material to the risk. Both the third instruction complained of given to the appellee and the instruction above quoted given to the appellant correctly stated the principle of law involved in this defense.
It is now complained by the appellant that the lower court erred in refusing the following instruction to the appellant: "The Court instructs the jury for the defendant that if you believe by a preponderance of the evidence in this case that Albert Green, at the time of the issuance of the policy, was not in sound health and was suffering from a disease tending materially to shorten his life, then it is your sworn duty to return a verdict for the defendant."
It is now claimed by the appellant that the above instruction was and is predicated on the special provision "if the insured is not alive or is not in sound health on the date hereof . . . the Company's full liability shall be discharged by the payment of the sum of the premiums received hereunder."
It is the contention of the appellee (a) That the above provision relates solely to a change in the condition of the health of the insured from the time the application was received and taken by the appellant to the time that the appellant delivered to the insured the policy in question; that in view of the fact that the appellant had received the application of the insured for the policy and had stated in said application that he was not suffering from tuberculosis, and that he was in good health on the date of the application, that in and by the above provision it was not the intention of the parties to question further the health of the insured at the time the application was made, and received, after delivery of the policy. Fidelity Mutual Life Ins. Co. v. Elmore, 111 Miss. 137, 71 So. 305, and New York Life Insurance Co. v. Smith, 129 Miss. 544, 91 So. 456. If the insurer, the appellant, had intended by this clause or provision to protect itself against any condition of health that the insured was in at the time of the application for the policy was made that necessarily would continue to the date of the delivery of the policy and on, it could have done so in plain and unambiguous language. (b) It is the further contention of the appellee that the appellant, by the delivery of the policy after taking the application, and after acting on the application and the answers therein contained, waived the right to and is estopped to reopen the question of the health of the insured on the date of the application or to deny any of the answers to the questions contained in the application or to assert by way of defense that on the date of the application the insured was suffering with tuberculosis even though he had stated in his application that he was not suffering with tuberculosis, unless the appellant further proved that he made such statement knowing it to be false at that time. New York Life Insurance Co. v. Smith, 129 Miss. 544, 91 So. 456.
But whether we are right or wrong in the foregoing contention, whether we are correct in our understanding of the principle of estoppel or waiver under the common law, we further submit, under the facts in this case, that by virtue of the provisions of Section 5174, Code of Mississippi, 1930, the objections made to this instruction are precluded to the appellant.
Under the provisions of this statute, since the evidence shows that the application was not delivered to the insured with the policy, the above provision in the policy is held to the meaning, which we have heretofore asserted, to-wit: that it refers only to changes in the condition of the health of the insured between the application and the date of the policy. This Honorable Court has construed this Section: "This section of the Code creates not a rule of evidence, but a rule of substantive law, for it deals not with the method of proving a fact, but with the substantive rights of both the insurer and insured under a policy which has been delivered to the insured without a copy of the application therefor attached thereto, and its provisions became a part of the contract here entered into to the same extent as if appellant had expressly agreed in its certificate not `to deny that any of the statements in said application are true.'" Sovereign Camp Woodman of the World v. Farmer, 116 Miss. 626, 77 So. 655. This holding was reaffirmed by this Court in the case of New York Life Ins. Co. v. Rosso, 154 Miss. 196, 122 So. 382. In the Farmer case, supra, the Court further held that no evidence could be offered to deny the correctness of any answers or statements made in the application, but that evidence of any change in the condition and health of the insured between the making of the application and the date of the delivery of the policy could be shown.
It may be contended, however, that this Honorable Court in the case of Metropolitan Life Insurance Company v. Scott, 160 Miss. 537, 134 So. 159, has held that the above statute is not applicable to a contract of insurance or a policy of insurance, where there is no language or provision in the policy indicating a purpose or intent on the part of the appellant company to make anything found in the application a part of the contract and where the policy is complete in itself and purports to contain all the terms, conditions and stipulations of the contract.
It is admitted that in that case as in this case the application is not made a part of the policy of insurance by expressed terms and this Court held in that case: "When the company chose to ignore the statements and representations appearing in the application, and incorporated in the policy in plain terms the conditions and stipulations upon which its validity should rest, and the policy was accepted by the insured as constituting a contract, it had the right to make any defenses it might have under the terms of the policy, without reference to such application. In support of the views above expressed, we refer to the case of Kirkpatrick v. London Guarantee Accident Co., Ltd., 139 Iowa 370, 115 N.W. 1107, 19 L.R.A. (N.S.) 102, and authorities there cited, wherein the Supreme Court of Iowa had under consideration a statute which in effect is practically the same as Section 5174, Code of 1930, and in a well-reasoned opinion reached a conclusion in accord with the views above expressed." This Court says that the provisions of the statute construed by the Supreme Court of Iowa were practically the same as Section 5174, Code of 1930.
By reference to the Iowa statute, there is a definite restriction in the words of the statute itself on its application, and there is a definite requirement in the statute itself that before it can be applicable to any policy, the policy, by its own terms, should make the application a part of the insurance contract. The pertinent part reads as follows: "Sec. 1741 — Copy of Application. — All insurance companies or associations shall, upon the issue or renewal of any policy, attach to such policy or indorse thereon a true copy of any application or representation of the assured which, by the terms of such policy, are made a part thereof, or of the contract of insurance, or referred to therein, or which may in any manner affect the validity of such policy." It will be noted that there is no such limitation contained in the statute in Mississippi, and the Iowa court could easily have predicated its decision on the express language contained in the statute that restricted its application to policies only that made the application a part of the contract of insurance.
There is no restriction as to the application of the Mississippi statute contained therein, and we submit with due deference that the only fair construction of the language used in this statute makes it applicable to all contracts of life insurance where an application is taken.
Under the common law, as we believe it to be, an insurance company is estopped by its action in taking an application and satisfying itself as to the soundness of the health of the insured, whether by medical examination or otherwise, to question the condition of the health of the insured if it delivers the policy in pursuance of said application, except that in cases where it can be shown that the applicant knowingly made false statements touching the condition of his health at the time the application was made. As we see it, therefore, the above statute is but a declaration of the common law, of estoppel and waiver, and an enlargement of its operation so as to estop an insurance company from even claiming that the statements were false and were knowingly false and untrue when made, unless a copy of the application is delivered with the policy.
We have discussed this statute not because its provisions were relied upon in the trial of this case, for the instruction No. 3 complained of by the appellant given to the appellee, and instruction No. 2 given to the appellant in the Court below, both show that this statute was not invoked against the appellant in the trial of this case.
Joseph E. Brown, of Natchez, for appellant, in reply.
The appellee, for the first time, on appeal, mentions Section 5174, Mississippi Code 1930, Annotated, as precluding the appellant from setting up the fact that the insured was not in "sound health" at the time of the issuance of the policy.
The pertinent language of the policy in the case now before the Court is identical with that before the Court in the case of Metropolitan Life Insurance Co. v. Scott, 134 So. 159, 160 Miss. 537. In the Scott case, the policy makes no such reference. In short, in the instant case, to quote the Scott case, supra, the Company "chose to ignore the statements and representations appearing in the application, and incorporated in the policy in plain terms the conditions and stipulations upon which its validity should rest, and the policy was accepted by the insured as constituting a contract" and thereupon, the appellant had the right "to make any defenses it might have under the terms of the policy, without reference to the application."
We submit, therefore, that Section 5174, Mississippi Code 1930, Annotated, has been held inapplicable to a case such as the one now before the Court.
Argued orally by Joseph E. Brown, for appellant, and by L.A. Whittington, for appellee.
Suit was brought and judgment obtained by appellee as plaintiff upon a life insurance policy issued upon the life of her brother, Albert Green. The policy contains the following provisions: "(3) . . . Except as herein provided, if the insured is not alive or is not in sound health on the date hereof . . . the Company's full liability shall be discharged by the payment of the sum of the premiums received hereunder. (4) This policy contains the entire agreement between the Company and all parties in interest . . ."
To the declaration the defendant pleaded the general issue and made tender of the premiums paid with interest thereon. It filed also notice of special affirmative matter to the effect that insured was not in sound health at the time the policy was delivered but was suffering from tuberculosis, wherefore no obligation was assumed under the policy except as to return of premiums paid. Counter notice was filed by plaintiff denying that insured was of unsound health when the policy was issued and further "that the defendant is now estopped to make such defense because it delivered the policy of insurance to the deceased, and whatever right it had by reason of the condition of the health of the deceased was waived by the delivery of the policy."
Brief for appellant discloses that the counter notice was based upon Code 1930, Section 5174, which is as follows: "All life insurance companies doing business in the state of Mississippi shall deliver to the insured with the policy, certificate or contract of insurance in any form a copy of the insured's application, and in default thereof said life insurance company shall not be permitted in any court of this state to deny that any of the statements in said application are true."
Insured's application for the insurance was introduced in evidence and it shows that the applicant represented that he was in sound health and that he had never had tuberculosis. Upon the issue as to the truth of these allegations there was considerable testimony. On behalf of the plaintiff the trial court instructed the jury that if the insured was not at the time the policy was issued, and for many months prior thereto, suffering from tuberculosis they should find for the plaintiff. However, the following instruction No. 3 was also given for plaintiff: "The Court instructs the jury for the plaintiff that if they believe from a preponderance of the evidence in this case that no medical examination was required in the writing of the policy of insurance in question on the life of Albert Green, and that the insurance was written by the defendant upon the recommendation of their agent, C.W. Campbell; and if they further believe from the evidence that the agent for the defendant, C.W. Campbell, had opportunity to observe the physical condition and the health condition of the insured, and further took his application for the insurance, and in good faith, after observing the insured, Albert Green, and after receiving answer to the questions propounded to the said Albert Green, believed the said Albert Green was a fit subject for insurance and recommended that the defendant issue a policy to him, and if the jury further believe that at the time the said policy was issued and delivered by the agent for the defendant to the said Albert Green, that the said agent of the defendant had opportunity to observe the physical condition and health of the said Albert Green, and in good faith believing him to be in good and sound health, delivered said policy to him; and if they further believe that the said Albert Green did not knowingly make any false representations to the said agent in procuring said insurance, and that he was acting in good faith in procuring said insurance, then and in such event it is the duty of the jury to find for the plaintiff, and your verdict should be `We, the jury, find for the plaintiff.'" It is true that the defendant in order to meet the theory of this instruction was allowed a charge involving the bad faith of the applicant, yet a party may not be estopped to assert a correct theory because he has been compelled to take defensive measures in kind against one which is erroneous.
The following instruction No. 2 requested by the defendant was refused: "The Court instructs the jury for the defendant that if you believe by a preponderance of the evidence in this case that Albert Green, at the time of the issuance of the policy, was not in sound health and was suffering from a disease tending materially to shorten his life, then it is your sworn duty to return a verdict for the defendant."
In view of Code 1930, Section 5174, above quoted, the defendant was estopped to deny that any of the statements in the application were true. However, it did not ground its defense upon the falsity of the representation in the application but upon the express provision in the policy itself set out above. That it was entitled so to do is clearly shown in Metropolitan Life Ins. Co. v. Scott, 160 Miss. 537, 134 So. 159, 161, where it was held that "One evident purpose of the statute requiring the delivery to the insured of a copy of the application is to exclude or eliminate from the contract an application, a copy of which is not delivered to the insured with the policy, and to render ineffective any defenses or attempted defenses based upon anything contained in such application, but it does not follow that a failure to incorporate in or attach to the policy a copy of the application will preclude the company from relying on any defenses available to it under the terms of the policy. In the policy here involved there is no language or provision indicating a purpose or attempt on the part of the appellant company to make anything found in the application a part of the contract. The policy was complete in itself, and purports to contain in plain language all the terms, conditions, and stipulations of the contract, and we do not think the company is precluded from relying on the express conditions and stipulations appearing on the face of the policy, by reason of the fact that the application contained representations or stipulations in reference to the same subject-matter. When the company chose to ignore the statements and representations appearing in the application, and incorporated in the policy in plain terms the conditions and stipulations upon which its validity should rest, and the policy was accepted by the insured as constituting a contract, it had the right to make any defenses it might have under the terms of the policy, without reference to such application."
This brings us to a consideration of the effect of the policy proviso that if the insured is not in sound health on the date of the policy the full liability of the company will be discharged by payment of the sum of premiums received. It is not helpful to discuss whether this provision is in the nature of a warranty, Cooley's Briefs on Insurance, vol. 4, p. 3007, or a condition precedent, Couch, Cyclopedia of Ins. Law, vol. 4, p. 2833. In any event, it is a provision which effectively limits recovery under the policy and is part of the contract between the parties. Such is its language and import and we are impotent to impair its literal effect by invoking rules of construction available only to resolve ambiguity. Even though it be placed in the contract for the benefit of the insurer, it is binding upon the insured. The issue is not fraud of the applicant, but breach of the condition. Such a limitation upon the liability of the defendant is a proper subject of contract, and is binding upon the insured. Mutual Life Ins. Co. v. Vaughan, 125 Miss. 369, 88 So. 11; National Life Acc. Ins. Co. v. Hugger, 158 Miss. 686, 131 So. 75. In the former case, the Court said [ 125 Miss. 369, 88 So. 13]: "The provision in the policy is that the proposed policy should not take effect unless the policy should have been delivered to, and received by, the insured during the continuance of good health. The question is then to be determined whether the applicant was in good health at that time." See, also, Co-operative Life Ass'n v. Leflore, 53 Miss. 1, 16; New York Life Ins. Co. v. Gresham, 170 Miss. 211, 154 So. 547; 37 C.J. pp. 400, 404; Couch, op. cit. supra.
The issue which should have been submitted to the jury by the instructions is not the good faith of the applicant or of the agent but whether there existed that condition — sound health — upon which the obligation of the defendant rested. 37 C.J., p. 400. It was error to give the third instruction for the plaintiff and to refuse the second instruction for the defendant.
Reversed and remanded.
ON SUGGESTION OF ERROR.
Counsel for the appellee urged on the appeal, and again urges on the suggestion of error, that the policy provision, ". . . if the insured is not in sound health on the date hereof . . . full liability shall be discharged by the payment of the sum of the premiums hereunder," means "a change in the condition of the health (for the worse) from the date of the acceptance of the application to the date of the actual delivery of the policy"; and he cites in support of that contention Fidelity Mutual Life Ins. Co. v. Elmore, 111 Miss. 137, 71 So. 305, and New York Life Insurance Co. v. Smith, 129 Miss. 544, 91 So. 456. That was the construction placed upon the provisions involved in those cases. Counsel might also have cited New York Life Insurance Co. v. Rosso, 154 Miss. 196, 122 So. 382, to the same effect. But those cases are quite different from the case at bar. In all three of those cases there was an examination of the applicant by a doctor and the policies were issued after and upon the result of such examination. In the case at bar there was no examination. The policy was issued upon the statements of the applicant. This is a fundamental and vital distinction. The examining doctor is the agent of the insurer. The knowledge gained by him is imputed to the insurer. New York Life Insurance Co. v. Smith, supra. Therefore, in such case, the insurer determines through its own agent the insurability of the applicant. It thereby establishes that status, and, on the condition so established through its own agent, appointed for the purpose, it accepts the risk. Under such circumstances it is but fair, reasonable, and logical to say the parties mean the insurance shall be issued and become effective unless the applicant is in worse health upon delivery of the policy than when the examination is made. 37 C.J., sec. 78, pp. 404, 405; Chinery v. Metropolitan Life Insurance Co., 112 Misc. 107, 182 N YS. 555.
Also the particular wording of each provision may produce a different meaning. In the Elmore case, for illustration, the phrase was "continued good health." The word "continued" naturally carried a meaning of comparative health as between the time of the examination and date of delivery of the policy.
Again, in these three cases there were provisions in the applications, or policies, or both, that statements made by the applicants were representations and not warranties in the absence of fraud, which left open for proof the question of good faith and fraud.
In the case at bar the application is not considered. No copy of it was attached to the policy or delivered to the insured. It is not a question of contradicting the statements in the application. The provision is in the policy itself. It is not a question of fraud. Good health, as defined by the cases, is a question of fact; it is a condition precedent to liability, except for return of the premiums.
The case of National Life Accident Ins. Co. v. Hugger, 158 Miss. 686, 131 So. 75, cited in the original opinion, is exactly in point — like provisions, apparently identical appellants; no medical examinations. To sustain the suggestion of error we would have to overrule that case.
In Murphy v. Metropolitan Life Insurance Co., 106 Minn. 112, 118 N.W. 355, 356, a case very similar to the one at bar the Court used this language:
"It is clear from the language of the policy that the defendant's promise of insurance was not absolute, but conditional, and that the existence of life and sound health in the insured on the date of the policy is the condition upon which the promise is made. It is the fact of the sound health of the insured which determines the liability of the defendant, not his apparent health, or his or any one's opinion or belief that he was in sound health." For collection and discussion of cases see 17 L.R.A. (N.S.) 1144-1151, and 43 L.R.A. (N.S.) 725.
It is but natural that the risk is greater without than with, an examination. The State of Mississippi recognizes that. The State has an interest in the solvency of insurance companies doing business in Mississippi. Therefore, we find the law of this State prohibiting insurance companies from issuing policies, without examination, to a greater amount than five thousand dollars "on any one life in any year." Chap. 205, Laws Miss. 1940, p. 376. Before the enactment of that statute the limit was twenty-five hundred dollars. Section 5158, Code of 1930.
No question of actual knowledge, if any, of insurer when the application was taken of unsound health of applicant is presented on this appeal.
Suggestion of error overruled.
In the absence of proof that an applicant for life insurance has knowingly made false statements in the application as to the condition of his health, the same rule should be applied as to the liability of the insurer in cases where a medical examination is waived as where the applicant has been examined by a physician. In each instance the insurance company determines the method by which it will ascertain the facts as to insurability. In one case it has the physician, as its own agent, to ascertain the applicant's state of health by asking him questions, recording the answers and a physical examination of his person. In the other, it has its insurance agent ask the questions, record the answers in the application, observe the physical condition of the applicant as reflected by a personal observation of his appearance as to good health, and make a recommendation as to the acceptance of the risk. A medical examination having been waived by the insurance company in the case at bar, it should not now be permitted to avoid the payment of the death claim because of its failure to obtain the knowledge or information that such an examination would have disclosed, unless it can show that the applicant intentionally concealed the true facts as to the state of his health at the time the application for the policy was taken, by knowingly making false statements in regard thereto.
It is true that the policy itself contains a provision to the effect that it will not be enforceable "if the insured is not alive or is not in sound health on the date hereof," meaning the date of delivery. However, a provision in this and other language of the same import has been repeatedly held by this Court not to relate to anything other than a change in the condition of health between the date of the application and the date of the policy. Fidelity Mutual Life Ins. Co. v. Elmore, 111 Miss. 137, 71 So. 305; New York Life Ins. Co. v. Smith, 129 Miss. 544, 91 So. 456; and New York Life Ins. Co. v. Rosso, 154 Miss. 196, 122 So. 382, cited in one of the controlling opinions herein. Moreover, this language of the provision itself shows on its face that it has reference to some change that might intervene from the date of the application and the delivery of the policy. The words, "if the insured is not alive . . . on the date hereof," obviously had reference to some change in his condition that might occur between the date of the application and the delivery of the policy, since the agent certainly knew that he was not dead when he made the application, and it is likewise clear that the remainder of the provision, "or is not in sound health," was intended to protect the insurance company against any changed condition in the health of the applicant between the time he had been recommended by the agent as a good risk and the date of the issuance and delivery of the policy. At any rate, this Court so construed the meaning of such a clause in the cases hereinbefore cited. In the Elmore case, supra, the Court said that the requirement that the insured be in sound health at the time the policy should take effect "means that the [assured's] health had not undergone any change between the date of the application for and the delivery of the policy." Likewise, in the Smith case, supra, the Court construed a provision that the policy should not take effect until the payment of the first premium, and delivery to the insured in his lifetime, and while in good health, related solely to a change in the condition of his health from the date of the application to the date of the policy, a provision identical in substance with the one contained in the policy before us. But the majority opinion herein seeks to distinguish those cases from the instant case, because there was an examination of the applicant in each of those cases by a doctor, and the policies were issued as a result of such an examination; and that the doctor was the agent of the insurance company. I am unable to thus distinguish those cases from the case at bar. While in those cases the insurance company selected the doctor as its agent, to secure the information as to the condition of the health of the applicant by asking him questions, recording the answers, and observing his physical condition, it likewise selected its insurance agent to ask the questions in regard to whether the applicant was then suffering from the tuberculosis that later caused his death, and whether he was suffering from other diseases mentioned in the application; and permitted its said agent to make a recommendation as to the insurability of the applicant, based on his personal observation of his physical condition and good health. Moreover, the cases referred to were determined by the meaning of the language employed in the policy, requiring that the applicant should be in good health at the time of the delivery of the same, and those decisions do not purport to be based upon the fact that in those cases there had been a medical examination. In other words, the Court was construing the meaning of the provision in the policy, and I am unable to see how such meaning could be affected by the fact that in one instance the insurance company procured its information as to the health of the applicant through a physician as its agent, and in another instance procures such information through its soliciting agent, to avoid the expense of a medical examination. The courts have not assigned the fact that a medical examination was made as the basis for construing such a provision in the policy to relate solely to a change in the state of the applicant's health between the date of the application and the delivery of the policy.
This case seems to have been tried in the court below by the plaintiff on the theory that there was a common law estoppel against the insurance company making the defense of non-liability on the ground that the applicant had tuberculosis when the insurance was applied for, and where no false representation was knowingly made by the applicant to negative such fact. The case was submitted to the jury on that issue, and in my opinion under proper instruction, resulting in a verdict for the plaintiff.
Some emphasis is also laid upon the fact that a copy of the insured's application was not delivered to him with the policy, as required by section 5174, Code of 1930, which provides that in case of such default the insurance company, "shall not be permitted in any court of this state to deny that any of the statements in said application are true." That statute, in full, reads as follows: "All life insurance companies doing business in the state of Mississippi shall deliver to the insured with the policy, certificate or contract of insurance in any form a copy of the insured's application, and in default thereof said life insurance company shall not be permitted in any court of this state to deny that any of the statements in said application are true."
No copy of the application in the present case was delivered to the insured with the policy, nor is the application referred to in the policy as being a part of the contract of insurance. It will be noted, however, from the language of the statute, that the application of its provisions are not made to depend upon whether the application is referred to in the policy as being a part thereof, nor is the application of the statute made to depend upon whether the applicant has been examined by a physician, or whether such examination has been waived. It is true that in the case of Metropolitan Life Ins. Co. v. Scott, 160 Miss. 537, 134 So. 159, the Court held that the statute was inapplicable to any provision where there is no language or provision in the policy indicating the purpose or intent on the part of the insurance company to make anything found in the application a part of the contract. Thus it will be seen that the decision in that case seeks to engraft an exception upon the statute as written, and permits the insurance company to deny that any statements in the application are true when the policy itself contains the requirement that the insured be in good health at the time of the delivery of the policy.
In other words, it was held that the insurance company, by inserting such a provision in its policy, may introduce evidence to deny the truth of statements contained in the application, if at the same time such evidence disproves the good health of the insured at the time of the delivery of the policy. The case, however, did not hold that the requirement that the insured shall be in good health on the date of the delivery of the policy relates to anything other than a changed condition in the insured's health at the time of the application to the date of such delivery. The case did not overrule the former decisions hereinabove referred to, nor is it controlling to require us to depart from the rule announced in those cases as to the meaning of such a provision in the contract.
But aside from the effect to be given to this statute, I am of the opinion that the evidence sustains the plea of estoppel at common law, and that the judgment of the court below should have been affirmed.
It is a matter of common knowledge that there is a great amount of life insurance now in force in this state where medical examinations were waived, both by old line life insurance companies, and under health and accident benefit insurance contracts, especially on the lives of young people, where the holders believe in good faith that they are protected, unless it can be shown by the insurer that false statements were knowingly made as to the health of the applicant when the applications were taken, and in my opinion an insurance company should not be permitted to defeat death claims in such cases by showing that death was caused by some illness which ante-dated the application, but which was unknown to the applicant at the time, by merely offering to refund the premiums paid. No one would be willing to sacrifice and pay premiums from year to year under such circumstances. If the insurance companies, in order to avoid the expense incident to a medical examination, should choose to accept the risk on the recommendation of their soliciting agents, they should be bound by such acceptance, in the absence of proof that the applicant has knowingly made those representations in order to obtain the insurance.
In the case of National Life Accident Ins. Co. v. Hugger, 158 Miss. 686, 131 So. 75, cited in the majority opinion on this suggestion of error, the evidence of the plaintiff showed that at the time the insured made the application he knew he was not in good health. If so, he knowingly made false statements therein to the contrary, and therefore no recovery could be allowed on the policy. The court below recognized this to be the law, and instructed the jury accordingly, as shown by instruction No. 3, set forth in the main opinion herein.
Referring again to the effect that should be given to section 5174, Code of 1930, hereinbefore quoted, attention should be called to the fact that in the Scott case, supra, this Court predicated its decision upon the holding of the Iowa Court in the case of Kirkpatrick v. London Guarantee Accident Co., Ltd., 139 Iowa 370, 115 N.W. 1107, 1108, 19 L.R.A. (N.S.) 102, saying that the Iowa statute under consideration, section 1741, is practically the same as ours, when in fact the statute of that state limited its own application to policies by the terms of which the application is "made a part thereof . . . or referred to therein, or which may in any manner affect the validity of such policy," whereas our statute is not so limited by its terms or by necessary implication. Nor is it contended by the appellant in the case at bar that the application "affects the validity of the policy," but non-liability is sought to be predicated solely upon the fact that the insured was not in good health at the time of its delivery when the policy itself required that he should be. Moreover, this Court expressly held in the cases of Sovereign Camp of W.O.W. v. Farmer, 116 Miss. 626, 77 So. 655, and New York Life Ins. Co. v. Rosso, 154 Miss. 196, 122 So. 382, 386, that our statute now under consideration is substantive law, and that its provisions "became a part of the contract here entered into to the same extent as if appellant had expressly agreed in its certificate [the policy] not `to deny that any of the statements in said applications are true.'" By the same token the appellant in the case at bar failing to comply with this requirement of the substantive law, should not be permitted to introduce proof to deny the truth of the statements contained in this application, which was then in evidence as a part of the plaintiff's case, on the ground that such proof would likewise show that a provision in the policy itself also required that the insured should be in good health. If the insurance company had, by the force of this statute, agreed not to deny the statements contained in the application, as the Court held in the cases above cited, then it cannot offer proof the effect of which would be to deny such statements by the expedient of invoking a provision in the policy itself, which the Court has thrice held to relate only to a change in the state of the applicant's health between the date of the application and the delivery of the policy, and especially when no such change is claimed to have occurred.
But aside from this statute, I am of the opinion, as hereinbefore stated, that the jury was justified in finding that the insurance company is estopped in this case under the rule of estoppel at common law, as embodied in the instructions granted in favor of the plaintiff.