Opinion
No. 27895.
April 22, 1929.
1. INSURANCE. Beneficiary cannot overturn release executed to insurer, where not alleging she was ignorant of falsity of representations inducing release, or that she endeavored to ascertain truth.
Beneficiary under life insurance policy cannot overturn release executed by her to insurer on ground of false representations by insurer's agent regarding cause of insured's death, where she did not allege that she was ignorant of falsity of representations, or that she endeavored to ascertain truth or falsity of statements before accepting insurer's offer of settlement, or that she knew doctor stating same cause of death was a physician and based his opinion on personal or communicated knowledge of insured's physical condition.
2. FRAUD. False representation, to constitute fraud, must justify reasonably prudent person in acting thereon.
In order for false representation to constitute fraud, it must have been made under such circumstances and be of such nature that reasonably prudent person would act thereon.
3. INSURANCE. Bill not showing when complainant ascertained falsity of defendant's agent's statements inducing settlement of loss under life policy did not show she ratified settlement by delay in disaffirming.
Where it did not appear from bill when complainant ascertained falsity of statements made by defendant insurer's agent inducing her to make settlement of loss under life policy, she could not be held on face of bill to have ratified settlement with insurance company by delay in disaffirming it.
4. INSURANCE. Complainant seeking to overturn release on ground of fraud need not offer to return money paid her.
Where beneficiary under life insurance policy sought to overturn release executed by her to insurance company on ground that it was fraudulently obtained, it was not necessary for her to offer to return money paid her in order to maintain suit.
APPEAL from chancery court of Forrest county, HON. T.P. DALE, Chancellor.
D.E. C.W. Sullivan, for appellant.
The attempt to charge fraud is wholly insufficient and does not entitle complainant to the relief sought. The attempt to charge fraud consists, in part, in the statement of the agents that deceased was not drowned but died of heart failure and that a certain doctor had said so. Complainant and her sister-in-law and her father were in a position to know as much or more about the truth of this statement than the agents were. They did not have to believe this statement. They were free to reject it, and they had an abundance of time to investigate the matter without prejudice to their right to investigate it, and to bring a suit for the full amount of the policy if they found the statement to be untrue or doubtful. Another fragment of the attempt to charge fraud is the allegation that they were ignorant in such matters, and were suffering from mental anguish and were overreached by the agents. They could have taken time to consider the proposition and consult with their friends if they had desired to do so. The law presumes that they all were of sound mind and possessed that common sense attributable to the average person. The bill does not charge that they were mentally unsound and therefore incapacitated to attend to the matter in hand. The further attempt to charge fraud is found in the allegation that the agents were in a great hurry and that it was immediately necessary to settle the claim as one of the agents was compelled to leave in a few minutes and when the complainant and her friends requested an opportunity to consult friends, they were told they merely desired to get out and talk to a lawyer and that this was unnecessary, and if they desired to settle they must do so at once. The complainant and her friends did not have to pay any attention to these statements if they did not want to and they were perfectly free to do as they pleased, and consult any person they wanted to consult.
If the bill does sufficiently charge fraud, still complainant is not entitled to the relief prayed for and the bill is subject to demurrer because the complainant does not offer to do equity by tendering the two thousand five hundred dollars, which she received under an agreement which she now repudiates. She must restore the status quo. She cannot retain the money received and sue for the balance due. She should place the defendant where it stood before compromise was made and sue for the entire sum of five thousand dollars and give the defendant an opportunity to make good its defense to the entire claim. Therefore, an answer to that part of the bill charging fraud is not necessary because complainant is not entitled to relief without making the tender. See Griffith's Miss. Chan. Prac., secs. 303 and 304, and authorities there cited; 4 R.C.L. 511.
Currie, Stevens Currie, for appellee.
We submit that counsel for appellant can find no basis in the allegations of the bill for their contention that appellee compromised a claim of five thousand dollars for fifty per cent of the amount. The bill recites in some detail the alleged fraud of the agents of the insurance company, but probably the most essential and striking averments of material fraud are set forth in the statement of facts of counsel for appellant. It there appears that it is alleged in the bill that the agents of the insurance company informed the appellee and her associates that Dr. Faulk had stated to the agents that Bodo Oscar Wade had died of heart trouble and not of accidental drowning. No more material misrepresentation could have been made than for the agents of the insurance company to inform the appellee that a physician had stated to them that the deceased did not die of accidental drowning, but that he died of heart failure. The bill shows this statement to have been untrue and that the agents knew it to be untrue and that no such statement had ever been made to them.
It was totally unnecessary for the appellee to tender or pay into court the two thousand five hundred dollars which she received from the agents and it is only necessary for her to credit this amount on the total sum named in the policy. We respectfully call the court's attention to Jones v. A. V. Ry. Co., 72 Miss. 22, 16 So. 379. This case expressly holds that a tender is not required where there is fraud or where the release is void on account of fraud, but that the amount paid should be credited upon the entire amount found to be due.
Counsel for appellant urges that appellee ratified the alleged settlement. The bill demonstrates the exact contrary. Ratification could not appear as a matter of law under the facts charged in the bill, and it is, therefore, not germaine under a demurrer. Kansas, etc., Ry. Co. v. Chiles, 86 Miss. 361, 38 So. 498; St. Louis, etc., Ry. Co. v. Ault, 101 Miss. 341, 58 So. 102.
This is an appeal from a decree overruling a demurrer to a bill of complaint and was granted for the purpose of settling the principles of the case.
The bill was filed by the appellee and sets forth, in substance, that the appellant issued to her husband a life insurance policy for the sum of five thousand dollars, payable to her in the event of his death, and that he was accidentally drowned; that, in order to induce her to accept two thousand five hundred dollars in settlement of the policy, an agent of the appellant fraudulently represented to her that her husband died of heart failure, and not by accidental drowning; that Dr. Faulk had so stated; that both of these statements were untrue, but were relied on by the appellee and caused her to accept two thousand five hundred dollars in settlement of the amount due on the policy and to execute a release to the appellant from further liability on the policy; that when the offer was made by the appellant's agent he told the appellee that it must be then acted on, if at all. The bill does not disclose any offer by the appellee to return the two thousand five hundred dollars paid on the policy to the appellant, and no tender thereof was made to the bill. The prayer of the bill is for the cancellation of the release to the appellant executed by the appellee and for the recovery of two thousand five hundred dollars alleged to be still due the appellee on the policy. The bill was filed more than six months after the appellee's settlement with the appellant, and it does not appear therefrom when she discovered that the statements made to her by the appellant's agent were not true.
The demurrer challenges the sufficiency of the bill on three grounds: First, the allegation of fraud is insufficient to warrant a recovery by the appellee; second, the appellee ratified the settlement by delay in disaffirming it; and, third, that she should have returned, or offered to return, the money paid her by the appellant.
The bill of complaint does not allege, as it should have done, that the appellee was ignorant of the falsity of the representations made to her that her husband had died of heart disease, and that Dr. Faulk had so stated, or that she endeavored to ascertain the truth or falsity of the statements before accepting appellant's offer of settlement. If she knew that these statements were false, or could have ascertained that they were from the ordinary means of information at her command, she was not justified in relying thereon. Moreover, the statement of appellant's agent that the appellee's husband died of heart failure was not of itself alone sufficient as a predicate for fraud. It would have been sufficient therefor when reinforced by the opinion of Dr. Faulk (who, we will assume, though the bill does not so allege, is a physician and competent to express such an opinion), provided the appellee knew, or was induced by the appellant's agent to believe that Dr. Faulk was a physician and based his opinion on personal or communicated knowledge of her husband's physical condition, without which his opinion could have been of no value. In order for a false representation to constitute fraud, it must have been made under such circumstances and be of such nature that a reasonably prudent person would act thereon.
As it does not appear from the bill when the appellee ascertained the falsity of the statements made to her by the agent, she cannot be held on the face of the bill to have ratified the settlement.
As the ground on which the appellee seeks to overturn the release executed by her is that it was fraudulently obtained, it was not necessary for her to offer to return the money paid her therefor in order to maintain this suit. Jones v. Alabama V.R. Co., 72 Miss. 22, 16 So. 379.
Reversed and remanded.