Summary
In Redden v. Constitution Life Ins. Co., 172 Ohio St. 20, at p. 24, 173 N.E.2d 365, at p. 367, the court said: "One of the elementary principles of insurance law is that nothing more completely vitiates an insurance contract than false answers to material questions in the application."
Summary of this case from Allstate Insurance Company v. CookOpinion
No. 36614
Decided March 8, 1961.
Insurance — Health and accident — False answers in application — Precludes recovery on policy, when.
Under the terms of a contract for health and accident insurance, a recovery is precluded by false answers knowingly given by the insured to material questions contained in his signed application or where the insured on delivery of the policy discovers that such answers are false and he then conceals such falsity from the insurer.
APPEAL from the Court of Appeals for Hamilton County.
In the Court of Common Pleas the plaintiff instituted this action to recover from the defendant insurance company the sum of $2,600 claimed to be due him under the terms of a health and accident policy as a result of a fall he sustained from an engine ladder on January 16, 1956, while he was engaged in his occupation as a locomotive engineer for the New York Central Railroad Company.
The trial resulted in a verdict and judgment for the plaintiff in the full amount of $2,600 in conformity with the prayer of his petition.
On an appeal to the Court of Appeals on questions of law, the judgment of the Court of Common Pleas was reversed and a final judgment rendered for the defendant as to $2,000 of the $2,600 verdict on the ground of failure of proof with reference thereto. As to the remaining $600 of the verdict, the judgment was reversed and the cause remanded to the Court of Common Pleas for a retrial.
The cause is in this court for a review by reason of the allowance of the plaintiff's motion to certify the record.
Messrs. Goldman, Cole Putnick, for appellant.
Mr. Milton M. Bloom, for appellee.
This controversy centers mainly about three facts.
The first is the discovery by the defendant insurance company that the plaintiff's answers to certain questions contained in the application for the policy were false — admittedly so.
The second fact is that upon discovery of the falsity of those answers the defendant on July 23, 1956, terminated the policy and notified the plaintiff that no further payment thereon would be made.
The third fact is that thereafter the plaintiff submitted to the defendant insurance company no periodic medical proof of his alleged continuing total disability.
Under the terms of the policy the defendant company was obligated to pay the plaintiff $200 per month during total disability. From the day after the plaintiff's fall to April 3, 1956, the company paid him the sum of $566.66. Further payments were refused by reason of the discovery that the plaintiff's answers to certain questions contained in the policy were admittedly false. The plaintiff then instituted this action to recover for 13 additional months at the rate of $200 per month. The jury's verdict was for the full amount.
For the months of April, May and June 1956, the Court of Appeals held that the verdict of the jury is against the manifest weight of the evidence, and that part of the plaintiff's claim was remanded to the Court of Common Pleas for a retrial. Since that reversal involves the weight of the evidence, the plaintiff presents no assignment of error to this court with reference thereto, and, of course, no opinion is expressed concerning it. Nor has the defendant filed a cross-assignment of error.
As to the remaining $2,000 for the period of 10 months, the Court of Appeals rendered a final judgment for the defendant on the ground that the plaintiff "failed to present any proof that" he was "under the professional care and regular attendance of a legally qualified physician or surgeon for each of the months from July 3, 1956, through June 22, 1957, for which benefits were claimed" and he "failed to present any medical proof in support of his claims for benefits for said period."
In the second defense in its answer the defendant insurance company alleges that "said policy of insurance was issued in consideration of the statements and agreements made by the assured in the application for said policy of insurance; that said policy of insurance provided that the same was contestable as to the accuracy of the representations made by the assured in the application for said policy.
"Defendant further says that said application of the plaintiff herein contained certain interrogatories therein in answer to which interrogatories the said plaintiff, Carlos Redden, stated that no renewal had ever been refused on any policy of insurance previously issued to him; that he had never made claim for or received benefits on account of any injury or illness; that his average monthly earnings were $800; that he had never been operated on by a physician or surgeon; that he had never had arthritis, neuritis, sciatica, sprained or lame back, disorder or disease of the kidneys, nervous system or heart; that he had received no medical or surgical advice or treatment or had any local or constitutional disease within a period of five (5) years preceding June 10, 1955.
"Defendant further says that at the time said interrogatories were answered and the statements made by the plaintiff, the same were false and untrue and known to be so by the said Carlos Redden at the time he made them * * *.
"* * *
"This defendant further says that said statements in said application were the basis upon which the policy of insurance was issued; that the defendant herein issued said policy solely and entirely in reliance upon the written answers to the above questions and interrogatories, which the plaintiff herein agreed were true and correct to the best of his knowledge and belief; that said policy would not have been entered into, nor would the same have been issued except that this defendant relied upon the truthfulness and correctness of said statements and answers contained in said application; that said false statements materially affected the acceptance of the risk and/or hazards assumed by the defendant herein.
"Defendant further says that immediately upon discovery of the falsity of said statements and answers contained in the application for said insurance, it terminated said policy of insurance, the plaintiff being notified of said termination on July 23, 1956, * * * and that by reason thereof said policy of insurance was void pursuant to the terms thereof."
Among the terms of the policy are the following provisions:
"This policy is issued in consideration of the statements and agreements made by the insured in the application and the payment in advance * * *.
"* * *
"No agent has authority to change this policy or to waive any of its provisions * * *."
That there were false answers in the application is shown conclusively by the following answer of the plaintiff himself:
"A. I knew there was some false statements."
When asked what he did about it, he answered:
"A. I didn't do nothing."
The plaintiff testified that he answered the questions correctly but that the agent wrote incorrect answers. This the agent denied. Said the Court of Appeals, "One thing, however, is perfectly clear and that is that upon or shortly after the policy was issued, the plaintiff saw the application attached to the policy, and found out then that the answers were not truthful, but he did not notify the defendant of this important fact upon discovery of the false statements."
No claim is made that the false answers were not material, and hence on either horn of the plaintiff's dilemma he can not recover. One of the elementary principles of insurance law is that nothing more completely vitiates an insurance contract than false answers to material questions in the application.
In his concurring opinion, one judge of the Court of Appeals said, "I join with my associates in the reversal of that part of the judgment representing the installments claimed by the plaintiff to be due for the months of April, May and June of 1956 of $600 on the ground that that part of the judgment is against the manifest weight of the evidence requiring that part of plaintiff's case to be remanded for further proceedings. * * * I desire to express the further thought that because plaintiff's own testimony shows that he discovered the false statements over his signature in the application shortly after he received the policy with the application attached thereto and that because he did not then notify the defendant of such erroneous statements, such facts would justify entering final judgment on this part of the plaintiff's claim." However, a majority of that court consented to a retrial of that phase of the controversy which has, as previously noted, not been brought before this court by either the plaintiff or the defendant for a review.
As to the $2,000 part of the plaintiff's claim, the Court of Appeals was clearly correct in rendering a final judgment for the defendant irrespective of whether the plaintiff gave false answers when he signed his application or concealed the truth after he admittedly learned of their falsity. Referring to the fraudulent conduct of the plaintiff, the Court of Appeals said, "Answering questions seeking this kind of insurance was not a new experience for the plaintiff. He had been concerned in a number of such transactions as shown by the record, three of which applications containing such wrong answers were approved by plaintiff's signature. The plaintiff owed a duty to inquire and report the errors that he admitted discovering in the application to the insured, and his failure to do so is strong evidence supporting the claim that he was untruthful in answering the questions on the application."
Other questions are raised by the plaintiff but it is not necessary to consider them inasmuch as he is precluded from recovery by reason of the admittedly false answers to the material questions in the application.
The part of the judgment of the Court of Appeals now before this court is affirmed.
Judgment affirmed.
ZIMMERMAN, MATTHIAS and HERBERT, JJ., concur.
TAFT, BELL and O'NEILL, JJ., concur in the judgment.
In view of our decision in Standard Life Accident Ins. Co. v. Sayler (1905), 73 Ohio St. 340, 78 N.E. 1137, indicating that what is now Section 3911.06, Revised Code, applies to the answers of the insured referred to in the syllabus in the instant case, I have considerable doubt as to the soundness of at least some of the pronouncements of law made in that syllabus.
That section reads:
"No answer to any interrogatory made by an applicant in his application for a policy shall bar the right to recover upon any policy issued thereon, or be used as evidence at any trial to recover upon such policy, unless it is clearly proved that such answer is willfully false, that it was fradulently made, that it is material, and that it induced the company to issue the policy, that but for such answer the policy would not have been issued, and that the agent or company had no knowledge of the falsity or fraud of such answer."
In the Sayler case, this court affirmed without opinion the judgment of the Superior Court of Cincinnati. It appears from the opinion of that court which is reported in 15 O.D., 137, that the plaintiff there argued that what is now Section 3911.06, Revised Code, applied only to ordinary life insurance and not to the "accident" policy there involved. In rejecting that argument, the court said:
"A policy of insurance issued by a so-called `accident' company, as applicable to injuries resulting in death, is but a contract of life insurance limited to specified risks; that is, a policy on the life of a person, but insuring against death from certain specified risks."
The same holding was made in Connecticut General Life Ins. Co. v. Richardson (1919), 11 Ohio App. 405 (motion to certify overruled 17 O.L.R., 365, 64 Bull., 462). See also 30 Ohio Jurisprudence (2d), 403, 404, Section 443.
In the instant case, the policy specifically provides "benefits for loss of life" as did the policies in the Sayler and Richardson cases.
Although the opinions in Republic Mutual Insurance Co. v. Wilson (1940), 66 Ohio App. 522, 35 N.E.2d 467, and Burpo v. Resolute Fire Ins. Co. (1951), 90 Ohio App. 492, 107 N.E.2d 227, contain statements that what is now Section 3911.06, Revised Code, is applicable only to life insurance, the policies in those cases did not contain any provisions for death benefits and hence neither court even considered whether that statute would apply to an accident policy that did.
In 1947, the General Assembly enacted what are now Sections 3923.01 to 3923.22, Revised Code, relating to "sickness and accident insurance." That these sections apply to the policy in the instant case is apparent from a reading of Section 3923.01, Revised Code. There are no words in those statutory sections which express a legislative intent to no longer have Section 3911.06, Revised Code, apply to an accident policy that provides benefits for loss of life. An argument might be made that such an intent should be implied from the provisions of Section 3923.14, Revised Code. However, amendments by implication are "not favored." State v. Fremont Lodge of Loyal Order of Moose (1949), 151 Ohio St. 19, 26, 84 N.E.2d 498 (paragraph ten of the syllabus), Henderson, Clerk of Council, v. City of Cincinnati (1909), 81 Ohio St. 27, 31, 89 N.E. 1072. See also 37 Ohio Jurisprudence, 379, Section 108.
At the time of the application in the instant case, that section read in part:
"The falsity of any statement in the application for any policy of sickness and accident insurance shall not bar the right to recovery thereunder, unless such false statement materially affects either the acceptance of the risks or the hazard assumed by the insurer."
That section as subsequently amended in 1956 and as now in force was obviously patterned after Section 3911.06, Revised Code.
The Court of Appeals in its journal entry gave only two reasons for rendering the only part of its judgment that is now before this court for review:
(1) "that the plaintiff * * * failed to present any proof that said plaintiff * * * was under the professional care and regular attendance of a legally qualified physician or surgeon for each of the months from July 3, 1956, through June 22, 1957, for which benefits were claimed in the sum of $2,000, and"
(2) "that the plaintiff * * * failed to present any medical proof in support of his claims for benefits for said period."
The significance of the first of the above reasons given by the Court of Appeals is apparent from the provisions of part R of the policy reading:
"This policy does not cover any loss * * * resulting from * * * (f) injury or sickness for any period during which the insured is not under the professional care and regular attendance of a legally qualified physician or surgeon, other than himself."
The words "any proof" used by the Court of Appeals were not intended to mean "any proof of loss" as plaintiff contends. This is apparent from the opinion of the Court of Appeals reading in part:
"* * * there was no proof submitted by the plaintiff supporting the requirement of the policy that liability cannot be established under part R (f) of the contract unless the assured is, during the entire period for which benefits are claimed, under the `professional care and regular attendance' of a duly licensed physician. The only evidence as to this requirement of the policy * * * is found in plaintiff's exhibits Nos. 5 to 9 * * *. These reports account for the period from April 3 to July 3 inclusive, or for a period of three months. There being no evidence whatever on this necessary element of plaintiff's case for each of the months from July 3 until the filing of the petition, * * * final judgment is entered for [defendant for those months]."
Even if we assume that plaintiff was excused from furnishing proofs of loss for the period after July 3, 1956, as plaintiff contends, that would certainly not excuse plaintiff from offering some evidence at the trial tending to prove that, during the period for which he sought benefits of $200 per month, plaintiff had the kind of "loss * * * from injury" covered by the terms of the policy.
Hence, I concur in the judgment being rendered herein for the first reason given by the Court of the Appeals for the part of the judgment of that court now under review by this court.
O'NEILL, J., concurs in the foregoing concurring opinion.