Opinion
Decided May 31, 1933.
Insurance — Life — Reinstatement of lapsed policy — Beneficiary to prove insurer's officers waived provision with knowledge of insured's poor health — Beneficiary, relying upon waiver, cannot rely upon inference contrary to fact — Insurer's failure to furnish copy of application, precludes defense of misrepresentation — Section 9387 et seq., General Code — Statute not available to beneficiary, relying upon waiver, when.
1. When an insurance policy provides that after a lapse it will be reinstated only if at the time of reinstatement the insured is in good health, and it is shown that in fact the insured was not in good health when a reinstatement was made, the beneficiary can avoid the provision only by showing that the officers of the company waived the provision with a full knowledge of the facts.
2. The beneficiary of such policy, relying upon a waiver, seeks relief of an equitable character, and to secure such relief cannot rely upon an inference contrary to fact, even though such fact might not be competently shown as a legal defense to an action on the policy.
3. The failure of an insurance company to furnish a copy of the application referred to in Section 9387 et seq., General Code, may preclude the company from relying on any misrepresentation therein as a defense to the policy, but where the beneficiary of the policy relies upon a waiver of a vital provision of the policy, and has the burden of proving knowledge on the part of the waiving officers, she cannot take advantage of the sections referred to and ask that an inference be drawn contrary to the fact that would be disclosed were such application admitted in evidence.
ERROR: Court of Appeals for Pike county.
Messrs. Vorys, Sater, Seymour Pease and Mr. Jacob E. Davis, for plaintiff in error.
Mr. Earl D. Parker, for defendant in error.
Irma L. Bennett brought an action to recover upon a policy of life insurance on her husband, in which she was the named beneficiary. At the conclusion of the plaintiff's testimony both sides entered motion for judgment, and the trial court entered judgment for the plaintiff as prayed for. This proceeding is to reverse that judgment.
The undisputed facts are that the insured, Orville E. Bennett, held in the defendant company a policy of insurance that had lapsed for nonpayment of premiums. The policy contained this provision: "If this policy lapse for nonpayment of premiums, it will be reinstated within one year from the date to which premiums have been duly paid upon payment of all arrears, provided evidence of the insurability of the Insured satisfactory to the Company be furnished; but such reinsurance shall not take effect unless at the date thereof the Insured is living and in sound health."
Within the time prescribed for reinstatement an agent of the defendant solicited Bennett to apply for reinstatement. Bennett told the agent that he was not in sound health, and the parties now agree that he was not in sound health at that time. Nevertheless, Bennett thereupon signed an application for reinstatement, and thereafter the company reinstated the policy and delivered it to the insured.
Upon the trial of the case the defendant offered in evidence what purported to be the application of the insured for reinstatement, which, over the signature of the insured, declared that he had not been sick since the policy lapsed, and that the revivor of the policy should be void if this and like representations were untrue. A copy of this application had not been attached to the reinstated policy, and as that fact had been pleaded as estopping the defendant from proving its contents, it was denied admission under the terms of Section 9387, General Code.
The case then stood thus: The policy permitted reinstatement only if the insured was in good health. The insured was not in good health, but had the policy. The plaintiff claimed that the insured had fully disclosed his unsound condition to the company's agent, and that the company had waived that condition by issuing the policy notwithstanding its knowledge. Clearly if the application had been admitted it would have shown that the insured and the agent had joined in a misrepresentation to the company and no recovery could have been had. The trial court had before it the fact that the insured had made full disclosure to the agent, and it had before it the fact that the reinstatement was made. It inferred from this that the agent had truly reported to its principal the unsound condition of the insured, and upon this inference predicated a finding that the company waived the unhealthful condition of the insured.
It is to be borne in mind that the insured's condition of health was admittedly such that no recovery could be had unless it were shown that the company waived its rights in that respect. The policy provided that its terms could not be changed or its conditions waived, except by a written agreement signed by its president or vice president. The defense of waiver under these circumstances is thus described by the Supreme Court in Foster v. Scottish Union National Ins. Co., 101 Ohio St. 180, at page 190, 127 N.E. 865: "This plea is in effect an appeal to the chancery powers of the court to enjoin the other party, the insurer, from setting up the restrictive clauses of the policy in defense of an action at law by the insured on the policy, and this on the ground that to permit the defense at law would be to work inequity or perhaps fraud on the insured."
The plaintiff was obliged to prove that the insuring company was advised of the insured's condition, for a party cannot be deemed to have waived a right unless he had knowledge of all the facts. Michigan Automobile Ins. Co. v. Van Buskirk, 115 Ohio St. 598, 155 N.E. 186. The only attempt by the plaintiff to show knowledge on the part of the officers of the company was in showing knowledge on the part of the agent, and then, by pointing out that the agent ought to have informed his company of what he knew, the inference is drawn that he did so. If this inference were allowed to be drawn, the doctrine of the fourth paragraph of the syllabus in John Hancock Mutual Life Ins. Co. v. Luzio, 123 Ohio St. 617, 176 N.E. 446, is overthrown. To this we cannot assent. It is argued, however, that National Surety Co. v. Bohn, 125 Ohio St. 537, 182 N.E. 506, modifies or overrules the Luzio case in this respect. It is not necessary for us to draw the distinction that exists between the two cases, inasmuch as Judge Day in the latter case makes it clear that the doctrine of the Luzio case is unaffected by the holding in the Bohn case.
In the absence of the authority referred to we would not on principle acquiesce in the plaintiff's method of proving waiver, or of substituting an unauthorized inference for proof. The plaintiff was seeking relief of an equitable character to avoid the written letter of the contract sued on, and was bound to bring to the court all her available information of what knowledge the company had upon which the claimed waiver was made. This the plaintiff did not do. She refused to bring before the court the identical application made by the insured that initiated the reinstatement. She had the statutory right to resist the introduction of this application so far as the defendant might use it in defense. Appearing, however, for equitable relief in a case where she had the burden, she had no right to ask that an inference favorable to her be drawn from the absence of testimony by suppressing the very testimony that would have made such inference impossible.
The judgment is reversed, and, proceeding to render the judgment that the common pleas should have rendered, judgment is entered for the plaintiff in error.
Judgment reversed and judgment for plaintiff in error.
BLOSSER, P.J., concurs.
MIDDLETON, J., not participating.