New York Life Insurance v. Strudel (243 F.2d 90, 1957)

TUTTLE, Circuit Judge,

This is an appeal from a judgment entered on a jury verdict for plaintiff, holding appellant insurance company lia-hie on four insurance policies in spite of ^he fact that the deceased insured had intentionally misstated material facts on his application. Appellant complains of various features of the charge and of the trial court’s failure to direct a verdict, enter a judgment n. o. v., or at least to order a new trial.

In March Henry strudel applied appeliant>g agent for ?20,000 of life insurance; on March 29th he completed app“n: “Aa^ers to the Mfdl,cal Examiner m which he gave ^ncededly wrong answers to several futhat flghJ have foaled the fac* ^ Jad sufferf a heart “ m 194J and had been under treat-f\ent by Vi“ days later> °n March Slat, he entered the¡Mi-am* ^ear* and stayed +ther+e untl1 APrill8tih observation and treatment of his heart condition, but he did not reveal this fact to any agent or mvestigator of the insurance company at any time during the subsequent investigation.

When the application was referred to appellant’s home office the Medical Director evidently had some grounds, unfortunately not inquired into at the trial, for suspecting that Strudel had once suffered from a heart disorder, for on that day he addressed an inquiry through the Medical Information Bureau to other insurance companies about any previous application that had been submitted to them by Strudel, and also instructed the appellant’s Miami doctor, who had recorded Strudel’s original answers to the medical questionnaire, to make a further report on applicant’s history of heart trouble and to complete a “heart chart.” On April 10th a reply was received from the Provident Life and Accident Insur-anee Company, which stated merely:

“We considered Mr. Strudel for insurance in 1949. I am sorry our information is confidential and cannot be divulged.”

« * m ^ nx i i . . , „ ,, . . , again by appellant s Miami doctor who found no abnormality of the heart and also recorded some more of applicants .... , ,, „ , , , misleading answers to the effect that he , , , _, , T , had no history of heart disease. In early „ , . . .... May appellant assigned an investigator x , i xt x xt x- xt , _ to check on the truth of the report of r lmd it is possible to dis_ tinguish most of the cases relied on by the appellee> which involve situations in wbjcb the insurer had notice of some inconsistencies and could easily have obtained the true facts, and only by closing his eyes could he still claim to “rely” on the manifestly false representation. In Johnson v. Life Ins. Co. of Georgia, Fla., 52 So.2d 813, insurer’s agent learned two months after the policy was issued, and within the contestable period, that the insured was living in a tuberculosis sanitarium, but nevertheless continued collecting premiums from him until his death. In N. Y. Life Ins. Co. v. Kincaid, 122 Fla. 283, 165 So. 553, 557, the court stated that “all the evidence relied on to cancel the reinstated policies [i. e. evidence of previous medical treatments] were present and available at the time of reinstatement.” In Reserve Loan Life Ins. Co. v. Boreing, 157 Ky. 730, 163 S. W. 1085, the Medical Director knew of applicant’s habitual intoxication, for the false denial of which cancellation was later attempted. In DiPasqua v. California Western States Life Ins. Co., 106 Cal.App.2d 281, 235 P.2d 64, the investigation by the insurance company aetually revealed the falsity of the representation on which it later still claimed to have relied. Here there were no such ambiguities or inconsistencies in the application and the other records put into evidence as were present in Love v. Metropolitan Life Ins. Co., D.C.E.D.Pa., 99 F.Supp. 641, and as would make the bona fxdes of the reliance on the application a jury question. See Provident Life & Accident Ins. Co. v. Hawley, 4 Cir., 123 F.2d 479, and Jefferson Standard Life Ins. Co. v. Stevenson, 5 Cir., 70 F.2d 72, for cases in which insurer’s knowledge of minor inconsistencies or falsehoods in the application were held not to bar reli-anee on representations which proved to be false.

. . , ,, The second question is whethL ’ J , er the very fact that insurer made an independent investigation precluded his reliance on the application. Clearly this cannot be so here for the very nature of the inquiry was such, and of necessity had to be such since the information sought about applicant s medical history was primarily within his own knowledge, that there was no assurance that the facts would come to light during the inquiry. Neighbors, merchants, and landlords may or may not have the desired information and though if enough are consulted perhaps some would be helpful there can be no requirement of consulting an indefinite number if all the initial responses are negative. All those in a position to know, the applicant, his wife — the appellee, the family doctor, and the business associate, gave false answers tending to induce appellant to stop the inquiry. Cf. A.L.I. Restatement, Torts § 547 comment a. The project of consulting all the doctors and hospitáis in an area the size of Miami was unreasonably burdensome even if the authorizations could have been obtained and was not even calculated to give assuranee that a negative result would be con-elusive. Thus this case differs from Columbian Nat. Life Ins. Co. v. Lanigan, 154 Fla. 760, 19 So.2d 67, on which appellee principally relies; there the applicant actually communicated to the insurer the names of the hospital and of the doctor who could give his complete medical history and thereby the investigation was given at least a reasonable start if the company chose to make one. The case is also distinguishable on other grounds, principally in that it appeared that the applicant was not there guilty of any misstatements but had clearly indicated that his own recitation of his medical history was but fragmentary. The court’s broad statement to the effect that:

“Having declined to rely solely upon the answers contained in the application forwarded by the medi- , . , , , . , cal examiner, and having made mde-dent investigation elsewhere, it folloWB that ^ is charged with all the knowledge it might have obtained had it purgued the inquiry to ^ end with reasonable diiigenCe and completeness » 19 So.2d at 71.

*s; context of that case, merely dicta if read without the implied qualification derived from its facts that the company had been placed in a position f° ma^e a fruitful inquiry. The three cases cited by the Florida Supreme Court in support of the quoted proposition supP°rf v:*ew f°r merely that *n a contract for the sale of land, where f-^e Purchaser has full opportunity duran inspection to observe certain Physical features of his acquisition, he may not “rely” on false representations as ^ose features made to him by the seUer which do not accord with the clear evidence of his eyes. See also Atwood v. Small, 6 Clark & F. 232, 7 Eng.Rep. 684, wMch shows that the doctrine of equita^le esf°PPel from relying on a misrepresentation only applies where the deceived Party is in a position to embark on an investigation calculated to reveal the true facts-

There being no evidence on which the jury could have returned a verdict for plaintiff, a judgment non obstaixte vere-dicto must be entered,

Reversed and remanded for entry of judgment for the defendant below.

. In particular, Strudel answered tlie following questions in tlie negative:

“7. B. Have yon ever been under observation or treatment in any hospital, clinic, asylum or sanitarium?

“8. Have you ever had, or ever cons-ultod a physician or practitioner for, any ailment or disease of

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“B. Tlie Heart, Blood Vessels or Lungs?

“10. Have you ever had or ever con-suited a physician or practitioner for, any ailment or disease not included in your above answers?

“11. What physicians or practitioners, if any, not named above, have you con-suited or been examined or treated by within the past five years?”

. See 16 Appleman, Insurance Law and Practice § 9088 at 624, 626; 17 id. § 9404.

. 17 id. § 9403 at 15.

. For the Florida rule as to the degree of good faith required of an insurance applicant, see Mutual Life Insurance Co. of N. Y. v. Denton, supra, 112 So. at pages 54-55.