
    The John Hancock Life Ins. Co. v. Warren.
    
      Life insurance policy — Defense of false answers to questions in application — Material nature of such answers —• Section 3625 Revised Statutes.
    
    Section 3625, Revised Statutes, is a valid constitutional enactment ; and to constitute a defense to a policy of insurance by reason of false answers to questions in the application, it must be clearly proven that the answers to such questions were willfully false and were fraudulently made, that the same were material, and induced the company to issue the policy, and that but for such answers the policy would not have been issued, and that; neither the company nor its agents had knowledge of the falsity or fraud of such answers at and before the delivery of the policy.
    (Decided October 11, 1898.)
    Error to the Circuit Court of Delaware county.
    The action below was by William M. Warren against the John Hancock Mutual Life Insurance Company of Boston, Massachusetts, to recover the amount of a policy of life insurance on the life' of George E. Warren, son of the plaintiff below. The first ground of defense denied that George E. Warren was in good health at the time the policy was issued, and denied generally the allegations of the petition. The second ground of defense was in the words and figures following:
    ‘ ‘ The defendant says that the policy of insurance set forth in the plaintiff’s petition, and upon which his action is based, was issued' upon an application made by the deceased, George E. Warren, to this defendant, which application is referred to and made a part of said policy of insurance, and that said policy of insurance provided that if any of the statements made in said application are untrue in any respect, said policy shall be void.
    
      The defendant further says that the said application of the said George E. Warren contained certain interrogatories therein, in answer to which interrogatories the said George E. Warren stated that at the time said application was made he was in good health, that he had not been obliged to consult a doctor during the ten years last preceding the date of said application, except once, and that was in 1893, for malarial fever, which sickness was of one week’s duration; that the last time he had consulted a physician was in the year 1893, on account of said attack of malarial fever; that he had never had or been predisposed to the disease known as syphilis, and that he had never had any illness or disease other than malarial fever in 1893.
    The defendant says that at the time said statements were made, they were all and each of them false and untrue, and were known to be so by the said George E. Warren at the time he made them, and that they were made by said George E. Warren for the purpose of defrauding this defendant.
    The defendant also says that at the time said application was made the said George E. Warren had syphilis and he knew it; that he had been obliged frequently during the ten years immediately preceding the making of said application, to consult a physician on account of said disease; that he had had a disease or diseases other than as stated in his said application, and that he was not at the time said application was made, in good health.
    This defendant says that the said statements in said application contained were the basis upon which the said contract or policy of insurance mentioned in the plaintiff’s petition was issued, and that said contract of insurance would not have been entered into, and said policy of insurance would not have been issued, except that this defendant relied upon the truthfulness of said statements, and this defendant is not liable upon said policy of insurance, and prays to be discharged from this action, and to recover its costs herein.”
    The reply admitted that the policy was issued upon the application set out in the answer, and that George E. Warren stated in his application that he was in good health, and denied the remainder of the answer, and claimed that the insurance company was estopped from denying the truth of the application. On the trial, evidence was given tending to support the answer, and by the plaintiff below tending to support the truth of his reply, and the verdict and judgment were in favor of the plaintiff below for the full amount of the policy. The principle controversy in the trial of the ease arose upon section 3625, Revised Statutes, which is as follows :
    “No answer to any interrogatory made by an applicant, in his or her application for a policy, shall bar the right to recover upon any policy issued upon such application, or be used in evidence upon any trial to recover upon such policy, unless it be clearly proved that such answer is willfully false and was fraudulently made, that it is material, and induced the company to issue the policy, and that but for such answer the policy would not have been issued; and, moreover, that the agent or company had no knowledge of the falsity or fraud of such answer.”
    The circuit court affirmed the judgment of the court of common pleas, and thereupon the insurance company filed its petition in error in this court, seeking to reverse the judgment.
    
      
      George K. Nash and W. Z. Davis, for plaintiff in error.
    The undisputed facts developed in this case were such that-, under the decision rendered by this court in the ease of Insurance Company v. Pyle, 44 Ohio St., 19, the verdict of the jury ought to have been in favor of the defendant.
    This statute, section 3625, is contrary to the constitutional limitations provided in amendments, article 5, and section 1, article 14, constitution of the United States, and-section 1, article 1, and section 16, article 1, of the constitution of Ohio. Cooley, Constitutional Limitations, marg'inal page 356; Bank of Columbia, v. Okley, 4 Wheaton U. S. Reports, 244; Cooley, Constitutional Limitations, marginal page, 289.
    The warranties, or mere representations which are made the basis of the contract and are proved to be such, eahnot be made to be immaterial by force of the statute, nor can the party alleging fraud in obtaining insurance by the agreement and representations, be required to prove them to be material. The very fact that the insurance was obtained on the faith of the agreement and representations, makes them material. Hexter v. Bast, 125 Pa. St., 52; Shackleford v. Handley, 1 A. K. Marshall (Ky.), 496.
    We think that our position in regard to the unconstitutionality of this section of the Ohio Statutes is fully sustained by the decision of this court in the case of Palmer do Crawford v. Tingle, 55 Ohio St., 423; Normal School District v. Blodgett, 155 Ill., 441; Ramsey v. The People, 17 L. R. A., 855.
    We say that, “There can be no public necessity” for a law which makes nugatory the warranty of a man that he tells the truth, in the representations, by which he procures a contract to be made. Such a law can only be promotive of evil. It encourages falsehood. Leep v. St. Louis I. M. & S. R. Co., 58 Ark., 407.
    Statute section 3625 is in derogation of the common law, because it seeks to abrogate the recognized law as to warranties ; and it is in derogation of common right, because it restricts the natural right of contracting. 23 Am. & Eng. Enc. Law, 383-386, et seq. to 393 and numerous authorities there cited.
    Therefore, as the statute does not declare what shall be deemed “material,” and does not provide how the answers to interrogatories shall be proved tobe “material,” it must be construed as leaving those questions to be determined by the judicial rules which would prevail if there were no such statute. These rules are, fortunately, clear and well defined.
    1. Representations may be material as to fact, or
    2. They may be made material by contract, or
    3. They may be made material by estoppel. Flanders on Ins., 202, 298, 326, et seq.; Hutchins v. Cleveland Mut. Ins. Co., 11 Ohio St., 479; Jeffries v. Life Ins. Co., 22 Wall. (U. S.), 47; Day v. Mut. Ben. Life Ins. Co., 1 McArthur, (Dist. Col.), 91; s. c. 29 Am. R., 565; Price v. The Phenix Mut. Life Ins. Co., 17 Minn., 497; 10 Am. R., 166; Campbell v. N. E. Mut. Ins. Co., 98 Mass., 381; Wood on Fire Ins., page 238, section 112, p. 396, 199; Babbitt v. Ins. Co., 66 N. C., 70; 8 Am. R., 494; 11 Am. & Eng. Enc. Law, 298; Walton v. Nat. Fund Ins. Co., 20 N. Y., 32; Byers v. Farmer's Insurance Co., 35 Ohio St., 606.
    
      As mere representations, the statute may well be held to be only declaratory, but as to warranties it made a new rule. White v. Prov. Sav. Life Assur. Soc. of New York, 163 Mass., 108 ; 27 L. R. A., 398; 39 N. E. Rep., 771.
    In Byers v. Ins. Co., 35 Ohio St., 618, the case of Anderson v. Fitzgerald, 4 House of Lords Cases, 484, is cited and the Supreme Court of Ohio say : “The point on which the case finally turned was whether certain answers made by the insured were material as well as false, and it was held that the representations being part of the contract, their truth and not their materiality was the question for the jury.” 1 Bigelow on Fraud, 622-623 ; Kimball v. Ætna Ins. Co., 9 Allen, Mass., 540; 85 Am. Dec., 786.
    It is important to note that this case is not put upon the ground of warranty. The case has been followed in 91 U. S. Rep., 512, 104 Ib. 202, 111 Ib. 341, as well as in a number of the state courts 44 Ohio St., 29; Cobb v. Mut. Ben. Asso.,153 Mass., 176; 10 L. R. A., 666; Penn. Mut. L. Ins. Co. v. Bank & Trust Co., 72 Fed. R., 414.
    We insist that there is nothing in morals, in public policy, or in law, which gives such an advantage to one who obtains insurance by deliberate misrepresentations.
    1.. A party who has accomplished his purpose through misrepresentation, will not be permitted to deny its materiality. 1 Bigelow on Fraud, 497; 46 Ohio St., 255; Smith v. Kay, 7 H. L. Cas., 750; Davenport v. N. E. Ins. Co., 6 Cush. (Mass.), 340; James v. Hodsden, 47 Vt., 127; Seifford v. Grout, 120 Mass., 20; Spaulding v. Knight, 116 Mass., 148; Hartford Ins. Co. v. Matthews, 102 Mass., 221; Edwards v. Marcy, 2 Allen, 486; 
      Jordan v. Picket, 78 Ala., 331; Carvil v. Jacks, 43 Ark., 454; s. c. Ib., 439 ; Hale v. Philbrick, 47 Iowa, 217., Md., 439; Winter v. Bandel, 30 Ark., 362; 1 Bigelow on Frauds, 543, 544, 535, 537.
    There was no reason why the court or jury should make a new contract for these parties, by saying that a fraud which lay at the very foundation of the contract was immaterial.
    Where the charge of the court to the jury is calculated to confuse and mislead the jury, as to the law of the case, there is error for which a judgment may be reversed. Ins. Co. v. Ins. Co., 5 Ohio St., 450; White v. Thomas, 12 Ohio St., 312; Railway Co. v. Wetmore, 19 Ohio St., 110; Insurance Co. v. Reed, 33 Ohio St., 283; Railway Co. v. Picksley, 24 Ohio St., 669.
    
      F. M. Ma/rriott and J. 8. Jones <& 8ons, for defendant in error.
    In the trial of the case before the court and jury below, there was no testimony offered which even tended to establish the defense, or to show that any answers made by George E. Warren were false, or if false, that they were willfully false or were fraudulently made, so as to bring them within section 3625 of the statutes.
    But to escape this failure of proof, counsel for plaintiff in error “maintain that section 3625, Revised Statutes of Ohio, is violative, not only of the constitution of Ohio, but also of the constitution of the United States,” and argue at great length to establish this contention.
    In answer to this we might well content ourselves by citing the case of the National Life Insurance Co. v. Brobst, 56 Ohio St., 728. We need not go out of Ohio to find authority establishing the right of the legislature to enact this and similar statutes. Smith v. Parsons, 1 Ohio, 239; Bank of Chillicothe v. Swayne et al., 8 Ohio, 283; Mansfield, C., and L. M., R. R. Co. v. Brown et al., 26 Ohio St., 224; Jewett v. Railway, 34 Ohio St., 607; Linderman v. Ingham, 36 Ohio St., 10; Bryan v. Insurance Co., 96 U. S., 627; Compton v. Railway Co., 45 Ohio St., 619; Wile v. The State, 46 Ohio St., 452; Cooley, Constitutional Limitations, 346; Insurance Co. v. Leslie, 47 Ohio St., 409; White v. Connecticut Mutual Life Ins. Co., 4 Dillon, Circuit Court Reports, 177; Moodie v. Insurance Co., 52 Ohio St., 23; Railway Co. v. Defiance, 52 Ohio St., 313; Norristown Tile Co. v. Hancock Ins. Co., 132 Pa., 385 ; New Era Life Ins. Co. v. E. N. Musser, 120 Pa., 384; Baxter v. The Brooklyn Life Ins. Co., 119 N. Y., 450.
    In the construction and interpretation of a statute, the court will look to the cause and the occasion of the passage of the act; Endligh, sections 29, 252, 295, 444, 446.
    The charge of the court was a most full, clear and accurate exposition of the law of the case. It was not misleading in any respect.
    Upon the question of temporary ailments and their effect upon a warranty in a policy or application, we cite: Lawyer’s Reports Annotated, vol. 22, p. 627, top of page ; May on Insurance, second edition, section 202, p. 246-7; 10 American State Reports, p. 242, and especially the notes; 70 New York Court of Appeals, p. 72-3.
    On the subject of the ten years’ health clause in the application we cite May on Insurance, second edition, p. 247; also Dillon v. Home Life Insurance Co., 69 N. Y., 256; Brown v. Metropolitan Life Insurance Co., 65 Michigan, 306; 8 American State Reports, 894; 97 Michigan, 513; 37 American State, 365.
    It is a well settled rule that “the answers need not be broader than the question requires.” 78 New York Court of Appeals, 568.
   By the Court :

In this state the subject matter of insurance is a franchise. State ex rel. v. Ackerman et al., 51 Ohio St., 163. And the state has a right to prescribe the terms and conditions upon which it grants such franchise, and the insurance company, having accepted the franchise with its terms and conditions, is bound thereby, and must accept the burdens with the benefits. Section 3625 was in force at the time this policy of insurance was issued, and therefore the legal effect is the same as if the section was copied into and made a part of the policy. The section is, therefore, a valid constitutional enactment. This section was held constitutional by this court in National Life Insurance Co. v. Brobst, 56 Ohio St., 728.

The case of Insurance Co. v. Pyle, 44 Ohio St., 19, was decided before this section was enacted, and, therefore, cannot control the matter. This section was passed for the purpose of abrogating the rule laid down in that case.

The court of common pleas, in the trial of the case, construed this section as requiring clear proof that the answers to the several questions by George E. "Warren were willfully false, and were fraudulently made, and were material and induced the company to issue the policy, and that but for suchanswers the policy would not have been issued, and that the company and its agents had no knowledge of the falsity or fraud of such answers at and before the delivery of the policy. In this there was no error. Such are the provisions of this section of the statute, and the statute should be construed so as to effect the intention of the legislature in passing the same. It will be noticed that the insurance company fails to allege that the answers to the questions were material, and without such allegation the answer failed to state a ground of defense, as it matters not how false and how fraudulent such answers may be, if they are not material, they furnish no. ground for defense to the company issuing’ the policy. There is, therefore, no error in the record and the

Judgment is affirmed.  