
    Mutual Benefit Life Insurance Co. v. Lehman et al.
    
    
      Bill in Equity to enforce Payment of Life Insurance Policy.
    
    [Decided June 28, 1902.]
    1. Life insurance policy; warranties; sufficiency of plea alleging breach thereof. — Where an applicant for life insurance agrees in his application that “the answers given herewith to the questions of the agent or examiner which. I declare and warrant to he true shall be the basis of my contract with the company,” and then makes answer to the questions propounded relative to his having formerly suffered from diseases and as to his physical condition, such statements by the applicant are mere representations and constitute no warranty; and a plea setting up that the answers mace to the questions so propounded were false and that, therefore, there was a breach' of warranties made by the insured, is insufficient to bar a recovery of the amount due upon the insurance policy on the death of the insured.
    Appeal from tlie Chancery Court of Jefferson.
    Heard before tlie Hon. John 0. Carmichael.
    Tlie bill in this case was filed by tlie appellants as creditors of tlie estate of George T. • Winton, deceased, against tlie appellant, Tlie Mutual Benefit' Life Insurance. Company, of Newark, N. J., to enforce tlie payment. by said Life Insurance Company of a policy of insurance issued by it on tlie life of said Winton.
    Tlie appeal is from an interlocutory decree of tlie chancellor bolding insufficient a plea by tlie defendant. Tin1 facts of tlie case and the defense interposed by said plea are sufficiently shown in the opinion.
    A. Latady, for appellant,
    cited Kelley v. Ins. Go., 113 Ala, -153; Railway Go. v. Gilmer, 85 Ala. 422; Robbins v. Webb, 68 Ala. 393; Byrne v. Marshall, 44 Ala. 355.
    James A. Mitchell and H. K White, contra,
    
    cited Lehman r. Gunn, 124 Ala. 213; A. G. L. ins. Go. v. Johnson, 80 Ala. 467; Mut. Ben. L. Ins. Go. v. Robertson, 59 Ill. 123; Morrison v. Sin. Go., 59 Wis. 162; Dillaber v. Ins. Go., 69 N. Y. 256; Edinqton v. Ins. Go., 67 N. Y. 185; Fitch v. Ins. Go., 59 N. Y. 572.
   McCLELLAN, C. J.

— This bill is prosecuted by Lehman and others, creditors of the estate of George T. Win ton, deceased, to enforce the payment by tlie insurance company of a policy of insurance issued by it, on the life of the debtor. The respondent, pleaded in bar of the relief sought, that Winton made application for said insurance, that, in his application is this provision : UI agree that the answers given herewith to the questions of the agent or examiner, which I declare, and warrant to be true, shall be the basis of my contract with the company; and respondent pleads * * * breach of warranties which formed the basis of said contract as follows : 1. That in answer' to the question: ‘Have yon any disease or disorders? — one of tire questions the answer to which the said George T. Win-ton warranted to be true, the said Winton answered: ‘No.’ And this'respondent says that said answer was untrue, in that, as, respondent avers, that said Winton at the time he made the answer set out, suffered from disorders of the kidneys, dyspepsia, headache and muscular pains. 2. That in answer to' the question: ‘How often and for what have you sought medical advice during the past seven years, dates of each, duration, physician consulted.?’ One of the questions the answer to which said Winton warranted to' be true, the said A Vinton answered: ‘Once, for la grippe in February, 1891, Dr. J. E. Griggs, Birmingham, Alabama; once for mumps in June 1893, Dr. T. L. Robertson, and that the disorder continued in each instance for one week;’ and this respondent says that the answers so given to the question above, set out were untrue; in this, that at the time of making said answers, the said Winton knew that in the Fall or Winter of 1894 he had consulted physicians for disorders from which he suffered, and that he likewise sought, medical advice in the Spring or Summer of 1895. 3. That in answer to the question: “Are you, or have you been subject to dyspepsia? Dates, duration and severity?’ One of the questions, the answer to which said Winton warranted to he true, he answered: ‘Yes, in February 1880. Three months, not very severe. Was never confined to> bed, and able to attend to business.’ And this respondent avers that the answer so given to the question herein set out was untrue, for that respondent says, that at the time said Winon made the answer averred to be untrue he knew that in the. Fall or Winter of 1894 he suffered from dyspepsia and that in the Spring or Summer of 1895 lie had to, leave the city of Birmingham on account of his state of health, and that he remained away at mineral springs for two weeks under the advice of a physician; that he was, just before leaving for tlie springs suffering from an attack of dyspepsia, headaches, muscular pa-ins and scanty urine, and that lie had been confined to his bed for several days, and that during the year* preceding his death, he had received sundry prescriptions from his physician for these complaints.’’ This plea, being set down for hearing on its sufficiency, the, chancellor held it insufficient on grounds dearly stated in his opinion, which we adopt: “The plea, as amended of the Mutual Benefit Life Insurance Company, attempts to set up some breaches of warranties, alleged to have been made by the decedent, George Winton. The contention that the plea does not disclose any breach of the alleged warranties was carefully argud at the bar, upon the trial of the sufficiency of the plea. I shall not go into' that question, as I think the plea is to be held insufficient upon another ground, anterior in point of the development, of the trial, to, the one argued. The plea does not disclose; any warranties niade by Winton. For aught that appears in the plea, the statements alleged to, have been made, by Winton, were mere representations. It is only stated by way of recital, not; by positive averment, that even the representations were made. The plea does not allege that the, warranties were in writing, that they wore incorporated into the contract of insurance, or that it. was referred to therein, in any manner, or in such manner as to make them a part of the contraed,. It would establish the plea if the respondent company should prove that Winton made the statements, recited in the plea, even by parol [oral evidence]. Tins would fall far short, of the essential elements of a warranty. In Ala. Gold Life Ins. Co. v. Johnston, 80 Ala. 470, Sommerville, Justice, says: ‘The distinction between a Avarranty and a representation in insurance is frequently a. question of difficulty, especially in the light of more recent decisions, AA'hicli recognize the subject as one of growing importance in its relations, particularly to life insurance.. As a general rule it has been laid down that, a warranty must be a part and parcel of the contract of insur-anee, so as to appear, as it were, upon the face of the policy itself, and is in the nature of a condition precedent.’ In the well considered case of Campbell v. New Eng. Life Ins. Co., 98 Mass. 391, it is said: ‘The application is, in itself, collateral merely to the contract of insurance. Its statements, whether of facts or agreements, belong to the class of representations. They are to he so construed, unless converted into warranties, by force of reference to them in the policy, and a clear purpose, manifest in the paper's thus connected, that the whole shall form oneentire contract.’ See also Fidelity & Casualty Co. v. Albert, 67 Fed. Rep. 460; Mo. K. T. & T. Trust Co. v. German Nat’l Bank, 77 Fed. Rep. 177; 16 Am. & Eng. Ency. of Law (2d ed.), p. 924. Tested by these decisions, the plea presents no defense to the bill, and is, therefore, insufficient. * * *” It is argued for appellant that inasmuch as a plea in chancery, like other pleadings, is amendable this plea should not have been held insufficient. This we take to be an inadvertent suggestion of counsel. The plea on such hearing is judged by what it contains, as a plea at law would be judged on demurrer, and not with reference to what might be injected into it by amendment; and the ruling of insufficiency goes upon' the ground that the plea is lacking in averment which, if the real facts admit of it, might be made by amendment.

We deem it unnecessary to pass upon other points made in argument against the sufficiency of the plea. We may remark, however, that forfeitures of policies of insurance by reason of the inaccuracy or falsity of answers to questions even when properly made warranties, is not favored by law, since the operation, of such warranties may be and frequently is to defeat the policy though neither, its issuance or the death of the assured may bear any relation to the fact concealed or inaccurately or falsely affirmed; and upon this and other considerations such warranties are strictly con-st™ ed against the insurer and liberally to the upholding of his liability under the policy. Hence it is held that a warranty arising upon questions and answers, incorporated by reference or bodily into the policy, may he broken in the letter’ without vitiating the contract, but that the breach, to that end, must be of the spirit, intent, and substance of the covenant, as, for example, where the warranty is that the applicant is in good health, the intention is not that lie. is in perfect health but that he is free from, all ailments calculated or tending to shorten life and increase the insurer’s risk; and, we apprehend that a warranty that the applicant has no disease or' disorders would not be breached by the fact that he did have a disease or disorder temporary in its nature and involving no1 tendency to shorten life. Thus one may, at the time of answers made, have an acute disorder of the kidneys, due to some specific and known cause, and eradicable both as to cause, and condition so as to leave no impairment of health, or lie. may have a .temporary' dyspepsia yielding to treatment, and not affecting the risk, and surely he may have headaches and muscular pains, none of which would be a, disorder within the sense and substance of the warranty- but each of which would be a disorder within its letter.. — 1 May on Ins., §§ 295 et. seq. and cases there cited.

In respect to the second and third assignments of breach, we suggest that the general averment of untruth refers alone to the answers affirmatively given, and is not supported by the specification, so> to speak. To illustrate: In the, second assignment it is averred that Winton in answer to the question: “IIoav often and for what have you sought medical advice during the past seven years, dates of each, duration, physician consulted?” said: Once for la grippe in February, 1891, Dr. J. E. Griggs, Birmingham, once for mumps in June, 1898, Dr. T. L. Ilobertson, and that the disorder continued in each instance for one week. Now it is this particular statement that is averred to be false, and the specification shows that this statement is not in fact challenged at all, but that the real complaint of nit- answer waj, not that it was untrue sc fa.fi as it went, but that il failed to go far- enough and cover the field of the question. And the same is true of the third assignment. The point as to whether an assignment of breach of warranty arising upon question ami answer may be rested upon a lack of fullness in the answer, we apprehend, is not presented by these assignments.

in one aspect of the. case pi-escaitexl by the bill, the respondent insurance company is alleged to have paid a part of the money evidenced by the policy to the administrator of the deceased insured in collusion with him to defeat the claims of complainants and other creditors of Win ton. If this be true the payment was a waiver of the breaches of warranty sought to he sec up in the plea; and it follows that the plea presents no defense to that aspect of the bill, and of consequence no defense to the bill as a whole. If, however, the payment to the administrator was made by the company in good faith as a compromise settlement of the claim against it, the company honestly believing it had a right to' settle with the administrator, and the face value of the policy being scaled to the amount so [acid in recognition and on account of the company’s claim that it was not liable at all because of breaches of the insured’s warranties, as may he, the case1 consistently with another aspect of the case presented by the bill, the payment would not as matter of law constitute a waiver of the alleged breaches so far as the balance unpaid is concerned.

The decree of the chancery court holding the plea insufficient must be

Affirmed.  