
    Insurance Company v. Pyle.
    
      Life insurance policy — Construction—TJntrue answers in application — Policy void ab initio— When premium may be recovered bach.
    
    1. Tlie provisions of a life insurance policy are construed and applied like the terms of any other contract, and such provisions may render the policy void, ab initio, by the terms of the same and the failure of warranty.
    2. When a life policy is issued and accepted upon the expressed condition that the answers and statements of the application are warranted true in all respects, and that if the policy be obtained by any untrue answer or statement, or by any fraud, misrepresentation, or concealment, “ the policy shall be absolutely null and void;” and, as to matters material to the risk, some of the answers and statements are untrue in fact, though made without actual fraud and under an innocent misapprehension of the purport of the questions and answers, no contract of insurance is thereby made, and the policy does not attach, but it is void ab initio.
    
    3. When, for such a policy, premium has been paid by the applicant to the insurance company, such payment may be recovered back.
    Error to the District Court of Ross county.
    August 1,1878, Jeremiah Pyle Drought suit against the Connecticut Mutual Life Insurance Company, to recover back the premium paid for a policy that the company had canceled.
    Pyle, in his petition, says :
    That, on August 21, 1872, the defendant, by its agent, one John A. Nipgen, duly authorized to take applications for life insurance in the company of defendant, and to receive the cash premium thereon, applied to plaintiff at his home, “Pyle Farm,” in Ross county, and requested him to take a policy of insurance in defendant’s company upon the life of plaintiff. At first, plantiff refused to do so on account of having no money, when Nipgen offered to advance to or loan plaintiff the money to make the first payment on the policy, to which proposition plaintiff acceded, and then told Nipgen that he, plaintiff, had failed in getting a policy of insurance, in June, 1871, in the Charter Oak Insurance Company, of which Mr. Schutte was agent, on account of something being the matter with his pulse. Nipgen then asked plaintiff if the application had been sent to the company. Plaintiff replied that it had not as he knew of. To which Nipgen responded, that if it had not gone any farther than that it did not make any difference; and, thereupon, plaintiff agreed with defendant, acting by its agent, to make application for a policy of insurance upon his life in defendant’s company for the sum of ten thousand dollars, the same to be paid at the office of defendant, in Hartford, Connecticut, to Ede Pyle, wife of plaintiff, if she survived him — if not, to the children of plaintiff, or their legal representatives, etc. The said Nip-gen, having a blank application, then commenced asking plaintiff the questions required to be asked of an applicant by the “statement of particulars respecting the person whose life is proposed for insurance, and which statement forms a part of the contract of insurance,” and which are the same questions attached to the policy afterward issued by defendant, and plaintiff answered them until Nipgen came to the question, “Has any company ever declined to grant insurance on your life?” when he, said Nipgen, said he would just answer that question “No.” Plaintiff'told him “it was something he knew nothing about; that he could do just as he pleased about that.” Said Nipgen thereupon put down, in answer to the question, “no.” Plaintiff and Nipgen, on the same day, went to Hallsville, to Doctor Gildersleeve, who, owing to the absence of the regular examining physician of the defendant, examined plaintiff, and thereupon Nipgen told Gildersleeve to answer all the medical questions “ noj” meaning the “ Questions to be answered by the medical examiner 0of the Connectical, Mutual Life Insurance Company,” and they were so answered. Plaintiff then signed said application for his wife and himself as required, and executed his note, payable to the order of Nipgen at the First National Bank of Chillieothe, Ohio, four months and ten days after date, for the sum of $219.20, with interest, being the amount of “ cash premium ” required to be paid, and which note, having been indorsed by Nipgen, plaintiff, afterward, at maturity, paid. The application was sent to the company, and a policy, No. 119,633, of date August 31, 1872, in said amount, on plaintiff’s life, issued, and shortly afterward delivered to plaintiff. Upon reading the policy, about a month afterward, plaintiff' found it contained, among others, the following conditions and agreements:
    “ This policy is issued and accepted upon the following express conditions and agreements :
    
      “1. That the answers, statements, representations, and declarations, contained in or indorsed upon this application for this insurance — which application is hereby referred to and made part of this contract — are warranted by the insured to be true in all respects : and that if this policy has been obtained by or through any'fraud, misrepresentation, or concealment, that this policy shall be absolutely null and void. . . .
    “ 4. That in every case in which this policy shall cease and determine, or shall become null and void, all premiums paid in respect of the same shall be forfeited to the company.”
    At the foot of the application, and a part thereof, is the following :
    “It is hereby declared and warranted that the above are fair and true answers to the foregoing questions; and it is acknowledged and agreed by the undersigned that this application shall form a part of the contract of insurance, and that if there be, in any of the answers herein made, any untrue or evasive statements, or any misrepresentations, or concealment of facts, then any policy granted upon this application#shall be null and void; and all payments made thereon shall be forfeited to the company.”
    Plaintiff then called on Nipgen, and, referring him to the terms of the policy, told him that he thought it was of no account, owing to the answer, “no,” to the question whether any company had ever declined to grant insurance on his life. He said the plaintiff should bring the policy in and get it corrected, and that he would write to the company about it.
    Plaintiff took the policy to Nipgen, and Nipgen wrote to the company, stating that said question should have been answered “yes,” instead of “ no,” and stated how far the Charter Oak matter had gone in plaintiff's case. Plaintiff signed the letter, and Nipgen mailed it. About three or four weeks afterward, plaintiff inquired of Nipgen about the matter, and was told that the company had said that plaintiff had better go before Doctor Scearce, and be reexamined. About a week after, plaintiff did so, and was asked about liis heart, and answered that it bothered him sometimes; that, after working hard, he got weak and nervous sometimes; that he took whisky and ginger for it. Plaintiff left, and they made out the application. Plaintiff called on Nipgen repeatedly about the matter, and he claimed that he had not yet heard from the company; then, about two months after that, Nipgen claimed the application, meaning the new or corrected one, had been mislaid in the Cincinnati office of defendant. Then Nipgen and Scearce made out another application, and sent it on. This was the third application, and was made without the knowledge of plaintiff. When plaintiff again called on Nipgen, he was informed by him that the company had declined his application.
    There were attempts to get a new or corrected policy in place of the original one.
    On August 1, 1873, or thereabouts, plaintiff informed Nipgen that he was ready to make payment whenever he, Nipgen, would get it fixed. The defendant, upon receiving the third application, and without the knowledge or consent of plaintiff, canceled and annulled said policy of August 31, 1872. This was, as plaintiff thinks, at or about the expiration of one year from the time it was issued. Upon being informed of said cancellation of said policy, some time in September, 1873, the precise time not now remembered, plaintiff:' demauded from said agent and said company, the re-payment of his money so paid as premium, which was refused.
    Wherefore plaintiff prays judgment against said defendant for said sum of $219.20, with interest thereon, from August 31, 1872; or, if the court shall be of opinion that an action to recover back the money paid is not the proper action, then that the plaintiff may recover from the defendant the sum of $500, his damages herein sustained; or that defendant, upon being paid the back premiums on said policy, may be ordered to rescind the cancellation and annulling of said policy, and to correct the same as to said answer mentioned, according to the fact, and for other proper relief.
    A demurrer to this petition was overruled, and the insurance company answered, denying that plaintiff “ told said Nipgen that he,plaintiff, had failed in getting a policy of insurance in June, 1871, in the Charter Oak Insurance Company, of which Mr. Scbutte was agent, on account of something being the matter with his pulsethat “Nipgen then asked plaintiff if the application had been sent to the company;” that “plaiutiff replied that it had not as he knew of, to which Nipgen responded that if it had not gone farther than that, it did not make any difference,” and says that no such conversation took place between the plaintiff and Nipgen ; also, the company denied other specific allegations, but it did not deny that its agent, .Nipgen, wrote the application. To this answer plaintiff replied, denying some specific allegations of the answer. On the trial, by request of defendant, the court found, as its conclusions of fact, that in addition to the facts admitted by the pleadings, that several of the answers to questions contained in the application of the plaintiff, on which the policy of insurance was issued, were erroneously answered, which answers were by the terms of the policy made warranties, but the court further finds that all of said questions so erroneously answered by the plaintiff', were so answered under an innocent misapprehension of the purport of the questions and the answers, and the answers that should have been made thereto, and without any intent to perpetrate a fraud of any kind upon the defendant. The court further finds that the untruth of several of said answers was upon questions material to the risk, and that by the terms of said policy and the application which became and was a part thereof, the untruth of said answers constituted breaches of the warranties in respect thereof contained in said policy, and that by its terms the breach of said warranties was to make said policy null and void.
    The court finds as conclusions of law, that the -plaintiff is not entitled to have the cancellation of said policy of insurance set aside, nor to have the same reformed in any particular, and that the same is wholly void, and of no effect whatever, and was so from the moment it was issued.
    The court further finds as a conclusion of law, that the plaintiff is entitled to recover of the defendant the sum of $219.20, the premium paid, with interest from the 21st day of August, 1872, to which the defendant, by counsel, excepted.
    A motion for a new trial was overruled, and the ruling excepted to, and judgment was entered for Pyle.
    The district court affirmed this judgment, and plaintiff in error now seeks to reverse these judgments.
    
      Lawrence T. Neal, for plaintiff in error.
    This is not a case in which the rule that the premium must be returned where the risk has not attached or commenced to run, can be applied. Upon the filing of the application, the payment of the premium, and the issuing of the policy, the contract between the parties was complete, and the risk then attached. This was not prevented by the declarations in the application and policy that fair and true answers should be given to the questions in the application, and that any untrue or evasive statements, or any misrepresentation or concealment of facts, should nullify the policy. These provisions were inserted for the benefit of the company. The policy was not void, but simply voidable at the option of the company.
    The company might have waived the provisions which authorized it to declare the policy void upon the terms and conditions named therein, and, in that event, the risk, which did run for one year, would have continued to run, Insurance Company v. Norton, 96 U. S. 234.
    The premium was, therefore, rightfully retained by the company when it elected to annul the policy, the rule being that if the risk once attaches the premium can not be returned. Bliss Life Ins., sec. 423; Fulton v. Lancaster, Ohio Ins. Co., 7 Ohio (2 pt.), 5.
    The rights of the parties are to be determined by the contract between them, and by the express terms of this contract the premium was to be forfeited to the company if there should be in any of the answers of Pyle “any untrue or evasive statement, or any misrepresentations or concealment of facts.” The terms of this agreement can not be altered or varied by interpolating new words, or by giving to the words used by the parties other than their ordinary meaning. It has been repeatedly held, in like cases, that the premium can not be recovered. Bliss Life Ins., §§ 37, 63; Ellis Fire and Life Ins. 260; Angell Fire and Life Ins., § 402; Byers v. Insurance Company, 35 Ohio St. 606; Anderson v. Fitzgerald, 4 Ho. Lords Cas. 484; s. c., 24 Eng. Law and Eq. 1; Miles v. Connecticut Mut. Life Ins. Co., 3 Gray, 580, 582; Duckett v. Williams, 2 Cromp. & Mees. 348; s. c., 4 Tyrwh. 240; Day v. Mutual Ben. Life Ins. Co., 1 McArthur, 41; s. c., 29 Am. Rep. 565; Low v. Union Cen. Life Ins. Co., 6 Cin. Law Bull. 666.
    The only ground upon which the premium can be recovered by the insured in any case where the policy is void ab initio, is that there is no consideration for its payment in the first instance. But there was a consideration. The responsibility assumed by the company, the risk and inconvenience to which it was exposed, and the expense incurred in commissions to its agents, and otherwise, constituted a sufficient consideration. Lewis v. Phœnix Mut. Life Ins. Co., 39 Conn. 100.
    The insured can in no case recover the premium if there has been any fraud upon his part. May on Insurance, § 567; Angell Fire and Life Ins., §400; Bliss Life Ins. § 423; Ellis Fire and Life Ins. 141.
    The misrepresentations made by Pyle, whether made purposely.or unintentionally, should be treated as fraudulent. Bliss Life Ins., § 36; 1 Story Eq. Jur., § 193; Friesmuth v. Agawam Mut. Fire Ins. Co., 10 Cush. 587.
    
      Clark $ MeDougal, for defendant in error.
    Whatever questions were erroneously answered were so answered by the agent of the company — at his dictation, and by him written in the application — after having been fully advised by Pyle of all the circumstances. Such wrong should be imputed to the company, and not to the insured. Insurance Company v. Williams, 39 Ohio St. 584, 588; Massachusetts Life Ins. Co. v. Eshelman, 30 Ohio St. 647, 656.
    The answers of the insured as to the condition of his health are made warranties by the terms of the policy. Such warranties are, however, in the nature of conditions precedent. O’Niel v. Buffalo Fire Ins. Co., 3 N. Y. 122; Ripley v. Ætna Ins. Co., 30 N. Y. 136.
    A contract made upon a condition precedent can only become a valid contract upon the existence of the condition according to the terms agreed upon by the parties. The answers being in certain particulars untrue — incorrect— and the truth of these answers being made warranties by the terms of the policy, the policy itself never took effect as a coutract of insurance. Pyle was at no time insured, for the company was at no time bound by the policy ; and the questions having been answered under an innocent mistake as to their import, and without any intention to deceive, the premium should be returned. 3 Kent’s Com. *341, *342; Steinback v. Rhinelander, 3 John. Cas. 274, 275; Tyrie v. Fletcher, Cowp. 666; Marshall on Insurance, 549; Delavigne v. United Ins. Co., 1 John. Cas. 310; s. c., 1 N. Y. Com. Law Rep. 335.
    A policy of insurance is a contract to be governed by the same principles which govern other contracts. May on Ins., §§ 172, 173; Cornfoot v. Fowke, 6 Mess. & Wels. 368; Turley v. North Am. Fire Ins. Co., 25 Wend. 374, 377.
    When the risk has not been run, whether its not having been run was owing to the fault, pleasure, or will of the insured, or to any other cause, the premium shall be returned. May on Ins., § 4; Stevenson v. Snow, 3 Burr. 1237; Tyrie v. Fletcher, Cowp. 668; Pothier du Cont. d’Ass. 4; Pardessus, Droit Commercial, 596, 3; 2 Marsh. Ins. 663.
    If a policy be void ab initio, or if the risk never attaches, and there is no fraud on the part of the insured, and the contract is not against law or good morals, lie may recover back all the premiums he may have paid. May on Ins., § 562; Clark v. Man. Ins. Co., 2 Woodb. & Minot, 472; Mutual Ass. Co. v. Mahon, 5 Call. (Va.) 517; Fowler v. Scottish Eq. Life Ins. Co., 28 L. J. Ch. 225; Rochester Ins. Co. v. Martin, 13 Minn. 59; Foster v. U. S. Ins. Co., 11 Pick. 85.
    Where a policy is avoided by concealment or misrepresentation, not fraudulent, the assured is entitled to a return of premium. Anderson v. Thornton, 8 Wels. H. & G. 425; Watertown Fire Ins. Co. v. Grehan, 72 Ga.
    To sustain the claim of forfeiture would be against the policy of our law. See act of May 15, 1878, 75 Ohio L. 376; act of April 2, 1873, § 3; 70 Ohio L. 99.
   Follett, J.

In filling up the application for this policy, Nipgen was the agent of the insurance company, and was not the agent of Pyle. Insurance Co. v. Williams, 39 Ohio St. 584. And though the application was thus made, the policy was canceled for its untrue statements innocently made on the part of. Pyle.

The application and the policy together form the contract. The terms of the contract are plain and free from doubt or ambiguity. It is agreed in the application, “that this application shall form a part of the contract of insurance, and that if there be, in any of the answers herein made, any untrue or evasive statements, or any misrepresentations or concealment of facts, then any policy granted upon this application shall be null and void.”

And the policy provides that “ this policy is issued and accepted upon the following express conditions and agreements : 1. That the answers, statements, representations, and declarations, contained in, or indorsed upon this application for this insurance — which application is hereby referred to, and made part of this contract — are warranted by the insured to be true in all respects; and that if this policy has been obtained by or through any fraud, misrepresentation. or concealment, that this policy shall be absolutely null and void.”

I. Did the policy ever attach, or was it ever valid ?

The court finds as conclusions of fact, that “ several of the answers to questions contained in the application of the plaintiff, on -which the policy of insurance was issued, were erroneously answered;” and the “court further finds that the untruth of several of said answers was upon questions material to the risk, and that, by the terms of said policy and the application which became and was a part thereof, the untruth of said answers constituted breaches of the warranties in respect thereof contained in said policy, and that by its terms the breach of said warranties was to make said policy null and void.”

And the court finds as a conclusion of law, that the policy “is wholly void, and of no effect whatever, and was so from the moment it was issued.”

But the plaintiff in error insists that the policy took effect and was in force until it was cauceled. To sustain such a claim would ignore the expressed terms of both the application and the policy, as well as the cause of the cancellation of the policy. These terms the plaintiff in error has never waived, but it-has insisted upon them and acted upon the strict letter.of the agreement, and has canceled the policy.

This is not a new question in the courts. In the case of Clark v. Manufacturer's Ins. Co., 2 Woodb. & M. 472, the court held: “A warranty is generally a stipulation made and described in the policy itself, and must be complied with, whether material or not.” “Where a material fact is suppressed in such representations, the insurance is avoided, and the policy does not attach, whether the suppression happens by neglect or fraud.” In Friesmuth v. Agawam Mutual Fire Ins. Co., 10 Cush. 587, “the application contained an untrue representation that the property was unincumbered,” and the court held, “ that the policy was wholly void.” In Foot v. The Ætna Life Ins. Co., 61 N. Y. 571, the court held: “ If a policy of insurance declare that the statements made in the application shall be part and parcel of the policy, such statements become warranties, and must be true, whether material or not.”

“A contract of insurance, like other contracts, is avoided by an untrue statement by either party as to a matter vital to the agreement, though there be no intentional fraud in the misrepresentation.” The Co-operative Life Ass’n of Miss. v. Leflore, 53 Miss. 1.

On a similar coutract the supreme court of the United States, in Jeffries v. Life Ins. Co., 22 Wall. 47, held : “Any answer untrue in fact, and known by the applicant for insurance to be so, avoids the policy, irrespective of the question of the materiality of the answer given, to the risk.” And in the opinion, Mr. Justice Hunt says: “Nothing can be more simple. If he makes any statement in the application, it must be true. If he makes any declaration in the application, it must be truc. A faithful performance of this agreement is made an express condition to the existence of a liability on the part of the company.” And this is approved in the case of Ætna Life Ins. Co. v. France, 91 U. S. 510, and there the court also held, “that the company was not liable if the statements made by the insured were not true. The agreement of the parties that the statements were absolutely true, and that their falsity in any respect should void the policy, removes the question of their materiality from the consideration of the court or jury.”

This court, in Union Mutual Life Ins. Co. v. McMillen, 24 Ohio St. 67, held: “Where a life policy is made and accepted, upon the expressed condition that if the annual premium is not fully paid within the time specified, the policy ‘ shall be null and void, and wholly forfeited,’the failure to pay the premium avoids the policy;” and that was where the policy had attached. But in such a case, in Union Central Life Insurance Co. v. Bernard, 33 Ohio St. 459, the court held, where “the uniform custom of the insurance company has been to give notice of the time when the premiums fall due, and to collect the same at the residence of the policy-holder, through a local agent residing in his neighborhood, good faith requires that this mode of collection should not be discontinued, and payment required at the company’s office, without notice to the insured.”

There are mistakes jm policies that may be disregarded or corrected and the policy enforced. See Harris v. Columbiana County Mutual Ins. Co., 18 Ohio, 116, and Insurance Co. v. Williams, supra. But in this case the court did not err in holding the policy “ is wholly void and of no effect whatever, and was so from the moment it was issued.”

II. Should the premium be returned ?

The court finds as a conclusion of law that Pyle is entitled to recover of the insurance company the premium paid, with proper interest. The court thus held, not only because the policy was void ab initio, but because it also found “that all of said questions so erroneously answered were answered by the plaintiff under an innocent misapprehension of the purport of the questions and the answers, and the answers that should have been made thereto, and without any intent to perpetrate a fraud of any kind upon the defendant.”

There was no actual fraud, at least on the part of Pyle. On this policy, no risk ever attached.

In 1777, in the case of Tyrie v. Fletcher, Cowp. 666, 668, Lord Mansfield stated the general rule to be, “that where the risk has not been run, whether its not having been run was owing to the fault, pleasure, or will of the insured, or to any other cause, the premium shall be returned, because a policy of insurance is a contract of indemnity. The underwriter receives a premium for running the risk of indemnifying the insured, and whatever cause it be owing to, if he does not run the risk, the consideration, for which the premium or money was put into his -hands, fails, and therefore he ought to return it.”

In 1800, in the case of Delavigne v. United Ins. Co., 1 Johns. Cas. 310, the court held, “where a policy becomes, void by a failure of the warranty, the insured is entitled to a return of the premium, if there be no actual fraud.”

“Where a policy is avoided by concealment or by misrepresentation not fraudulent, the assured is entitled to a return of the premium, and the policy is conclusive evidence of the receipt of the premium by the insurer.” Anderson v. Thornton, 8 Exch. 425.

And such is now the general rule. See 3 Kent, *341, and May on Ins. § 4.

The rule is different where the risk has attached or there is actual fraud.

Tet it is urged here that “ we must leave the premium paid by the insured to be disposed of according to the terms of his contract with the insurer.” No such terms exist. There is no contract between Pyle as the “insured” and the company as the “insurer.” Under this policy Pyle never was insured, and the company never was an insurer of Pyle. The policy has always been void, and this claim, based on the contract, is as void as the policy. From all that appears Pyle was not in fault, and the agent should not have obtained the premium, and the insurance company should not retain Pyle’s money.

Of course, we have not considered how far the provisions of such a policy may be waived by the acts of the parties, nor to what extent such parties may be bound by their subsequent acts, and in connection with such provisions, and what was done in procuring such application and policy. The court did not err.

Judgment affirmed.  