Life Insurance Co. v. Warren.

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

Life Insurance Co. v. Warren.

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 case 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.

Life Insurance Co. v. Warren.

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 case 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, marginal 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, cannot 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 & 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

Life Insurance Co. v. Warren.

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 recog nized 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 to be “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.

Life Insurance Co. v. Warren.

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. Etna 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. N. E. E. Ins. Co., 6 Cush. (Mass.), 340; James v. Hodsden, 47 Vt., 127; Safford 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;