METROPOLITAN LIFE INSURANCE COMPANY, a corporation, Plaintiff and Appellant, v. Josephine DEVORE, Individually and as Administratrix of the Estate of Charles Devore, Deceased, Defendant and Respondent.
Josephine DEVORE, Plaintiff and Respondent, v. METROPOLITAN LIFE INSURANCE COMPANY, a corporation, Defendant and Appellant.
On November 30, 1959, appellant Metropolitan Life Insurance Company, a corporation, hereinafter designated as ‘Metropolitan,’ delivered its 15-year policy of life insurance to Charles Devore. On October 21, 1960, prior to Mr. Devore's death, Metropolitan commenced action No. 756878 in the Superior Court of Los Angeles County, against Charles Devore to rescind said policy of insurance and to have it declared null and void. Charles Devore filed an answer and cross-complaint wherein he sought to have the policy declared to be in full force and effect. On January 10, 1962, Charles Devore died. Pursuant to stipulation and order of court, Josephine Devore, administratrix of the estate of Charles Devore, deceased, was thereafter substituted as a defendant in the place of Charles Devore. Josephine Devore, in her individual capacity as the beneficiary named in said policy was also a defendant and filed an answer in said action.
After the death of Charles Devore and on April 23, 1962, Josephine Devore in her individual capacity, commenced a separate action in the Superior Court of Los Angeles County, No. 794556, against Metropolitan to recover the benefits allegedly due under said policy of insurance. By stipulation and order of court this action was at issue on Josephine Devore's complaint and the pleadings of Metropolitan in the action numbered 756878. Both actions were then consolidated for the purposes of pretrial and trial.
Metropolitan sought relief on the grounds (1) that by its terms the effectiveness of the contract of insurance and Metropolitan's liability thereunder were conditioned upon the payment of the first full premium and delivery of the policy ‘during the lifetime and continued insurability of the applicant,’ which condition, it is claimed was not met, and (2) that in any event, Charles Devore misrepresented and concealed material facts concerning his state of health and medical history at the time the contract of insurance was delivered.
The facts disclose that on September 2, 1959, Charles Devore executed Part A of a written application to Metropolitan for issuance to him of a 15-year mortgage term policy of life insurance in the initial face amount of $20,000. The questions contained in Part A of the application were general in their nature and did not pertain to Devore's medical history. This part of the application contained the following provisions: ‘It is agreed that: 1. The statements and answers in Part A and Part B of the application for this insurance shall form the basis of the contract of insurance, if one be issued. * * *
‘4. The Company shall incur no liability under this application until a policy has been delivered and the full first premium specified in the policy has actually been paid to and accepted by the Company during the lifetime and continued insurability of the applicant, in which case such policy shall be deemed to have taken effect as of the date of issue as recited therein, except as follows: If an amount equal to the full first premium on the policy applied for is paid to and accepted by the Company at the time Part A of this application is signed and if this application is approved at the Company's home office for the class, plan and amount of insurance herein applied for, then the insurance in accordance with the terms of the policy applied for shall be in force from the date hereof.’ Devore did not pay the premium mentioned above at the time Part A of his application was executed.
The application is one document consisting of four pages. Part A is contained on page 2 or the reverse side of page 1. Part B designated as ‘Applicant's Statements to the Medical Examiner’ appears on page 3. Part C designated as ‘Medical Examiner's Report’ on the application appears on page 4, or the reverse side of page 3.
After Part A of the application was completed arrangements were made for Devore to submit to a medical examination by a doctor of Metropolitan's choice. On September 21, 1959, he submitted to said examination before Dr. Gerald Lieberman at which time Devore executed Part B of the application. In Part B of the application Devore gave the following answers to the following questions: ‘3. Have you ever had or been treated for or sought advice concerning any ailment or disease of: (a) The heart or lungs? [A] No
‘4. Have you ever had or been treated for or sought advice concerning: (a) * * * any disease of the blood or blood vessels? [A] No
‘5. (a) Have you ever been a patient in or visited a hospital, clinic, dispensary or sanatorium for observation, examination or treatment?
‘(b) Have you ever had or been advised to have a surgical operation?’ The answers to these two questions were ‘Yes' with the following explanation: ‘appendectomy 5 yrs ago Good Samaritan hosp Portland Ore Dr Chauncey’ * * *
‘(d) Do you have periodical physical examinations or check-ups? [A] Yes—Dr. Thorner Beverly Hills
‘(e) Have you ever had an electrocardiogram or X-ray examination or any laboratory examinations or tests? [A] Yes 1 yr ago Routine exam Dr Thorner ch X ray EKG neg
‘(f) Have you consulted any physician, healer or other practitioner within the past 5 years for any reason not mentioned above? [A] No’
Devore's application was sent to Metropolitan's headquarters in San Francisco for consideration. Upon review of the application and an investigation, Metropolitan felt that there was a possible history of dyspepsia or indigestion in 1953 and a cardiospasm1 or pylorospasm in 1958.
As a result of this investigation, on September 25, 1959, Metropolitan asked Dr. Lieberman to again see Devore and question him regarding a possible history of dyspepsia, indigestion, cardiospasm or pylorospasm. Dr. Lieberman again saw Devore on October 14, 1959. The purpose of this visit was not to completely re-examine the latter but according to Devore was ‘Just to talk over one particular point.’ At this interview Devore told Dr. Lieberman that for some period of time he had experienced occasional attacks of ‘indigestion.’ That in 1952 he had been seen by Dr. Uhley and had been advised by him to give up fatty foods, that he did not have any history of cardiospasm or pylorospasm and that all tests he had been given were negative.
Based upon this medical history, Metropolitan, on November 12, 1959, approved the issuance of an intermediate or rated policy to Devore. On November 16, 1959, such a policy was prepared and sent to Metropolitan's Los Angeles Office for delivery to Devore and was delivered to him on November 30, 1959. On October 10, 1959, Devore visited Dr. Meyer C. Thorner, his own physician, for an examination. This visit occurred after Devore had executed both Parts A and B of his application and after Dr. Lieberman had examined him but before the insurance policy was delivered to him. Dr. Thorner's specialty is cardiology. He had seen Devore in 1958 but had found no evidence of heart disease or other serious ailment. Dr. Thorner testified that on October 10, 1959, Devore said that he felt fine but complained of ‘A little pressure in chest if he rushes.’ Dr. Thorner took an EKG (at rest) which was essentially normal but which showed some T-wave variations that were not previously present. He did not reach a diagnosis at this time but entertained a suspicion that Devore had a coronary insufficiency. He did not discuss this with Devore at this time but requested that he return for further tests on October 19, 1959.
On October 19, 1959, Dr. Thorner took a series of EKG's, after exercise, and found one of them to be abnormal. He then made a diagnosis that Devore was suffering from coronary insufficiency secondary to arteriosclerotic heart disease, mild in form. He testified, however, that any arteriosclerotic heart disease is serious, is normally permanent and in most cases it is a progressive and degenerative disease. Devore's death was caused by ‘Myocardial Ischaemia due to Coronary Atherosclerosis, Severe.’ That was the same condition that Dr. Thorner felt Devore had earlier.
After Dr. Thorner found the abnormal EKG on October 19, 1959, he told Devore that he had a litle mild hardening of the arteries, that he could live a normal life but he was never to overeat and should avoid excitement and unusual physical exertion. He told him further that ‘* * * what we were doing to him was precautionary to prevent him from getting into trouble.’ That ‘he had mild insufficiency of his heart, he should go into the hospital for rest and medication to prevent trouble.’ Devore testified in his deposition, taken on behalf of Metropolitan on March 16, 1961, that Dr. Thorner had called him up again and asked him to come back for further tests saying ‘I don't like the way you look.’ He testified further that on his second visit to Dr. Thorner's office another EKG was taken and the doctor told him that this EKG was a little different than the one just previously taken. The idea was conveyed to him by what Dr. Thorner said that it was not a normal electrocardiogram. Devore testified ‘He said he wanted me in a hospital and he would decide what to do.’ Devore was admitted to Mount Sinai Hospital for treatment on October 21, 1959, and remained there until he was discharged on October 26, 1959. The hospital records as interpreted by Dr. Thorner contained the following entries concerning Devore's entry and stay therein: ‘PRESENT COMPLAINTS: Chest discomfort on exertion
‘ONSET AND COURSE: The patient felt well until recently when he noticed increasing substernal distress on exertion. An EKG taken 10/10/59 showed flat T2 and inverted T3 not previously present. A master 2-step test done 10/19/59 showed marked coronary insufficiency pattern. Patient admitted for anticoagulation therapy.’
‘Discharge Summary: 53 yr old man admitted with history of chest discomfort on excitement with abn EKG - Pt admitted for therapy, diet and oral anticoagulation - Pt feeling fine, pro time at good levels and Pt discharged for further follow up as out patient.’
‘Final Diagnosis: ASHD with coronary insufficiency.’
While in the hospital, Devore was given Peritrate, 20 milligrams, with phenobarbital to help dilate his blood vessels and also to sedate him. He was also given Dicumarol to thin his blood so that there would be less chance of a blood clot forming inside the arteries thus closing off the blood vessel and producing a heart attack. Dr. Thorner told Devore that ‘we were going to thin his blood. He was getting medication for it.’ Devore testified in his deposition in relation to Dr. Thorner's conversation with him, as follows: ‘A Well, I guess it was during the time I was in the hospital that he thought that I had, in layman's terms, what would be a little hardening of the arteries.
‘Q Did he discuss with you a diagnosis of coronary insufficiency?
‘A He may have said something like that. I am not sure of the exact words that he used.
‘Q In general terms, he did discuss with you the condition of your heart?
‘Q And he did indicate to you, didn't he, that you should take it easy and that you did have a disease of the heart?
‘A He said that there was one vessel leading into the heart that was a little bit—that seemed to be growing together, which he called hardening of the arteries.’
After Devore's discharge from the hospital on October 26, 1959, he was given prescriptions for Peritrate and Dicumarol which he continued to take until the time of his death, January 10, 1962. He continued under the care of Dr. Thorner and after leaving the hospital he saw Dr. Thorner on October 28th and 31st and on November 5th, 12th and 19th, 1959, all prior to the date of the delivery of the policy of life insurance here in question. Wilfred Bennett, Metropolitan's lay underwriter, testified that he would not have approved Devore's application and would have referred it to Metropolitan's medical department if he had known any one of the following: That Devore visited Dr. Thorner or had EKG's taken in October, 1959; that he had been hospitalized, that he had chest pains on exertion; that he had been told by his treating doctor that he had hardening of the arteries; that he was taking Dicumarol or that there had been a diagnosis of arteriosclerotic heart disease.
Dr. James G. Forgerson, Metropolitan's Assistant Medical Director, testified that he would not have approved, and would have been required under Metropolitan's rules to decline Devore's application if he had known any one of the following: That Dr. Thorner had made a diagnosis of arteriosclerotic heart disease with coronary insufficiency, that Devore was taking Dicumarol, or that the EKG taken on October 19, 1959, was abnormal.
The intermediate policy that Metropolitan's San Francisco office authorized to be issued to Devore on November 12, 1959, provided for a higher than standard premium rate. This rate was based upon Devore's history of indigestion in 1953 and pylorospasm in 1959 and not because of the presence of a heart condition. Metropolitan's intermediate policy was offered to and accepted by Devore on November 30, 1959. At this time he paid the first premium due under the policy and signed an amendment to his application in which he, among other things, (1) consented to the intermediate premium rating and (2) requested that the policy delivered to him bear the date of issue of September 1, 1959. Under Metropolitan's rules, the amendment to the application is required to be signed before the policy could be delivered. The amendment also provided ‘These amendments and declarations are to be considered as a part of the said application and subject to the agreements, covenants, and statements therein contained. The said application, together with these amendments, is to be considered as the basis of and as a part of the contract of insurance. The said application, as amended, is correct and true and I hereby ratify and confirm the statements therein made as of the date hereof.’
The trial court found, among other things, that ‘5. It is true that each and every answer to the questions contained in said Part B of said application made by Charles Devore were substantially true, honest and complete. * * *
‘11. It is true that at the time of making said application and at the time of the examination of Charles Devore by Dr. Lieberman, and at the time of the delivery and acceptance of said policy, Charles Devore considered himself in good health, and had no knowledge of any condition such as would lead him or any reasonable person to believe his life of health was endangered.
‘12. It is true that, if in fact, Charles Devore did have or suffered from a cardiac condition, such condition existed prior to said Charles Devore making said application and being examined by Dr. Lieberman, and such condition was not a material change in health or physucal [sic] condition which originated or occurred after the said application and physical examinations and before the delivery of said policy of insurance on November 30, 1959; it is also true that Charles Devore was not aware or had any knowledge of such condition, or of any material change in his health of [sic] physical condition between the time of said application and examination by said Dr. Lieberman and the delivery to him of said policy of life insurance.
‘13. It is true Charles Devore's health and physical condition were substantially the same on November 30, 1959, the date the said policy was delivered to him, as on the date Charles Devore made application for said insurance policy, and on the date he was examined by Metropolitan's Dr. Lieberman.’
The court further found that the clause referred to as the ‘continued insurability clause’ is ambiguous and should be and is construed as referring only to material changes in health or physical condition of the applicant originating between the date of the application and medical examinations and the date of the delivery of the policy. The court also found that the terms of the application amendment are ambiguous and should be interpreted only that Devore ratified and confirmed that the answers in his original application were true and correct when made; that Devore did not misrepresent or conceal material facts when he accepted delivery of the policy and executed said application amendment.
The contract of insurance was not complete until Devore signed the amendment to the application and the policy of insurance was delivered to and accepted by him, all of which occurred on November 30, 1959. As heretofore pointed out, in Part B of the application, Devore in response to specific questions, had represented as of September 21, 1959, that (1) he had never been treated for or sought advice concerning any ailment or disease of the heart; (2) he had never been treated for or sought advice concerning any disease of the blood vessels; (3) he had not been a patient in or visited a hospital, clinic, dispensary, or sanatorium for observation, examinations, or treatment other than the Good Samaritan Hospital in Portland, Oregon, 5 years previously; (4) he had not had any electrocardiograms except that he had one a year ago taken by Dr. Thorner during a routine examination and which was negative; (5) he had not consulted any physician within the past 5 years except Dr. Chauncey when he was in the Good Samaritan Hospital in Portland, Oregon, for an appendectomy 5 years ago and Dr. Thorner one year ago for a routine examination.
We cannot agree with the conclusion reached by the trial court that the language contained in the amendment to the application is ambiguous. On November 30, 1959, before the policy of insurance was delivered to him, Devore signed and delivered the amendment to his application containing the language hereinabove quoted. On Part B of the application Devore had already stated that his answers to the questions therein contained were true and complete, and there was no reason why he should duplicate this statement. To apply the language in the amendment in such manner as to make it a duplication of matters already covered, renders it without meaning or purpose. Metropolitan was interested, and properly so, in the truth of the representations as of the time of the completion of the contract of insurance. To assure itself of this it required the applicant to state, before the delivery of the policy that ‘* * * The said application, as amended, is correct and true, and I hereby ratify and confirm the statements therein made as of the date hereof.’ If this language is to be construed as relating to the date of September 21, 1959, appearing on Part B of the application, the words ‘date thereof’ would have to be substituted for the words ‘date hereof’ appearing in the amendment. It is clear that the words ‘date hereof’ relate to the date that the amendment was signed and the language of the amendment constitutes a confirmation of the truth of the representations contained in the application as of the time the policy was delivered.
‘The completion of the contract of insurance is the time to which a representation must be presumed to refer.’ (Insurance Code § 356.) This section of the Insurance Code was a part of the contract of insurance here under consideration. (General Acc., Fire & Life Assur. Corp., etc. v. Industrial Acc. Com., 196 Cal. 179, 187, 237 P. 33.) Devore's representations contained in his application and the amendment thereto must be deemed to relate to the time when the premium was paid and the policy was delivered. Under these circumstances the representations concerning his hospitalization and treatment hereinabove referred to were, and each of them was false and Devore knew them to be false as of November 30, 1959. Devore's failure to disclose these facts to Metropolitan amounted to a concealment of them, and whether such concealment was intentional or unintentional is immaterial as it may bear on the right of Metropolitan to rescind the contract, if they were material to the risk. (Insurance Code § 331; Telford v. New York Life Ins. Co., 9 Cal.2d 103, 105, 69 P.2d 835.) It has been said that ‘* * * even the most unsophisticated person must know that, in answering the questionnaire and submitting it to the insurer he is furnishing the data on the basis of which the company will decide whether, by issuing a policy, it wishes to insure him. If, while the company deliberates, he discovers facts which make portions of his application no longer true, the most elementary spirit of fair dealing would seem to require him to make a full disclosure. If he fails to do so the company may, despite its acceptance of the application, decline to issue a policy, [citations] or, if a policy has been issued, it has a valid defense to a suit upon it.’ (Stipcich v. Metropolitan Life Ins. Co., 277 U.S. 311, 316–317, 48 S.Ct. 512, 513, 72 L.Ed. 895.)
Answers to questions in an application are generally considered to be material representations of fact, which if false will vitiate the contract. (Iverson v. Metropolitan Life etc. Co., 151 Cal. 746, 91 P. 609, 13 L.R.A., N.S., 866; Pierre v. Metropolitan Life Ins. Co., 22 Cal.App.2d 346, 348, 70 P.2d 985; California-Western States etc. Co. v. Feinsten, 15 Cal.2d 413, 423, 101 P.2d 696, 131 A.L.R. 608.) ‘Materiality is to be determined not by the event, but solely by the probable and reasonable influence of the facts upon the party to whom the communication is due, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries.’ (Insurance Code § 334.) ‘A life insurance company is entitled to select and classify its risks, and for this purpose is entitled to demand a truthful statement of the applicant's medical history. Material misrepresentations or concealments in this respect are grounds for rescission of the policy.’ (Burns v. Prudential Ins. Co., 201 Cal.App.2d 868, 869–870, 20 Cal.Rptr. 535, 536.) ‘Where an applicant for insurance is asked generally whether he has had or been treated for any disease or ailment, the failure to mention minor or temporary indispositions is not material to the risk and will not avoid the policy. [Citations.] But the rule is otherwise when the applicant is asked specific questions as to his medical history, and false answers thereto will vitiate the contract.’ (Cohen v. Penn Mut. Life Ins. Co., 48 Cal.2d 720, 725, 312 P.2d 241, 243.)
In construing section 334 of the Insurance Code, formerly section 2565 of the Civil Code, it has been said: ‘The test of materiality here is a subjective test: the effect which truthful answers would have had upon the insurer. In a number of cases courts have held that where the insurer demands written answers to specific questions, the answers given are deemed material as a matter of law. [Citations.]
‘In other cases the materiality of the false answers has been treated as a question of fact, even though the matters to be answered in writing were ‘deemed material.’ [Citations.]
‘Where the insurance company concedes or the evidence shows that the company would not have been influenced by full and truthful answers, the falsity of the application has been held not to justify rescission. [Citations.]
‘The distinction between the various groups of cases appears to rest upon the nature of the information withheld and what the evidence shows as to the practice of the insurance company when confronted with an application containing a truthful disclosure of the fact which was involved. Such distinction seems to be required by the clear mandate of the statute.’ (Burns v. Prudential Ins. Co., supra, 201 Cal.App.2d 868, 871, 872, 20 Cal.Rptr. 535, 537,) ‘It is not necessary that the misrepresentation have any causal connection with the death of the insured. Robinson v. Occidental Life Ins. Co., supra, [131 Cal.App.2d 581, 281 P.2d 39]. The question is whether the misrepresentation is such that if the insurer had known the true facts it would have made further inquiries or would have been influenced materially in its decision in accepting the risk.’ (Torbensen v. Family Life Ins. Co., 163 Cal.App.2d 401, 405, 329 P.2d 596, 598.)
The testimony of the underwriters for Metropolitan was that had the true facts been known concerning Devore's examinations by a medical doctor, his having had electrocardiograms, his having been hospitalized for examinations and treatment of a heart condition and his having received treatment for a condition of his blood vessels, Metropolitan would not have issued its policy of life insurance to him, that he was uninsurable under the underwriting standards of Metropolitan. This testimony stands uncontradicted in the record.
The record discloses that Metropolitan asked Devore to answer specific questions bearing upon his medical history and that his answers to such questions were false and that Devore knew them to be false. Under the law the answers to such questions are deemed material to the risk and if false will vitiate the contract. The undisputed evidence shows that the answers given to such questions were material to the risk and had truthful answers been given in accordance with the facts as they existed, on the date the policy was delivered, Metropolitan would have declined the risk and refused to issue its policy of life insurance. (Burns v. Prudential Ins. Co., supra, 201 Cal.App.2d 868, 20 Cal.Rptr. 535.) The failure on the part of Devore to disclose his true medical history as of the date of delivery of the policy constituted a concealment which entitled Metropolitan to rescind the contract of insurance. The record further shows that when Metropolitan discovered the true facts concerning Devore's medical history it acted promptly to rescind.
The judgment is reversed with directions to the trial court to enter a judgment in favor of Metropolitan in accordance with the views expressed herein.
1. A cardiospasm has nothing to do with heart disease but refers to a spasm of the muscle at the inlet of the stomach which is near the heart.
FRAMPTON,* Justice pro tem. FN* Retired judge of the superior court sitting under assignment by the Chairman of the Judicial Council.
SHINN, P. J., and FORD, J., concur.