Summary
In Raives v. Raives, 54 F.2d 267 (C.C.A. 2), the policy provided for incontestability after six months except for nonpayment of premiums, but, because the policy did not give the government the right it had by statute — contestability for fraud — this court declared the policy not binding on the government when fraud had been practiced.
Summary of this case from Wilber Nat. Bank v. United StatesOpinion
No. 28.
Argued October 15, 1931.
Decided November 2, 1931.
Appeal from the District Court of the United States for the Eastern District of New York.
Action by Anna Raives against Mary Raives and the United States of America, to enforce payment of a converted policy of term life insurance issued by the government to plaintiff's husband under the War Risk Insurance Act and reinstated under the World War Veterans' Act of 1924 as amended (38 USCA § 421 et seq.). From a judgment for the United States [ 39 F.2d 142], plaintiff appeals.
Affirmed.
The plaintiff is the widow of Irving Raives who enlisted in the military service of the United States on February 25, 1918, and was therefore entitled to such insurance, when he thereafter applied for and the government issued to him a policy of yearly renewable term insurance in the principal sum of $10,000. He was discharged from service on December 28, 1919. He allowed this insurance to lapse by failing to pay the premium for December of that year.
On May 15, 1926, Irving Raives applied for reinstatement of this lapsed policy and for its conversion into nonterm life insurance. Both of these applications were granted, and the desired policy issued to take effect as of May 1, 1926. The plaintiff, Anna Raives, was the designated beneficiary. This policy was allowed to lapse because of failure to pay the premium for the month of May, 1927.
On June 24, 1927, Irving Raives filed his application for reinstatement of the policy, and it was reinstated. On August 31, 1927, he requested that the beneficiary be changed from the plaintiff, his wife, to Mary Raives, his mother, and the beneficiary was so changed. All premiums were paid for the year 1927, and Irving Raives died on December 1, 1927.
As his widow and his mother were unable to agree as to the ownership of the proceeds of the policy, this suit was brought against the mother by the widow, and the United States was joined as a party defendant. The controversy between the widow and the mother was settled between them and forms no part of this appeal. The government pleaded and proved that, when Irving Raives applied for reinstatement of the policy in 1926 and again when he applied for its reinstatement in 1927, his applications contained certain questions which he answered. Plainly printed in the application above them was a paragraph numbered (1), of which the following is a part: "As a condition to the reinstatement of this insurance, I do hereby certify that the answers to the following questions are true to the best of my knowledge and belief. * * *" This was one of the questions: "Have you been ill, or contracted any disease, or suffered any injury, or been prevented by reason of ill health from attending your usual occupation, or consulted a physician in regard to your health, since lapse of this insurance? (Answer `Yes' or `No'.) If so, give dates and full particulars, including the name and address of physician." The applicant answered "No."
At the trial a jury was waived and evidence was introduced which justified the court in finding, as it did, that when the application for reinstatement was filed in 1926 the applicant's answer to the effect that he had not consulted a physician in regard to his health since the insurance had lapsed was false and fraudulent. The evidence was undisputed that he had consulted a physician in regard to his health many times during that period.
The reinstated policy contained a clause that it should be incontestable from its effective date except for nonpayment of premiums. The applicant was examined and passed by a physician while his application of 1926 was pending, and the report of that examination was considered in granting the reinstatement.
Anderson, Phillips Moss, of New York City, for plaintiff.
Edward Weinfeld, of New York City (Harry G. Anderson and Louis H. Merrell, both of Brooklyn, N.Y., of counsel), for defendant Mary Raives.
Howard W. Ameli, U.S. Atty., and A.D. Smith, Asst. U.S. Atty., both of Brooklyn, N.Y., William Wolff Smith, Sp. Counsel Veterans' Administration, and Lawrence A. Lawlor, Attorney, Veterans' Administration, both of Washington, D.C., for the United States.
Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
Representations made by an applicant for insurance to the effect that within a specified period previous to the date of the application the applicant had not consulted a physician concerning his health are material, and, when false, amount to a fraud on the insurer who has relied upon them in issuing a policy of insurance that will render the insurance void. Mutual Life Ins. Co. of New York v. Hurni Packing Co. (C.C.A.) 260 F. 641 (see, also [C.C.A.] 280 F. 18, where this case was decided on another ground); Jenkins v. United States (D.C.) 24 F.2d 452; Mutual Life Ins. Co. v. Hilton-Green et al., 241 U.S. 613, 36 S. Ct. 676, 60 L. Ed. 1202; Ætna Life Ins. Co. v. Moore, 231 U.S. 543, 34 S. Ct. 186, 58 L. Ed. 356. The fact that the government had a report by a physician who examined and passed this applicant in no way tends to indicate that it did not rely upon this answer or that it knew the answer was false. The answer was made to be relied upon and was relied upon. Since it was willfully false, the intention to deceive follows as a matter of law. Claflin v. Insurance Co., 110 U.S. 81, 3 S. Ct. 507, 28 L. Ed. 76.
It is urged that the fraud, if any, only entered into the reinstatement of the policy, and had no effect upon the converted policy. We agree that the reinstatement of a policy for insurance is something different from the conversion of the insurance, but it is too plain for discussion that there had to be a reinstated policy before it could be converted, and, since the reinstatement of the policy must be held void because of a fraudulent application, there was no valid policy to convert.
The provision in the policy that it should be incontestable from the date it took effect, except for nonpayment of premiums, must be read in connection with the provisions of the statute under which the reinstatement was authorized. This statute was the World War Veterans' Act of 1924 as amended in 1925 (43 Stat. 1302), and provided in section 307 (38 USCA § 518) that all such "Policies of insurance heretofore or hereafter issued shall be incontestable after the insurance has been in force six months from the date of issuance or reinstatement, except for fraud or nonpayment of premiums and subject to the provisions of section 447. * * *" The incontestability clause in the policy did not accord to the government the rights to contest provided by the statute which permitted it to be issued and to the extent that it was in violation of the statute was not binding upon the United States which acts only through its authorized agents and is bound only to the extent it has consented to be bound. No agent had authority to waive the provisions of the statute. Birmingham v. United States (C.C.A.) 4 F.2d 508.
Judgment affirmed.