O'Brien v. Home Benefit Society — 27 N.Y. St. Rep. 326

Majority

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Thomas J. O’Brien, Resp’t, v. The Home Benefit Society of New York, App’lt.^[1]

(Court of Appeals,

Filed November 26, 1889.)

Headnote

1. Insurance—Statement in application for.

Where insured gives true answers to questions put to him as the basis of insurance, and an authorized agent of the insurance company inserts in the application false answers, the company and not the insured is responsible for the falsity, and the untrue answer furnishes no defense to an action upon the policy.

2. Same—Mutual benefit societies—Action at law to compel assessment.

When a mutual benefit insurance society refuses to make an assessment, it violates its contract with the insured, and the damage for the breach can be recovered by an action by law, and it is not necessary to enforce the assessment by an equitable action.

3. Same—Measure of damages—Evidence to establish.

Plaintiff is bound to give evidence which will enable the jury to decide what the contract was worth and what the assessment would have produced for him.

Appeal from judgment of supreme court, general term, third department, affirming judgment in favor of plaintiff entered on verdict of jury.

This action was brought by the administrator of Peter O’Brien, deceased, to recover upon a certificate of membership issued to him upon his application by the defendant, as follows: This is to certify that Peter O’Brien, of 15 Fayette street, city of Albany, state of New York, has paid the sum of twelve dollars, being the amount required on application for membership, and is, therefore, accepted as a memtier of the Home Benefit Life & Accident Society of New York, in division B, subject to the conditions and requirements of the amended by-laws, rules and regulations of the society, and stipulations contained in the application for membership, and also to the conditions printed hereon.

The membership entitles Peter O'Brien, after the presentation bf satisfactory proof of the affliction with disabling injury by accident of said member, subject to and in accordance with the charter, amended by-laws, rules and regulations of the society, and of the conditions printed hereon, to nine dollars, weekly indemnity, not exceeding three months; or if said member shall have become permanently and totally disabled by accident for life, i. e., so as to preclude the possibility of ever following any vocation; or in the event of death, and upon satisfactory proofs thereof, the membership entitles Peter O’Brien, heirs or assigns, within ninety days after satisfactory proofs have been furnished to the officers of the society at the home office, to all of the amount realized from one assessment, not exceeding $2,000, payable at the home office of the society, in New York.

Provided said member continues to observe and comply with the conditions, requirements and stipulations above referred to, and to duly pay the semi-annual dues and assessments of said society

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during membership, otherwise the membership, with all moneys paid to the society, and all claims against the same in his behalf, shall be forfeited, and this certificate shall be null and void, without any notice to said member, or any action thereon being taken by this society. ,6

(l. s.) Given under the seal of the society, at New York, this 25th of April, 1884.

The application was taken from O’Brien by an agent of the defendant, and it contains the answers to various questions, some of which are as follows:

First. Are you now in good health and free from any disorder, infirmity or weakness ? A. Yes.

Second. Have you ever had any of the following diseases; if so, state particulars and separate answer to each question ?

To all of which he answered “ No.” Among the diseases enumerated was •“ rheumatism.”

Third. What sickness, disease or injury have you ever had ? A. None.

Fourth. When were you attended by a physician last, and for what complaint ? A. None.

Fifth. Name and residence of your usual medical attendant? A. None.

The application also contained the following:

“ I further declare and agree that the statements and representations contained in the foregoing application and declaration, together with those made to the medical examiner, shall be the basis of the contract between me and the said society; that I hereby warrant the same to be full, complete and true, whether written by my own hand or not, and that if the same, or any of them, are in any respect untrue, the certificate which may be issued hereon shall be null, and void, and of no effect, and all moneys which may have been paid on account of such insurance shall be forfeited to said society, and the said contract shall not become binding upon the society, unless at the time of its delivery the applicant is in sound health and mind.” O’Brien died on the 10th day of January, 1886, from the disease of rheumatism, which disease he had had for some years prior to his application, and he had been attended therefor by physicians; and the answers given to the questions above set out were untrue. The plaintiff made proofs of the death of O’Brien, and forwarded them to the defendant, and the defendant refused to make an assessment for the payment of his claim, alleging that it had been defrauded by the untrue answers given by O’Brien as to his health and the medical attendance upon him. Thereafter this action was commenced, and the plaintiff alleged in his complaint the membership of Peter O’Brien, his death, that the amount to which he was entitled under and in pursuance of the certificate was the sum of $2,000, that the defendant had neglected and refused to pay the same or any part thereof, and he demanded judgment for $2,000 with interest. The defendant in its answer alleged as a defense, among other things, the untrue answers of O’Brien, contained in his applica-< lion, and that they were false and fraudulent. The action was

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"brought to trial, and a verdict was rendered in favor of the plaintiff. The judgment upon that verdict having been affirmed at the general term, the defendant appealed to this court

Charles Blandy, for app’lt; E. Countryman, for resp’t

The application for membership taken by the defendant’s agent from O’Brien was signed by his mark. He did not read, and was not able to read it, and it was not read to him, and there was evidence upon the trial that he gave correct answers to all the questions contained in the application, but that his answers were incorrectly written therein by the agent, without- his knowledge or consent. There was also evidence given on the part of the defendant that the answers of O’Brien to the questions put to him were correctly written just as he gave them, and the trial judge submitted to the j ury this evidence on both sides. He charged them that if O’Brien did not truly answer the questions the plaintiff conld not recover; but that if he answered them truly and the agent of the defendant did not write them in the application as they were given, the defendant was responsible for the mistake or fraud of its agent, and that in that event the untrue answers would furnish no defense to the action. The jury having found a verdict for the plaintiff, we must assume that upon sufficient evidence they found that O’Brien gave true and •honest answers to the questions put to him and that the untrue answers contained in the application were therein inserted by the agent of the defendant by fraud or mistake. That upon such facts the defendant has failed to sustain its defense of breach of warranty and fraud is abundantly established by the authorities in this state. Grattan v. The Metropolitan Life Ins. Co. of New Yorkt 80 N. Y., 281 ; S. C., 92 id., 274; Miller v. The Phoenix Life Ins. Co., 107 id., 292 ; 12 N. Y. State Rep., 1; Bennett v. The Agricultural Ins. Co, of Watertown, 106 N. Y., 243 ; 8 N. Y. State Rep., 693. These authorities hold that where the insured gives true answers to the questions put to him as the basis of insurance, and an authorized agent of the Insurance company inserts in the application false answers, the company and not the insured is responsible for the falsity, and that their falsity is no defense to an action upon the policy.

There is no doubt that the complaint in this action sets forth an action at law to recover a money demand. The defendant contends that if the plaintiff is entitled to maintain any action, it is. only an action in equity to compel it to make and collect an assessment for the payment of plaintiff’s claim, and that therefore the complaint should have been dismissed. By its certificate and the conditions annexed thereto, and under its by-laws, the defendant agreed to do something, and that was to make an assessment upon its members for a death claim and to pay the proceeds not exceeding the stipulated amount.

It is undoubtedly true that a suit in equity could have peen maintained upon the facts of this case to compel the defendant to make and collect an assessment and to pay to the plaintiff the proceeds thereof. Such a suit, however, would have required

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complicated and tedious proceedings, and the plaintiff was not obliged to resort to it. When the defendant refused to make an assessment it violated its contract, and became liable to the plaintiff for the damages caused by such violation; and such damages, like all damages for breaches of contracts, can be recovered by an action at law. So it has been held in many analogous cases. Peck v. Equitable Accident Ass'n, 52 Hun, 255 ; 23 N. Y. State Rep., 465; Freeman v. National Benefit Society, 42 Hun, 252 ; 5 N. Y.. State Rep., 82 ; Cumming v. Mayor of Brooklyn, 11 Paige, 596, 602; Fulmer v. Union Mutual Ass’n, 12 N. Y. State Rep., 347; Fitzgerald v. Equitable Reserve Fund Assn, 24 N. Y. State Rep., 493; Lueder's Executors v. Hartford Life, etc., Ins. Co., 12 Fed. Rep., 465 ; Earnshaw v. Sun. Mut. Aid Society, 68 Md., 465 ;, Jackson v. Northwestern etc., Society, 73 Wis., 507 ; Burland v. Mutual Benefit Ass’n, 47 Mich., 424 ; Taylor v. Temperance Ass'n,. 94 Mo., 35 ; Kansas Protective Union v. Whitt, 36 Kan., 760 ; Life Ass'n v. Lemke, 40 Kan., 142 ; Mut. Aid Ass'n v. Riddle, 91 Ind., 84 .

Our attention is called by the learned counsel for the defendant to certain cases which uphold his contention. But those cited above we think stand upon the best reason.

While upon the trial it was claimed on behalf of the defendant that this was an action at law, and that such an action could not be maintained against it, no claim was there made that the facts-stated in the complaint were not sufficient for the maintenance of an action at law if such an action was maintainable. The complaint is open to some criticism ; but its alleged defects worked no harm to the defendant, and its objections to it came too late here.

The plaintiff was therefore entitled to recover something, and what was the measure of his damages ? Just what he lost by the defendant’s breach of its contract. He was entitled to have an assessment made and collected and the proceeds thereof paid to him. What was the contract worth to him and what would the assessment have produced for him? It was incumbent upon the plaintiff to give evidence which would enable the jury to answer these questions.

As the assessment was not made it was impossible for the plaintiff to show accurately or precisely what such an assessment would have produced. He was bound to give such evidence as the nature of the case permitted bearing upon the matter of damages, and legitimately tending to prove their amount. We have carefully read the evidence, and we think there was sufficient to justify the verdict of the jury.

These views dispose of the most material exceptions bearing upon the general merits of the case taken at the trial. There were, however, many exceptions taken on behalf of the defendant, both to the reception and exclusion of evidence having relation to the question of damages, which are also complained of. We have carefully scrutinized these exceptions and we do not believe that they point out any material error to th ; prejudice of the defendant.

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Our conclusion, therefore, is that the judgment should be affirmed, with costs.

All concur.