On appeal from the Supreme Court.
For the appellant, Klein & Klein (Edward Gaulkin, of counsel).
For the respondent, George W. C. McCarter.
The opinion of the court was delivered by
HEHER, J. Plaintiff was designated as beneficiary of a limited payment life income policy of insurance issued May 1st, 1936, by the defendant insurer upon the life of her husband, Jack; and, upon the insured's death on November 9th, 1937, she instituted this action to recover the stipulated payments. The answer pleaded false and fraudulent representations respecting the insured's prior ailments and diseases, hospitalization, surgical operations, and medical consultations.
A previous trial of the action resulted in a verdict for plaintiff. The judgment entered thereon was reversed by this court on the ground that the trial judge had erred in submitting to the jury the issue of whether the answers to the questions propounded by the insurer in the application for insurance respecting the matters adverted to were material to the risk. It was held that their "materiality is not the subject of findings of fact by a jury." Urback v. Metropolitan Life Insurance Co., 127 N.J.L. 585. On the retrial, the judge found that, as regards the inquiries pertaining to "medical advice and treatment," the evidence was conclusive of fraud by the insured, and he accordingly directed a verdict for defendant. The appeal is from the consequent judgment.
Respondent maintains that the evidence definitively established that in this and other respects the insured was guilty of "fraudulent misrepresentations," and consequently there was no error in the direction of a verdict in its favor. It is said that "the materiality of the questions asked and answers made to them by the insured is the settled law of the case on the first appeal," and there "is no dispute whatsoever in the evidence."
But this reasoning fails to take into account well-established principles of law applicable to cases of this class. The statute obliges the insurer to incorporate in every policy of life insurance a provision, inter alia, that "all statements purporting to be made by the insured shall, in the absence of fraud, be deemed representations and not warranties." Comp. Stat., p. 2868, § 94; R.S. 17:34-15. The policy here contains such provision. To avoid at law a policy of life insurance on the ground of misrepresentation in respect of matters material to the risk, it is requisite that moral or conscious fraud be established. False representations are not alone sufficient. They must be made with a fraudulent intent, i.e., an intent to deceive. This is the settled interpretation of the cited provision. Kerpchak v. John Hancock Mutual Life Insurance Co., 97 N.J.L. 196; Prahm v. Prudential Insurance Co., 97 Id. 206; Metropolitan Life Insurance Co. v. Tarnowski, 130 N.J. Eq. 1; Shapiro v. Metropolitan Life Insurance Co., 114 Id. 378. The materiality of a false representation
is a question of law rather than one of fact for the jury; but it is not incumbent upon the insured to include immaterial matters in his answers to questions put by the insurer; and, as to material matters, the falsity of the representation is not a ground of avoidance unless it is knowingly and willfully made. A false statement or concealment is regarded as material "if the knowledge or ignorance of it would naturally and reasonably influence the judgment of the underwriter in making the contract at all, or in estimating the degree or character of the risk, or in fixing the rate of premium." Kerpchak v. John Hancock Mutual Life Insurance Co., supra.
The insured died of a brain hemorrhage at the age of thirty-nine. For a period of nine months, beginning in April, 1933, he suffered intermittent "fainting spells." He finally called upon a physician and requested "a check up." The physician suggested that he visit the New York Hospital "for a diagnosis work-up." He said that "it wasn't a regular visit; he just called me and I sent him over there." The insured was admitted to the hospital on January 2d, 1934. There, he was given a thorough physical and neurological examination by four physicians over a period of five days. The result was "completely negative." A urinalysis "was completely normal." A Wasserman test was negative. When he entered the hospital he was suffering from a cold and a finger infection; but there was no evidence of "organic disease," nor was there any indication of "illness or disease." The cause of the fainting spells was not discovered. The local physician treated him for tonsilitis shortly before his admittance to the New York Hospital, and for the same condition shortly after his return. He concluded that his tonsils should be removed, and this was done at the Beth Israel Hospital in Newark. This physician was also a member of the staff of the New York Hospital. In due course, he ...