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Hogan v. John Hancock Mut. Life Ins. Co.

decided.: April 11, 1952.


Author: Kalodner

Before GOODRICH, KALODNER and HASTIE, Circuit Judges.

KALODNER, Circuit Judge.

Where a policy of life insurance provides that it may be reinstated after lapse "upon production of evidence of insurability satisfactory to the Company", may the insurer subsequently require that (1) the insured be in sound health on the date of approval of the reinstatement application and (2) that he had not been treated by a physician in the interval between the signing of the application and its approval?

This question is presented by the instant appeal from the judgment of the court below granting appellee's motion to dismiss*fn1 and its order denying the appellant's motion for a new trial. The facts giving rise to the appeal are as follows:

On June 6, 1945, the John Hancock Mutual Life Insurance Company ("Company") issued a policy in the amount of ten thousand dollars insuring the life of one William J. Savage, and naming as beneficiary Charles J. Hogan, appellant herein, who was a business partner of the insured. This policy was countersigned by an official of the Company at its home office in Boston, and delivered to the insured in Philadelphia. At the same time an identical policy was issued on the life of the appellant naming Savage as beneficiary. The first quarterly premium on each policy was paid at the time of issuance.The second quarterly premium, due on September 6, 1945, was not paid, and both policies lapsed according to their terms on October 7, 1945. Subsequently, either during the last week in October or the first week in November, Herold and Lull, two of the Company's agents called upon the appellant at his office for the purpose of inducing the two partners to reinstate their respective policies. At the time, Savage was not in the office but was attending to some outside work pertaining to the partnership. Herold and Lull persuaded the appellant to sign a reinstatement application, and left with him a similar application which they instructed him to have Savage sign and return to the Company's Germantown (Philadelphia) office. Shortly thereafter, one Spearing, an employee of the partnership, secured Savage's signature on the second application and delivered it to the Germantown office.

The application signed by Savage contained a printed declaration that the insured

"is now in sound health, and that during the time, including the grace period, since the first premium now in default became due, has had no injury, ailment, illness or disease, or symptoms of such, and has not consulted or been treated by a physician or any other practitioner, except as otherwise hereinafter stated."

Under this declaration, in the space provided, the written word "none" appeared; and under that was the printed statement "All exceptions have been stated." The application also provided that:

"A. No reinstatement of said policy shall be effective if any of the foregoing declarations are untrue or incomplete * * * nor until the application, duly executed * * * is approved by the Company at its Home Office in Boston, nor if the person named as insured in said policy has, since the date of this application, consulted or been treated by a physician or other practitioner, nor unless such person is alive and in sound health on the date of such approval * * * by the Company at its said Home Office, which shall be the effective date of reinstatement. * * *"

The application form was received by the Company at its home office on December 17, and was approved on December 21, 1945. On November 3, 1945, Savage consulted his personal physician, and on his advice entered the Jefferson Hospital, Philadelphia, where he remained for ten days, and where it was determined that he was suffering from tuberculosis. The parties are in dispute as to whether this occurred before or after he signed the reinstatement application - the application was dated November 4, but appellant claims that it was actually signed on October 26.*fn2 It is undisputed, however, that prior to December 21 (the date of final approval of the application) Savage was on several occasions treated by physicians, both at the Jefferson Hospital and at the Barton Memorial Hospital, Philadelphia. On January 7, 1946, the Barton Memorial Hospital reported to the Pennsylvania Department of Health that Savage had tuberculosis. Thereafter he spent a good part of the remainder of his life in sanatoriums, and he finally succumbed to the disease on March 5, 1947.

When payment of the principal amount of the policy was refused,*fn3 appellant brought suit in the District Court for the Eastern District of Pennsylvania, which assumed jurisdiction because of the diverse citizenship of the parties. The Company's answer set up the form of the reinstatement application and denied liability, alleging in substance that reinstatement had never become effective because: (a) the insured's declaration in the application that he had not consulted a physician since the policy lapsed was false; (b) the insured had been treated by physicians between the signing of the application and its approval by the Company; and (c) the insured was not in sound health on the date of approval.

The cause was originally tried to a jury, but at the close of all the evidence the trial judge granted the Company's motion to dismiss, charging the jury that whether or not Savage had consulted a physician prior to signing the reinstatement application, the appellant could not recover "if at any time (Savage) consulted a physician or was not in sound health before December 21, 1945, when the policy was approved. * * *" Appellant's motion for a new trial was denied, and this appeal followed.

It is the appellant's contention that the policy was irrevocably reinstated in that the insured had complied with the reinstatement provision in the original policy; that the provisions in the reinstatement application that reinstatement would not be effective if the insured should consult a physician prior to, or if he were not in sound health on, the date of final approval were void as repugnant to the policy; and hence that the trial judge erred in taking the case from the jury. We cannot subscribe to this contention.

The insured was a resident of Philadelphia and the policy, though countersigned at Boston, was delivered to him at Philadelphia. Therefore, the law of Pennsylvania applies. Both parties are in agreement as to this. Bush v. Prudential Ins. Co. of America, 3 Cir., 1945, 150 F.2d 631; Pierkowskie v. New York Life Ins. Co., 3 Cir., 1944, 147 ...

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