[112 NJSuper Page 266] This matter is before the court on plaintiff's motion for judgment. It raises the question whether a life insurance policy may still be declared invalid after the death of the insured on the ground of equitable fraud and, in particular, it involves consideration of the scope and effect of the recent decision of the Supreme
Court in Johnson v. Metropolitan Life Insurance Company , 53 N.J. 423 (1969), with respect to that point.
Plaintiff, Elizabeth Russ, is the beneficiary of an insurance policy issued by defendant on March 1, 1968 on the life of her son George C. Russ, Jr. The insured died at the age of 36 on September 25, 1968, approximately seven months after the issuance of the policy. Defendant declined to pay and this suit was instituted to collect death benefits under the policy in the amount of $4,000.
Defendant filed an answer denying liability and also a counterclaim praying that the complaint be dismissed and that the policy be declared void and rescinded because it was obtained by fraud. The counterclaim is based upon alleged false answers given by the insured to certain questions in the application for insurance dated February 10, 1968. The portion of the application which relates to the insured's past and present condition of health and his medical history consisted of five questions, numbered 15 through 19. It is alleged that all but one of these questions were answered falsely either in whole or in part.
Question 15 is the first of the questions in the medical sequence:
15. In past 5 years, have any physicians or other practitioners examined, advised, or treated you? No.
It is alleged that the said answer was false in fact in that the insured "was examined, advised, and treated by physicians at the Essex County Overbrook Hospital, Cedar Grove, New Jersey, from June 23, 1962 until August 4, 1962, and on a second occasion, from August 14, 1967 to October 6, 1967."
Question 16, which calls for information as to treatment, etc., for specific diseases or conditions, is alleged to have been falsely answered as follows:
16. Have you ever received treatment, attention or advice from any physician or other practitioner for, or been told by any physician or other practitioner that you had:
(d) epilepsy, paralysis, dizziness, or any mental disorder? No.
It is alleged that the answer was false in fact because the insured "had physical defects and impairments of health including chronic brain syndrome associated with alcoholism and psychotic reaction for which [he] was hospitalized at the Essex County Overbrook Hospital, Cedar Grove, New Jersey, from June 23, 1962 until August 4, 1962 and for which Mellaril, Noludra, and Paraldehyde were administered", and that he "had physical defects and impairments of health including schizophrenic reaction, catatonic type, acute brain syndrome, and alcohol intoxication with psychotic reaction for which he was admitted and treated at the Essex County Overbrook Hospital, Cedar Grove, New Jersey, during the period August 14, 1967 to October 6, 1967 because of heavy drinking since 1959, withdrawal, and the stuporous loss of contact with reality. While so hospitalized, the said George C. Russ, Jr., demonstrated an episode of catatonia and was placed on various tranquilizers, including Thorazine and Noludar."
Question 18 consisted of two parts and it is alleged that both were falsely answered. Question 18(a) and the answer thereto are as follows:
18 (a) Have you any physical defect, or have you been aware of any impairments of health not revealed above? No.
It is alleged that said answer was false in fact for the same reasons that the answer to question question 16 was false.
Question 18(b) and the answer thereto are:
18 (b) In the past 6 months, have you taken any prescribed medication or have you been advised to restrict your diet or living habits? No.
(If yes, state details below, who recommended, and give reason).
It is alleged that the answer to this question was false in fact in that the insured "had taken the prescribed medicines, Thorazine and Noludar and various tranquilizers during his hospitalization at the Essex County Overbrook Hospital from August 14, 1967 to October 6, 1967 for heavy drinking, withdrawal from reality, and catatonic stupor, and during which he received a diagnosis of schizophrenic reaction, catatonic type, acute brain syndrome, and alcohol intoxication with psychotic reaction."
The last question alleged to have been falsely answered is as follows:
19. For any 'YES' answer to questions 15-18 identify question and give full details. * * *
The application form provides space for details with columns headed "question," "disorder, symptoms or other reasons for consultation," "dates and duration," "treatment received or recommended," and "name and address of each physician or other practitioner and each hospital." The space for answers to this question was left blank by the insured.
Defendant claims that this answer was false in fact for the same reasons that the answers to questions 15, 16, 18(a) and 18(b) were false.
The counterclaim further alleges that the answers were material to the risk and were relied upon by defendant in the issuance of the policy; that defendant had elected to rescind the policy and had tendered to plaintiff the sum of $42.84 representing the ...