Hindin, A. A.

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Marquette University Law School

Marquette Law ReviewVolume 26Issue 2 February 1942 Article 9Insurance: Effect of Doubtful and AmbiguousLanguage in Applications and PoliciesA. A. HindinFollow this and additional works at: http://scholarship.law.marquette.edu/mulrPart of the Law CommonsThis Article is brought to you for free and open access by the Journals at Marquette Law Scholarly Commons. It has been accepted for inclusion inMarquette Law Review by an authorized administrator of Marquette Law Scholarly Commons. For more information, please contactmegan.obrien@marquette.edu.Repository CitationA. A. Hindin, Insurance: Effect of Doubtful and Ambiguous Language in Applications and Policies, 26 Marq. L. Rev. 106 (1942).Available at: http://scholarship.law.marquette.edu/mulr/vol26/iss2/9THE MARQUETTE LAW REVIEWby frequent repetition; aptitude by doing frequently the same thing; usage;established manner. When a person has repeatedly acted in a particular way atintervals, whether regular or irregular for such length of time as that we canpredicate with reasonable assurance that he will continue so to act, we mayaffirm that this is his habit." State v. Savage, 89 Ala. 1, 7 So. 183, 7 L.R.A.426 (1890). /However in another case on habitual drunkenness from the viewpoint ofcriminal law the element of loss of will power to resist alcoholic stimulantswas not stressed. The court held: "An habitual drunkard is one who customarilybecomes intoxicated, the word "habitual" meaning frequent or customary con-duct, and it is not necessary that such person be intoxicated most of his timeor that he shall have lost his will power so that he cannot resist stimulants."Lester v. Sampson, 180 S.W. 419 (Mo. 1915).The necessity of giving a clear-cut definition of habitual drunkeness eitherunder the divorce statutes or under the criminal law statutes does not appear tohave arisen in any Wisconsin decisions.ANTHONY FRANK.Insurance--Effect of Doubtful and Ambiguous Language in Applicationsand Policies.-Intestate on an application for a life insurance policy, on May21, 1938, in reply to a question of whetlfer he ever had an ailment or diseaseof the stomach answered "no." The true fact was that he did have cancer of thestomach, as was discovered by a physician who examined him in September1938 and who inferred that cancer had existed for some time. The plaintiffsought to have the insurance policy rescinded on the ground that the lack ofknowledge of such an ailment was a breach of a warranty, within the statutewhich provided, that the insured's misrepresentations or warranties in the nego-tiation of a policy, is not material and will not defeat the policy unless made withactual intent to deceive or unless the matter represented was made of one'sknowledge, in a matter susceptible of knowledge, without having knowledge.Lower court gave judgment for the defendant. Held, on appeal, that there wasno misrepresentation because the question in the application was of doubtfulmeaning, therefore it could not be construed as calling for more than an opin-ion or statement to the best of the applicant's knowledge or belief. The court alsostated that an innocent misrepresentation in an application for life insurancecould be constructive fraud, where the applicant stated as a fact somethingmaterial to the risk, susceptible of knowledge and it be untrue, although hebelieved it to be true. Metropolitan Life Insurance Co. v. Bruno, 309 Mass. 7,33 N.E. (2d) 519 (1941).A review of the decisions reveals the fact that the courts have construedthe language in insurance applications and policies most favorable to the appli-cant or the insured, when the language is ambiguous or of doubtful meaning.Indiana Lumbermen's Mutual Ins. Co. v. Fair, 109 F. (2d) 607 (C.C.A. 5th,1941) ;Wall v. Mutual Life Ins. Co. of New York, 228 Ia. 119, 289 N.W. 901(1940) ; Muller v .Boston Casualty Co., 304 Mass. 549, 24 N.E. (2d) 514 (1931) ;Miller v. Mutual Life Ins. Co. of New York, 206 Minn. 225, 289 N.W. 399(1939).In reply to a question, on an application for life insurance, as to whetherthe applicant ever had the disease of rheumatism, he answered "no," while infact there was evidence tending to show the insured had sub-acute rheumatism.The court held that the insured had the right to answer the question upon the[Vol. 26RECENT DECISIONSbasis that its terms were used in their ordinary signification. If there was anyambiguity in the question so that its language was capable of being construed inan ordinary as well as a technical sense, the insurance company could not takeadvantage of such an ambiguity. Price v. Phoenix Mutual Life Ins. Co., 17 Minn.497, 10 Am. Rep. 166 (1871).In Purcell v. Washington Fidelity National Ins. Co., 141 Ore. 93, 16 P. (2d)639 (1932), an applicant for health and accident insurance was asked, "what acci-dent or health insurance have you in other companies or associations?", heanswered "none," while the fact was he had a $10,000 disability insurance policyupon reaching the age of sixty. This was followed by the question; "Doyour average weekly earnings exceed the aggregate single indemnity payableunder this policy and all other similar policies carried by you? The court statedthat the use of the word "similar" was significant, and could readily confinethe applicant's attention to straight policies of accident and health insuranceand not to disability insurance. Since the application was prepared by theinsurance company, ambiguities would be construed against it, and words sus-ceptible of two reasonable constructions would be given the one most favorableto the insured so as to avoid a forfeiture. A question, in an application for lifeinsurance, as to under what policies the applicant had been accepted forinsurance in the insuring company, followed by the further question, as to whatother companies or associations the applicant was insured in, was ambiguous.The court held that this was sufficient to lead one to conclude that the informa-tion called for was life insurance, evidenced by policies in regular insurancecompanies and not insurance evidenced by certificates in fraternal orders, andaccident policies. This reasoning followed that of the majority rule, for theinquiry, being in the language of the company, had to be given the interpreta-tion most favorable to the insured. Mutual Life Insurance Co. v. Ford, 61 Tex.Civil App. 412, 130 S.W. 769 (1910).In Wright v. Fraternities Health and Accident Ass'n., 107 Me. 418, 78 At.475 (1910), there was a question in an application for health and accident insur-ance to the effect, "has any company, society or association ever rejected yourapplication or canceled your policy?" The plaintiff answered "no," while infact his application for life insurance had been rejected. Plaintiff contended thatthe question did not call for an answer as to a life insurance policy but waslimited to health and accident insurance companies. The court held, that whenthe phraseology of this qusetion was construed in connection with the subjectmatter of the contract, it was evident that the ordinary prudent person wouldbe authorized to imply the word "health" before the word "company" so thatthe question in the mind of the applicant would be; "has any health companyrejected your application?" All doubt must be resolved in favor of the assured.It is incumbent upon the insurer who prepares the question to use language soplain and intelligent that an ordinary person under the usual circumstances canreadily comprehend it.Also, in an action on a life insurance policy the defendant contended thatthe policy provision-that if other policies of insurance are in force at the timeof death, the amount payable should not exceed the amount specified in thetable attached, less the total amount payable under other policies by whom everissued,-should be construed to include an accident policy held by the deceased.Under the rule of strict construction and the deciding of ambiguities againstthe insurer, this language was construed as referring to life insurance con--tracts and does not include a policy of accident insurance. Julius v. MetropolitanLife Ins. Co., 299 Ill. 343, 132 N.E. 435 (1921).1942]-THE MARQUETTE LAW REVIEWAlthough the courts hold that where an insurance policy is susceptible totwo constructions the one most favorable to the insured should be adopted, therule is equally well settled that contracts of insurance, like other contracts, areto be construed according to the sense and meaning of the terms which theparties have used, and if they are unambiguous the terms are to be taken intheir plain, ordinary, popular sense. It does not follow that the terms of aninsurance policy may be distorted from their natural meaning, or that theagreed liability of the insurer should be enlarged into one which only a newcontract could have imposed. Carpenter v. Continental Casualty Co., 95 F. (2d)634 (C.C.A. 8th, 1938). In National Automobile Ins. Co. v. Industrial AccidentCommission, 11 Calif. (2d) 689, 81 P. (2d) 926 (1938) a workman's compensa-tion policy provided that if the policy provided that if the policy was issued toan individual, it should cover only his liability as an individual employer andnot any liability as a member of a copartnership. Such a policy was issued to arestaurant owner, individually. It was held not to cover his liability for in-juries sustained by a dishwasher, after the insured took in his sister as a part-ner in operating his restaurant business. The rule is, where the provisions of apolicy are definite and certain, there is no room for interpretation, and thecourts will not indulge in a forced construction to cast a liability upon an in-surer which it has not assumed. Where life insurance policies unambiguouslyprovided that on due proof of disability the insurer would waive payment ofpremiums and pay disability benefits, the conditions of furnishing due proof,were conditions precedent to waiver of premiums or payment of benefits. Bottsv. Equitable Life Assurance Society of the United States, 78 P. (2d) 860 (1938).In New York Life Ins. Co. v. Malloy, 21 F. Supp. 1001 (D. N.H. 1938), a clauseproviding that the life insurance policy should be incontestable after two yearsexcept for non-payment of premiums and except as to provisions and condi-tions relating to disability and double indemnity benefits, did not preclude in-surer, after expiration of two years from obtaining cancellation of doubleindemnity and disability clauses for fraud practiced by insured at the incep-tion of the policy. The excepting clause in life policy must be construed inaccordance with its language and the fair meaning expressed. Moreover, a fireinsuranc policy covering potatoes handled or used by insured growers associa-tion, its own or those held in trust or in storage, "if in case of loss theinsured is legally liable therefor," was so unambiguous that the associationcould not set up insurer's conduct, after loss, where the association was notliable to members for loss. The terms of an insurance policy are to be takenand understood, in absence of ambiguity, in their plain ordinary and popularsense. Miller's Mutual Fire Ins. Assn. of Ill. v. Warroad Potato Growers Ass'n.,94 F. (2d) 741 (C.C.A. 8th, 1938).A. A. HiNDiN.Principal and Agent-Liability of Principal for Acts of Agent InvolvingPhysical Force.-Plaintiff, a boy of fifteen years, while attending a theatre ofthe defendant, was told by a substitute usher to remove his hat and on replyingthat he was about to leave, the substitute usher remarked, "You are leaving,and damned quick." Thereupon the usher seized the plaintiff and hurried himup the aisle. When they came to one of the plate glass doors the substituteusher gave the plaintiff a shove, and in an attempt to ward off injury, plaintiffput up his hands and struck the plate glass causing it to break and inflictserious injury upon him. The substitute usher was a helper who received[Vol. 26

Insurance: Effect of Doubtful and Ambiguous Language in Applications and Policies

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Insurance: Effect of Doubtful and Ambiguous Language in Applications and Policies

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