Federal Life Insurance Co. v. Cary

NOURSE, P. J.

On March 17, 1936, plaintiff commenced this action to rescind four noncancellable health insurance policies issued August 20, 1925. A demurrer both general and special was sustained with leave to amend. The plaintiff declined to amend, and the defendant had judgment.

On this appeal from the judgment the respondent rests upon two grounds—that the admitted fraud and misrepresentations in the application for the insurance was waived by plaintiff, and that its cause of action is barred by the statute of limitations. If either ground is good, the judgment must be sustained.

The four applications for the insurance were all made in the month of July, 1925. The plaintiff was an insurance corporation having its principal place of business in Chicago, Illinois; the defendant was a' physician and surgeon practicing his profession in Oakland, California. In each application he represented that he was not then suffering and had not since the year 1921 suffered any illness, particularly bronchial asthma. These representations were admittedly false, and are conceded to have been material. At the same time, however, it was represented that he was then receiving a permanent disability from the federal government for services in the world war “on account of a bronchial asthma secondary to a frontal sinus infection”. It is alleged that on February 11, 1935, the defendant filed a claim with the plaintiff for disability under said policies due to bronchial asthma. Thereafter, the plaintiff made investigation of the records of the Veterans’ Bureau and learned for the first time that defendant had suffered severe attacks of bronchial asthma in January, 1923', July, 1923, and October, 1924. Plaintiff thereupon gave notice of rescission.

On the issue of waiver, the respondent cites and relies upon

Farrar

v.

Policy Holders Life Ins. Assn.,

3 Cal. App. (2d) 87 [39 Pac. (2d) 229]. That was a case where the applicant for insurance had falsely represented his physical condition, but had at the same time notified the insurer that he was drawing a disability pension from the federal government as a veteran of the Spanish-American war. The insurer

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