Civil Service Employees Insurance v. Blake

FLEMING, J.

Blake and Carter appeal from a judgment in favor of the insurance company declaring Blake’s automobile insurance policy void from its inception because of fraudulent statements in his application for the policy.

In 1962 Blake obtained automobile insurance by submitting an application in which he answered two questions falsely. The first question was “Have you or

any other driver

of this car: (A) Any chronic ailment? (espec. Heart disease, Epilepsy, Fainting spells, etc.) ” Blake answered “Yes. In 1950 but none after.” In fact, Blake had had epileptic blackouts continuously from 1949 to at least 1960. In 1949 Blake had had a blackout while driving and caused an accident in which three persons had been killed. The second question was “Have you or

any other driver

of this car: (G) Ever had your driver’s license revoked, suspended, or restricted?” Blake answered “No” although in fact his license had been surrendered in 1950 and revoked in 1959 and his other applications for a license had been denied. The evidence showed that Blake intentionally answered these two questions falsely, that Tucker, the agent who took Blake’s application, had no knowledge of his physical condition or his driving history, that the insurance company would not have issued the policy had the questions in the application been answered truthfully.

During the period covered by the policy Blake had an automobile accident involving Carter, and Carter sued Blake for personal injuries. Thereafter the company discovered Blake’s true health history and rescinded its policy. Subsequent to the notice of rescission, Blake demanded that the insurance company assume the defense of his personal injury action; and the company then filed this suit for declaratory relief against Blake and Carter.

Insurance Code, sections 359 and 650, provide “If a representation is false in a material point . . . the injured

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party is entitled to rescind the contract from the time the representation becomes false,” and “Whenever a right to rescind a contract of insurance is given to the insurer . . . such right may be exercised at any time previous to the commencement of an action on the contract.” Blake and Carter concede there was substantial evidence to support the finding of false representation. This being conceded, “The law seems clear that where the insured has secured a policy of automobile liability insurance through fraud, breach of warranty, or material misrepresentation, the insurer can rescind the policy as of its inception, notwithstanding the existence of any rights in third parties who were injured by the acts of the insured which occurred before the rescission.”