Reuter v. Pacific Mutual Life Insurance Co.

SCOTT, J.,

pro tem.

This is an appeal by defendant from a judgment in favor of plaintiff on certain policies of disability insurance.

[335]

In November of 1923, upon application of plaintiff, defendant issued to him four policies of disability insurance, each providing benefits of $100 a month. In March of 1928 plaintiff notified defendant that he was permanently and totally disabled, declaring that he was at that time suffering from syphilis. Defendant refused to pay, asserting that plaintiff was thus afflicted when the policy was applied for and his concealment of the fact was fraudulent. Plaintiff denied he was thus afflicted in 1923, and upon defendant’s refusal to pay filed suit against defendant. After some negotiations defendant paid plaintiff $2,000 on each policy, totaling $8,000, by way of settlement. That action was then dismissed with prejudice, in April, 1929.

About November, 1933, plaintiff and his physicians discovered (and defendant does not dispute it) that he was not suffering from syphilis but that his ease was then and had been one of encephalitis or sleeping sickness, a disease which is different from syphilis in origin and character although resembling it in some of its aspects. It appears from the record that if plaintiff in 1928 had been afflicted with syphilis which was of a stage as advanced as indicated by the physicians, there would have been some probability that he had suffered from it when he took out the insurance; whereas, when encephalitis rather than the other malady was discovered to be the disease from which plaintiff was suffering, such probability of syphilitic infection at the time of the issuance of the insurance policy was removed.

Plaintiff thereupon in 1933 notified defendant that he rescinded the contract of settlement above referred to, offered to return to defendant the money received thereunder and filed this suit on the original insurance policies, acknowledging as payment on each the sum received as such settlement. In its answer defendant pleaded the contract of settlement and dismissal of the prior action. Upon trial by jury a verdict was returned in favor of plaintiff for “the then present value on 23rd day of May, 1928, of the sum of '$400 per month for the plaintiff’s life expectancy of 23 years from and after the 23rd day of May, 1928, less the sum of $8,000 paid plaintiff April 17, 1929, with interest on said $8,000 at the legal rate”. Judgment for plaintiff was entered thereon for $55,341.60.