Hayes v. Automobile Insurance Exchange

On Rehearing.

Per Curiam.

Upon re-argument of this case

{Hayes v. Automobile Insurance Exchange, 126 Wash. 487, 218 Pac. 252), before the court En Banc, it is vigorously urged by the respondent that he should be allowed to submit to the jury the question of his lack of intent to deceive, for the reason that as a matter of fact, he never read his policy and therefore could have had no such intent. The answer to this argument is that, as stated in the Department's opinion, whether he read the policy or not is immaterial, for the law charges him with the duty of reading it.

Justice Holmes, of the United States supreme court, in Lumber Underwriters v. Rife, 237 U. S. 605, said, *203“no rational theory of contract can be made that does not hold the assured to know the contents of the instrument to which he seeks to hold the other party. ’ ’

The same doctrine is announced by the supreme court of Missouri in Modern Woodmen of America v. Angle, 127 Mo. App. 94, 104 S. W. 297:

“Now it is well established in the law of insurance that, when the agent has written down untrue answers to such questions, even though it be done without the knowledge of the insured, and the insured is furnished a copy of the application containing such untrue answers annexed to the policy, he is afterwards estopped from denying knowledge thereof. The doctrine, of course, proceeds upon the theory that it is the duty of the insured to use reasonable diligence in discovering the contents of the contract, and, it is said, upon discovering the same, it becomes his duty to notify the company of such fraud perpetrated upon both himself and the insurer. At any rate, if he held the policy, referring in apt terms to the warranties contained in the application annexed, for a reasonable time, he is conclusively presumed to know the contents of the contract and the untruthful answers plainly written in the application, and is thereby estopped to assert that he had no knowledge of the subject.”

To the like effect the supreme court of Iowa, in Moore v. State Ins. Co., 72 Iowa 414, 34 N. W. 183, said:

‘ ‘ The policy is a unilateral contract, and its acceptance by plaintiff operates as an assent to the conditions intended to bind him. These conditions are as obligatory upon him as though he had signed the policy.”

See, also, Fidelity & Casualty Co. v. Fresno Flume & Irrigation Co., 161 Cal. 466, 119 Pac. 646, and 32 C. J. 1129.

The result, therefore, is that the respondent is charged in law with having accepted and read a policy *204containing warranties which he knew at the time to he untrue, and that he is thereby estopped from asserting that, in the application, the answers which were after-wards embodied in the policy itself as warranties were written in by an agent of the company without his knowledge. The manner in which the application was made might relieve the respondent upon the theory that false statements contained in it were not made with intent to deceive, but that the policy itself was accepted by the respondent with knowledge of false warranties is another matter, for he is in law charged with knowing them and he cannot escape responsibility by saying merely that he did not read them.

Whether the application was filled out by the insurance company’s agent becomes immaterial, for the respondent knew that the statements made therein were not based upon any facts detailed by him, and when he accepted the policy and is charged with having read it, he then, in legal effect, made for the first time the false statements with knowledge of their falsity, and the fact that they appeared there as a result of the agent’s failure to inquire the facts of him does not make them any the less his own misstatements.

The case falls squarely within the rule announced in Day v. St. Paul Fire & Marine Ins. Co., 111 Wash. 49, 189 Pac. 95, for here, as there, the assured accepted a policy knowing that it contained false warranties, and here, as there, his effort to take advantage of § 7078, Rem. Comp. Stat. [P. C. § 2941], went only to the extent of an assertion that he had actually no intention to deceive; in the Day case the testimony by the assured being that he did not intend to deceive, and here merely that he did not read the policy. Section 7078, by its terms, relieves the assured from the effect of false statements made only in “the negotiations of a contract of policy of insurance,” and there is consider*205able question whether that section applies to false representations or warranties made in the policy itself; but assuming that it applies to the policy itself, still the rule which we have announced is applicable.

The decision of this case is not in conflict with prior decisions relating to this same subject-matter, for in all of them in which recovery upon a policy has been permitted there was positive proof of facts and circumstances from which the triers of the fact could rightfully determine that the assured had actually no intent to deceive; either that the insurance company knew the real condition of affairs, or that the assured, through a legitimate oversight, or for some reason of that nature, had neglected to state the facts as they really existed. But here the assured made no such explanation and his reason for asserting that he had no intention to deceive is that he had never read the policy. This amounts to no more than a claim that he is not bound by a policy which he did not read, and which, as we have shown, is not the rule of law applicable to such contracts.

The judgment is therefore reversed and the action dismissed.