Mutual Life Insurance v. Allen

ANDERSON, J.

Section 4579, Code 1907, in regulating insurance, among other things, says: “No life, nor any other insurance company, nor any agent thereof, shall make any contract of insurance or agreement as to policy contract, other than is plainly expressed in the policy issued thereon,” etc. This court has construed this section in the recent case of Manhattan Life Ins. Co. v. Verneuille, 156 Ala. 592, 47 South. 72. It was there held that the insured ivas not bound by any anterior or contemporaneous agreement not plainly expressed in the policy. The statute was enacted for the protection of the public, and all contracts, unless plainly expressed in the policy, are expressly prohibited, and are void. This statute is, therefore, unlike the one considered in the case of Sunflower Co. v. Turner, 158 Ala. 191, 48 South. 510. It is rather analogous to the statutes considered by that class of cases differentiated from the Turner Case, supra, in the opinion in said case.

We did not hold, however, in the Verneuille Case, supra, that section 4579 was broad enough to exclude false and fraudulent representations inducing the contract or agreement, and which did not become warranties or agreements. Nor can we so construe this section in the case at bar, as it expressly applies only to contracts and agreements, and not to misrepresentations made with the actual intent to deceive, and whicn would increase the risk of loss, and which did not amount to an agreement or warranty. Sections 4572, 4579, are in pari materia, and must be construed together. Section 4572 clearly contemplates that mere misrepresentations, whether written or oral, would not have to be expressed in the policy, else the word “oral” would not appear therein, as it would be useless to provide against oral misrepresentaions if, under the terms of section 4579, they had to be expressed in the policy contract. These two sections should be construed so as to avoid a conflict and give each a field of operation, which can be done without doing violence to the letter of either, and according to the plain language and intent of same. We therefore hold that under section 4579 any contract or agreement relating to same is not binding on the insured, unless expressed in the policy. But misrepresentations in the application or negotiation for insurance or proof of loss thereunder, and Avhich are not made a part of the contract of insurance, or of an agreement relating to same, are binding on the insured, although not expressed in the policy contract, provided, of course, it is made with the actual intent to deceive, or the risk is thereby increased.

Our court, in the case of Ala. Gold Ins. Co. v. Johnston, 80 Ala. 470, 2 South. 125, 59 Am. Rep. 816, draws a very decided distinction between warranties and misrepresentations as regards insurance, and our lawmakers evidently had this distinction in mind when enacting the statutes uoav under consideration. As section 4579 includes only contracts or agreements, and section 4572 not only covers warranties, which must be expressed in the policy, under section 4579, but misrepresentations also, Avhether Avritten or oral, and Avhich did not have to he written in the policy contract, provided they are made with the intent to deceive or the risk is increased. This case is not in conflict with the Verneuille Case, supra, and so much as was there decided is affirmed. The defense there set up was a warranty or agreement only, and not mere misrepresentation. The special pleas in said case, from 4 to 10, inclusive, each set up an agreement or warranty not expressed in the policy. It may be that pleas 8, 9, and 10 set up an intent to deceive or defraud; but each of them made plea 7 a part thereof, and which expressly set up and referred to a contract or agreement not expressed in the policy contract.

While there were many special pleas interposed, and to which demurrers were sustained, counsel for appellant have grouped and classified them for convenience. The first class set up Avarranties not expressed in the policy, and the demurrers thereto were properly sustained. The second class set up false and fraudulent misrepresentations, and the trial court erred in sustaining demurrers to such of them as comply with section 4572. It is needless to discuss them separately, and it is sufficient to say that plea 31 was good, and the trial court erred in sustaining the demurrer to same.

In discussing this, question, Ave deal Avith it as applicable to original policy contracts, and are not unmindful that the contract or Avarranties set up in the pleas refer to a revival or reneAval of a policy that had previously lapsed. We are of the opinion, hoAvever, that section- 4579 is broad enough to include any contract or agreement as to the policy, whether it relates to the issuance of the policy, or to a reneAval, revivor, or reinstatement- of same. The policy of the statute was r« inform the insured of his warranties affecting the validity of his contract by having them expressed in the contract. If they relate to the issuance of the policy, they should be expressed in the original policy. If they relate to a revival or renewal of the policy, they nevertheless relate to the policy contract, and should be expressed in or made a. part of the policy as revived or renewed.

F'or the error above pointed out, the judgment of the circuit court is reversed, and the cause remanded.

Reversed and remanded.

Dowdell, C. J., and Sayre and Evans, JJ., concur.