Oade v. Jackson National Life Insurance

Michigan Supreme Court
Lansing, Michigan 48909
____________________________________________________________________________________________
C hief Justice Justices

Opinion
Maura D. Cor rigan Michael F. Cavanagh
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
____________________________________________________________________________________________________________________________

FILED JULY 30, 2001

JEFFREY LEE OADE and Thomas E.

Walsh, Personal Representative of

the Estate of SHEILAH CHOUINARD,

Plaintiffs-Appellees,

v No. 114786

JACKSON NATIONAL LIFE INSURANCE

COMPANY OF MICHIGAN,

Defendant-Appellant.

____________________________________

BEFORE THE ENTIRE BENCH

YOUNG, J.

I. INTRODUCTION

In this life insurance dispute, plaintiffs, Jeffrey Lee

Oade and Sheilah Chouinard, seek to recover benefits from a

Jackson National Life insurance policy issued and delivered to

Gary Oade. Plaintiffs, the son and friend of Mr. Oade,

respectively, are the named beneficiaries of the insurance

policy. Defendant claims that the policy never became

effective because Mr. Oade failed, as required by the terms of

the insurance application, to provide updated information

about his health and medical treatment between the date he

signed the application and the day the policy was issued. We

granted leave to address the applicability of the statutory

requirement under MCL 500.2218(1), that a misrepresentation in

an application of insurance be material in order to make the

insurance policy avoidable.

Because Mr. Oade had an explicit, contractual continuing

duty to ensure that the answers in his insurance application

remained true until the effective date of the policy, we hold

that Mr. Oade’s failure to supplement his medical history

rendered his original answers false, making them

“misrepresentations” within the meaning of MCL 500.2218(2).

However, contrary to the Court of Appeals decision, we

conclude that these misrepresentations were material, and that

defendant was therefore entitled to avoid the contract.

Accordingly, we reverse the Court of Appeals decision and

reinstate summary disposition in favor of defendant.

II. FACTUAL AND PROCEDURAL BACKGROUND

On November 29, 1993, Mr. Oade, a fifty-three year-old

store owner, contacted his insurance agent and completed a

Jackson National Life Insurance Company of Michigan

application for a “preferred” $100,000 life insurance policy.1

In order to evaluate the insurance risks posed by an applicant

and consistent with standard underwriting procedures, the

Jackson National application required answers to certain

questions about an applicant's health status. That

application further required that the applicant inform

defendant in writing if the applicant’s health or any of the

answers or statements contained in the application changed

between the time the original answers were given and the date

the policy was issued and delivered.2

The application contained the following questions

relevant to the resolution of this case:

1
Mr. Oade applied for a “preferred” life insurance

policy. After evaluating Mr. Oade’s medical history, Mr. Oade

was finally approved for a “standard” policy which was more

expensive than the “preferred” policy. Though both parties

neglect to provide an explanation of the difference between

the two policies, it appears that a “preferred” policy is

issued to applicants who are in “better” health.

2
The interim insurance receipt is another document that

Mr. Oade signed. The language on the interim insurance

receipt provided:

I . . . understand and agree that:

1. no policy will go into force unless all my

statements and answers in this application continue to be

true as of the date I receive the policy:

2. if my health or any of my answers or statements

given in this or any other supplement to this application

change prior to delivery of the policy, I must so inform

the Company in writing . . . .

2. Have you ever been treated for, or ever

had any indication of:

* * *

d. Chest pain, discomfort or tightness;

palpitations, high blood pressure, rheumatic fever,

heart murmur, heart attack or blood vessels?

3. Have you, in the past five years:

a. Consulted or been treated by a physician or

other medical practitioner?

b. Been a patient in a hospital, clinic, or

medical facility?

In answering the application questions, Mr. Oade denied,

in response to question 2(d), that he had been treated for

chest pain, discomfort or tightness, palpitations, rheumatic

fever, heart murmur, heart attack or other disorder of the

heart or blood vessels. However, he disclosed that he had

been treated for high blood pressure. In response to question

3(a) and (b), he denied that he had been hospitalized but

disclosed that he had been treated by a physician or other

medical practitioner during the preceding five years.

Defendant did not contest the accuracy of the initial answers

Mr. Oade made in response to the application.

On December 25, 1993, between the submission of Mr.

Oade’s application and defendant’s approval and delivery of

the policy, Mr. Oade went to a hospital emergency room,

complaining of chest pains. He was admitted to the hospital

and stayed overnight while tests were performed. As noted,

the application for insurance required Mr. Oade to provide

updated health information. In particular, Mr. Oade’s initial

answers that he had not been a patient in a hospital in the

preceding five years, and had never been treated for chest

pains thus became inaccurate information concerning his health

status. Despite the requirement to provide updated health

information, it is undisputed that Mr. Oade did not inform

defendant of his December hospitalization for chest pains.

On January 4, 1994, after evaluating Mr. Oade’s

application, defendant approved him for a “standard” policy

rather than the “preferred” policy he had originally sought.

Oade paid the additional premium on January 6, and the policy

was delivered that day.

Mr. Oade died suddenly from a heart attack on

September 1, 1994. Plaintiffs submitted a claim to defendant

for payment of the death benefits provided in the life

insurance policy. Defendant investigated, discovered the

undisclosed hospitalization, and denied the claim on the

ground that, although required to do so under the terms of the

insurance application, Mr. Oade failed to report his change in

medical history. Defendant declared that, because Mr. Oade

had violated conditions precedent to create insurance

coverage, the policy never became effective.

Following defendant’s refusal to pay under the policy,

plaintiffs brought this action in the circuit court where both

parties filed cross-motions for summary disposition. The

circuit court granted summary disposition in favor of

defendant, holding that Mr. Oade’s failure to communicate in

writing the “material changes” to his answers in the

application prevented the policy from taking effect.

The plaintiffs appealed, and the Court of Appeals

reversed in an unpublished per curiam decision.3 The Court of

Appeals recognized that parties may mutually agree that

certain conditions be met before an insurance contract will

become effective. However, the Court reasoned that such

contract terms must not conflict with applicable statutes.

The Court held that the case was governed by MCL 500.2218(1).

It rejected defendant’s argument that the insurer was not

claiming misrepresentation permitting rescission of an

existing policy, but that the policy never became effective in

the first instance.

In applying the statute, the Court of Appeals attempted

to determine whether the undisclosed health information was

material within the meaning of MCL 500.2218(1). In so doing,

the Court relied on Zulcosky v Farm Bureau Life Ins Co of

Michigan, 206 Mich App 95; 520 NW2d 366 (1994), for the

3
Unpublished opinion per curiam, issued February 26, 1999

(Docket No. 202501).

proposition that a misrepresentation is not material if the

insurer would have issued “a” policy, albeit a different one

issued at a higher rate.

Applying these principles to the facts of the case, the

Court of Appeals concluded that, because plaintiffs had

presented the deposition and affidavit of one of defendant’s

underwriters indicating that there was a possibility that Mr.

Oade would have been offered a policy at a higher rate,

plaintiffs had established a genuine issue of fact concerning

the materiality of Mr. Oade’s failure to disclose.

This Court granted defendant’s application for leave to

appeal.4

III. STANDARD OF REVIEW

Issues of statutory interpretation are questions of law

and are therefore reviewed de novo. Cardinal Mooney High

School v Michigan High School Athletic Ass’n, 437 Mich 75, 80;

467 NW2d 21 (1991).

A motion for summary disposition under MCR 2.116 (C)(10),

which tests the factual support of a claim, is subject to de

novo review. Smith v Globe Life Ins Co, 460 Mich 446, 454; 597

NW2d 8 (1999).

IV. ANALYSIS

The Court of Appeals relied on the materiality

4
463 Mich 864 (2000).

requirement found in MCL 500.2218(1):

No misrepresentation shall avoid any contract

of insurance or defeat recovery thereunder unless

the misrepresentation was material. No

misrepresentation shall be deemed material unless

knowledge by the insurer of the facts

misrepresented would have led to a refusal by the

insurer to make the contract.

Although we agree with the Court of Appeals that MCL 500.2218

applies to the facts of the instant case, we disagree with its

conclusion that Mr. Oade’s misrepresentations were not

material.

A. APPLICABILITY OF MCL 500.2218

The touchstone of the statute’s applicability is a

“misrepresentation.” MCL 500.2218(2) defines a

“misrepresentation” as a “false representation.” A

“representation,” in turn, is statutorily defined as a

“statement as to past or present fact, made to the insurer by

or by the authority of the applicant for insurance or the

prospective insured, at or before the making of the insurance

contract as an inducement to the making thereof.” MCL

500.2218(2).

When he submitted his insurance application, Mr. Oade

indicated on the application that he had not been a patient in

a hospital in the preceding five years and that he had never

been treated for chest pains. However, between the submission

of Mr. Oade’s application and defendant’s approval and

delivery of the policy at issue, Mr. Oade was hospitalized for

chest pains. It is undisputed that Mr. Oade did not inform

defendant of this event.

The question, then, is whether Mr. Oade engaged in a

misrepresentation for purposes of MCL 500.2218(2). We

conclude that he did. Under the express language of the

insurance application, Mr. Oade had a continuing duty to

ensure that the answers in his insurance application remained

true as of the date he received the policy. In relevant part,

the application variously states:

It is represented that the statements and

answers given in this application are true,

complete, and correctly recorded to the best of my

. . . knowledge and belief.

* * *

I understand that no policy based on this

application will be effective unless all of my

statements and answers continue to be true as of

the date I receive the policy. I understand that

if my health or any of my answers or statements

change prior to delivery of the policy, I must so

inform the company in writing.

* * *

I understand that my statements and answers in

this application must continue to be true as of the

date I receive the policy. I understand that if my

health or any of my answers or statements change

prior to delivery of the policy, I must so inform

the Company in writing.

Likewise, the interim insurance receipt provides as follows:

[N]o policy will go into force unless all my

statements and answers in this application continue to be

true as of the date I receive the policy:

* * *

If my health or any of my answers or

statements given in this or any other supplement to

this application change prior to delivery of the

policy, I must so inform the Company in writing

. . . .

Despite contractually promising that his answers would

“continue to be true” as of the effective date of the policy,

Mr. Oade failed to do so. This failure rendered Mr. Oade’s

previous answers false, thereby making them misrepresentations

under MCL 500.2218(2).

Having determined that the statute applies, we turn to

the Court of Appeals decision that Mr. Oade’s

misrepresentations were not material and that defendant

therefore could not avoid the insurance contract.

B. MATERIALITY REQUIREMENT

MCL 500.2218(1) provides:

No misrepresentation shall avoid any contract

of insurance or defeat recovery thereunder unless

the misrepresentation was material. No

misrepresentation shall be deemed material unless

knowledge by the insurer of the facts

misrepresented would have led to a refusal by the

insurer to make the contract.

The Court of Appeals relied on its prior decision in

Zulcosky v Farm Bureau Life Ins Co, supra, for the proposition

that a change in facts is “material” only where the correct

information would cause the insurer to reject the applicant

altogether. Zulcosky would not find materiality where the

correct information would merely prompt the insurer to offer

a policy at a higher premium. However, this is contrary to

the binding precedent of this Court. Our decision in Keys v

Pace, 358 Mich 74, 82; 99 NW2d 547 (1959), made clear that a

fact or representation in an application is “material” where

communication of it would have had the effect of

“substantially increasing the chances of loss insured against

so as to bring about a rejection of the risk or the charging

of an increased premium.” Keys, in turn, is consistent with

the plain language of MCL 500.2218(1), which defines

materiality in terms of the insurer’s refusal “to make the

contract” (emphasis added), not “a” contract.

In this case, the undisputed evidence presented to the

trial court made clear that the correct information would have

led the insurer to charge an increased premium, hence a

different contract. Indeed, defendant’s underwriter stated in

her affidavit that defendant “may have been willing to offer

a more expensive ‘rated’ insurance contract at approximately

double the premium cost that Mr. Oade had paid for the

‘standard’ insurance policy in this instance.”

Thus, the Court of Appeals erred in focusing on whether

defendant would have issued any contract of insurance to Mr.

Oade. The proper materiality question under the statute is

whether “the” contract issued, at the specific premium rate

agreed upon, would have been issued notwithstanding the

misrepresented facts. The Court of Appeals contrary decision

in Zulcosky is overruled.

Because there is no genuine issue of material fact on the

issue of materiality, defendant is entitled to summary

disposition under MCR 2.116(C)(10).

V. RESPONSE TO THE DISSENT

Contrary to the dissent, we conclude that it is

altogether irrelevant that plaintiff’s health did not change

during the prepolicy period. The dissent, in concluding that

the case presents a question of material fact, asserts that

plaintiff offered evidence that he had not suffered a heart

attack. It further asserts that plaintiff’s personal

physician affirmed that decedent’s health “did not change in

anyway [sic]” between the date he applied for the insurance

policy and when it was delivered. Post at 9. On the basis of

this evidence, the dissent concludes that “the fact issue

concerning the materiality of decedent’s misrepresentations

should be resolved by the trier of fact.” Post at 15.

However, the focus of inquiry under the statutory

“materiality” test is whether a reasonable underwriter would

have regarded Mr. Oade’s updated answers regarding his

hospitalization for chest pains as sufficient grounds for

rejecting the risk or charging an increased premium, not

whether the status of Mr. Oade’s health had changed. Because

there is no dispute that defendant would have, at minimum,

issued an insurance policy at a higher premium rate, no

reasonable jury could conclude that it would have issued the

same contract.

To create an issue of fact on the materiality question,

plaintiffs were free to bring forth evidence drawing into

question the testimony of defendant’s underwriter. Because

plaintiffs did not do so, the trial court properly granted

summary disposition to defendant under MCR 2.116(C)(10).

VI. CONCLUSION

While we agree with the Court of Appeals that MCL

500.2218 applies here, we conclude that Mr. Oade’s

misrepresentations were material, thereby entitling defendant

to avoid the insurance contract. Accordingly, we reverse the

Court of Appeals decision and reinstate summary disposition in

favor of defendant.

CORRIGAN , C.J., and WEAVER , TAYLOR , and MARKMAN , JJ.,

concurred with YOUNG , J.

S T A T E O F M I C H I G A N

SUPREME COURT

JEFFREY LEE OADE and Thomas E.

Walsh, personal representative

of the estate of SHEILAH CHOUINARD,

Plaintiffs-Appellees,

v No. 114786

JACKSON NATIONAL LIFE INSURANCE

COMPANY OF MICHIGAN, a Michigan

corporation,

Defendant-Appellant.

___________________________________

KELLY, J. (concurring in part and dissenting in part).

I concur in part IV(A) of the majority's opinion. Because

the decedent violated his contractual duty by failing to

update his medical history, true statements in his insurance

application became false at the time the contract was made.

The false statements were "misrepresentations" within the

meaning of MCL 500.2218(2).

However, I dissent from the majority's conclusion in its

part IV(B) that there was no genuine issue of material fact

concerning the materiality of the misrepresentations.

Plaintiff introduced sufficient evidence to raise a fact

question whether defendant would have issued the same policy

at the same premium if timely notified of decedent's 1993

episode and hospitalization. Because the issue should be

resolved by the trier of fact, I would affirm the Court of

Appeals decision that summary disposition for defendant was

improper.

I. Misrepresentation and § 2218(2)

A trial court's ruling on a motion for summary

disposition under MCR 2.116(C)(10), which tests the factual

support for a claim, is reviewed de novo. See Smith v Globe

Life Ins Co, 460 Mich 446, 454; 597 NW2d 28 (1999).

Affidavits, pleadings, depositions, admissions, and

documentary evidence filed in the action or submitted by the

parties, are considered in the light most favorable to the

party opposing the motion. MCR 2.116(G)(5). This case

involves statutory interpretation, a question of law, that is

also subject to de novo review. See Oakland Co Rd Comm'rs v

Michigan Property & Casualty Guaranty Ass'n, 456 Mich 590,

610; 575 NW2d 751 (1998).

As the majority points out, "representation" and

"misrepresentation" are defined in the act:

A representation is a statement as to past or

present fact, made to the insurer by or by the

authority of the applicant for insurance or the

prospective insured, at or before the making of the

insurance contract as an inducement to the making

thereof. A misrepresentation is a false

representation, and the facts misrepresented are

those facts which make the representation false.

[MCL 500.2218(2).]

Unless defined in the statute, every word or phrase of a

statute should be accorded its plain and ordinary meaning.

See Western Mich Univ Bd of Control v Michigan, 455 Mich 531,

539; 565 NW2d 828 (1997). Where a statute does not define a

word, courts may consult dictionary definitions to ascertain

the word's plain meaning. See Popma v Auto Club Ins Ass'n,

446 Mich 460, 470; 521 NW2d 831 (1994).

Although § 2218(2) defines a misrepresentation as, in

essence, a "false statement as to past or present fact . . .

at or before the making of the insurance contract . . . ," it

does not define "statement." Resorting to a dictionary, one

finds that "statement" is "something stated," "a communication

or declaration in speech or writing, setting forth facts,

particulars, etc.," or "a single sentence or assertion."1

In the present case, it is undisputed that, at the time

he completed the insurance application, decedent provided

accurate answers to the questions relating to his health and

medical treatments. The application required him to provide

1
Random House Webster's College Dictionary (1995).

an update to defendant if any of his answers changed between

the time of his application and the time defendant issued the

policy.

Because of decedent's December 1993 hospitalization, his

statements that he had not been hospitalized in the preceding

five years and had never been treated for chest pains were

rendered false. Given that he did not update the statements,

decedent's application contained false statements regarding

his health at the time defendant issued the policy.2 Because

there were false statements or representations by decedent at

the time the policy was delivered to him, there were

misrepresentations within the meaning of § 2218(2).

The case of Guardian Life Ins Co of America v Aaron,3 is

instructive. In Aaron, the defendant answered in his

application for insurance with plaintiff Guardian Life

2
See 6 Couch, Insurance, 3d, § 82:2, pp 82-6, 82-7, ns 8
9 (1998). Statements set forth in an application for insurance

are "continuing representations" until the date the contract

becomes binding; see generally Stipcich v Metropolitan Life

Ins Co, 277 US 311, 316; 48 S Ct 512; 72 L Ed 895 (1928),

explaining the "continuing representation" concept. This Court

has recognized the concept of "continuing representations," at

least where an indorser of a note gives a financial statement

to a bank to secure a line of credit. See First State Savings

Bank v Dake, 250 Mich 525, 528; 231 NW 135 (1930). In Dake,

this Court called the financial statement a "continuing

representation" of defendant's responsibility. There, the

indorser represented that the information within the financial

statement was and continued to be true and correct unless

notice of a change was given.

3
181 Misc 393; 40 NYS2d 687 (1943).

Insurance Company that he had never been refused life

insurance. That answer was true at the time. However, before

Guardian accepted the policy, the defendant applied for and

was refused life insurance by a second insurance company. He

failed to give Guardian this information before it accepted

the policy.

The New York court held that the defendant's failure to

provide updated information constituted a misrepresentation

under the applicable New York statute. See id. at 395-396.4

The court reasoned that, because the defendant had a duty to

disclose new information, statements in his application

constituted continuing representations. They were considered

as having been made before the time of the delivery of and

4
The New York statute provisions implicated in Aaron are

remarkably similar to § 2218. In particular, § 149(1) of the

New York Insurance Law defined, at that time, a representation

as "a statement as to past or present fact made to the insurer

. . . , at or before the making of the insurance contract as

an inducement to the making thereof." A "misrepresentation"

was defined as "a false representation." Gay v NY Property Ins

Underwriting Ass'n, 1985 WL 1665 (SD NY). The statute further

provided:

(2) No misrepresentation shall avoid any

contract of insurance or defeat recovery thereunder

unless such misrepresentation was material. No

misrepresentation shall be deemed material unless

knowledge by the insurer of the facts

misrepresented would have led to a refusal by the

insurer to make such contract. [Greene v United Mut

Life Ins Co, 38 Misc 2d 728, 730; 238 NYS 2d 809

(1963). NY Ins Law § 149, revised and renumbered

and is now McKinney's Insurance Law § 3105 (1985).]

payment for the policy. See id. at 395. There, the defendant's

earlier statement that he had never been refused insurance was

rendered false because he did not update his application. It

was deemed a misrepresentation under the New York insurance

statute.

Also instructive is Cosby v Transamerica Occidental Life

Ins Co,5 describing an insurance applicant's change of health

as rendering untrue his responses in an insurance policy

application where the application provided that "[a]ll of the

statements and answers given in this application to the best

of my . . . knowledge and belief continue to be true and

complete as of the date of delivery of the policy."

Finally, there is Fjeseth v New York Life Ins Co, 20 Wis

2d 295; 122 NW2d 49 (1963). In that case, the decedent

asserted on an insurance application that he had never had

pain in his chest. He asserted that he had not consulted or

been examined by a physician in the previous ten years. After

he completed the application, but before the policy was

delivered, the plaintiff suffered chest pains and went to a

doctor. The plaintiff failed to disclose these facts to the

defendant insurer. A provision in the policy conditioned it

becoming effective on the continued truth of such answers up

to the time that the policies went into effect. See id. at

5
860 F Supp 830, 834 (ND Ga, 1993).

304. The Supreme Court of Wisconsin held that the plaintiff's

failure to update constituted a material misrepresentation

under Wis Stat § 209.06(1). See id. at 305. At the time, Wis

Stat § 209.06(1) provided:

No oral or written statement, representation,

or warranty made by the insured or in his behalf in

the negotiation of a contract of insurance shall be

deemed material or defeat or avoid the policy,

unless such statement, representation, or warranty

was false and made with intent to deceive, or

unless the matter misrepresented or made a warranty

increased the risk or contributed to the loss.

[Fjeseth, supra at 305, n 1; § 209.06(1) has been

revised and renumbered and is now Wis Stat §

631.11.]

Following the reasoning in Aaron, Cosby, and Fjeseth, I

would conclude that decedent's December 1993 hospitalization

rendered false his statements in the application regarding his

hospitalization and chest pain history. As a consequence, his

application contained false statements or representations at

the time the policy was delivered to him. These constitute

misrepresentations within the meaning of § 2218(2).

II. Materiality

The next question is whether defendant may avoid the

insurance policy, as a matter of law, on the basis that the

misrepresentations were material. Under § 2218(1), a

misrepresentation is deemed "material" when knowledge by the

insurer of the facts misrepresented would have led to a

refusal by the insurer to "make the contract." MCL

500.2218(1).

The Court of Appeals relied on Zulcosky v Farm Bureau

Life Ins,6 for the proposition that a misrepresentation is

"material" only where the insurer would have rejected the

application altogether. See id. at 99, citing In re Certified

Question, Wickersham v John Hancock Mut Life Ins Co, 413 Mich

57, 65; 318 NW2d 456 (1982); Clark v John Hancock Mut Life Ins

Co, 180 Mich App 695, 699-700; 447 NW2d 783 (1989).7

As the majority observes, the Zulcosky test for

materiality appears contrary to Keys v Pace, 358 Mich 74; 99

NW2d 547 (1959). In Keys, we articulated the proper test for

materiality as follows:

"The generally accepted test for determining

the materiality of a fact or matter as to which a

representation is made to the insurer by an

applicant for insurance is to be found in the

answer to the question whether reasonably careful

and intelligent underwriters would have regarded

the fact or matter, communicated at the time of

effecting the insurance, as substantially

increasing the chances of loss insured against[,]

so as to bring about a rejection of the risk or the

charging of an increased premium." [Id. at 82,

quoting 29 Am Jur, Insurance, § 525.]

However, even under the seemingly more stringent Keys test,

there exists a genuine factual dispute whether decedent's

misrepresentations were "material."

6
206 Mich App 95; 520 NW2d 366 (1994).

7
We denied leave to appeal in Zulcosky. 448 Mich 929

(1995).

Defendant submitted an affidavit from one of its

underwriters in support of its claim that the

misrepresentations were material to its acceptance of the risk

or hazard assumed. The affiant stated that she would have

provided a policy at a higher premium had she known of the

1993 hospital visit when issuing the policy, hence a different

contract.

Plaintiff proffered evidence that one day after the 1993

hospital visit, medical tests ruled out a heart attack as the

cause of the decedent's chest pain. Also, about two weeks

later, decedent passed a cardiovascular stress test. It

showed that his level of cardiovascular fitness was above

average for someone his age.

Plaintiff also introduced an affidavit from Dr. John

Hall, the decedent's personal physician. In it, Dr. Hall

stated that decedent's health "did not change in anyway [sic]"

between the date he applied for the insurance policy and when

it was delivered.

A jury reasonably could conclude, on the basis of the

record, that a reasonable underwriter would have issued the

same policy to decedent even had he given it notice of his

hospitalization. It reasonably could conclude, also, that a

reasonable underwriter would not have charged an increased

premium.

The majority notes that the underwriter's affidavit was

"uncontradicted" in stating that defendant would have charged

a higher premium had it known of decedent's hospitalization.

It asserts, also, that plaintiff's evidence that the

decedent's health did not change is "altogether irrelevant."

Slip op at 12. This evidence leads it to conclude that a

reasonable jury could only find that defendant would have

charged an increased premium. Id. This conclusion

impermissibly invades the province of the factfinder by

resolving an unsettled question of fact.

I disagree that the affidavit from defendant's

underwriter precludes a finding that a genuine factual dispute

exists here whether defendant would have charged an increased

premium. First, as the majority observes, the Keys test for

materiality is an objective inquiry. See Keys, supra at 82.

Thus, the evidence from defendant's underwriter, while

relevant, is not dispositive. Instead, the question is what a

reasonable underwriter would have decided had it known of the

misrepresented facts when it issued the policy of insurance.

Id. In this regard, I find evidence that the decedent's health

did not change during the prepolicy period very relevant. It

challenges the credibility of the affiant. See generally,

McDaniels v American Bankers Ins Co of Florida, 227 AD2d 951,

952; 643 NYS2d 846 (1996). The affiant did not assert that the

mere fact of the hospitalization would have occasioned an

automatic premium increase irrespective of whether there was

a change in the applicant's health.8 The affiant did not

indicate that she had been informed that there had been no

change in decedent's health within two months after the

hospitalization.

Moreover, plaintiff introduced evidence questioning the

veracity of the defendant's underwriter's assertions in the

affidavit. Specifically, plaintiff proffered evidence that

his 1993 hospitalization was not due to a heart attack and

that he passed a cardiovascular stress test shortly after the

hospitalization Also, he showed that his health did not

change between the date he applied for the insurance policy

and the date it was delivered. Therefore, the affidavit does

8
The majority asserts that "the undisputed evidence

presented to the trial court made clear that the correct

information would have led the insurer to charge an increased

premium, hence a different contract." Slip op at p 11. The

correct information was that, at the time of and after the

1993 hospitalization, no test or medical opinion evidenced

that defendant had had a heart attack. The affiant based her

conclusion that the defendant would not have entered into the

insurance contract on her belief, stated in the affidavit,

that the decedent "had been admitted to Sparrow Hospital in

December 1993 complaining of shortness of breath, chest pains

and a probable heart attack . . . ."

Hence, the affiant's reference to charging an increased

premium was based on inaccurate or incomplete information.

Also, it did not state that any hospitalization, regardless of

the triviality of its cause, would have given rise to a

different contract having been offered.

not stand unchallenged. See Meyer v Blue Cross & Blue Shield

of Minnesota, 500 NW2d 150, 153 (Minn App 1993).

In Meyer, the defendant's underwriter testified that the

defendant would have denied coverage had it known of the

insured's physical condition. The court found that a question

of fact existed on the issue, nonetheless. It stated that

"materiality is a fact question based on the objective facts

of the particular case, and '[a] jury is not required to

accept even uncontradicted testimony if improbable or if

surrounding facts and circumstances afford reasonable grounds

for doubting its credibility.'" Id. at 153, quoting Blazek v

North Am Life & Casualty Co, 251 Minn 130, 137; 87 NW2d 36

(1957).

The same is true respecting defendant's self-serving

affidavit in support of the motion for summary disposition.

Surely the majority would not assert that any affidavit by its

underwriters, if not directly refuted, would eliminate a fact

question on materiality. By way of hypothetical example,

assume that questions in the insurance application asked the

applicant, "Do you use tobacco in any form other than

cigarettes?" "Did you ever use tobacco in any other form?"

Assume that the applicant answered "No" and that, between the

date he submitted the application and received the policy, he

smoked a cigar in celebration of a newborn child. Assume,

also, that he did not inform the insurer of that fact. Assume

that, in subsequent litigation, the insurer's underwriter

submitted an affidavit in support of the insurer's motion for

summary disposition. Assume he asserted that the insurer

would not have issued the insurance policy to the applicant

had it known about the cigar. Would that assertion, if not

directly rebutted, require a finding, as a matter of law, that

the failure to disclose the cigar was a material

misrepresentation?

In Brown v Pointer,9 this Court expressed its agreement

with the proposition that summary disposition is inappropriate

where a factual assertion in a movant's affidavit depends on

the affiant's credibility. In particular, it stated:

[W]here the truth of a material factual

assertion of a movant's affidavit depends on the

affiant's credibility, there inheres a genuine

issue to be decided at a trial by the trier of fact

and a motion for summary judgment cannot be

granted. Arber v Stahlin, 382 Mich 300, 309; 170

NW2d 45 (1969); Durant v Stahlin, 375 Mich 628,

647-648; 135 NW2d 392 (1965). [Id. at 354.]

In this case, plaintiff's evidence of the state of

decedent's health after the hospitalization afforded

reasonable grounds to doubt the credibility of the

underwriter's affidavit. Thus, plaintiff created a triable

fact question whether defendant would have charged an

9
390 Mich 346; 212 NW2d 201 (1973).

increased premium had it known of the hospitalization that,

decedent's physician said, showed no change in decedent's

health. See Skinner v Square D Co, 445 Mich 153, 161; 516

NW2d 475 (1994), "[t]he court is not permitted to assess

credibility, or to determine facts on a motion for summary

judgment."

Moreover, the court should be cautious in concluding that

no factual dispute exists solely on the basis of an

"uncontradicted" affidavit from an insurance company's

underwriter. See Gibbons v John Hancock Mut Life Ins Co, 227

AD2d 963, 964; 643 NYS2d 847 (1996); Volunteer State Life Ins

Co v Richardson, 146 Tenn 589; 244 SW 44 (1922); 6 Couch,

Insurance, 3d, § 82:7, p 82-15.

In Volunteer State L Ins Co, the Tennessee Supreme Court

articulated well the concerns associated with accepting as

dispositive statements from insurance companies regarding the

materiality of a misrepresentation:

It is not to be left to the insurance company

to say after a death has occurred that it would or

would not have issued the policy had the answer

been truly given. It is true the practice of an

insurance company with respect to particular

information may be looked to in determining whether

it would have naturally and reasonably influenced

the judgment of the insurer, but no sound principle

of law would permit a determination of this

question merely upon the say so of the company

after the death has occurred. [244 SW 49 (emphasis

added).]

When reviewing the ruling on defendant's motion for

summary disposition, we construe the facts in the light most

favorable to plaintiff. That, coupled with the reasoning

already set forth, leads me to conclude that the fact issue

concerning the materiality of decedent's misrepresentations

should be resolved by the trier of fact. Summary disposition

in defendant's favor, therefore, was improper.

III. Conclusion

I would hold that, because decedent failed to update his

health information, his application contained

misrepresentations on the date the insurance policy was

delivered. Thus, because a genuine factual dispute exists

regarding whether the misrepresentations were material, I

would affirm the Court of Appeals conclusion that summary

disposition for defendant was improper.

CAVANAGH, J., concurred only in the result reached by

KELLY, J.

Oade v. Jackson National Life Insurance

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