APPEAL from the Circuit Court of Madison County; the Hon.
CLAYTON R. WILLIAMS, Judge, presiding.
MR. JUSTICE GEORGE J. MORAN DELIVERED THE OPINION OF THE COURT:
This action was brought to recover under a life insurance policy which had lapsed and was reinstated shortly before the insured's death. In a bench trial in the circuit court of Madison County, the court entered judgment for the plaintiff in the amount of $9620 as to count I of the complaint which alleged general liability under the contract of insurance. At the close of plaintiff's case, the court granted defendant's motion for a directed verdict as to count II of the complaint, which alleged fraudulent misrepresentations on the part of defendant's agent. Both parties have appealed.
The facts of the case are as follows: The decedent, Clarence Beck, was insured by the defendant under a life insurance policy for $9620. The insured did not make the quarterly premium payment due in March of 1971, and one month later the policy was cancelled for nonpayment. The decedent sought to reinstate the policy in an application dated May 12, 1971. Contained in the reinstatement application was the following provision:
"IT IS HEREBY DECLARED: that all such persons are now in good health and free from any symptom of disease; and that within the past five years * * * they (1) have had no illness, injury or disease, (2) have not consulted or been treated by any physician or practitioner, or been confined in any hospital or institution * * * except:"
A box provided on the application indicating "no exceptions" was checked, and the space to provide details or explanations was left blank. Based on the application for reinstatement and the payment of the overdue premium, the policy was reinstated on June 4, 1971.
However, at the time of the application for reinstatement of the policy the decedent was in poor health. He had recently missed work due to congestion, a slight cough, and swelling of the ankles. On May 8, 1971, the decedent had seen a doctor who prescribed medication to relieve the swelling in the legs and shortness of breath. On May 15, 1971, he was hospitalized and as a result of tests, found to have been suffering from congestive heart disease and mild diabetes. The decedent was later released from the hospital and was under a doctor's care until his death on June 16, 1971, from a heart attack.
Plaintiff, decedent's wife and beneficiary under the life insurance policy, instituted this suit to recover the benefits under the policy. Defendant has maintained that it is excused from payment due to the insured's misstatement concerning his good health.
The only factual dispute in this case centers around the reinstatement application. Defendant's agent testified that after the Becks received the reinstatement offer, he received a call from Mrs. Beck concerning the reinstatement application. The agent stated that he told Mrs. Beck how to complete the application, including the medical information, and that she delivered the form to his home, signed by her husband but otherwise blank. He then completed the application in accordance with the information given him by Mrs. Beck that there were no changes in Mr. Beck's health.
On the contrary, Mrs. Beck testified she went to the agent's office on May 12, 1971, to pay the past due premium, but the agent did not have the application ready. She further testified that he brought a completed application to her home the following afternoon in order to obtain the signature of Mr. Beck. According to Mrs. Beck, the agent made no inquiries about Mr. Beck's health on either occasion.
It is obvious from the testimony of Mr. Beck's doctor that the deceased was not in good health at the time the application was submitted to the defendant. The statement in the application to the contrary was wholly false. Additionally, it is undisputed that this misrepresentation was material to the risk. The only remaining question, therefore, is which of the parties before the court must bear the responsibility of this material misrepresentation.
• 1 We cannot say that the judgment of the trial court in favor of plaintiff as to count I of her complaint was in error. The trial court was faced with two contradictory versions of the facts leading to the misrepresentation, and having the advantage of observation of both the direct and cross-examination testimony of these witnesses, accepted the plaintiff's testimony as true. Having carefully reviewed the record in this case, we cannot say that this finding of fact was against the manifest weight of the evidence, and therefore we decline to substitute our judgment for that of the trial court. Stilwell v. Continental Illinois National Bank & Trust Co., 31 Ill.2d 546, 202 N.E.2d 477.
Defendant insurer contends further, however, that even if the misrepresentation as to the deceased's health was made by its agent, and not the decedent, the policy is voidable because the deceased, in signing the application for reinstatement, was bound by its contents and representations as his own. We cannot agree.
• 2 We believe that where an agent of the insurer completes an application for insurance without propounding the questions therein to the insured, in the absence of collusion with the insured, the insurer is estopped from asserting any misrepresentations as a defense in an action for payment under the policy. This position finds support from several authorities on insurance law. For example, in Appleman's Insurance it is stated:
"* * * an insurer waives or is estopped to rely on representations contained in an application where the agent fills in the application without propounding any of the questions to the insured. Where an agent assumes the responsibility for answering the questions asked in the application, and answers falsely or incorrectly without the applicant having made any statements in connection therewith or knowing the manner in which they were answered, the insurer will be ...