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Lotman v. Security Mutual Life Insurance Co.

April 26, 1973

BERNARD LOTMAN AND CHARLES LOTMAN
v.
SECURITY MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, APPELLANT



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

Author: Van Dusen

Before VAN DUSEN and ADAMS, Circuit Judges and BARLOW, District Judge

Opinion OF THE COURT

VAN DUSEN, Circuit Judge.

After the district court entered its September 23, 1971 order denying defendant's motion for judgment n.o.v. and for new trial,*fn1 the defendant, Security Mutual Life Insurance Company of New York (hereafter Security Mutual), filed this appeal from a February, 1971 judgment entered on the verdict of a jury.

The plaintiffs,*fn2 co-beneficiaries of a life insurance policy issued to the decedent*fn3 by Security Mutual, brought this action to recover the proceeds under the decedent's policy. Security Mutual refused payment claiming three separate defenses: (1) the insured obtained her policy by fraud and misrepresentation; (2) her death from barbiturate poisoning was the result of suicide; and (3) the acceptance by the plaintiffs of a tendered check representing a return of the premiums paid under the policy constituted a mutual recision and waived any claim by the plaintiffs for proceeds under the policy.

A jury found in favor of the plaintiffs on the first two of these defenses. The claim of mutual recision was reserved by agreement between the parties for separate determination by the court on the basis of the deposition testimony of the plaintiffs. After completion of the trial, the court held that the plaintiffs' conduct did not constitute mutual recision and did not amount to a waiver of their claim to the proceeds of the life insurance policy.

The defendant raises three contentions in its appeal. Two contentions deal with the court's charge to the jury: that it erred in its instructions that the defendant had the burden of proving that the false answers given by the insured in the application for her insurance policy were made in bad faith for the purpose of deceiving it; and that the court erred in its instructions on the presumption of Minnie Glazer's sanity. Security Mutual also reasserts its claim that the conduct of the plaintiffs constituted an agreement of mutual recision of the policy.

On March 31, 1966, the insured applied to Security Mutual for a $25,000 life insurance policy. On April 2, 1966, Dr. Kermit Snyder, who performed medical examinations for Security Mutual, went to Minnie Glazer's apartment and completed the medical application and examination required for insurance. (N.T. 118).*fn4 It is clear that false and material misstatements were made by insured and that Security Mutual would not have issued the policy had correct information been provided.*fn5 The most significant of the misrepresentations in the answers given by the insured during the medical examination were as follows:

"Part II.

"2. To the best of your knowledge and belief have you ever had or been treated for: A. Epilepsy, convulsions, mental or nervous disorder?

"3. Have you: A. Had one or more electrocardiograms?

C. Been in a clinic, hospital or sanitorium for treatment, observation or diagnosis?

"5. Have you within the past 5 years consulted a physician or surgeon for any examination or ...


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