JEFFREY LEE OADE V JACKSON NATL LIFE INSUR
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Michigan Supreme Court
Lansing, Michigan 48909
____________________________________________________________________________________________
C hief Justice
Opinion
Justices
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
2
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
questions
about
application
application
an
further
required
required
to
certain
health
applicant's
status.
That
the
applicant
that
answers
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 . . . .
3
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
medical
had been treated by a physician or other
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.
4
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
September 1, 1994.
for
payment
of
from
a
heart
attack
on
Plaintiffs submitted a claim to defendant
the
insurance policy.
suddenly
death
benefits
provided
in
the
life
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.
had
violated
Defendant declared that, because Mr. Oade
conditions
precedent
to
create
coverage, the policy never became effective.
5
insurance
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.
circuit
court
granted
summary
disposition
in
The
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
reversed in an unpublished per curiam decision.3
Appeals
recognized
that
parties
may
mutually
of
Appeals
The Court of
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).
6
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.
The
4
Court
of
Appeals
ANALYSIS
relied
463 Mich 864 (2000).
7
on
the
materiality
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.
The
APPLICABILITY
touchstone
of
the
“misrepresentation.”
“misrepresentation”
“representation,”
in
MCL 500.2218
OF
statute’s
MCL
as
a
turn,
applicability
500.2218(2)
“false
is
is
defines
a
representation.”
statutorily
defined
a
A
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
8
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
conclude that he did.
purposes
of
MCL
500.2218(2).
We
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:
* * *
9
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
misrepresentations
Appeals
were
not
decision
material
that
and
Mr.
that
Oade’s
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
10
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
MCL
plain
language
of
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
misrepresented facts.
have
been
issued
notwithstanding
the
The Court of Appeals contrary decision
11
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.
Contrary
to
the
RESPONSE
TO THE
dissent,
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.”
However,
the
focus
of
inquiry
Post at 15.
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
12
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.
While
500.2218
we
agree
applies
with
here,
CONCLUSION
the
we
Court
of
conclude
Appeals
that
that
Mr.
MCL
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 ,
concurred with YOUNG , J.
13
TAYLOR ,
and
MARKMAN ,
JJ.,
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,
No. 114786
v
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
NW2d
Ins
Co,
Affidavits,
460
Mich
pleadings,
446,
454;
597
depositions,
28
(1999).
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"
"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
2
and
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.
1
The application required him to provide
Random House Webster's College Dictionary (1995).
3
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.
application
In
for
Aaron,
the
insurance
defendant
with
answered
plaintiff
2
in
Guardian
his
Life
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).
4
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
constituted continuing representations.
in
his
application
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).]
5
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).
6
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
7
"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).
8
Defendant
underwriters
submitted
in
an
affidavit
of
support
from
claim
its
one
of
that
its
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.
9
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
impermissibly
invades
premium.
the
province
Id.
of
This
the
conclusion
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.
challenges the credibility of the affiant.
It
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
10
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.
11
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
cigarettes?"
you
use
tobacco
in
any
form
other
than
"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.
12
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
reasonable
grounds
after
to
underwriter's affidavit.
fact
question
9
whether
the
doubt
hospitalization
the
credibility
afforded
of
the
Thus, plaintiff created a triable
defendant
would
390 Mich 346; 212 NW2d 201 (1973).
13
have
charged
an
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
"uncontradicted"
exists
affidavit
solely
from
an
on
the
basis
insurance
of
an
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).]
14
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,
misrepresentations
delivered.
on
his
the
date
application
the
insurance
contained
policy
was
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.
15
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