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committee of the grand lodge at its recent lodge had not refused to pay the amount meeting decided that in their judgment claimed under the certificate. The correctthere was no liability under the beneficiary ness of the statement made by Mr. Taylor certificate of Wilbur N. Taylor, but that, in the application as to his age had not yet without admitting any liability, they would been determined. It was a matter for furbe willing to refund to the widow of the de- ther investigation. The lodge had been put ceased all amounts paid by Mr. Taylor to upon inquiry by the conflicting statements the grand lodge as assessments. This which appeared in the application and the amount will be approximately $200. proofs of death. But it was still possible that the discrepancy was the result of an honest error, and that it could be explained away. We are unable to see how it can fairly be claimed that a mere suggestion of this character can be considered as a waiver on the part of the lodge of the right to avail itself of a material misrepresentation, which at that time had not been established even to the satisfaction of the lodge. The writing of this letter was perfectly consistent with an intention to elect to consider the certificate as forfeited, and furnished no basis for an estoppel. Frazer v. Ætna L. Ins. Co. 114 Wis. 510, 90 N. W. 476; Freedman v. Fire Asso. of Philadelphia, 168 Pa. 249, 32 Atl. 39; Boyd v. Vanderbilt Ins. Co. 90 Tenn. 212, 25 Am. St. Rep. 676, 16 S. W. 470; 4 Joyce, Ins. § 3376.

Plaintiff declined to accept this proposition, and brought suit to recover the full amount of the beneficiary certificate. The trial court found that the statement of Taylor, made in the application, as to his age, was knowingly false and untrue; that Taylor was at the time of the application in his forty-seventh year, and was therefore ineligible to membership in the said lodge and not entitled to receive the beneficiary certificate; that the false statement was made for the purpose of procuring membership in the lodge and order, and for the purpose of procuring the beneficiary certificate; and ordered judgment for the defendant. The judge who made this order having gone out of office, a motion for a new trial was subsequently made before another judge, who granted a new trial upon the ground that the defendant had by its failure to properly tender back the money paid on as-risk, and is material as a matter of law. sessments waived its right to avail itself of the defense that the certificate was obtained by fraud. The appeal is from this order.

2. The understatement of his age by an applicant for life insurance increases the

Dolan v. Mutal Reserve Fund Life Asso. 173 Mass. 197, 53 N. E. 398; Wiberg v. Minnesota Scandinavian Relief Asso. 73 Minn. 297, 76 N. W. 37; Swett v. Citizens' Mut. Relief Soc. 78 Me. 541, 7 Atl. 394; Etna L. Ins. Co. v. France, 91 U. S. 510, 23 L. ed. 401; Marcoux v. St. John Baptist Benefi

ford F. Ins. Co. v. Moore, 13 Tex. Civ. App. 644, 36 S. W. 146; McCarthy v. Catholic Knights, 102 Tenn. 345, 52 S. W. 142;

100 Pa. 12; Lowe v. Union Cent. L. Ins. Co. 41 Ohio St. 273. The contract between Taylor and the defendant contained a provision that it should be "null and void forever" if it appeared that Taylor had made false statements in his application. The word "void" has been given different meanings. A contract may be void in the sense of be

1. There is no merit in the claim that the defendant waived its right to insist upon the forfeiture by the suggestion in the letter of January 22, 1904, that Mrs. Tay-cence Soc. 91 Me. 250, 39 Atl. 1027; Hartlor should employ someone with whom the defendant might consult with reference to the discrepancies found to exist as to the age of Mr. Taylor. The rule that an insur-United Brethren Mut. Aid Soc. v. White, ance company, by demanding that the insured do some act which by the terms of the policy he is required to ao upon demand of the insurer, is thereby estopped to claim a forfeiture upon grounds then known to it (Trippe v. Provident Fund Soc. 140 N. Y. 23, 22 L. R. A. 432, 37 Am. St. Rep. 529, 35 N. E. 316; Granger v. Manchester Fire Assur. Co. 119 Mich. 177, 77 N. W. 693;ing illegal; that is, prohibited by law and Titus v. Glens Falls Ins. Co. 81 N. Y. 410; Gibson Electric Co. v. Liverpool & L. & G. Ins. Co. 159 N. Y. 418, 54 N. E. 23), has no application upon the facts of this case. The officers of the lodge had no legal right, under | affirmative act of the party. But it may the certificate or the rules of the order, to also be void in the sense of being merely incall upon the beneficiary named in the cer- effective, of no force and effect; and this is tificate to employ an attorney. The sug- the meaning we attach to the words as used gestion was evidently made in a friendly in this contract. The words "null and void" spirit, for the purpose of advancing the in- in such a connection do not require constructerests of all parties, and making easier and tion. All that is necessary is to take them more satisfactory the investigation which in their natural and commonly accepted was then contemplated. At that time the sense. Taylor secured his membership by

incapable of ratification and enforcement. It may also in some connections be construed as merely meaning voidable; that is, in force and effect until repudiated by the

false statements, and the beneficiary certifi- | clearly established in our English jurispru cate which was issued to him never went dence that wherever the contract is void for into effect. It was simply null and void. gross and actual fraud on the part of the But it was of such character that it could assured, whether committed by himself or be revived by the lodge through its affirma- his agent, there shall be no return of tive action, or become enforceable through premium. 2 Marshall, Ins. p. 661; Chapthe operation of the doctrine of waiver or man v. Frazer, 3 Park. Ins. 218. After citestoppel. After the discovery of the fraud ing the exceptions to the general rule, Arthe lodge was not required to rescind the nould says: "There must, however, be accontract. It had merely to determine tual fraud on the part of the assured or his whether it would avail itself of the defense. agents thus to preclude him from recoverJohnson v. American Ins. Co. 41 Minn. 396, ing back the premium; a mere misrepresen399, 43 N. W. 59; Frazer v. Ætna L. Ins. Co. tation, made without actual fraud (i. e., supra; Connecticut Mut. L. Ins. Co. v. wilful intention to deceive), does not disPyle, 44 Ohio St. 19, 58 Am. Rep. 781, entitle the assured to a return of the pre4 N. E. 465. miums." 2 Arnould, Marine Ins. 7th ed. § 1256. In Feise v. Parkinson, 4 Taunt. 640, 14 English Ruling Cases, 530, Gibbs, J., said: "Where there is fraud there is no return of premium; but upon a mere misrepresentation, without fraud, where the risk never attached, there must be a return of premium." In Anderson v. Thornton, 8 Exch. 425, Baron Parke said: "With respect to the return of the premium there is no doubt in my mind that the plaintiffs would be entitled to recover it, as there was no fraud in the representation; if there had been, the case would be different." That the rule does not apply where there is actual fraud is also recognized in Henkle v. Royal Exch. Assur. Co. 1 Ves. Sr. 317 (per Lord Hardwicke); Long v. Allen, 4 Dougl. 276, 14 English Ruling Cases, 517; Colby v. Hunter, 3 Car. & P. 7; and Prince of Wales Asso. Co. v. Palmer, 25 Beav. 605. In a note to Feise Parkinson, 14 English Ruling Cases, 530, the learned editor says that "in a case of fraud, however, that is to say, where the insured has personally made or authorized a representation which is false to his knowledge, or been personally guilty of concealment of a material fact,—there is no doubt that he is debarred from claiming return of premium."

The general rule with reference to the right of the insured to have the premiums returned is stated by Lord Mansfield in Tyrie v. Fletcher, 2 Cowp. 666, in the following language: "Where the risk has not been run, whether its not having been run was owing to the fault, pleasure, or will of the insured, or to any other cause, the premium shall be returned, because a policy of insurance is a contract of indemnity. The underwriter receives a premium for running the risk of indemnifying the insured, and whatever cause it be owing to, if he does not run the risk, the consideration for which the premium or money was paid into his hands fails, and therefore he ought to return it." Although not expressly stated in all the cases which recognize the right to the return of the premium, there is a well-recognized exception by which the insurer is relieved from any duty to return the premium when it was induced to enter into the contract by the actual fraud of the insured. In this case the trial court found, in substance, that the untrue statement as to his age was knowingly made by the applicant for the fraudulent purpose of obtaining membership in the lodge. It was, then, a case of actual fraud, not a mere innocent or unintentional breach of warranty or conditions.

V.

Chancellor Kent says that "the premium paid by the insured is in consideration of the risk which the insurer assumes; and, if the contract of insurance be void ab initio, or the risk has not been commenced, the insured is entitled to a return of premium.

An examination of the English authorities shows that the exception to the general rule stated by Lord Mansfield is now as well established as the rule itself. It was for some time uncertain whether the English. . . The insurer retains the premium in courts would recognize a right to the return all cases of actual fraud on the part of the of the premium when the contract was ren- insured or his agent." 3 Kent, Com. p. 341, dered void ab initio by the fraud of the in- citing Cours de Droit Commercial sured. In Whittingham v. Thornburgh, 2 Maritime, iv. 98, 99. In a recent book on Vern. 206, De Costa v. Scandret, 2 P. Wms. insurance it is said: "When the risk has 170, and Wilson v. Ducket, 3 Burr. 1361, the never attached, the premium paid is always right to the return of the premium was rec-returnable, unless (a) the contract was renognized even in the case of gross fraud. dered void ab initio by the fraud of the inMiller, Elem. Ins. (1787) p. 531. But, as sured, or (b) the contract is illegal and the said by Marshall and repeated by Arnould: parties in pari delicto." After quoting the The point, however, agreeable to truer no-language of Lord Mansfield in Tyrie v. tions of justice and to good policy, is now Fletcher, supra, the writer says: "The rule

so stated, notwithstanding the eminent respectability of its origin, has not been accepted without qualification. Its terms are too broad. If the fault of the insured, to which the failure of the risk to attach was due, was wilful and fraudulent, the insurer may nevertheless retain the premiums; for the insured shall not profit by his own wrong. If the policy was void from its inception by reason of the untruth of any representation or warranty, the right of the insured to have again his premiums depends solely on the character of the misrepresentation,-if fraudulent, he cannot recover; but, if innocent, he may recover." Vance, Ins. p. 241. May says that the contract of insurance "is, moreover, a conditional contract; for, when no risk attaches, no premium is to be paid, or if paid, must, in the absence of fraud, be returned to the assured." 1 May, Ins. 3d ed. § 4. See also, 1 Wood, Ins. 2d ed. § 109; Angell, Fire & Life Ins. 2d ed. § 404; 2 Joyce, Ins. § 1398; 2 Phillips, Ins. 5th ed. § 1841; 2 Marshall, Ins. p. 652; 1 Parsons, Marine Ins. p. 560; 4 Current Law, p. 199; 2 Clement, Fire Ins. p. 538.

In Delavigne v. United Ins. Co. 1 Johns. Cas. 310, the court said: "Where a policy becomes void by a failure of the warranty, the insured is entitled to a return of the premium, if there be no actual fraud." Connecticut Mut. L. Ins. Co. v. Pyle, supra, was an action on a fire insurance policy. It was held that the policy was void and of no effect from the moment it was issued, because of the untrue statements made in the application, but that the insured was entitled to recover back the premiums he had paid. Mr. Justice Follett said: "the court thus held not only because the policy was void ab initio, but because it also found 'that all of said questions so erroneously answered were answered by the plaintiff, under an innocent misapprehension of the purport of the questions and the answers, and the answers that should have been made thereto, and without any intent to perpetrate a fraud of any kind upon the defendant.' There was no actual fraud, at least on the part of Pyle. On this policy no risk ever attached. The rule is different where the risk has attached or there is actual fraud." In Jones v. Insurance Co. of N. A. 90 Tenn. 604, 25 Am. St. Rep. 706, 18 S. W. 260, it was held that, where no risk has ever attached under a policy of fire insurance, the insurer must return the premium paid, provided the assured has been guilty of no fraud. Lurton, J., said: "The contract of insurance is a conditional one. If no risk attaches, no premium, in the absence of fraud, is earned. Where the risk never attached, and no risk was ever

run, the premium is to be returned, in case it has been paid and the assured was guilty of no fraud." In Himely v. South Carolina Ins. Co. 1 Mill, Const. 154, 12 Am. Dec. 623, the policy was held invalid because there had been a concealment of the facts necessary to the risk. The court said: "The fifth ground is that the policy was confirmed by the answer of the board that it would cover specie, and also by a refusal to return the premium. When they refused to return the premium they had discovered the fraud, and therefore had a right to retain it. 'In all cases of actual fraud on the part of the insured, committed either by himself or his agent, the underwriter shall retain the premium.'

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The well-considered case of Blaeser v. Milwaukee Mechanics' Mut. Ins. Co. 37 Wis. 31, 19 Am. Rep. 747, holds that such a contract is absolutely void. It was an action upon a policy of insurance on a building and its contents. The company defended on the ground that the plaintiff had fraudulently misrepresented the value of the property, and had wrongfully caused the fire by which the property was destroyed. Mr. Justice Cole said: "There is another portion of the charge excepted to which we deem it proper and necessary to notice, which is where the court instructed the jury that, although there might be misrepresentations in the application, yet the company could not avail itself of them in an action upon the policy, without first tendering back to the insured the amount of premium paid. The learned circuit judge held upon this point that the rule in regard to the rescission of contracts for fraud was applicable; that, when a party seeks to avoid a contract on that ground, he must put the other party to the contract back to the condition in which he stood prior to the transaction. This is undoubtedly a well-settled rule in regard to the rescission of contracts; but we think it has no application to the case before us, and for this reason: By the condition of the policy itself, any fraudulent misrepresentations of a fact material to the risk avoids the contract. It is not necessary that the company refund the premium in order to avail itself of this stipulation in the policy. The representations in the application constitute the basis upon which the risk is taken, and the policy declares that, if there is any misrepresentation or concealment, the insurance shall be void and of no effect. The company enters into the contract relying upon the truth of the representations; and, if it has been misled or deceived upon matters material to the risk, it may well say that no contract was ever made; that there was no concurrence of assent upon the same facts. In this case

the wife of the insured, participated with the agent of the insurance company with fraudulent intent in procuring a policy of insurance for her benefit upon the life of her husband. She signed his name without. his knowledge and consent to the examination form on the back of the application for the policy, which by the rules of the com

the insured declared that the several representations made in the application by way of answer to the questions asked were 'made warranties,' by which he was bound; and we know of no case which holds that, if the property is not as warranted, or there are fraudulent representations in a matter material to the risk, the company cannot avail itself of that defense unless it first ten-pany to which the policy was subject render back to the insured the premium paid. In Campbell v. New England Mut. L. Ins. Co. 98 Mass. 381, Mr. Justice Wells says: 'Representations to insurers, before or at the time of making a contract, are a presentation of the elements upon which to estimate the risk proposed to be assumed. They are the basis of the contract, its foundation, on the faith of which it is entered into. If wrongfully presented in any respect material to the risk, the policy that may be issued thereupon will not take effect. To enforce it would be to apply the insurance to a risk that was never presented.' These remarks are sufficient to show that the position of the defendant in attempting to defeat the action on the ground that fraudulent representations were made in the application is essentially different from that held by a party who seeks to rescind a contract on the ground of fraud.”

In Thompson v. Travelers' Ins. Co. 11 N. D. 274, 91 N. W. 75, the policy contained a provision that it "shall not take effect unless the first premium is actually paid while the insured is in good health." After the application was sent to the company, and before the policy was delivered and the premium paid, the applicant contracted a disease from which he soon died. The company first learned of these facts when the proofs of death were received. No attempt was made to return the premiums. In an action on the policy the court said: "The case is not parallel as to its facts with one where the premium was paid by an insured upon a policy which the insurer is endeavoring to cancel through an action in a court of equity. In such a case, a return or an offer to return everything of value received under the policy must be made at or before the commencement of the action. . In

this case the defendant is not seeking any affirmative relief. It seeks to establish that there never existed a policy of insurance in favor of the deceased in defendant's company, by reason of the fact that it was delivered under circumstances that by its own terms provided that it should not come into effect." American Cent. Ins. Co. v. Antram (Miss.) 38 So. 626. Fisher v. Metropolitan L. Ins. Co. 160 Mass. 386, 39 Am. St. Rep. 495, 35 N. E. 849, was an action brought to recover back the amount of premiums paid on a life insurance policy. The plaintiff.

dered it void. It was held that an action could not have been maintained upon the policy, and that if the plaintiff, in collusion with defendant's agent, intended to cheat the company or practise a fraud upon it, then the money she had paid the company was paid in pursuance to this fraudulent intention, and could not be recovered back. See also Trabandt v. Connecticut Mut. L. Ins. Co. 131 Mass. 167; Hoyt v. Gilman, 8 Mass. 336; Friesmuth v. Agawam Mut. F. Ins. Co. 10 Cush. 587; Lewis v. Phoenix Mut. L. Ins. Co. 39 Conn. 100; Schwartz v. Unit ed States Ins. Co. 3 Wash. C. C. 170, Fed. Cas. No. 12,505; Hearne v. New England Mut. M. Ins. Co. 20 Wall. 488, 22 L. ed. 395.

In Georgia Home Ins. Co. v. Rosenfield, 37 C. C. A. 96, 95 Fed. 358, the question of the duty of an insurance company to return the premium is given very full consideration. In United States L. Ins. Co. v. Smith, 34 C. C. A. 506, 92 Fed. 503, it had been held by the same court that "the general rule is that, if a risk never attaches under a policy, the premium is not earned, and, if paid, may be recovered, unless the insured has been guilty of fraud." In reference to the Smith Case Judge Lurton in the Rosenfield Case said: "It is true that the decision of the case did not turn upon the absolute necessity of a previous tender, inasmuch as the court found that there had been an unequivocal repudiation of liability before the death of the assured upon the ground of breach of warranty, and that during the trial a tender back of the premium had been made and rejected. This we held was a sufficient offer to repay the premium, if the repayment could have been legally demanded. An action by the assured to recover a premium paid, where the policy never attached and where no risk was run, will not lie when the contract was procured through the active fraud of the insured. This is well settled. .. If a policy be void ab initio,—that is, if the risk never attached and the insurer was at no time subject to liability, and the contract was not against law or public morals,--the insured may recover back all the premiums he may have paid, provided there was no fraud upon the part of the insured [citing Foster v. United States Ins. Co. 11 Pick. 85, and Clark v. Manufacturers' Ins. Co. 2 Woodb. & M. 472, Fed Cas. No. 2,829]. The analogy

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between a suit for rescission upon the ground of fraud and reliance upon fraud as a defense, when it is sought to enforce a contract void for fraud, is not perfect."

and

The claim that a party who has by false fraudulent representations secured membership in an order of this character has an absolute right to the return of the money which he has paid into its treasury upon the discovery of his fraud, to say the most, rests upon a very meager foundation of merit. Such a rule is an invitation to fraud. If all moneys thus voluntarily paid can be recovered or must be returned by the insurer as a condition precedent to pleading the fraud as a defense, a party who contemplates obtaining insurance by false representations may well feel that he is taking no chances of loss, but is entering upon a transaction in which he stands to gain large returns without any possibility of endangering his investment. If the fraud is never discovered, the beneficiary under the policy which will be issued to him will receive the full benefit of the contract. If it by chance is discovered, his estate will receive back all that has been paid by the guilty party, and the trouble and expense attending upon the transaction will be thrown upon the innocent party. As the beneficiary certificate upon which this action is brought was obtained by fraud, the lodge was not required to return what it had received for assessments as a condition of availing itself of the right to elect to treat the contract as void ab initio. The widow of the party who had obtained membership by fraudulent representations had no just claim to the money, and certainly it was not due to the party named as beneficiary in the certificate. Thompson v. Travelers' Ins. Co. supra.

The conclusion to which we have arrived is consistent with all the cases heretofore decided by this court. The effect of the active fraud of the applicant for membership in an order such as the defendant or for a policy in an ordinary insurance company was not considerea in Schreiber v. German-American Hail Ins. Co. 43 Minn. 367, 45 N. W. 708, or in any of the subsequent cases. There is high authority for the view that the insured is not entitled to recover the premiums paid where there is a breach of conditions and no fraud (Austin v. Mutual Fund Life Asso. 132 Fed. 555; Georgia Home Ins. Co. v. Rosenfield, supra); but we think that the weight of reason and authority is otherwise when the contract never went into effect. But it has never to our knowledge been held by this court that, even when there is no fraud on the part of the insured, the insurer is absolutely bound to seek the insured and return or make a technical tender of the premiums which have

been voluntarily paid before the insurer acquired knowledge of the breach of condition. In the Schreiber Case Chief Justice Gilfillan states that the question is not there determined. This case and First Nat. Bank v. Manchester Fire Assur. Co. 64 Minn. 96, 66 N. W. 136, rest upon the act of ratification after knowledge of acts done by the insurer before it acquired knowledge of the right to defend against the contract, which was inconsistent with an intent to elect to repudiate the obligation. In Mee v. Bankers' Life Asso. 69 Minn. 210, 72 N. W. 74, it appeared that the insurer clearly recognized the contract as in force after it had full knowledge of all the facts. The same is true of Perine v. Grand Lodge, A. O. U. W. 48 Minn. 82, 50 N. W. 1022. In Wiberg v. Minnesota Scandinavian Relief Asso. 73 Minn. 297, 76 N. W. 37, the insurer collected an assessment and received the money after knowledge of the right to forfeit the contract for nonpayment of an assessment. First Nat. Bank v. Manchester Fire Assur. Co. supra, follows the Schreiber Case, and there is nothing in the decision or the language of the court inconsistent with the rule that the question of waiver or election is one of intention. After the loss the insurer, in ignorance of the breach of conditions, had asserted its rights under the contract to certain salvage. No waiver could be based on this action (St. Paul F. & M. Ins. Co. v. Parsons, 47 Minn. 353, 50 N. W. 240); but it was held that after it had acquired knowledge it was bound to do all that it reasonably could do to place the assured in its former position. The failure "to make any effort to do this" after it was fully advised of its rights was held to be an affirmance and ratification of its previous act of taking possession of the salvage.

Had there been no fraud on the part of the applicant, the lodge might have been required, upon demand, to return the amount paid by Taylor as assessments, because the permanent retention of this money would have been inconsistent with an honest intent to treat the contract as void. The retention of the money would imply that the insurer had been subject to some liability, and it might well have been argued that it conclusively showed that there had been an election to treat the contract as valid. In the present case the acts and statements of the defendant show beyond any reasonable doubt that the lodge intended to elect, and did elect, to exercise its right to avail itself of the breach of condition. It certainly never did anything inconsistent with such an intention. Mr. Taylor died November 20, 1903, and the proofs of death from which the lodge obtained its first intima

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