Stipcich v. Metropolitan Life Insurance

Background

A widow sued as beneficiary under her husband Anton Stipcich’s life policy after he died of a recurrent duodenal ulcer. He applied for insurance, then consulted two physicians and was told surgery was necessary. He told Coblentz, the company’s local agent, and Coblentz had requested the second visit. At trial the insurer argued the husband failed to inform the company of the new illness before the policy was delivered. The trial court excluded evidence that the husband had told Coblentz and directed a verdict for the insurer.

Reasoning

The Court considered whether telling the company’s soliciting agent counted as notifying the insurer. Oregon law makes the person who solicits an application the company’s agent for matters related to the application and the policy. The Court concluded that, under that statute and basic fairness, a disclosure of a material change in health to the soliciting agent could be treated as communication to the company. The Court rejected the insurer’s reliance on a printed clause saying only written facts in the application would bind the company, because the disclosure occurred after the application had been sent to the home office and could not reasonably have been written there.

Real world impact

The Court reversed and sent the case back for a new trial so the widow may offer the excluded evidence about what the husband told the agent. On retrial the truth of certain written answers in the application can be examined, and the final outcome may still depend on those application answers.