Insured Rescinding A Policy

Here is a curious 1933 opinion from the Texas Court of Commission of Appeals.  It is styled, American National Insurance Co. v. Huey.

This is a case wherein an insurance agent is alleged to have misrepresented the terms of an insurance policy wherein the insured was to receive monthly benefit.  This was not what the policy provided.  When the claim for benefits was denied, the insured filed suit alleging the misrepresentations by the agent.

It appears from the record and findings of the jury that, Huey made an application for insurance to the insurance company.  As actually written and signed, this application called for the issuance of a life insurance policy for $2,000, providing for double indemnity in case of accidental death, and waiver of premiums in case of total disability.  On March 12, 1929, a policy of insurance issued by such company was delivered to Huey in all things conforming to the application as written.

It further appears that, at the time the above application was made, the soliciting agent who secured the same represented to Huey that he was signing an application for a life, health, and accident policy, which would provide for a monthly compensation of $86.10 in case of total disability from an accident.  Huey believed and relied on such representation at the time.  However, Huey did not read the read or examine the policy.

The policy contains the following stipulation:

“Power to Modify. No agent can make, alter or discharge this contract or extend the time for payment of premiums, nor can this contract be varied or altered or its conditions waived or extended in any respect, except by the written agreement of the Company, in compliance with the law of the state in which the contract is issued, signed by the President, or one of the Vice Presidents or Secretaries, whose authority will not be delegated.”

There is no evidence that the insurance company, the agent, or anybody else prevented Huey from reading the policy.

In making its ruling against Huey, the court stated:

“If the application for insurance does not set forth all the provisions which the policy is to contain, and the agent represents that the policy will contain certain lawful stipulations, the policy must contain them, or the insured will not be bound to accept it.  In such case, however, it is incumbent upon the applicant immediately on receipt of the policy to notify the company of his refusal to accept the policy.”