Friez v. National Old Line Insurance Company

703 F.2d 1093 (9th Cir. 1983)

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Nature of the Case

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Facts

The policy application, completed on December 15, 1977, contained the following health question: 'Do you know of any impairment, disease, or disorder now existing in your health or physical condition?' The insured, Mr. Friez, answered 'No.' The application also contained a 'good health' clause which provided: 'I understand and agree that there shall be no insurance in force until the policy hereby applied for is issued and delivered to me during my lifetime and good health and the first premium is paid by me in which event the insurance shall be effective as of the Date of issue stated in the policy.' The policy was issued on January 5, 1978. Mr. Friez died on February 21, 1978. D refused to pay the death benefits specified in the policy; it returned the premiums paid and canceled the policy. D argued that the policy was void under Montana law on two grounds. First, pursuant to the 'good health clause,' the insured's good health at the time the policy was delivered was a condition precedent to coverage, and that, because at the time the policy was issued the insured was suffering from an undiagnosed terminal cancer, the policy was void. Second, D argues that Mr. Friez made a misrepresentation in his answer to the health question because, nine years prior to the time of application, he had been treated for ulcers. The court ruled for P. D appealed.