Marcella A. MacKenzie v. The Prudential Insurance Company of America
1969 U.S. App. LEXIS 12117, 411 F.2d 781 (1969)
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Rule of Law:
An insurance applicant has a continuing duty to disclose material changes in health that occur between the date of the application and the delivery of the policy. The failure to do so constitutes a material misrepresentation that may render the policy void.
Facts:
- On August 10, 1964, Jerome F. MacKenzie applied for a life insurance policy with Prudential Insurance Co. of America.
- In the application, MacKenzie stated he had never been treated for heart trouble or high blood pressure, which was true at the time.
- The application included a provision stating that all answers must continue to be true and complete as of the date of the policy's delivery.
- After applying but before the policy was delivered, MacKenzie was injured and sought medical help on September 16, 1964.
- During this medical visit, a doctor discovered MacKenzie had high blood pressure (170/100) and prescribed medication for it.
- On the evening of September 17, 1964, Prudential's agent delivered the policy to MacKenzie.
- MacKenzie accepted the policy but did not disclose his recent doctor's visit or his newly diagnosed high blood pressure.
- In August 1966, MacKenzie died.
Procedural Posture:
- The plaintiff, MacKenzie's beneficiary, brought an action against Prudential in a Kentucky state court after Prudential refused to pay the policy proceeds.
- Prudential removed the case to the United States District Court based on diversity of citizenship.
- The district court granted summary judgment in favor of the defendant, Prudential.
- The plaintiff appealed the district court's decision to the United States Court of Appeals for the Sixth Circuit.
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Issue:
Does an insurance applicant's failure to disclose a material change in health, which occurred after the application was submitted but before the policy was delivered, constitute a material misrepresentation sufficient to void the policy?
Opinions:
Majority - Combs, Circuit Judge
Yes, an applicant's failure to disclose a material change in health that occurs between application and delivery constitutes a material misrepresentation sufficient to void the policy. Under Kentucky law, a misrepresentation can void an insurance policy if it is either material to the risk or fraudulently made. The court determined that the change in MacKenzie's health—the diagnosis of high blood pressure—was obviously material, meaning the insurer would have acted differently had it known the truth. Citing the Supreme Court's decision in Stipcich v. Metropolitan Life Ins. Co., the court held that an applicant has a duty, rooted in the 'most elementary spirit of fair dealing,' to inform the insurer of any new facts that make the original application no longer true while the insurer is still deliberating. MacKenzie's failure to disclose his high blood pressure reading was therefore a material misrepresentation, which provided Prudential with a valid defense to a suit upon the policy.
Analysis:
This case affirms the doctrine of continuing representation in insurance law, establishing that an applicant's representations of health are not a one-time event but are considered to be ongoing until the policy is delivered. It places a significant affirmative duty on the applicant to volunteer information about material health changes, even if not specifically asked by the agent at the time of delivery. This decision protects insurers from assuming risks they were not made aware of and underscores that the contract is based on the applicant's state of health at the moment the policy becomes effective, not just at the time of the initial application.
