INSURANCE - FALSE STATEMENTS IN APPLICATION - IMPLIED KNOWLEDGE OF INSURANCE COMPANY AS GROUND FOR WAIVER

In a suit by the beneficiary on a life insurance policy, the insurance company defended on the ground that the insured knowingly had made false statements material to the risk in his application and therefore the company had a right to rescind the contract. The insured\u27s false statements were to the effect that he had never been refused insurance on a former application, whereas in fact the John Hancock Insurance Co. had rejected his application in the preceding year. Both the John Hancock Co. and the defendant insurer were members of a common agency which gave information to its members concerning all applicants for life insurance. When the John Hancock Co. had rejected the insured\u27s application, this agency had sent out information that said company had created a record against him. Held, for the beneficiary on the ground that the insurer had waived the false statements by issuing the policy when it had within its possession information which, if pursued with reasonable diligence, would have led to knowledge of the fact that the insured had made false statements in his application. Columbian Nat. Life Ins. Go. v. Rodgers, (C. C. A. 10 th, 1940) 116 F. (2d) 705, cert. den. (U. S. 1941) 61 S. Ct. 838