B-140476, MAR. 27, 1963

B-140476, MAR. 27, 1963

TO F. RUSSELL MILLIN, ESQUIRE:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 22, 1963, ENCLOSING FOR OUR INFORMATION A THERMOFAX COPY OF LETTER OF JANUARY 17, 1963, ADDRESSED TO MR. JOHN HARRY WIGGINS, ASSISTANT UNITED STATES ATTORNEY, BY THE KANSAS CITY LIFE INSURANCE COMPANY, KANSAS CITY 41, MISSOURI, AND REQUESTING ANY ADDITIONAL SUGGESTIONS REGARDING THE INDEBTEDNESS INVOLVED.

IT IS STATED IN THE LETTER OF JANUARY 17, 1963, THAT ON THE BASIS OF A REPORT OF THE AMERICAN SERVICE BUREAU MADE AT THE TIME OF THE ISSUANCE OF THE POLICY AND IN VIEW OF THE FACT THAT THE MILITARY INSTALLATION AUTHORIZED THE ALLOTMENT FOR THE PERIOD SEPTEMBER 1947 THROUGH 1954, THE INSURANCE COMPANY HAS CONCLUDED THAT CHARLES JOHN MCCOURT, THE INSURED, IS A REAL PERSON. CONSEQUENTLY, THEY DECLINE TO MAKE PAYMENT OF THE INDEBTEDNESS AND STATE THAT THEY WILL CONTEST PENDING LITIGATION. THAT REPORT INDICATED, AMONG OTHER THINGS, THAT PRIVATE CHARLES J. MCCOURT WAS AT THE TIME 19 YEARS OF AGE, WAS OF ANGLO-SAXON EXTRACTION, AND WAS ENGAGED IN GENERAL LABORING DUTIES. ACCORDING TO THE AVAILABLE EVIDENCE OF RECORD, IT IS QUESTIONABLE WHETHER THE REPORT WAS ADEQUATE AND THOROUGH FOR THE PURPOSE INTENDED. AS SHOWN IN OUR LETTER OF MARCH 17, 1960, B- 140476, TO THE KANSAS CITY LIFE INSURANCE COMPANY, NEITHER THE DEPARTMENT OF THE ARMY NOR THE DEPARTMENT OF THE AIR FORCE WAS ABLE TO LOCATE ANY RECORD OF SERVICE OF A CHARLES JOHN MCCOURT, WHOSE ARMY SERIAL NUMBER IS 17186119.

WHILE IT APPEARS THAT SOMEONE DID APPLY TO THE NORTHERN CALIFORNIA AGENCY OF THE KANSAS CITY LIFE INSURANCE COMPANY FOR A POLICY ON AUGUST 5, 1947, IN THE NAME OF CHARLES JOHN MCCOURT, IT SEEMS EQUALLY CLEAR THAT A SERVICEMAN WITH THAT NAME DID NOT SIGN THE APPLICATION FOR INSURANCE SINCE THE ONLY PERSON OF RECORD WITH THAT NAME WHO WAS A MEMBER OF THE ARMY OR THE AIR FORCE HAD A DIFFERENT SERIAL NUMBER, PLACE AND DATE OF BIRTH, AND FATHER, THEN WAS CLAIMED BY THE INSURED. THIS IS FURTHER SUBSTANTIATED BY THE FACT THAT NO PERSON WITH THAT NAME WAS PAID PAY AND ALLOWANCES AT THAT TIME AT HAMILTON FIELD, CALIFORNIA, THE PLACE THE INSURED STATED WAS HIS MILITARY POST OF DUTY. THE FOREGOING STATEMENTS ARE BASED ON EXTENSIVE SEARCHES OF OFFICIAL RECORDS AND NO FURTHER RECHECKING IS BELIEVED WARRANTED. THE FOLLOWING DETAILED SUMMARY OF THE APPARENT MATERIAL FALSE REPRESENTATIONS APPEARING IN THE INSURANCE AND ALLOTMENT APPLICATIONS SIGNED IN THE NAME OF CHARLES JOHN MCCOURT IS FURNISHED FOR YOUR INFORMATION:

INSURANCE APPLICATION

1. QUESTION 2. THE ADDRESS 1173 CLAY STREET, BRONX 17, NEW YORK APPEARS TO BE FICTITIOUS. AN EXAMINATION OF THE "BRONX ADDRESS TELEPHONE DIRECTORY," DATED DECEMBER 26, 1947, SHOWS THAT THE HOUSE NUMBERING SEQUENCE ON CLAY AVENUE (NO CLAY STREET IS SHOWN), BRONX, BEGINS WITH NUMBER 1151, WITH A SHOWING OF 1170, 1171, 1174, 1175, ONWARD, BUT NO 1173. THE IDENTICAL LISTING APPEARS IN THE SAME DIRECTORY DATED JANUARY 7, 1963. THE CLASSIFIED TELEPHONE DIRECTORY FOR THE BRONX INDICATES THAT THE HOUSES ON THE 1100 BLOCK OF CLAY AVENUE ARE IN POSTAL ZONE NO. 56, NOT 17.

2. QUESTIONS 4, 5, AND 6. OUR EXAMINATION OF PAYROLLS FOR HAMILTON FIELD, CALIFORNIA (467TH AAFBU), RESULTED IN A NEGATIVE FINDING OF A CHARLES J. MCCOURT AS HAVING BEEN STATIONED AT THAT FIELD EITHER IN AUGUST OR SEPTEMBER 1947.

3. QUESTIONS 7, 8, AND 9. IT HAS BEEN ESTABLISHED BY ARMY RECORDS THAT NO CHARLES JOHN MCCOURT, DATE OF BIRTH SEPTEMBER 27, 1928, AND BORN IN NEW YORK CITY, WAS IN THE MILITARY SERVICE ON AUGUST 5, 1947.

4. QUESTIONS 16, 17 AND 18. THE RECORDS OF NEW YORK CITY DO NOT SUPPORT THE STATEMENTS OF THE APPLICANT THAT HE WAS BORN IN NEW YORK ON SEPTEMBER 27, 1928. SUCH RECORDS REFLECT ONLY THE BIRTH ON SEPTEMBER 28, 1929, OF A "JOHN MCCOURT" WITH A SHOWING OF LAWRENCE MCCOURT AS HIS FATHER.

5. QUESTION 23. STATEMENT THAT ARMY ALLOTMENT WOULD CONSTITUTE PREMIUM PAYMENT IS FALSE SINCE THE APPLICANT HAD NO MILITARY STATUS AND, HENCE, COULD NOT INITIATE AN ALLOTMENT FOR PRIVATE INSURANCE PREMIUM PAYMENTS.

6. QUESTION 25. ARMY RECORDS DO NOT REFLECT ANY PAY DEDUCTIONS FOR NATIONAL SERVICE LIFE INSURANCE ON THE ACCOUNT OF A CHARLES JOHN MCCOURT, ARMY SERIAL NO. 17186119. INFORMAL INFORMATION FURNISHED BY THE VETERANS ADMINISTRATION, WASHINGTON, D.C., IS TO THE EFFECT THAT THEIR INSURANCE RECORDS SHOW ONLY ONE CHARLES JOHN MCCOURT, A FORMER ARMY MEMBER, ARMY SERIAL NO. RA 16229934, AS THE HOLDER OF A NATIONAL SERVICE LIFE INSURANCE POLICY (NO. V-7339651). ARMY RECORDS SHOW SUCH MEMBER'S DATE OF BIRTH AS MARCH 15, 1928, AND HIS FATHER'S NAME AS CHARLES MCCOURT.

7. BENEFICIARY. WILLIAM J. MCCOURT IS SHOWN AS FATHER AND BENEFICIARY. THE APPLICANT'S ANSWERS TO QUESTIONS ON THE FORM SHOW THAT HE WAS UNDER 18 YEARS OF AGE WHEN HE ENTERED MILITARY SERVICE AND IT SEEMS REASONABLE TO ASSUME IN SUCH CIRCUMSTANCE THAT HIS FATHER WOULD HAVE BEEN LIVING AT THE ADDRESS SHOWN IN THE APPLICATION, 1173 CLAY STREET. AS INDICATED ABOVE, THAT ADDRESS APPEARS TO BE FICTITIOUS.

8. REFERENCES. THE APPLICANT FURNISHED ONLY ONE OF THE THREE CONTEMPLATED REFERENCES AND EVEN THEN HE FURNISHED THE NAME OF A PERSON WHO MAY BE NONEXISTENT. CONCERNING THE ADDRESS "151 OXFORD ST., BRONX, N.Y.' SHOWN FOR SUCH PERSON, THE ADDRESS TELEPHONE DIRECTORIES MENTIONED IN ITEM 1 ABOVE LIST ONLY THE HOUSE NUMBERS 3199 TO 3644 FOR OXFORD AVENUE (NOT OXFORD STREET), BRONX, AND THE NAME "WILLIAM RIDGE" IS NOT LISTED WITH ANY OF SUCH HOUSE NUMBERS.

ALLOTMENT OF PAY NOTIFICATION FORM

1. QUESTION 5. SERIAL NO. 17186119 WAS ASSIGNED TO A PERSON OTHER THAN THE APPLICANT, ONE WILLIAM B. BAUMAN.

2. QUESTION 24. THE ONLY MILITARY MEMBER NAMED CHARLES MCCOURT WHO WAS ASSIGNED TO THE 467TH ARMY AIR FORCE BASE UNIT, HAMILTON FIELD, CALIFORNIA, ON AUGUST 4, 1947, WAS ONE CHARLES T. MCCOURT, SERIAL NO. AF 11158080, WHOSE DATE OF BIRTH IS SHOWN BY THE RECORDS AS JULY 12, 1929.

FROM THE FOREGOING, IT WILL BE SEEN THAT ALMOST EVERY STATEMENT OF FACT CONTAINED IN THE ABOVE APPLICATIONS, WHICH IS SUBJECT TO VERIFICATION ON THE BASIS OF INFORMATION AVAILABLE TO US, IS FALSE.

ON PAGES 370 AND 371, VOLUME 12, APPLEMAN ON INSURANCE LAW AND PRACTICE, IT IS STATED IN PERTINENT PART, AS FOLLOWS:

"SECTION 7258. CONFLICT OF LAWS.

"A STATUTE LIMITING THE EFFECT OF A WARRANTY HAS APPLICATION TO A POLICY MADE IN THAT STATE. IT IS CLEAR THAT A LOCAL STATUTE DEALING WITH MISREPRESENTATIONS HAS APPLICATION TO A FOREIGN COMPANY DOING BUSINESS WITHIN THE STATE, AND IT CANNOT WITHDRAW ITSELF FROM THE OPERATION OF SUCH STATUTE BY A PROVISION IN ITS POLICY TO THE CONTRARY. * * *

"GENERALLY, THE VALIDITY OF DEFENSES OF EQUITABLE ESTOPPEL BY MISREPRESENTATIONS AND CONCEALMENT IS DETERMINED BY THE LAW OF THE PLACE OF CONTRACT. IF THE POLICY IS ISSUED IN ONE STATE TO A RESIDENT OF THAT STATE, THE STATUTES OF THAT JURISDICTION CONTROL THE EFFECT TO BE GIVEN MISREPRESENTATIONS.' (CASE CITED IN FOOTNOTE IS JOHN HANCOCK MUT. LIFE INS.CO. V. YATES, 57 S.CT. 129, 299 U.S. 178, 81 L.ED. 106).

UNDER THE RULE THUS STATED, IT WOULD SEEM THAT SINCE THE INSURANCE CONTRACT WAS ENTERED INTO BY THE PARTIES CONCERNED IN SAN FRANCISCO, CALIFORNIA, THE LAWS OF CALIFORNIA WOULD GOVERN AS TO THE LEGALITY OF THAT CONTRACT AND THE EFFECT AND MATERIALITY OF THE MISREPRESENTATIONS MADE IN THE INSURANCE APPLICATION. THE PERTINENT CALIFORNIA STATUTES DEALING WITH CONCEALMENT AND MISREPRESENTATIONS IN INSURANCE CONTRACTS, AS SHOWN IN DEERING'S CALIFORNIA CODES--- INSURANCE, DIVISION 1, PART 1, CHAPTER 3, ARE AS FOLLOWS:

"ARTICLE 1. CONCEALMENT

"SECTION 331. EFFECT. CONCEALMENT, WHETHER INTENTIONAL OR UNINTENTIONAL, ENTITLES THE INJURED PARTY TO RESCIND INSURANCE.

"SECTION 332. REQUIRED DISCLOSURES. EACH PARTY TO A CONTRACT OF INSURANCE SHALL COMMUNICATE TO THE OTHER, IN GOOD FAITH, ALL FACTS WITHIN HIS KNOWLEDGE WHICH ARE OR WHICH HE BELIEVES TO BE MATERIAL TO THE CONTRACT AND AS TO WHICH HE MAKES NO WARRANTY, AND WHICH THE OTHER HAS NOT THE MEANS OF ASCERTAINING.

"SECTION 334. DETERMINATION OF MATERIALITY OF FACT CONCEALED. MATERIALITY IS TO BE DETERMINED NOT BY THE EVENT, BUT SOLELY BY THE PROBABLE AND REASONABLE INFLUENCE OF THE FACTS UPON THE PARTY TO WHOM THE COMMUNICATION IS DUE, IN FORMING HIS ESTIMATE OF THE DISADVANTAGES OF THE PROPOSED CONTRACT, OR IN MAKING HIS INQUIRIES.

"ARTICLE 2. REPRESENTATION

"SECTION 358. FALSITY: WHAT CONSTITUTES. A REPRESENTATION IS FALSE WHEN THE FACT FAILS TO CORRESPOND WITH ITS ASSERTIONS OR STIPULATIONS.

"SECTION 359. SAME: EFFECT. IF A REPRESENTATION IS FALSE IN A MATERIAL POINT, WHETHER AFFIRMATIVE OR PROMISSORY, THE INJURED PARTY IS ENTITLED TO RESCIND THE CONTRACT FROM THE TIME THE REPRESENTATION BECOMES FALSE.

"SECTION 360. MATERIALITY. THE MATERIALITY OF A REPRESENTATION IS DETERMINED BY THE SAME RULE AS THE MATERIALITY OF A CONCEALMENT.'

IT WOULD SEEM THAT THERE SHOULD BE NO QUESTION CONCERNING THE MATERIALITY OF AT LEAST SOME OF THE MISREPRESENTATIONS CONTAINED IN THE INSURANCE APPLICATION AND IN VIEW OF THE ABOVE PROVISIONS OF THE STATE LAW THERE APPEARS TO BE AMPLE AUTHORITY FOR THE KANSAS CITY LIFE INSURANCE COMPANY TO RESCIND POLICY NO. 1118291, ISSUED IN THE NAME OF CHARLES JOHN MCCOURT, WITHOUT JUDICIAL PROCEEDINGS, ON THE GROUND OF INTENTIONAL FALSE REPRESENTATIONS WHICH HAD THE EFFECT OF MISLEADING THEM IN THE ISSUANCE OF SUCH POLICY. SUPPORT FOR THIS CONCLUSION WILL BE FOUND IN THE CASE OF COHEN V. PENN MUTUAL INS.CO., 312 P.2D 241 (CAL. 1957), IN WHICH IT WAS HELD THAT THE INSURER HAD THE RIGHT TO KNOW ALL THE APPLICANT KNEW RELATING TO SPECIFIC QUESTIONS CONTAINED IN THE INSURANCE APPLICATION. LEGAL AUTHORITY FOR PROPOSED CANCELLATION OF THE POLICY WILL BE FOUND IN THE CASE OF DECAMPOS V. STATE COMP.INS. FUND, 265 F.2D 617 (CAL. 1954), WHICH STANDS FOR THE PROPOSITION THAT MATERIAL FACTS INTENTIONALLY CONCEALED OR FALSE REPRESENTATIONS MADE IN REFERENCE TO THEM WITH INTENT TO MISLEAD INSURER IS FRAUD, WHICH, AT HIS OPTION, AVOIDS THE POLICY. FURTHER SUPPORT THERE ARE THE CASES OF PIERRE V. METROPOLITAN LIFE INSURANCE CO., 70 P.2D 985 (CAL. 1937), AND CALIFORNIA-WESTERN STATES LIFE INS.CO. V. FEINSTEIN, ET AL., 101 P.2D 696, 131 A.L.R. 608 (CAL. 1940), HOLDING THAT ANSWERS TO QUESTIONS IN AN APPLICATION FOR LIFE INSURANCE ARE GENERALLY CONSIDERED TO BE MATERIAL REPRESENTATIONS OF FACT, WHICH IF FALSE WILL VITIATE THE CONTRACT. SEE ALSO, AMERICAN MUTUAL LIABILITY INS.CO. V. GOFF, 281 F.2D 689 (1960) AND TELFORD V. NEW YORK LIFE INS.CO., 69 P.2D 835 (CAL. 1937).

WE INVITE YOUR ATTENTION TO CHAPTER 266 "REPRESENTATIONS" IN APPLEMAN ON INSURANCE LAW AND PRACTICE. IN SECTIONS 7297 AND 7299 THE FOLLOWING IS STATED:

"SECTION 7297. FRAUD. MANY COURTS HAVE ADOPTED THE DOCTRINE THAT, IN ORDER FOR AN INSURER TO AVOID LIABILITY UPON THE GROUND OF MISREPRESENTATION, IT MUST SHOW FRAUD ON THE PART OF THE INSURED, USUALLY CONSISTING OF KNOWINGLY OR WILFULLY MAKING FALSE STATEMENTS WITH THE INTENTION OF DECEIVING OR DEFRAUDING THE INSURER. THIS HAS BEEN HELD THE TEST EVEN THOUGH THE POLICY WAS ISSUED WITHOUT A MEDICAL EXAMINATION. * * *" (CASES CITED IN FOOTNOTE INCLUDE SHAW V. IMPERIAL MUT. LIFE AND BENEFIT ASS-N, 41 P.2D 574, 4 CAL.APP.2D 534 (1935), AND KAHN V. COMMERCIAL UNION FIRE INS.CO. OF NEW YORK, 60 P.2D 177, 16 CAL.APP.2D 42 (1936) (

"SECTION 7299. FRAUD. MATTERS CONSTITUTING LEGAL FRAUD. FRAUD, EITHER ABSOLUTE OR LEGAL, MAY AVOID THE POLICY. SOME FEW CASES HAVE APPARENTLY IMPLIED THAT THE MERE MAKING OF A FALSE ANSWER MAY CONSTITUTE LEGAL FRAUD EVEN THOUGH MADE IN GOOD FAITH OR ACCORDING TO HIS BELIEF OR UNDERSTANDING. IT WOULD SEEM MORE PROPER TO ARRIVE AT SUCH A FINDING WHERE THE INSURED INTENDS TO MISLEAD THE INSURER, WHERE THE INSURED KNEW OR MUST HAVE BEEN AWARE OF SUCH FALSITY, OR WHERE THE MATTER WAS SUCH THAT THE INSURER MUST NECESSARILY REGARD IT AS MADE ON PERSONAL KNOWLEDGE. * * " (CASES CITED IN FOOTNOTE INCLUDE GENERAL ACCIDENT, FIRE AND LIFE ASSUR. CORPORATION, LIMITED, OF PERTH, SCOTLAND V. INDUSTRIAL ACCIDENT COMMISSION, 237 P. 33, 196 CLA. 179 (1925) (

IT IS EVIDENT THAT THE INSURANCE COMPANY'S CASE FOR CANCELLING THE POLICY AB INITIO IS STRENGTHENED BY THE FACTS THAT THE APPLICANT FOR THE INSURANCE POLICY DID NOT TENDER A CASH PREMIUM PAYMENT AT THE TIME HE EXECUTED THE APPLICATION OR MAKE ANY CASH PREMIUM PAYMENTS THEREAFTER (HAD HE BEEN A SERVICEMAN, UNDER NORMAL CIRCUMSTANCES HE WOULD HAVE CONTINUED THE PREMIUM PAYMENTS AFTER HIS DISCHARGE FROM THE MILITARY SERVICE) AND HAS NOT AT ANY TIME AFTER THE INITIAL INTERVIEW COMMUNICATED WITH THE INSURANCE COMPANY. THESE FACTS WHEN CONSIDERED IN CONJUNCTION WITH THE SPURIOUS APPLICATION SHOW AN INTENT TO DEFRAUD THE INSURANCE COMPANY. THAT COMPANY APPARENTLY IS IN POSSESSION OF NO EVIDENCE TO ESTABLISH THE EXISTENCE OF A WILLIAM J. MCCOURT, THE BENEFICIARY, AND IT WOULD BE MOST REMARKABLE IF THEY NOW HAVE ANY INTENTION OF PAYING ANY BENEFIT UNDER THE POLICY AFTER HAVING BEEN INFORMED BY OUR LETTER OF MARCH 17, 1960, OF THE FRAUDULENT ASPECTS OF THE INSURANCE APPLICATION. IN SUCH CIRCUMSTANCE, IT IS BELIEVED THAT JUDGMENT CAN BE OBTAINED FOR THE FULL AMOUNT OF THE PREMIUMS PAID BY THE GOVERNMENT TO THE KANSAS CITY LIFE INSURANCE COMPANY. THEIR ASSERTION THAT THE LAW COMPELS THEM TO MAINTAIN THE POLICY IN FORCE DOES NOT APPEAR TO HAVE MUCH LEGAL WEIGHT IN THE FACE OF POSITIVE EVIDENCE SHOWING THAT THE INSURANCE POLICY WAS OBTAINED UNDER FALSE PRETENSES AND UPON WRITTEN MISREPRESENTATIONS.

THE PRESENTATION OF THE SPURIOUS ALLOTMENT APPLICATION TO THE ARMY APPEARS TO HAVE MANY OF THE ELEMENTS OF A FALSE CLAIM AGAINST THE UNITED STATES. UNDER 18 U.S.C. 287 SUCH ACTION WAS AN OFFENSE PUNISHABLE BY FINE OR IMPRISONMENT. SEE ALSO 18 U.S.C. 1001. ACCORDINGLY, UNDER THE PURVIEW OF THOSE STATUTES IT MAY BE YOUR DESIRE TO REFER THE MATTER TO THE FEDERAL BUREAU OF INVESTIGATION FOR THE PURPOSE OF ASCERTAINING THE IDENTITY OF THE PERSON WHO SIGNED THE ALLOTMENT FORM IN THE NAME OF CHARLES JOHN MCCOURT WHICH STARTED THE CHAIN OF EVENTS RESULTING IN THE GOVERNMENT BEING DEFRAUDED.

CONCERNING THE QUESTION RAISED BY THE INSURANCE COMPANY AS TO THE POSSIBILITY OF A CONFUSION IN THE SERIAL NUMBERS WHICH MIGHT BE CLEARED UP BY A RECHECK OF THE RECORDS, WE AGAIN REFER YOU TO OUR LETTER OF MARCH 17, 1960, TO THEM IN WHICH WE POINTED OUT THAT AFTER EXTENSIVE SEARCH NEITHER THE AIR FORCE NOR THE ARMY HAS BEEN ABLE TO LOCATE ANY RECORD OF A CHARLES JOHN MCCOURT OTHER THAN THE ONE WHO SERVED UNDER ARMY SERIAL NO. 16229934.

IN AN ATTEMPT TO SECURE ADDITIONAL INFORMATION WHICH MAY HAVE A BEARING IN THIS MATTER, WE HAVE WRITTEN TO THE AIR FORCE AND THE ARMY FOR COPIES OF DOCUMENTS BEARING THE SIGNATURES OF CHARLES JOHN MCCOURT, ARMY SERIAL NO. RA 16229934, AND CHARLES T. MCCOURT, AIR FORCE SERIAL NO. 11158080. SHOULD IT BE DETERMINED THAT THE SIGNATURE OF EITHER OF THOSE VETERANS BEARS A STRONG SIMILARITY OR IS IDENTICAL TO THE ONE APPEARING ON THE APPLICATIONS, THE PAPERS BEARING THE SIGNATURES WILL BE REFERRED TO THE EXAMINER OF QUESTIONED DOCUMENTS, TREASURY DEPARTMENT, WASHINGTON, D.C., A GOVERNMENT HANDWRITING EXPERT, FOR AN OPINION AND YOU WILL BE ADVISED IN THE EVENT THE OPINION IS IN THE AFFIRMATIVE.