BRUNILDA TORRES vs. FIDELITY AND GUARANTY LIFE INSURANCE COMPANY.

DREBEN, J. This case involves the interrelationship between Sections 124 and 186 of G. L. c. 175. More particularly, the question before us is whether a life insurance policy, issued without previous medical examination, is defeated by a misrepresentation which increases the risk of loss to the insurer but is not found to be wilfully false, fraudulent, or misleading. A judge of the Superior Court held that the life insurance policy issued to the plaintiff's husband may not be so defeated. We affirm.

On April 18, 1986, the plaintiff's husband, Erickson Torres (Torres), assisted by an insurance broker, completed an application for life insurance with the defendant, naming the plaintiff as primary beneficiary. The broker filled out the application by asking Torres a series of questions and filling in

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or checking off his answers; thereafter Torres signed the application. A policy was issued by the defendant without a medical examination. On January 27, 1987, Torres died while the policy was in full force. Relying on G. L. c. 175, Section 186, see note 2, infra, the defendant denied coverage, alleging that Torres had made material misrepresentations of fact in the application which resulted in an increased risk of loss to the company. The judge, while finding that Torres's failure to disclose a history of Hepatitis B symptoms and liver problems had increased the risk of loss to the insurer, [Note 1] ruled that Section 124, see note 3, infra, was controlling and that the insurer had failed in sustaining its burden under that statute of proving that the statements were wilfully false, fraudulent, or misleading. He thus concluded that Section 124, which specifically deals with life insurance without a medical examination, is the governing statute and that Section 186, which pertains to all types of policies, does not apply.

Section 186, set forth in the margin, [Note 2] adopted in 1878, and applicable to all insurance policies, provides that a misrepresentation is not material unless it is made with actual intent to deceive or unless it increases the risk of loss. Section 124, a later provision, adopted in 1892, also set out in the margin, [Note 3] provides that where a life insurance policy is issued

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without a previous medical examination, the statements in the application are binding on the insurer unless it proves such statements were wilfully false, fraudulent, or misleading.

As the judge pointed out, if Section 186 also applies to life insurance policies issued without medical examination, Section 124 would be virtually meaningless. Under the defendant's construction, Section 124 would apply only in those limited circumstances, if any, in which the words "wilfully false, fraudulent or misleading" (Section 124) were found to have a broader scope than a "misrepresentation . . . made with actual intent to deceive." (Section 186) "Such [an ineffective] result ought not to be imputed to the Legislature in enacting a statute unless no other result can be reached reasonably." Boston & Maine R.R. v. Hartford Fire Ins. Co., 252 Mass. 432, 436 (1925). "It must be presumed that the Legislature intended to accomplish something substantial by the enactment of the later statute. It must be presumed also in this connection that the Legislature was aware of [Section 186]." Id. at 435.

Moreover, where two provisions are in conflict, [Note 4] if a specific provision (life insurance policy issued without medical examination) is enacted subsequent to a more general rule, the specific and not the general provision applies. 2B Singer, Sutherland Statutory Construction Section 51.02, at 121 (5th ed. 1992).

Our interpretation of the statutory scheme is also confirmed by the legislative history of Section 124. Under G. L. c. 175, Section 17, the Commissioner of Insurance is required to report annually to the Legislature. His Thirty Third Annual Report (1888), part two at vii, discussed industrial insurance, [Note 5]

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then a new and growing branch of the business of life insurance, and specifically recommended that:

"if . . . risks are taken without a medical examination, alleged misrepresentation by the applicant -- who in a large number of these cases is made to understand next to nothing of the statement he is asked to sign -- as to his physical condition, ought not to be permitted as a bar when a claim arises. Misrepresentation by the agent and misunderstanding by the assured now lead, under the methods thus pursued, to almost innumerable cases of hardship and injustice."

The Commissioner repeated this recommendation in his Thirty Fourth Annual Report, part two at vii, in 1889, and again in his Thirty Sixth report, part two, in 1891, when he wrote, at viii, that he:

"would repeat and emphasize the suggestion, twice before made in these reports, that when any company effects insurance upon a life, without medical examination, it should be forbidden from setting up, as a bar to any claim, alleged misrepresentation by the insured as to his family history or his physical condition at the time the policy was issued . . . ."

Since Section 186, see St. 1878 c. 157, Section 1, see also St. 1887, c. 214, Section 21, was already on the books when the Commissioner made his recommendation, it is evident that the Legislative intent, based on the Commissioner's report, in enacting Section 124 was to preclude the insurer from raising any defenses not contained in Section 124. See also Taylor, The Life Insurance Law of Massachusetts, 19 B.U.L. Rev. 53, 112 (1939), where the author, an associate counsel of the John Hancock Mutual Life Insurance Company, wrote:

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"The later statute [Section 124] in effect carves an exception out of the earlier one [Section 186] and renders it inapplicable to cases within the ambit of the later one. Both statutes made a fraudulent statement a defence, but the later one makes no reference to an increase in the risk of loss . . ."

Based on our analysis, we hold that the defenses of Section 186 are not available to the insurer and, since it did not sustain its burden under Section 124, [Note 6] the judgment is affirmed.

So ordered.