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Ng Gan Zee v Asian Crusader Life Assurance Corporation

EMERGENCY RECIT: Kwong Nam applied for life insurance. Upon his death, his widow
presented a claim for payment of face value of policy but insurer refused on the ground of
insureds misrepresentation in the insurance application. WON misrepresentation has misled
insurer into entering the contract. No. Misrepresentation is an affirmative defense, and insurer
failed to produce evidence showing fraudulent intent on the part of the insured. Presumption of
good faith when insured made such answers still stand. Moreover, insurers failure to make any
further inquiry on matters which as shown on the application, were not or imperfectly answered,
constitutes as waiver of its right to know such material facts. Insurer liable.
Kwong Nam applied for a 20 year endowment insurance on his life for the sum of 20,000, with
his wife, Ng Gan Zee, as beneficiary. Asian Crusader approved the application and issued the
policy. All premiums had been regularly paid, until Kwong Nam died of cancer of the liver with
Widow Ng Gan Zee thereafter presented a claim to the insurer for payment of the face value of
the policy, but the latter denied the claim on the ground that the answers given by the insured to
the questions in the application were false (Has any life insurance company ever refused your
application for insurance or for reinstatement of a lapsed policy or offered you a policy different
from that applied for? If, so, name company and date. Insured: No. & that he was operated on for
a tumor of the stomach and that the tumor was hard and of the size of a hens egg, when in fact
he was operated on for peptic ulcer and involved the excision of a portion of the stomach).
Insurance Commissioner found no material concealment, and directed the insurer to pay the full
face value of the policy, but insurer still refused.
ISSUE: WON the insurer was, because of the insureds misrepresentation, misled or deceived
into entering the contract?- No
Concealment exists where the assured had knowledge of a fact material to the risk, honesty,
good faith, and fair dealing requires that he should communicate it to the assurer, but he
designedly and intentionally withholds the same. Further, the concealment must, in the absence
of inquiries, be not only material, but fraudulent, or the fact must have been intentionally
Assuming that the aforesaid answer given by the insured is false, as claimed by the appellant.
Sec. 27 of the Insurance Law, nevertheless requires that fraudulent intent on the part of the
insured be established to entitle the insurer to rescind the contract. Misrepresentation as a
defense of the insurer to avoid liability is an affirmative defense. The duty to establish such a
defense by satisfactory and convincing evidence rests upon the defendant. The evidence before
the Court does not clearly and satisfactorily establish such defense.
Moreover, Sec. 32 of the Insurance Law provides that where, upon the face of the application, a
question appears to be not answered at all or to be imperfectly answered, and the insurer issues
a policy without any further inquiry, they waive the imperfection of the answer and render the
omission to answer more fully immaterial. The fact of the matter is that the insurer in this case
was too eager to accept the application and receive the insured's premium without making
further inquiries. It would be inequitable now to allow the defendant to avoid liability under the