Chapter — The Casuist
Case VI: Defrauding an Insurance Company: a Case of Restitution
A father wished to have his son who was not in very good physical condition, insured in his labor union, and fearing he would not be passed by the examining physician, sent another son to undergo the physician's examination, and a policy of several thousands of dollars was taken out. After paying premiums on this policy for several years, the father became worried about the honesty of his method of procuring the policy. He says that in his anxiety he went to a priest and told him the whole story of the policy and the priest told him it was all right. Recently the son died and the father applied for the money, but has received none as yet, and it is rumored that on account of the great number of recent labor troubles, the union in question will, in all likelihood, be unable to satisfy the claim. In case the union does settle the claim, either in whole or in part, will the father not have to forfeit all that he paid in for premiums, as he paid the premiums to perpetuate an evident fraud? And what responsibility rests on the priest, to whom the father says that he went for advice, and who told him that it was all right to continue the payments of the premiums?
ANSWER. When the father wished to have his son insured in his labor union, he wished to enter into a true and burdensome contract with the labor union. This contract is known in moral theology as an aleatory contract, in which what is given or promised by one or the other contracting party depends upon an uncertain event. The contract depends on an uncertain contingency, like the throw of the dice. Now one of the conditions of an aleatory contract is that the risk to be taken be made known honestly and without equivocation.
If the person assuming the risk is knowingly deceived by the other party to the contract, regarding the substance of the risk, then the contract is void by the law of natural justice, since the person assuming the risk was deceived as to the substance of the contract. In a contract for life insurance, the party seeking insurance must not fraudulently conceal or distort the risk assumed by the company or labor union, but must submit to a physical examination and answer honestly and without equivocation all legitimate questions concerning his physical condition past and present. If while undergoing the examination, the applicant for life insurance conceal some disease or ailment, the presence of which greatly increases the risk assumed by the company, then he wilfully deceives the company regarding something that is substantial to the contract and forfeits all claim to any money paid him, and must repair any damages that the company may have suffered by his action. In the case submitted to us, there has been practised a complete deception on the labor union. One person has been substituted for another. The labor union was made to believe, by fraud, that it was taking a risk on the life of A, while in reality it was taking a risk on the life of B. The union had no knowledge of B, nor of any risk connected with B's life, and, in fact, did not make any contract conditioned by anything connected with B. Therefore, in truth, the labor union had no contract at all with the father of A and B, and is under no obligation whatever to pay him any money, for the death of his son. Therefore the father may not keep the insurance money, if the labor union eventually pays him any.
But now there arises a second question, concerning the premiums paid to the labor union by the father. Must the father forfeit these, because they were paid to perpetrate a fraud?
No, he must not. The labor union has no title or claim to these premiums. The only claim the company could have to them, would be as payment for carrying the risk on the son's life. But, as there was no valid contract from the beginning, and as the labor union was not carrying any risk on the life of the son, it can have no claim to this money. We mean, of course, in foro interno, ante judicis sententiam. We are trying this case in the court of conscience. If, therefore, the father were to receive the insurance on the life of his son, he would be justified in subtracting the amount of the premiums, before making restitution to the labor union. But he would be obliged to reimburse the union for any expenses they incurred on his son's account, as, for example, fees for medical examinations and certificates, etc. This, however, might be considered cancelled by the interest that the paid-in premiums earned for the labor union.
We now come to the third question. The father says that when his conscience began to trouble him about the honesty of his method of having his son's life insured, he went to a priest and laid the whole matter before him, and the priest told him that "it was all right." The father had been paying the premiums on the policy for several years, when he went to consult the priest. And it is now some three years since he sought the priest's advice.
Supposing now that the man really put the case before the priest, as it is stated here, and that the priest understood him rightly and told him that the means he used to procure the policy were honest (suppositions that we find considerable difficulty in making), what would be the priest's liability before God? How much restitution would he be bound to make, if any?
The question is treated in moral theology under the heading "de restitutione ob consilium doctrinale nocivum."
Whoever, by virtue of his office, is authorized to give advice, and through culpable ignorance, or evil intent, gives counsel that proves harmful either to the person seeking the advice or to a third person, he is bound in conscience to repair all the damages that result from his wrong advice. As to this there is no doubt, be the person giving the advice or counsel a physician, or be he a lawyer, or be he a priest, provided only that he give the advice or counsel by virtue of his office, in the things pertaining to his profession, and of which the public has a right to demand of him that he know what is right and wrong, what is lawful and what is forbidden. The people have a strict right to require of a professional man, who by virtue of his profession is authorized by society to give counsel to those seeking it and to protect the interests of all concerned, that he possess the knowledge his office calls for and that he exercise reasonable diligence in the use and application of his knowledge. If at any time he should realize that his professional knowledge is insufficient for the right exercise of his office, and that harm may result to his clients or to other persons, by advice or counsel proceeding largely from unjustifiable ignorance, he is bound in conscience to suspend the exercise of his office or profession, until he acquire the necessary knowledge, and if he fail to do this, he sins against his conscience, and lays himself liable for all the damage that may result from his lack of knowledge of his profession. Now the priest who assumes the care of souls, is bound in conscience to know the ordinary teachings of moral theology on justice and rights, what is honest and dishonest in the ordinary business relations of life, when a man is bound to make restitution, etc. He can scarcely be ignorant of these things and still have the cure of souls, without grievous sin. His ignorance of the common laws of justice, in his actual position, will ordinarily amount to a gravis culpa. And therefore he must repair the damages resulting from it. Now, in the case which occupies us at present, if the labor union should pay the insurance to the father of the dead boy, then when the father, less the amount of the premiums, has returned the money to the labor union the case is settled. But suppose that the labor union is unable to pay any part of the insurance. What is the priest's liability in that event? It is very simple. If, in reality, the father of the dead boy would have ceased paying the premiums, had the priest so advised him, and allowed the policy to lapse, then the priest is bound to pay to the father the amount of the premiums from the time he advised him wrongly up to the time of the son's death. For we consider his advice to have been the efficacious cause of the continuance of these payments, and therefore of that much damage to the father. And as the advice was sought and given by virtue of his office as a priest, the advice was consilium doctrinale nocivum, vi OFFICII datum, ex-ignorantia graviter culpabili, and the giver of it must repair the damages resulting from it.