In the case of John Hancock Mutual Life Insurance Co. v. Yates, 1936, the U.S Supreme Court ruled in favor of Mrs. Yates who was a beneficiary under her husband's life insurance policy issued by John Hancock Mutual Life Insurance Company (JHMLIC). The dispute arose when JHMLIC refused to pay Mrs.Yates claiming that Mr.Yates had misrepresented his health condition at the time of applying for insurance and hence they were not liable to pay any benefits after his death due to this misrepresentation. However, according to New York law where the policy was issued, an insurer cannot deny payment on grounds of misrepresentation if it does not discover and act upon it within two years from issuance date which JHMLIC failed to do so. Therefore, despite Mr.Yates' alleged misrepresentation about his health status during application process for life insurance coverage with JHMLIC , since company did not discover or take action against this within stipulated period as per state law; court held them accountable for paying out benefits owed under said policy post-death.

In the dissenting opinion for John Hancock Mutual Life Insurance Co. v. Yates, Justice Cardozo disagreed with the majority's ruling that a life insurance policy could be rescinded due to misrepresentation of age by the insured party. He argued that there was no evidence of fraudulent intent on behalf of Mrs. Yates when she misrepresented her age and therefore, it should not invalidate her claim to benefits under the policy after her death. Furthermore, he pointed out that even if such an error were made in good faith or through innocent mistake, it would still result in harsh consequences for beneficiaries who had no part in making them - which is contrary to public policy considerations and principles of equity and fairness inherent within contract law.