In the case of Penn Mutual Life Insurance Co. v. Austin (1897), the U.S Supreme Court ruled in favor of Austin, upholding a lower court's decision that an insurance policy could not be invalidated on grounds of misrepresentation if the insurer had not made any inquiries into statements made by the insured party at time of application. The dispute arose when Penn Mutual refused to pay out a life insurance claim following Mr. Austin’s death, alleging he had misrepresented his health condition during application for coverage and thus violated terms leading to forfeiture under Pennsylvania law. However, it was found that Penn Mutual did not make any investigations or ask further questions regarding Mr.Austin's health despite having opportunities to do so before issuing him with a policy; hence they were deemed as having accepted his answers as satisfactory and true.

In the dissenting opinion for Penn Mutual Life Insurance Co. v. Austin, Justice Harlan argued that the majority's decision was inconsistent with previous rulings and principles of equity. He contended that a life insurance policy should be considered as an entirety, not separated into its cash surrender value and unearned premium components when determining insolvency liabilities under Pennsylvania law. The justice believed this approach would provide greater protection to policyholders by ensuring they receive their full benefits in case of insurer bankruptcy rather than being limited to recovering only part of their claims from the insolvent estate. Moreover, he criticized the majority's interpretation of state law as overly narrow and contrary to legislative intent, asserting it unjustly favored other creditors over policyholders who had paid premiums in good faith expecting complete coverage.