Goff

This is an appeal by the American Mutual Liability Insurance Company from a declaratory judgment imposing liability on it under a professional liability insurance policy for any judgment obtained against the named insured, Dr. E. Vernon Ashley, in a then pending malpractice action filed in California Superi- or Court by the heirs of Bette Jo Goff, deceased. Judgment was eventually entered in the state court against the said insured in the amount of $75,932.00. The instant action was brought by the above heirs and the insured after appellant had withdrawn from Dr. Ashley’s defense during the state trial and tendered notice of rescission of the policy. 1 Jurisdiction is conferred by diversity of citizenship and 28 U.S.C.A. § 2201 .

The two main questions presented by this appeal are whether appellant is entitled to rescind its policy because of Dr. Ashley’s purported misrepresentation or concealment of material facts in applying for the policy of insurance.

The facts, so far as pertinent, reveal that Dr. Ashley practiced medicine in Hollywood, California as an associate of one Dr. A. E. Carter during the latter part of 1954. In November of that year, Mrs. Adelstein, a patient,…