No one is smarter than life. Complex and unpredictable situations can get the better of anyone, no matter how smart.
Asking a question like "Why do smart people fail?" suggests that someone can become so smart as to avoid failure completely. Or to get to the point, that failure can somehow always be avoided. This is not a healthy attitude, or a good question.
Better questions would be:
"How can I prepare and properly handle failure?"
"What can I do to minimize the loss of a failure and maximize the gain?"
Perhaps, as has been already suggested, smart people fail more than "dumb" people not because they are constantly crushed and afraid of failure, but because they have learned how to manage failure so well, that it hardly affects them in the same way it would affect someone who "isn't smart enough" to properly deal with it.