Obrázky stránek
PDF
ePub
[blocks in formation]

Insurance, § 370-construction of policy-incontestable clause-suicide. Under a policy of life insurance containing a two-year incontestable clause, and further providing that, in case the insured commits self-destruction within two years, the recovery shall be limited to the premiums paid, the failure of the insurer, after the suicide of the insured within two years from the date of the policy, to take affirmative action, within the two years limited by the incontestable clause, to contest and avoid the policy, does not make it liable absolutely for the amount of the policy with statutory penalty, together with the premium paid, but the incontestable clause is without application, and the rights of the beneficiary are fixed by the suicide clause:

[See annotation on this question beginning on page 549.]

APPEAL by plaintiff from a decree of the Chancery Court for Davidson County (Aust, Ch.) dismissing a bill filed to recover on a life insurance policy. Affirmed.

The facts are stated in the opinion of the court. Messrs. Hughes & Felts, for appellant:

The incontestability clause in the policy sued on, as affected by the statute (Acts 1907, chap. 457, § 1, ¶ 3), became operative two years from the date of the policy, and the policy thereupon became incontestable, irrespective of the prior death of the insured.

Humpston v. State Mut. L. Assur. Co. 148 Tenn. 439, 31 A.L.R. 78, 256 S. W. 438; Thistle v. Equitable Life Assur. Soc. 149 Tenn. 667, 261 S. W. 667; Monahan v. Metropolitan L. Ins. Co. 283 Ill. 136, L.R.A.1918D, 1196, 119 N. E. 68; Powell v. Mutual L. Ins. Co. 313 Ill. 161, 36 A.L.R. 1239, 144 N. E. 825; Priest v. Kansas City L. Ins. Co. 41 A.L.R. 1100, and note, 119 Kan. 23,

237 Pac. 938; Feierman v. Eureka L. Ins. Co. 279 Pa. 507, 32 A.L.R. 646, 124 Atl. 171; Jefferson Standard L. Ins. Co. v. McIntyre (C. C. A. 5th) 294 Fed. 886; Mutual L. Ins. Co. v. Hurni Packing Co. 31 A.L.R. 102, and note, 263 U. S. 167, 68 L. ed. 235, 44 Sup. Ct. Rep. 90; Missouri State L. Ins. Co. v. Cranford, 161 Ark. 602, 31 A.L.R. 93, 257 S. W. 66.

The true meaning of the incontestability clause is that, after it becomes effective, no defense will be interposed by reason of the terms, conditions, or stipulations of the policy contract, except those defenses reserved in the incontestability clause itself, in this case the nonpayment of premiums.

Union Cent. L. Ins. Co. v. Fox, 106

Tenn. 347, 82 Am. St. Rep. 885, 61 S. W. 62; Thompson v. Fidelity Mut. L. Ins. Co. 116 Tenn. 571, 6 L.R.A. (N.S.) 1039, 115 Am. St. Rep. 823, 92 S. W. 1098; Jackson v. Loyal Additional Ben. Asso. 140 Tenn. 501, 205 S. W. 318; Lavelle v. Metropolitan L. Ins. Co. 209 Mo. App. 330, 238 S. W. 504; Mutual L. Ins. Co. v. Hurni Packing Co. 31 A.L.R. 110, note; Northwestern Mut. L. Ins. Co. v. Johnson, 254 U. S. 101, 102, 65 L. ed. 159, 41 Sup. Ct. Rep. 47; Supreme Lodge, K. P. v. Overton, 203 Ala. 193, 16 A.L.R. 650, 82 So. 443; Hardy v. Phoenix Mut. L. Ins. Co. 180 N. C. 180, 104 S. E. 166; Sun L. Ins. Co. v. Taylor, 108 Ky. 408, 94 Am. St. Rep. 383, 56 S. W. 668; Mutual Reserve Fund Life Asso. v. Austin, 6 L.R.A. (N.S.) 1064, 73 C. C. A. 498, 142 Fed. 400; Metropolitan L. Ins. Co. v. Peeler, 122 Okla. 135, 6 A.L.R. 441, 176 Pac. 939.

Where the defense of suicide is not reserved in the incontestability clause, and where it is not considered against public policy in the particular jurisdiction to permit a recovery on a contract of insurance where the insured came to his death by his own hand, the incontestability clause shuts out the defense of suicide when it goes into effect.

Jackson v. Loyal Additional Ben. Asso. 140 Tenn. 500, 205 S. W. 318; Silliman v. International L. Ins. Co. 131 Tenn. 314, L.R.A.1915F, 707, 174 S. W. 1131; National L. Ins. Co. v. Miller, 254 U. S. 96, 65 L. ed. 155, 41 Sup. Ct. Rep. 47; Northwestern Mut. L. Ins. Co. v. Johnson, 254 U. S. 101, 102, 65 L. ed. 159, 41 Sup. Ct. Rep. 47; Mutual Protective League v. McKee, 122 Ill. App. 376; Triple Link Mut. Indemnity Asso. v. Froebe, 90 Ill. App. 299; Simpson v. Life Ins. Co. 115 N. C. 393, 20 S. E. 517; Mareck v. Mutual Reserve Fund Life Asso. 62 Minn. 39, 54 Am. St. Rep. 613, 64 N. W. 68; Supreme Lodge, K. P. v. Overton, 203 Ala. 193, 16 A.L.R. 649, 82 So. 443; United Order, G. C. v. Overton, 13 A.L.R. 672 and note, 203 Ala. 335, 83 So. 59; Mutual L. Ins. Co. v. Lovejoy, 203 Ala. 452, 83 So. 591; Sun L. Ins. Co. v. Taylor, 108 Ky. 408, 94 Am. St. Rep. 383, 56 S. W. 668; 19 Am. & Eng. Enc. Law 2d ed. p. 80.

Mr. Thomas G. Watkins, for appellee:

Though suicide is against public policy in Tennessee, an insurance company may, as it chooses, contract to

assume the risk of suicide, and clauses limiting the amount payable upon suicide or excluding such risk entirely are valid.

Union Cent. L. Ins. Co. v. Fox, 106 Tenn. 347, 82 Am. St. Rep. 885, 61 S. W. 62; Childress v. Fraternal Union, 113 Tenn. 252, 82 S. W. 832, 3 Ann. Cas. 236; Silliman v. International L. Ins. Co. 131 Tenn. 303, L.R.A.1915F, 707, 174 S. W. 1131.

The clause limiting payment in event of a suicidal death, or excluding such risk entirely, is not affected by a clause fixing a limited period of contestability.

Clement v. New York L. Ins. Co. 101 Tenn. 22, 42 L.R.A. 247, 70 Am. St. Rep. 650, 46 S. W. 561; Union Cent. L. Ins. Co. v. Fox, supra; Childress v. Fraternal Union, 113 Tenn. 252, 82 S. W. 832, 3 Ann. Cas. 236; Silliman v. International L. Ins. Co. supra; Mutual L. Ins. Co. v. Kelly, 52 C. C. A. 154, 114 Fed. 268; North American Union v. Trenner, 138 Ill. App. 586; Stean v. Occidental L. Ins. Co. 24 N. M. 346, 171 Pac. 786; Hearin v. Standard L. Ins. Co. (D. C.) 8 F. (2d) 202; Sanders v. Jefferson Standard L. Ins. Co. (C. C. A. 5th) 10 F. (2d) 143; Mack v. Connecticut Gen. L. Ins. Co. (C. C. A. 8th) 12 F. (2d) 416, affirmed in 271 U. S. 687, 70 L. ed. 1152, 46 Sup. Ct. Rep. 638; Howard v. Missouri State L. Ins. Tex. Civ. App., 289 S. W.

Co. 114.

Chambliss, J., delivered the opinion of the court:

On July 26, 1924, the insurance company issued its $5,000 policy on the life of Noah Remmel Scales for an annual premium of $55.75 containing the following "general provisions:" "(a) After this policy Ishall have been in force for two whole years from the date hereof it. shall be incontestable for any cause except for nonpayment of premium. (b) In case of self-destruction committed, whether sane or insane, within two years from the date hereof, the extent of recovery hereunder shall be the premiums paid."

It appears from the stipulation filed herein that the insured committed suicide on or about July 15, 1925, and that in August following tender was made by the insurance company to the beneficiary of the

(155 Tenn. 412, 295 S. W. 58.)

premiums paid, to wit, $55.75, which was rejected, and that this tender was continued and made into court upon the filing of this suit by the beneficiary, father of the insured. The suit was brought July 27, 1926, one day after the expiration of two years from the date of the policy, and a year and twelve days after the death of the insured.

The insistence of the claimant is, in substance, that, no affirmative action having been taken by the insurance company within two years from the date of the policy to contest and avoid it, provision (a), above quoted, applies so as to make the liability of the insurance company absolute, not to the extent of the premiums paid only, but for the $5,000 named therein, together with the statutory penalty.

The defense, as finally framed, is that the provision relied on, commonly known as the incontestable clause, has no application to a case of self-destruction within two years -within one year in the instant case-but in such a situation the extent of the liability under the contract of insurance is as provided in (b), above set out, namely, "the extent of the recovery hereunder shall be the premiums paid."

The chancellor dismissed the bill, and in a clear and forceful opinion sustained the position of the insurance company, and has granted this appeal.

Upon both principle and authority, we think it clear that under this contract the incontestable clause is without application, but that the rights of the beneficiary are fixed by the suicide clause.

In neither Humpston v. State Mut. L. Assur. Co. 148 Tenn. 439, 31 A.L.R. 78, 256 S. W. 438, nor Thistle v. Equitable Life Assur. Soc. 149 Tenn. 667, 261 S. W. 667, relied on for appellant, was the question here presented involved. Neither

were cases of suicide, occurring either within or after two years, which difference we regard as immaterial as affecting the application of the incontestable clause, although

the defense of suicide, if occurring after two years, is cut off under the terms of the policy, not by the general incontestable clause (a), but by the suicide clause (b) itself.

In those cases the application generally of the incontestable clause was assumed; the discussions and decisions being confined to the form in which and time when rights under it must be asserted.

However, it is perhaps unnecessary to go beyond expressions contained in the opinions in these cases, and authorities therein quoted from and approved, to illustrate conclusively the essential distinction on which the decree of the chancellor rests. Running through both of these opinions, in stating the purpose and effect of incontestable clauses, are expressions emphasizing that this limitation on contests has reference to matters going to the validity of the contract; as affected particularly by the representations made in its procurement.

In the Humpston Case, supra, Mr. Justice Hall said: "It was held by this court in Clement v. New York L. Ins. Co. 101 Tenn. 22, 42 L.R.A. 247, 70 Am. St. Rep. 650, 46 S. W. 561, that incontestable clauses inserted in insurance policies similar to the one in question are reasonable and valid, and that the practical and intended effect of such a clause is to create a short statute of limitation in favor of the insured, within which limited period, the insurer must, if ever, test the validity of the policy. The court in that case said: 'It has been well said: "The effect of the provision is to prevent the insurer from interposing as a defense the falsity of the representations of the insured, which is a fraud. But it does not prevent abandonment, rescission, and cancellation of the contract for such fraud, provided the action for that purpose is brought within a year." It is virtually saying to the insured that "I will take one year in which to ascertain whether your representations are false or not, and whether you have been guilty of any fraud

in obtaining the contract, and if within that period I cannot or do not detect such falsity and fraud, I will obligate myself to make no further inquiry into these matters, and to make no defense on account of them."""

In answer to a petition to rehear, the concluding paragraph above is again quoted. Emphasis is thus put on the meaning and purpose of the provision-that is the limited period is given within which the insurer must "ascertain whether your representations are false, and

whether you have been guilty of any fraud in obtaining the contract" (italics ours)-not a period within which the insurer may ascertain whether or not the insured will exercise an election as to the manner of his death. How would it be possible to fix the running of a limitation period allowed for investigation, except until and upon the happening of the matters to be made the subject of the investigation?

And so Mr. Justice McKinney, in the Thistle Case, supra, speaking of the statutory incontestable clause, says: "The purpose of the above statute was to prevent the issuing of a life policy that could be contested after two years. In other words the Legislature entertained the view that two years was a reasonable time for the insurer to ascertain whether the policy had been obtained by fraud or for other reason justifying a contest as to its validity."

How could the "purpose" thus defined possibly have application to a "reason justifying a contest" until the arising of the reason?

The incontestable clause considered in Clement v. New York L. Ins. Co. supra, while not identical with that now before us, was, in substance, the same. On page 27 of the opinion, this court said: "The provision in this case is very broad in its terms. There is only one condition upon which the validity of the policy can be questioned, after the lapse of a year, and that is the nonpayment of premiums. The meaning of the

[merged small][ocr errors]

The effect of this agreement not to contest is to put the company in the attitude of being unable to set up any fraud or false swearing in obtaining the policy, or any other defense to it, save the one excepted, so far as its original validity is concerned."

On page 38 (46 S. W. 565) the same opinion proceeds: "It is argued, gued, however, that the clause agreeing not to contest must have the effect to preclude any inquiry into the transfer and also the right of the transferee to take under the policy. We are of opinion, however, that the clause does not go to this extent and cannot have this effect. It is intended to cut off inquiry into the truth of the statements made by the assured in the application, and other matters going to the original validity of the policy, but not to any subsequent disposition of the policy, and the company expressly disclaims any responsibility for the validity of any assignment."

In Childress v. Fraternal Union, 113 Tenn. 252, at page 255, 82 S. W. 833, 3 Ann. Cas. 236, it is said: "The incontestable clause in the policy is, in substance, that the validity of the policy will not be questioned after the expiration of two years, except upon the ground of false answers made in the application as to age, occupation, and the use of alcoholic stimulants. Upon these grounds it may be questioned at any time."

And, again, at page 255, the court said: "But the suicide clause is not one which enters into the original validity of the contract, but one which defeats the right of recovery

(155 Tenn. 412, 295 S. W. 58.)

after the full existence of the contract is established. The incontestable clause has no reference to the suicide clause, and the latter is in no wise affected by the former. If the insured commit suicide after the expiration of two years from the date of the policy, the effect is the same as if it occurred within two years."

The italics in the foregoing quotations are ours, emphasizing thus the phrases particularly pertinent to the issue now before us, and it cannot be gainsaid that these expressions are much in point. On principle, the holding in Childress v. Fraternal Union, supra, appears to control here.

This view is sustained by authorities relied on for appellee: Hall v. Mutual Reserve Fund Life Asso. 19 Pa. Super. Ct. 31; Starck v. Union Cent. L. Ins. Co. 134 Pa. 45, 7 L.R.A. 576, 19 Am. St. Rep. 674, 19 Atl. 703; North American Union v. Trenner, 138 Ill. App. 586; Travelers' Ins. Co. v. McConkey, 127 U. S. 661, 32 L. ed. 308, 8 Sup. Ct. Rep. 1360; Mutual L. Ins. Co. v. Kelly, 52 C. C. A. 154, 114 Fed. 268; Stean v. Occidental L. Ins. Co. 24 N. M. 346, 171 Pac. 786; Hearin v. Standard L. Ins. Co. (D. C.) 8 F. (2d) 202; Mack v. Connecticut General L. Ins. Co. (C. C. A. 8th) 12 F. (2d) 416, affirmed in 271 U. S. 687, 70 L. ed. 1152, 46 Sup. Ct. Rep. 638; Howard v. Missouri State L. Ins. Co. Tex. Civ. App., 289 S. W. 114.

[ocr errors]

The rule enforced in the Humpston and Thistle Cases, supra, requiring affirmative action within the contestable period, cannot be extended to cases like the one before us, where the contract of insurance is not sought to be invalidated, but where the effort is rather to enforce it according to its express terms. The distinction is well drawn in the following quotation from the opinion of the United States Circuit Court of Appeals in Mack v. Connecticut Gen. L. Ins. Co. (C. C. A. 8th) 12 F. (2d) 416.

"The contract provision expressly excluding the assumption of the risk of suicide for two years is en

tirely distinct from the incontest-
able clause, is consistent with it, and
the one in no way contradicts the
other. There is a distinction be-
tween facts which would warrant a
rescission of the contract and a risk
not covered by the contract. The
incontestable clause relates to the
former. The suicide clause relates
to the latter. Hearin v. Standard
L. Ins. Co. (D. C.) 8 F. (2d) 202.
A contest made within two years is
not to be confused with a defense
of death by suicide committed with-
in two years. .
The contest
by suit or answer must be instituted
within two years from the issuance.
of the policy. Missouri State L. Ins.
Co. v. Cranford, 161 Ark. 602, 31
A.L.R. 93, 257 S. W. 66. But in the
suicide clause the two-year period is
a period of exclusion of risk on ac-
count of suicide. That clause does
not undertake to limit the time with-
in which the defense of suicide may
be made, nor does the statute of
Illinois, above quoted, undertake to
do so."

Jackson v. Loyal Additional Ben. Asso. 140 Tenn. 495, 205 S. W. 318, and certain other cases relied on for appellant, in which the policies contained no provision as to the effect of suicide, are without application to the instant case; nor are those cases controlling wherein an incontestability clause was incorporated in the contract in terms, or applied by statute, and which contained a suicide clause without

construction of

testable clause

express time limita- Insurance-
tion, in some of policy-incon-
which the courts ap- suicide.
pear to have held
the limitation in the incontestability
clause to apply. See Mareck v. Mu-
tual Reserve Fund Life Asso. 62
Minn. 39, 54 Am. St. Rep. 613, 64
N. W. 68; Simpson v. Life Ins. Co.
115 N. C. 393, 20 S. E. 517, and Mu-
tual Protective League v. McKee,
122 Ill. App. 376. Nor is the case
of Silliman v. International L. Ins.
Co. 131 Tenn. 314, L.R.A.1915F,
707, 174 S. W. 1131, authority for
the position of appellant, but rather
otherwise, the principle of providing

« PředchozíPokračovat »