Harris v. Security Life Insurance Co. of America

OPINION.

I.

BOND, J.

insurance: Incontestability. (after stating the facts as above).— The modern rule is that a life insurance policy containing a provision that it shall be incontestable after a specified time, cannot be contested by the insurer on any ground not excepted in that provision. [Williams v. Ins. Co., 189 Mo. 70; Massachusetts Benefit Life Ass’n v. Robinson, 104 Gra. 256; Ins. Co. v. Montgomery, 116 Gra. 799; Wright v. Ins. Co., 118 N. Y. 237; Patterson v. Ins. Co., 100 Wis. 118; Mutual Reserve Ass’n v. Austin, 6 L. R. A. (N. S.) 1064; Murray v. Ins. Co., 22 R. I. 524; Clement v. Ins. Co., 101 Tenn. 22; Ins. Co. v. McClure, 138 Ky. 138; 25 Cyc. 875.]

In the case first cited the accordant doctrine of this State is expressed. There the suit was by the husband upon a policy issued on the life of his wife. The defenses were that the insured imposed upon the company by substituting another woman for medical examination and by making false warranties as to her health. The policy contained a clause that after two years, with certain exceptions as to occupations, it *314 should be incontestable “except for non-payment of premiums or under-statement of age.” In speaking of the effect of this language, the court (Valliant, J.) said, that it would govern assessment as well as other policies, and that if applicable, then the company “must abandon all other defenses” than those excepted in the provision. The reason of the rule is, that no other interpretation can be given to a contract not to contest (with named exceptions) after a fixed time, without destroying the natural and ordinary meaning of the terms employed and reading into them a significance which they will not bear. The motive for such contracts is to put the insured at rest as to all attacks upon the validity of his policy other than the exceptions named, provided he will pay the premiums and abstain from perilous callings, and to engender in his mind a conviction that those he has undertaken to protect will not be left unprotected. To effectuate these purposes the companies now propose contracts to the insured (like the one at bar) whereby they agree for a consideration, after a time fixed by them-, selves, to abandon any attack upon the obligations of their contract other than for specially reserved grounds. Such agreements are lawful and should be enforced according to their terms. Not to do so is to permit the insured to be misled and induced to take out insurance under the proffer of a contract of “imperishable security” for his beneficiary, ^hich is nevertheless in reality open to the same attacks for false warranties which might be made in any suit brought on policies not containing that provision. This is not a construction but a misconstruction which would convert a contract not to contest into a delusion and a snare, and would permit the insurance companies, after having acquired policies taken out in faith thereof and because of such faith in many instances at a great pecuniary sacrifice, to make the very defenses, aftér the lapse of the time fixed for excluding *315 them, which might have been made before. We do not understand the learned counsel for appellant to deny the fact that the rule formulated above is supported by “the great weight of latter day authority in this country” (Appellant’s brief, p. 29), but we gather from their brief that they are content to assail the proposi- • tion by characterizing the reasoning of the courts as being “more specious than sound,” “at variance with good morals,” “sophistry,” and inconsistent with the “Decalogue.” This method of assailing the logic of the decisions of the courts, if it be lacking in demonstrative force or constructive reasoning, may have the merit, at least, of reflecting the temper and taste of the writers. Possibly the great judgments of the great judges cited above will not be wholly dissolved by an irruption so slight and so entirely free from every element of dialectical reasoning or any form of logical disproof. We are inclined to indulge this hope when we bear in mind that the demolition of this great consensus of judicial conclusion is attempted, only, by the use of the particular aerial force which is said to have overthrown the walls of Jericho.

warranties: Fraud The learned counsel for appellant having, as they express it, “gotten the matter out of their system at the outset,” “return to the mutton” and assign for error that under the pleadings and proof in this case the policy was not incontestable on the grounds of false warranty and fraud despite its provisions to the contrary. Their point being that the period of one year fixed by the parties to the contract was not sufficient to enable one party thereto (the insurer) to ascertain by diligence whether his contract was fraudulently obtained. In support of which they cite two Illinois eases which they claim govern the interpretation of the policy in suit. An examination of the answer of appellant discloses that it does not allege any facts of diligent conduct on its part to discover whether its policy was obtained *316 by fraud. The answer avers inquiry by correspondence and through appellant’s agents to ascertain the truth of the applicant’s warranties, and it is also replete with general statements of “fraud” and “skillful concealment,” but it nowhere alleges the particular acts and doings of appellant within the year to discover and unearth the facts justifying its general charges of misconduct; and it nowhere shows, by the things done and the time consumed in doing them, that this period was not sufficient time within which, by reasonable diligence, they might have acquired the information desired. The answer, therefore, did not present a triable issue on that point. And this, is decided in the two decisions of the Illinois courts relied on by appellant. [Flanigan v. Federal Life Ins. Co., 231 Ill. 399; Royal Circle v. Achterrath, 204 Ill. 549.] But beyond all this and irrespective of the pleadings, the evidence contained in the record wholly fails to show that appellant used reasonable diligence in searching out the history of the insured and the truth of the matters stated in his application for the policy, and it also failed to show that the time given in the policy to do this (one year) was not sufficient for that purpose. (Even if that limit could be ignored under the Illinois decisions, which we do not decide.) The result is that the defense sought to be interposed was neither well pleaded nor sustained by the evidence.

But the matter does not stop here, for it distinctly appears from the record, that after making inquiries as to the past of the insured, the appellant, on January 17, 1907, through its State manager for Illinois, wrote to its medical examiner in reference to the application of the insured for a second policy a letter which concludes as follows: “I think we have found out all that is necessary about this man, and the only thing to do is to refuse to issue the second $10,000 policy. In regard to the original $10,000 policy is *317 sued, the note he gave in payment of the premium thereof is due February 16th, when we can see whether the same is paid; and if not, take action accordingly.” This letter was written only about three weeks after the issuance of the policy in suit, and apparently after appellant had satisfied itself as to the antecedents of the insured, and shows that while it did not care to take additional insurance on his life, it was entirely willing to continue the policy in suit.

Again, on July 12, 1907, appellant through its secretary, answered a letter of inquiry written by the brother of the beneficiary in the policy, using the following language: “I have been prevented from replying to you, giving to you for Mrs. Harris, beneficiary, the information desired respecting policy No. 10677, on the life of her husband, Robert H. Harris, who on Dec. 20, 1906, secured a policy for $10,000 in this company in favor of the said beneficiary. There appears to be no good reason why the information should not be furnished to your sister, as the policy is in her favor, and -in reply I have to say, that the first premium on the policy was settled by a promissory note for $225, which note has been paid, and the policy is now in force up to Dec. 20,1907, when another premium of $225 will become due.

11 Imperishable Security.

Henry C. Brown, Secretary.”

This letter contains a distinct affirmance of the existence and enforceability of the policy in suit made more than six months after it was issued and in full light of all of the investigation made on part of the appellant up to that time, and 'which seems not to have been continued thereafter. The letter contains no hint of an intention to annul or cancel the policy, and undoubtedly was a waiver of any grounds for so doing of which appellant had been previously apprised.

Our conclusion is, that under the pleadings and *318 proof in this case the error assigned by appellant cannot be sustained under the applicatory law contained in the Illinois decisions, supra.

II.

Appellant insists that it was incumbent on the-insured to make proof of the full payment of all premiums on the policy at the time of the death of the insured. Whether the premiums had been received or not was a matter peculiarly within the knowledge of appellant. It, however, neither pleaded nor proved non-payment; although if that were the fact, the policy would have been relieved of the preclusion of the clause making it incontestable after one year, and it would have been open to any legitimate defenses, such as false warranties or fraudulent representations. The record contains no positive proof of the payment of the second premium. The payment of the first premium is admitted.

Under these circumstances, the production of the policy, together with proof and due notice of the death of the insured, made a prima-facie case for respondent, and cast upon the defendant the burden of showing whether any premium was unpaid at the death of the insured. [25 Cyc. 925, 927; Provident Sav. Life Assur. Society v. Cannon, 201 Ill. 250; Ins. Co. v. March, 118 Ill. App. 261; Crenshaw v. Ins. Co., 71 Mo. App. l. c. 52.]

The trial court in this case submitted by instruction No. 1 the questions upon which a prima-facie right to recover depended — the issuance of the policy, the relationship of the plaintiff to the beneficiary, the death of the insured, and due notice thereof to appellant. That instruction was proper under the pleadings and evidence in this case, and justified the trial court in refusing instructions of a contrary tenor requested by appellant. The judgment in favor of plaintiff is therefore affirmed.

Woodson, P. J., Lamm and Graves, JJ., concur.