Fore v. New York Life Insurance , 180 Ark. 536 ( 1929 )

Appellant instituted this suit against appellee on April 5, 1929, in the circuit court of Pulaski County, Third Division, to recover $2,999 (waiving statutory penalties) as beneficiary in a life insurance policy issued by appellee to her husband, Peter J. Fore, on the 7th day of July, 1926, which provides that, in consideration of the payment of an annual premium, it would pay her $5,000 in the event her husband should die a natural death, and double indemnity under certain conditions. The policy of insurance was made the basis of the suit, and contained self-destruction and incontestable clauses. The self-destruction clause is as follows:

"In case of self-destruction during the first two insurance years, whether the insured be sane or insane, the insurance under this policy shall be a sum equal to the premiums thereon which have been paid to and received by the company, and no more."

The incontestable clause is as follows: "This policy shall be incontestable after two years from its date of issue, except for nonpayment of premium and except as to provisions and conditions relating to disability and double indemnity benefits."

It was alleged in the complaint that the insured died on March 15, 1928, at which time the policy was in force, and that notice and proof of death had been furnished appellee in accordance with the terms of the policy.

On the 15th day of April, 1929, appellee filed an answer to the complaint, alleging that Peter J. Fore, the insured, came to his death on the 15th day of March, 1928, by suicide, and tendering the amount of premiums paid by the insured, with interest thereon, into the registry of the court, and interposing the self-destruction clause contained in the policy as a defense to a recovery of any additional amount.

Appellant filed a demurrer to the answer, upon the alleged ground that the policy sued upon was incontestable for any purpose after two years, except as to provisions and conditions relating to disability and double indemnity benefits, and for that reason failed to state a defense. The court overruled the demurrer, over the objection and exception of appellant. Appellant stood on her demurrer, and refused to plead further, whereupon the court rendered judgment against appellee for $818.14, the amount tendered and deposited in the registry of the court, in full of its liability under said policy, from which is this appeal.

Appellant contends for a reversal of the judgment and the entry of a judgment here for the amount sued for, with interest and attorney's fee, upon the ground that the incontestable clause in the policy relates to the self-destruction clause, and the suicide of Fore within two years from the date of the policy could not be pleaded after the expiration of two years from the date thereof as a defense to a recovery of the amount specified in the face of the policy. Appellant cites the case of Standard Life Ins. Co. v. Robbs, 177 Ark. 275, 6 S.W.2d 520, in support of her contention. In that case it was ruled that the incontestable clause, in substance the same as the incontestable clause in the instant case, had reference to the self-destruction clause, and was a short statute of limitations which precluded the insurance company after one year from pleading the suicide of the insured, which occurred within one year from the date of the policy, as a defense. The Robbs case was decided upon authority of the case of Missouri State Life Ins. Co. v. Cranford,161 Ark. 602, 257 S.W. 66, and the cases cited in support of the rule announced in the Cranford case, to the effect that:

"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. It is said that the practical and intended effect of such a stipulation is to create a short statute of limitations. By the stipulation the insurance company agreed that it would take a year to investigate and determine whether it would contest the policies of insurance, and that, if it failed within that time to discover any grounds for contesting the same, it would make no further investigation, and would not thereafter contest the validity of the policies."

In overruling the motion for a rehearing in the Robbs case, this court approved and reannounced the rule laid down in the Cranford case in the following language:

"The fact of suicide or not could only be established by proof, and this would bring on a contest, which is the very thing the insurance company has agreed not to do after a certain time. As Mr. Justice Holmes so aptly expressed it, after the period of time expressed in the incontestable clause has expired there can be no dispute of fact, except the fact of death, unless other conditions are imposed in the incontestable clause itself. The cause of death has, by the agreement of the parties, ceased to be an issue of fact. In short, after the period of time prescribed in the incontestable clause has expired, the insurance company cannot contest the fact of suicide. While there are authorities to the contrary, we think the better reasoning is in accordance with the decisions of the courts above cited. The incontestable clause constitutes, as the courts generally put it, not an assurance against the results of crime, but an assurance against the hazards of litigation; and we are of the opinion that the insurance company could not contest the policy before or after the death of the insured, after the period of time prescribed in the incontestable clause had expired, except for the conditions set out in the incontestable clause itself."

Appellee argues that the instant case is not ruled by the Robbs case, because the self-destruction clause in the policy in the Robbs case was different from the self-destruction clause in the policy issued by appellee to Fore, in that under the former the act of suicide by the insured within a specified time avoided or anulled the policy in toto as to a recovery by the beneficiary, whereas under the latter the policy remained in full force and effect in favor of the beneficiary for a recovery of premiums paid by the insured. In other words, the contention is that, in tendering the premiums and interest, appellee was carrying out the terms of the policy and not attempting to contest it, and for that reason the incontestable clause is not applicable to the self, destruction clause contained in the policy involved in the case at bar. This conclusion is reached by appellee on the theory that the contract of insurance contemplates two separate and distinct risks. This exact theory was advanced as a defense in the case of Mareck v. Mutual Reserve Fund Life Assn., 62 Minn. 39,64 N.W. 68, 54 Am. St. Rep. 613, in which the self-destruction and incontestable clauses in the policy involved are in substance the same clauses contained in the policy in the case at bar, and the court in the Mareck case said:

"The only question in this case is whether the company is bound to pay the $5,000 or only a ``sum equal to the amount of the assessment paid by said member, with six per cent. interest.' Defendant's contention is that the contract contemplates two separate and distinct risks — death by suicide, and death from any other cause; that in the latter case it promised to pay $5,000, and in the former only the amount of premiums paid, with interest; that the ``incontestable clause' is inapplicable because the company is not contesting the policy, but only proposing to pay according to its terms; that death by suicide was not a risk which they assumed, except to the extent of the premiums, with interest. While the literal language of the contract lends an air of plausibility to this argument, yet we do not think it is sound. There is nothing in the policy contemplating two distinct and separate risks. The assured applied for an insurance on his life of only one sum, viz., $5,000. The amount for which the policy was issued was $5,000, payable at his death, but coupled with numerous conditions, the breach of any one of which, if not waived, relieved the insurer from liability. Counsel for defendant admits, correctly, and no doubt advisedly, that, if death had occurred from any of the causes enumerated in the eleventh paragraph, the ``incontestable clause' would have applied. But these risks were no more assumed by the company than was death by suicide."

What the court said in the Mareck case, quoted above, is a complete answer to the assertion that the invocation of the self-destruction clause as a defense to a suit on the policy is not a contest. The Mareck case, which holds that there is no real difference or distinction between the self-destruction clauses, was cited in and made a basis for the court's decision in the Cranford and Robbs cases. We are unable to see why the incontestable clause would not apply to both alike when interposed as a defense to a suit upon the policy for the full amount thereof.

Appellee contends that the instant case is ruled by the case of Interstate Business Men's Association v. Adams, 178 Ark. 856, 13 S.W.2d 591, instead of the Robbs case. The incontestable clause and its effect on the self-destruction clause or other conditional clauses, which might relieve the insurer from liability, in whole or in part, was not an issue or involved in the case referred to, so it does not control or govern the case at bar.

On account of the error indicated the judgment is reversed, and judgment is directed to be entered here for $2,999, with interest, and $300 as an attorney's fee.