Citation Numbers: 132 Misc. 892
Judges: Rodenbeck
Filed Date: 8/28/1928
Status: Precedential
Modified Date: 1/12/2023
The weight of authority seems to favor the proposition that the “ incontestable ” clause in a policy of insurance means that the insurer shall raise any question about the insurance, within the contestable period, by suit, or answer. There is nothing of that sort, necessarily, involved in the language employed, and that meaning should not be imported into it, contrary to the common-law and equitable rights of the insurer. This construction involves judicial legislation, or contractual creation. The language should be given its ordinary meaning, and not one which conflicts with rights or remedies that would legally arise from certain conduct of the parties. The language does not say what the insurer shall or shall not do within the two years, and it is left to its usual common-law and equitable resources. These rights and remedies should be given their normal application and effect. To say that a policy shall not be contestable after two years does not imply that any rights or remedies existing within the two years shall be thereby lost or even affected. These rights and remedies still continue, and should be given their true legal value. The contract says that the insurer shall not contest the policy after two years, but the prevailing construction says that within the two years it shall be of no avail to refuse to accept further premiums and to return those paid, or to reject a claim filed, but that the company must sue to rescind, if the insured be living, or answer, if suit by the beneficiary is brought. It relieves the insured from the necessity of enforcing the rejected policy, and the beneficiary of suing to collect a rejected claim, within the two years, and wipes out all rights and remedies of the insurer, except to sue or answer within the two years’ period. If the insurer refuses to carry out the policy within the two years, for fraud by the insured, the latter may stand idle, until the expiration of two years, and then the insurer will be helpless to defend, and if the insured dies, and the claim is rejected, the
When the insured dies, as in this case, within the two years, and a claim for the insurance is rejected, new rights and remedies arise. The risk of insurance is at an end, and there is nothing to rescind. The contingency upon which payment was predicated has occurred. The right to be protected by the payment of premium was changed, by death, into a right to payment upon presentation of proper proofs of death. There was nothing for the insurer to do, in this case, until a claim was presented, and when this was rejected, a suit to collect the insurance was the normal remedy. The insurer, by rejecting the claim, had fixed its rights, and had contested the policy, in a most effective manner. The right to repudíale the policy and return the premiums, or to sue to rescind it, while effective, during the fife of the insured, was superseded by the death of the insured, and new rights and remedies intervened. The company was required to adjust its action to conform to the new situation. When the insurer, as in this case, rejected the claim for the insurance, it did exactly what the law allowed it to do, and it had the right to expect that, whenever suit was brought, it could set up its rejection and endeavor to justify it in the usual course of legal proceedings. The beneficiary
There are authorities against the views above expressed (Humpston v. State Mutual Life Assurance Co., 148 Tenn. 439 ; 256 S. W. 438; Missouri State Life Ins. Co. v. Cranford, 161 Ark. 602; Ebner, Admr. v. Ohio State Life Ins. Co., 69 Ind. App. 32; Lavelle v. Met. Life Ins. Co., 209 Mo. App. 330; Reliance Life Ins. Co. v. Thayer, 84 Okla. 238; Hardy v. Phoenix Mut. Life Ins. Co., 180 N. C. 180. See 31 A. L. R. 108; 36 id. 1245; Powell v. Mutual Life Ins. Co., 313 Ill. 161; Northwestern Mut. Infe Ins. Co. v. Pickering, 293 Fed. 496; Indiana Nat. Life Ins. Co. v. McGinnis, 180 Ind. 9; N. Y. Life Ins. Co. v. Adams, 145 N. E. [Ind. App.] 499; Rapala v. John Hancock Mut. Life Ins. Co., 229 Mich. 463; 201 N. W. 465; Ramsey v. Old Colony Life Ins. Co., 297 Ill. 592; American Trust Co. v. Life Ins. Co., 173 N. C. 558; Mutual Life Ins. Co. v. Buford, 61 Okla. 158; Thistle v. Equitable Life Assur. Soc., 149 Tenn. 667); but there are authorities, more or less in point, supporting them, which latter seem to contain the better reason. (Jefferson Standard Life Ins. Co. v. Smith, 157 Ark. 499; Bankers Reserve Life Co. v. Omberson, 123 Minn. 285; Mutual Life Ins. Co. v. Stevens, 157 Minn. 253; 195 N. W. 913; Indianapolis Life Ins. Co. v. Aaron, 158 Minn. 359; 197 N. W. 757; Feierman v. Eureka Life Ins. Co., 279 Penn. St. 507; 124 Atl. 171; Markowitz v. Met. Life Ins. Co., 122 Misc. 675; McDonnell v. Mutual Life Ins. Co., 131 App. Div. 643; Fink v. Fink, 171 N. Y. 616; McCormack v. Security Mut. Life Ins. Co., 220 id. 447; Piasecki v. Met. Life Ins. Co., 243 id. 637; Eichwedel v. Met. Life Ins. Co., 270 S. W. [Mo. App.] 415; Mutual Life Ins. Co. v. Rose, 294 Fed. 122; Stiegler v. Eureka Life Ins. Co., 146 Md. 629; 127 Atl. 397.)
The motion for summary judgment and for severance is denied and that for the appointment of a guardian ad litem is granted, without costs to any party.