102 F.2d 16 (8th Cir. 1939), 11228, Toucey v. New York Life Ins. Co.

Docket Nº:11228.
Citation:102 F.2d 16
Case Date:February 24, 1939
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

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102 F.2d 16 (8th Cir. 1939)




No. 11228.

United States Court of Appeals, Eighth Circuit.

February 24, 1939

Rehearing Denied March 16, 1939.

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Cornelius Roach, of Kansas City, Mo., for appellant.

Richard S. Righter and Horace F. Blackwell, Jr., both of Kansas City, Mo. (Louis H. Cooke, of New York City, and Lathrop, Crane, Reynolds, Sawyer & Mersereau, of Kansas City, Mo., on the brief), for appellee.

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Before SANBORN, WOODROUGH, and THOMAS, Circuit Judges.

WOODROUGH, Circuit Judge.

In 1924 the New York Life Insurance Company issued a policy on the life of Samuel R. Toucey, then aged 45, providing that in consideration of the specified premiums the company would pay $50,000 in case of death and that in case of total and presumably permanent disability occurring before the age of sixty years, further payment of premiums would be waived and $500 a month would be paid during the continuance of total disability. In 1934 the company, in compliance with written application by Mr. Toucey, reduced the policy from the face amount of $50,000 to the face amount of $25,000, with corresponding reductions in all of the other benefits of the policy and also in the amount of premiums. In 1935 the policy thus reduced was lapsed on the books of the company for failure to pay the premium due October 2, 1934.

On October 26th, 1935, Mr. Toucey brought a suit in equity against the insurance company in the federal district court to have the reduction of the policy declared null and void and for a decree reinstating the original policy and adjudging it to be in full force and effect. He alleged in his bill that in April, 1933, as the result of an operation for stomach ulcers he became totally and permanently disabled within the meaning of the policy and that he gave notice thereof in writing to the company and was entitled under the policy provisions to receive $500 per month and to have the payment of premiums waived.

But he alleged 'that he did not know his rights under his policy and the coverage thereof' and in July, 1934, before he had reached the age of sixty years and while the premiums on the policy were fully paid up, he called upon the company 'to advise him as to the coverage of the policy. ' That the insurance company, although it well knew of his then existing total disability and his right to the monthly payments and waiver of further premiums, fraudulently and intentionally failed to advise him of his rights under the policy and fraudulently induced him to accept the said reduction of his policy, and also fraudulently induced him to thereafter make a premium payment upon the reduced policy. He alleged that in September of 1935 he was advised by a medical examiner that his policy covered disability benefits for disease and he promptly made demand upon the company for reinstatement of his original policy and for payment of benefits in accordance therewith. He prayed the court to reinstate the original policy and to award recovery for the disability benefits provided therein.

The insurance company having joined issues on the bill, a trial was had extending over several days and the court found upon the evidence that Mr. Toucey was not and had not been disabled within the disability provisions of his policy. In deciding the case, the court said: 'I say that the plaintiff has made a most favorable impression upon me. He is a man of capacity and integrity and of high standing, and I believe his testimony fully as to the nature of his malady, but because I do believe him to be a man of great ability intellectually, and of much experience in the business world, I cannot believe, and do not believe that within the meaning of this contract of insurance that we have here, the $50,000.00 policy, I do not believe that he is so disabled by his malady and disease as that he is prevented thereby from engaging in any occupation whatsoever for remuneration or profit. In the light of all of the other testimony in this case, of all of the medical testimony, I think it is impossible to come to the conclusion that this plaintiff is so totally and permanently disabled. I can understand his viewpoint. I can understand what I think is the viewpoint of his learned counsel. He certainly is totally disabled, I would think, from carrying on the same kind of a business enterprise as that upon which he was engaged and at which he was very successful. He cannot do that nor anything of that character, but it is an incorrect interpretation of this contract to conclude that if he cannot do what he did do theretofore, he is totally disabled within the meaning of this contract. This contract says that to be totally disabled he must be unable to engage in any occupation whatsoever for remuneration or profit. Now, that means any one of a thousand occupations. I have not the slightest doubt but that the plaintiff has the ability for example, to carry on the occupation of clerk of this court, of the deputy clerk who sits here in this chair, or work of any similar character. I believe that it has not been proved that the plaintiff, within the meaning of this contract, is now or has been at the times alleged in the petition, wholly disabled

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by bodily injury or disease, so that he is prevented thereby from engaging in any occupation whatever for remuneration or profit, and I think the fact to be that he is not and has not been so disabled. That is finding of fact, I think, No. 2.'

The court also found that the insurance company had not in any manner or by any means concealed the fact that the policy contained the provision for indemnity against total and permanent disability from Mr. Toucey, but, on the contrary, the company advised him that it contained such provision, and 'upon the facts and circumstances shown' Mr. Toucey was conclusively presumed to know the provisions of his policy. The court also found generally that Mr. Toucey was not entitled to the relief prayed for and dismissed the bill with prejudice at plaintiff's costs.

Thereafter Mr. Toucey made an assignment of the policy and his claims thereunder to one James Shay, a resident of the District of Columbia, who instituted an action at law as assignee against the insurance company upon the original policy in the state court in Missouri. In that action, after reciting the issuance of the original policy to Mr. Toucey and the terms thereof, omitting all reference to the reduction that had been made, it was alleged that while the policy was in full force and in April, 1933, before Mr. Toucey had reached the age of sixty years, Mr. Toucey became totally and permanently disabled; that he had performed all the conditions of the policy on his part to be performed and judgment was demanded for accumulated disability installments aggregating $28,000...

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