142 F. 398 (1st Cir. 1905), 587, Mutual Reserve Fund Life Ass'n v. Austin

• Docket Nº: 587.
• Citation: 142 F. 398
• Party Name: MUTUAL RESERVE FUND LIFE ASS'N v. AUSTIN.
• Case Date: December 13, 1905
• Court: United States Courts of Appeals, Court of Appeals for the First Circuit

Page 398

142 F. 398 (1st Cir. 1905)

MUTUAL RESERVE FUND LIFE ASS'N

v.

AUSTIN.

No. 587.

United States Court of Appeals, First Circuit.

December 13, 1905

Victor J. Loring, for plaintiff in error.

Joseph Bennett, for defendant in error.

Before LOWELL, Circuit Judge, and ALDRICH and BROWN, District Judges.

BROWN, District Judge.

The policies of insurance upon the life of Jonathan W. Austin contain the following clause:

'XIV. If this policy of insurance shall have been in continuous force for three years from its date, it shall thereafter be incontestable except for nonpayment of premiums as herein provided or for misstatement of the age of the member in the application therefor, subject to the provisions hereof.'

The insurance company contends that this so-called 'incontestable clause' never took effect, for the reason that the policy had not been

Page 399

'in continuous force' for three years from its date. The application contains the following language:

'The applicant further agrees * * * that under no circumstances shall the insurance hereby applied for be in force until payment in cash of the first payment, while the applicant is in good health, and delivery of the policy to the applicant in person during his lifetime and while in good health.'

A further provision in the policy is:

'II. This contract shall not take effect until this policy is delivered to the member in person, during his lifetime and while in good health, nor until the first payment is paid in cash hereon while said member is also in good health. * * * '

It is established as a fact that Austin was not in good health within the meaning of the applications and policies, either when the applications were made or when the policies were delivered, or when the first premiums were paid. It is further established that the policies were delivered to Austin on April 14, 1897;-- that he paid the first payment and all premiums as stipulated in each policy until his death on October 5, 1902. The company does not rely upon false or fraudulent representations, and disavows an intention to avoid its policies for breach of warranties. It contends that the good health of the applicant was a condition precedent, and that no contractual relation, therefore, ever existed between the applicant and the defendant below.

According to this contention, the agreement that the policy, after three years from its date, shall be incontestable, save for nonpayment of premiums or misstatement of age, is itself a conditional agreement, conditional upon the insurance having been 'in force'; and the insurance was not in force because, at the time of the delivery of the policy, the assured was not in good health.

Upon the view that the expression 'in force' implies that the contract of insurance shall have been of full and binding obligation during three years, the clause may be regarded as self-destructive and deceptive. If we are to read it to mean that, if the policy shall have been incontestable for three years, it shall...