Humpston v. State Mut. Life Assur. Co. of Worcester, Mass.

• Decision Date: 22 December 1923
• Citation: 256 S.W. 438,148 Tenn. 439
• Parties: HUMPSTON v. STATE MUTUAL LIFE ASSUR. CO. OF WORCESTER, MASS.
• Court: Tennessee Supreme Court

256 S.W. 438

148 Tenn. 439

HUMPSTON v. STATE MUTUAL LIFE ASSUR. CO. OF WORCESTER, MASS.

Supreme Court of Tennessee.

December 22, 1923

Certiorari to Court of Civil Appeals.

Action by Reuben Allen Humpston against the State Mutual Life Assurance Company of Worcester, Mass. Judgment for defendant was reversed, and judgment entered for plaintiff, by the Court of Civil Appeals, and defendant brings certiorari. Affirmed.

HALL J.

An action by Reuben Allen Humpston, who will hereinafter be referred to as plaintiff, against State Mutual Life Assurance Company of Worcester, Mass., who will hereinafter be referred to as defendant, to recover upon two policies of life insurance for $5,000 each, dated March 7, 1919, and issued upon the life of Charles Ernest Humpston, the beneficiary named in the policies being the plaintiff, who is the father of the insured.

The insured died on November 29, 1919, and within less than a year after the policies were issued, as the result of Bright's disease. Proofs of death were promptly and seasonably made and filed by plaintiff, and on January 30 1920, defendant wrote plaintiff a letter denying the justice of the claim, and refused to pay the same, but made no tender of the premiums which had been paid by the insured at the time of the issuance of said policies.

The summons was issued on March 5, 1920, and was executed by service on defendant's agent on March 16, 1920.

Plaintiff's declaration was filed April 26, 1920. It made profert of the policies, and in addition to seeking a recovery for the principal sum of $10,000, it sought a recovery of interest and the statutory penalty of 25 per cent. because of defendant's refusal to make prompt payment in accordance with the terms of the policies.

Defendant on June 15, 1920, which was more than a year after the policies were issued, filed its pleas to the declaration setting up, in substance, that the insured had made certain representations in his applications for said insurance, which were false and fraudulent, and were made with the intent to deceive defendant in that he had been asked in said applications, "For what ailment or disease not included in your above answers have you ever consulted a physician?" and the applicant answered, "Typhoid fever in 1913," and the pleas aver that this answer was falsely and fraudulently made, because, in December, 1918, the insured had been dangerously ill with influenza and double pneumonia for a period of weeks; and that, had this fact been disclosed to the company, the policies applied for would not have been issued; and, further, that, by reason of said misrepresentations, said policies were and are void at the election of defendant, which it then and there elected to avoid and cancel them because of said false representations made in said applications.

It was further interposed in said plea, by way of defense, that the illness of the insured in December, 1918, left him in such an impaired physical condition that his death was due to a disease caused and superinduced by said illness and the weakened condition in which the insured was left as a result thereof; that, had these facts been made known to defendant, the applications for said insurance would have been rejected, and said policies would not have been issued; and, along with these pleas, defendant tendered into court the sum of $267.75, the amount of the premiums paid on the policies and accrued costs in the case; also the plea that said representations were material and increased the risk of loss; and later, by leave of the court, defendant filed an additional plea setting up the falsity of the following certificate made by the insured to his applications for said insurance:

"I hereby certify that I have made all the statements and answers in numbers one and two of these applications, and declare that they have been correctly recorded by the soliciting agent and medical examiner, and that no circumstance or information touching my past and present state of health and habits of life has been withheld or omitted."

It was further averred in this plea that said certificate was false and fraudulent for the reasons mentioned in the second and third pleas hereinbefore referred to.

On these pleas plaintiff joined issue, and later sought to file an additional replication to defendant's pleas, which averred, in substance, that said policies were Georgia contracts, and were controlled by the laws of the state of Georgia, which laws were copied in said replication.

This additional replication was resisted by defendant as a departure in pleading; its insistence being that plaintiff was attempting to set up a new cause of action by way of replication, which was in no wise related to the cause of action stated in the declaration.

This replication was disallowed by the court, but the matter incorporated therein was ordered by the court to stand as an amendment to plaintiff's declaration, but was subsequently withdrawn by the plaintiff upon demurrer being filed to the declaration as amended.

On the issues thus made the case went to trial before the court and a jury. The policies were offered in evidence by the plaintiff, considered as read, and became a part of the record in the case. They each contain the following incontestable clause:

"This policy shall be incontestable after one year from the date of its issue, except for nonpayment of premiums."

At the conclusion of all the evidence, plaintiff moved the court to direct a verdict in his favor for the reasons:

First, that the issues presented were immaterial as under the policies, it was necessary for defendant to take some affirmative proceedings to cancel or rescind the policies within the contestable period; and, second, because a complete copy of the applications was not attached to the policies and made a part thereof.

Defendant also moved the court for a directed verdict in its favor, for the following reasons:

First, that the undisputed evidence in the case showed that the insured made certain misrepresentations and concealments as to his previous health, which were false and fraudulently made with the intent to deceive defendant, and thereby procure said policies; and, second, that he was guilty of misrepresentations and concealments that were material to the risk, which were sufficient to avoid the policies regardless of the question of good or bad faith on the part of the insured.

Defendant's motion for a directed verdict was sustained by the trial court, and a judgment was entered dismissing plaintiff's suit.

From this judgment plaintiff appealed to the Court of Civil Appeals. That court reversed the judgment of the trial court, and sustained plaintiff's motion for a directed verdict, and entered judgment against defendant for the principal amount of said policies and interest, but denied plaintiff a recovery for the statutory penalty.

The case is now before this court upon a writ of certiorari, sued out by defendant, for review, and errors have been assigned.

By the first assignment of error, it is insisted that the Court of Civil Appeals erred in giving effect to the incontestable clause contained in said policies; that the court should have held:

First. That, upon the death of the insured within one year from the date of the issuance of said policies, they became mature demands, and the rights of the parties in respect to liability or nonliability became fixed as of that date, and that defendant could not set up any defense to plaintiff's action existing as of that date, and in holding that defendant was bound to take affirmative action to rescind the policies within a year from the date of their issuance; that, in any event, the court erred in not holding that, plaintiff having sued on said policies, defendant had the right by proper pleas to contest the same, regardless of when its pleas were filed.

Second. That the Court of Civil Appeals erred in holding that plaintiff had not waived the incontestable clauses contained in said policies by his failure to expressly plead the same, either in his declaration or by way of replication to defendant's pleas.

Third. That the Court of Civil Appeals erred in holding that the matters set up in defense of plaintiff's action were immaterial; but on the record it should have held that said matters were material to the risk, and that the representations and concealments relied on by defendant in its pleas were made by the insured with the intent to defraud, and did defraud defendant in that it induced it to issue said policies, which, but for said fraudulent misrepresentations, would not have been issued.

Fourth. That the Court of Civil Appeals erred in sustaining plaintiff's motion for a directed verdict, and in rendering judgment against defendant for the amount of said policies with interest and costs.

Fifth. That the Court of Civil Appeals erred in not affirming the judgment of the circuit court in favor of defendant and dismissing plaintiff's suit with costs.

As we view the case, only three questions need be determined, and, if determined in favor of the judgment of the Court of Civil Appeals, they are conclusive of the case. The first is, Did defendant's letter of January 30, 1920 in which it denied the justice of plaintiff's claim, and refused to pay the same, amount to a rescission of the policies? and the second is whether or not the policies are contestable at all by defendant, in view of the incontestable clauses contained therein and the facts; and, third, did plaintiff waive said incontestable clauses by his failure to rely on them in his pleadings?

There is no merit in the first contention of defendant that its letter of January 30, 1920, had the effect of rescinding the policies. There was no...