Mutual Life Ins. Co. v. Stroehmann

Decision Date17 May 1934
Docket NumberNo. 973.,973.
PartiesMUTUAL LIFE INS. CO. OF NEW YORK v. STROEHMANN et al.
CourtU.S. District Court — Western District of Pennsylvania

O'Malley, Hill, Harris & Harris, of Scranton, Pa., for plaintiff.

Snyder, Miller, Hull & Hull and Carl B. Shelley, all of Harrisburg, Pa., for defendants.

WATSON, District Judge.

The Mutual Life Insurance Company of New York, on October 11, 1932, filed a bill in equity against Carl F. Stroehmann and Lycoming Trust Company, trustee, to reform three policies of insurance issued by it on the life of Carl F. Stroehmann. One policy is No. 2,646,105, for the face amount of $5,000, and is dated September 20, 1919. This policy I shall refer to as policy No. 1. Another policy is No. 2,677,078, for the face amount of $5,000, and is dated December 9, 1919. This policy I shall refer to as policy No. 2. The other policy is No. 4,361,192, for the face amount of $40,000, and is dated June 30, 1930. This policy I shall refer to as policy No. 3. It is alleged in the bill that the said Carl F. Stroehmann made false answers to the questions of the medical examiners as to his physical condition at the time of his examinations, and that the plaintiff issued the policies on the strength of these answers. Copies of the policies are attached to the bill of complaint. Each policy provides that the Mutual Life Insurance Company of New York will pay the face amount at the death of the insured, and double that amount if the insured's death is accidental. Each policy also provides for the payment of a monthly income to the insured in case of total and permanent disability of the insured, and for the waiver of payment of premiums in case of the permanent disability of the insured. Policies Nos. 1 and 2 contain the following provisions as to incontestability: "This Policy shall be incontestable after two years from its date of issue except for non-payment of premiums." Policy No. 3 contains the following provision as to incontestability: "Except for non-payment of premiums and except for the restrictions and provisions applying to the Double Indemnity and Disability Benefits as provided in sections 1 and 3 respectively, this Policy shall be incontestable after one year from its date of issue unless the Insured dies in such year, in which event it shall be incontestable after two years from its date of issue." The relief prayed for is the rescission and cancellation of the provision for disability benefits in the policies, and the restraining of the defendants from bringing any action at law, or otherwise, upon the policies for the payment of disability benefits until the hearing in this case and the final decree therein.

The defendants moved the court to dismiss the bill of complaint for the following reasons:

"1. The bill of complaint shows upon its face that Carl F. Stroehmann, the insured named in the policies of insurance pleaded therein, has made demand upon the plaintiff for the payment of disability benefits, and, unless restrained will bring an action at law upon said policies to recover the same. By defense to such action the plaintiff has a full, complete and adequate remedy at law for all of the matters complained of in its bill of complaint.

"2. The bill of complaint shows upon its face that the plaintiff has no cause of action against the defendants."

The questions, therefore, for the court, are: First, whether the bill of complaint shows that the plaintiff has a cause of action against the defendants; and, second, whether the plaintiff has a full, complete, and adequate remedy at law for all the matters complained of in the bill of complaint.

I shall consider the questions in the order stated.

The question as to whether the bill of complaint shows that the plaintiff has a cause of action against the defendants should, in my opinion, be answered in the affirmative. It is urged by the defendants that the words in the incontestable clause in policy No. 3 do not exclude from the incontestable clause the obligation to pay disability benefits but relate only to the particular limitations and provisions contained in sections 1 and 3 of the policy; that they were inserted to assure to the company the right to insist upon those limitations and provisions after the contestable period had expired; and that they were not intended to permit any contest of the obligation to pay on the ground of fraud after the expiration of the contestable period. In Mutual Life Insurance Co. v. McConnell et ux., 20 D. & C. (Pa.) 250, the same question arose on exactly the same incontestable clause. There the court said: "The question for consideration of the court is whether the incontestability clauses in these policies preclude the insurer from avoiding the disability benefits on account of fraud if more than 1 year has expired since the policies were issued. It is clear that the policies are incontestable after 1 year from the date of issue, except for `the restrictions and provisions applying to the double indemnity and disability benefits as provided in sections 1 and 3, respectively.'

"Section 3 is entitled: `Benefits in event of total and permanent disability before age of 60.' It would appear, therefore, that the incontestability clauses do not apply to the disability benefits, and the action here seeks only the cancellation of the disability provisions. The defendants, however, contend that the incontestability clauses in the policies bar the suit of the plaintiff, notwithstanding the exceptions of section 3 relative to the disability cases. It is contended that the purpose of the clause in the policy is to preclude defenses to the policy after 1 year unless the defense is nonpayment of premium, or one of the defenses incident to double indemnity or disability necessary to protect the company from injustice, which defenses are all suggested in sections 1 and 3 of the policy. It is argued that the plaintiff company cannot now go back to the inception of the policy and allege fraud on the part of the insured in answering the questions set forth in the application.

"It is true the alleged fraud goes back to the obtaining of the policy, but why should that interfere with the operation of the exception as to disability? We have had very few cases cited by counsel relative to the question before the court, but we have given careful examination to these and made further investigation as to the law on the subject. We are of the opinion that it was the intent of the contracts to exempt from their incontestability clauses its operation in the disability provision. In other words, the incontestability clauses do not apply to the disability benefits, and the action now before the court seeking only the cancellation of the disability provisions is therefore brought in time."

In Connecticut General Life Insurance Co. v. Jos. F. Brandstein, 233 App. Div. 723, 249 N. Y. S. 1018, the same questions were...

To continue reading

Request your trial
5 cases
  • Thompson v. New York Life Ins. Co., 4552.
    • United States
    • United States District Courts. 10th Circuit. Eastern District of Oklahoma
    • January 14, 1935
    ...Society (Ariz.) 28 P. (2d) 817; New York Life Insurance Co. v. Davis (D. C. W. D. Pa.) 5 F. Supp. 316; Mutual Life of New York v. Stroehmann et al. (D. C. M. D. Pa.) 6 F. Supp. 953; Mutual Life Insurance Co. v. McConnell et ux., 20 Pa. Dist. & Co. R. 250. The Greber, McConnell, and Davis Ca......
  • Pyramid Life Ins. Co. v. Selkirk
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • January 3, 1936
    ...Greber v. Equitable Life Assur. Soc. (Ariz.) 28 P.(2d) 817; New York Life Ins. Co. v. Davis (D.C.) 5 F.Supp. 316; Mutual Life Ins. Co. v. Stroehmann (D. C.) 6 F.Supp. 953; Connecticut General Life Ins. Co. v. Brandstein, 233 App.Div. 723, 249 N.Y.S. 1018. Compare, contra, Thompson v. New Yo......
  • Smith v. Equitable Life Assur. Soc. of United States
    • United States
    • Supreme Court of Tennessee
    • January 13, 1936
    ...this class are New York Life Ins. Co. v. Davis (D.C.W.D.Pa.) 5 F.Supp. 316, 319; Mutual Life Ins. Co. v. Stroehmann et al. (D.C.M.D.Pa.) 6 F. Supp. 953; Greber v. Equitable Life Assurance Society (Ariz.) 28 P.(2d) 817 (identical language); Mutual Life Ins. Co. v. McConnell, 20 Pa.Dist.& Co.......
  • Mutual Life Ins. Co. of New York v. Stroehmann
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • October 6, 1936
    ...at law or otherwise upon the policies. The appellees filed a motion to dismiss the bill. The District Court, after issuing an order (6 F. Supp. 953) on May 17, 1934, denying the motion reversed its position, and on July 2, 1935, issued the order dismissing the bill, on the authority of the ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT