Ness v. Mutual Life Ins. Co., 3579.

• Decision Date: 03 April 1934
• Docket Number: No. 3579.,3579.
• Citation: 70 F.2d 59
• Parties: NESS v. MUTUAL LIFE INS. CO. OF NEW YORK.
• Court: U.S. Court of Appeals — Fourth Circuit

70 F.2d 59 (1934)

NESS v. MUTUAL LIFE INS. CO. OF NEW YORK.

No. 3579.

Circuit Court of Appeals, Fourth Circuit.

April 3, 1934.

Joseph A. Patla and J. M. Horner, Jr., both of Asheville, N. C., for appellant.

J. Bat Smathers, of Asheville, N. C. (Frederick L. Allen, of New York City, and Johnson, Smathers & Rollins and T. A. Uzzell, Jr., all of Asheville, N. C., on the brief), for appellee.

Before PARKER and SOPER, Circuit Judges, and WILLIAM C. COLEMAN, District Judge.

PARKER, Circuit Judge.

This is an appeal in a suit instituted to cancel the disability and double indemnity provisions of two policies of life and disability insurance and to recover the moneys paid by the company as disability benefits together with the premiums waived on account of disability. The court below found that both policies were obtained by means of false and fraudulent representations made by the insured and granted the relief prayed. The insured has appealed, contending that the company is precluded by the incontestability clause of the policies from relying on the fraud alleged. We think that this point is conclusive of the case.

The incontestability clause in question, which is the same in both policies, except that only one policy provides for double indemnity and consequently only one incontestability clause refers to this feature of the policy, is as follows:

"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 company contends that the effect of the second exception of this clause is to make it inapplicable to the double indemnity and disability provisions of the policy. The contention of the insured, which we think is correct, is that the effect of this exception is merely to preserve the rights of the company under the restrictions and provisions specifically set forth in sections 1 and 3.

It is to be observed that the promise of the company to pay double indemnity and disability benefits is in the face of the policy and that sections 1 and 3 contain the provisions, limitations, and conditions under which these double indemnity and disability benefits will be paid. The promise in the face of the policy is that the company will pay to the beneficiary $10,000 upon due proof of the death of the insured "or twenty thousand dollars, upon receipt of due proof that such death resulted from bodily injury effected solely through external, violent, and accidental means, and occurred within ninety days after such injury, all upon the conditions set forth in Section 1, and if the insured is totally and presumably permanently disabled before age 60, will pay to the insured one hundred dollars monthly during such disability, besides waiving premium payments, all upon the conditions set forth in Section 3." The section 1 referred to is as follows:

"Section 1. Double Indemnity. The double indemnity will be payable upon receipt of due proof that the insured died as a direct result of bodily injury effected solely through external, violent, and accidental means, independently and exclusively of all other causes, and of which, except in the case of drowning or asphyxiation, there is evidence by a visible contusion or wound on the exterior of the body, and that such death occurred within ninety days after the date of such injury; provided that the double indemnity shall not be payable if death resulted from self-destruction, whether sane or insane, or from military or naval service in time of war, or from any act incident to war, or from engaging in riot or insurrection, or from committing an assault or felony, or from participation in aeronautics, or directly or indirectly from disease or bodily or mental infirmity.

"The Company shall have the right and opportunity to examine the body and to make an autopsy unless prohibited by law.

"If requested in writing by the insured, the Company will terminate the provision for double indemnity by endorsement on this Policy. If so terminated, the premiums payable thereafter shall be reduced by the premium for such benefit."

The section 3, relating to disability benefits, begins by defining total and permanent disability. This is followed by a provision that the disability benefits and waiver of premiums shall be granted, if the insured, before attaining the age of sixty and while no premium is in default, shall furnish the company due proof of disability. Then follows a number of general provisions relating to disability benefits, including provisions, that, if upon request of the company the insured should fail to furnish proof of the continuance of disability, no further income payments would be made or premiums waived, that disability benefits would not be granted if the disability should be the result of self-inflicted injury, and that the provision for disability benefits should automatically terminate if the insured should engage in military or naval service outside the continental limits of the United States and Canada.

The purpose of the second exception...