93 F.2d 416 (3rd Cir. 1937), 5939, Ruhlin v. New York Life Ins. Co.

Docket Nº:5939.
Citation:93 F.2d 416
Party Name:RUHLIN et al. v. NEW YORK LIFE INS. CO.
Case Date:September 27, 1937
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

Page 416

93 F.2d 416 (3rd Cir. 1937)

RUHLIN et al.

v.

NEW YORK LIFE INS. CO.

No. 5939.

United States Court of Appeals, Third Circuit.

September 27, 1937

Margiotti, Pugliese, Evans & Reid, S. C. Pugliese, and John E. Evans, Sr., all of Pittsburgh, for appellants.

Wm. H. Eckert, and Smith, Buchanan, Scott & Gordon, all of Pittsburgh, Pa., for appelee.

Before BUFFINGTON, DAVIS, and THOMPSON, Circuit Judges.

DAVIS, Circuit Judge.

This case is before us on reargument.

This is a suit by the appellee to rescind the double indemnity and disability provisions in certain policies of life insurance issued by it to John G. Ruhlin, one of the appellants, because of fraud and alleged to have been practiced by him in procuring the insurance, and to enjoin him from prosecuting a suit previously commenced by him in a state court to collect the disability benefits.

The question in issue are whether or not the company is barred from rescinding these provisions because of the 'incontestability' clause contained in each of the policies, and whether or not the insured should be enjoined from prosecuting the suit in the state court. This clause reads as follows: 'This policy shall be incontestable after two years from its date of issue except for the non-payment of premiums, and except as to provisions and conditions relating to Disability and Double Indemnity Benefits.'

In our former opinion, filed October 6, 1936, disposing of this case, and also the case of Gatti v. New York Life Insurance Company (FN1) which involved the same questions as are here in issue, we held that the company was not barred by the incontestability clause from rescinding the disability and double

provisions, though the action was commenced more than two years after the policy was issued, and that the District Court erred in enjoining the prosecution of the suit in the state court.

In the recent decision in the case of Stroehmann et al. v. Mutual Life Ins. Co.

Page 417

of New York, 300 U.S. 435, 57 S.Ct. 607, 609, 81 L.Ed. 732, the Supreme Court held that the incontestability clause there involved did bar an action to rescind the double indemnity and disability provisions after the period of contestability had passed because it was ambiguous. The clause in that case read 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.'

In its opinion the Supreme Court said:

'The Circuit Court of Appeals followed its earlier opinion in New York Life Ins. Co. v. Gatti (Oct. 6, 1936), (FN1) where the company employed different language. Certain life companies undertake to make exceptions to the incontestability clause by words more precise than those now under consideration and opinions in cases arising upon their policies must be appraised accordingly.

'Without difficulty respondent could have expressed in plain words the exception for which it now contends. It has failed, we think, so to do. And applying the settled rule, the insured is entitled to the benefit of the resulting doubt.'

The...

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