94 F.2d 288 (7th Cir. 1938), 6225, New York Life Ins. Co. v. Jackson

Docket Nº:6225.
Citation:94 F.2d 288
Party Name:NEW YORK LIFE INS. CO. v. JACKSON et al.
Case Date:January 10, 1938
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

Page 288

94 F.2d 288 (7th Cir. 1938)

NEW YORK LIFE INS. CO.

v.

JACKSON et al.

No. 6225.

United States Court of Appeals, Seventh Circuit.

January 10, 1938

Rehearing Denied February 14, 1938.

Page 289

Rudolph J. Kramer, Bruce A. Campbell, R. E. Costell, Roland H. Wiechert, and Norman J. Gundlach, all of East St. Louis, Ill. (James J. Graham, of Springfield, Ill., of counsel), for appellant.

M. W. ***********, Arthur J. Freund, and Fred A. Eppenberger, all of St. Louis, Mo., for appellees.

Before EVANS and SPARKS, Circuit Judges, and LINDLEY, District Judge.

SPARKS, Circuit Judge.

This appeal presents the rather narrow question whether, under the provisions of the policy here involved, an insurer is liable for disability benefits to its insured who became totally and permanently disabled during the period of grace following the date on which a semiannual premium payment fell due, which premium was not paid until after the expiration of the period of grace. The insurer filed suit in equity to cancel the reinstatement of the policy on the ground that it was secured by fraudulent misrepresentations in the application for such reinstatement. The defendants named in the bill, the insured and his wife who was the beneficiary under the policy, filed an answer denying the responsibility of the insured for any misrepresentations which might have occurred in the application by reason of his mental incapacity at that time. They also filed a cross-bill asking that the insurer be ordered to pay the monthly disability benefits provided for in the policy, with 10 per cent. additional for the vexatious delay in payments due up to the date of the decree, and $2,000 for their attorney's fees. Decree was rendered in favor of the defendants on their cross-bill, and the insurer was ordered to pay the amount of monthly benefits accrued from August 18, 1934, to date, with 5 per cent. interest, less the amount owed by the insured on a loan secured by him on his policy. The decree also declared null and void the reinstatement of the policy August 25, 1934, and held the policy in full force and effect from the date of its issuance. It is from this decree that the appeal is prosecuted.

The facts were all stipulated except as to the mental condition of the insured during the period in question, and as to that appellees introduced evidence, the materiality and probative value of which appellant denied. Appellant introduced no evidence. The court found the facts substantially as follows: Appellant issued its policy to Jackson, then a resident of Missouri, July 22, 1927. All premiums were paid up to and including that due January 22, 1934. August 25, 1934, Jackson executed a written application for reinstatement of his policy, stating that he was then in the same condition of health as when the policy issued, and that he had suffered no illnesses or injuries nor had he consulted or been treated by any physician during the preceding 2 years. Both appellees then executed a loan agreement note for $1,471, and paid appellant $142 in cash, thereby paying a note executed in February, 1934, with interest, and...

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