New York Life Ins. Co. v. Jackson

• Citation: 94 F.2d 288
• Decision Date: 14 February 1938
• Docket Number: No. 6225.,6225.
• Parties: NEW YORK LIFE INS. CO. v. JACKSON et al.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

94 F.2d 288 (1938)

NEW YORK LIFE INS. CO. v. JACKSON et al.

No. 6225.

Circuit Court of Appeals, Seventh Circuit.

January 10, 1938.

Rehearing Denied February 14, 1938.

Rudolph J. Kramer, Bruce A. Campbell, R. E. Costello, 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. Feuerbacher, 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 attorneys' 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 paying the semiannual premium due July 22, 1934.

On December 5, 1934, Jackson furnished proofs for a claim for total disability benefits from August 18, 1934. He had suffered from paralysis agitans from August 1, 1934, having been under the care of two physicians who had thus diagnosed his condition by reason of which he was totally disabled. He was at that time less than 60 years of age. In February, 1935, appellant notified appellees that it rescinded the reinstatement of the policy and had restored its status as of July 22, 1934, indorsing on the last policy loan agreement (that of August 25, 1934) that by reason of the rescission of the reinstatement the amount of the indebtedness was reduced to $1,363, foreclosed and paid by deducting the amount of the indebtedness and accrued interest from the value of the policy as of the date of lapse. It then tendered to Jackson the sum of $145, the amount of cash received in connection with the reinstatement, with interest. The court further found, in accordance with the stipulation of facts and the evidence introduced, that on August 18, 1934, Jackson was permanently and totally mentally and physically disabled and incapacitated, and that such mental and physical condition had continued from that date up to the date of entry of the decree. It concluded, therefore, that the attempted reinstatement of the policy was of no effect; that at the time of the disability the policy was in full force and effect, and continued so to be; and that there was owing the sum of $2,900, with interest amounting to $181, less $1,363, with interest of $231, due from Jackson to appellant.

The policy here involved provided for payment of $10,000 in case of the death of the insured, with double indemnity if that death resulted from accident, and, "upon receipt of due proof that the Insured is totally and presumably permanently disabled before age 60, as defined * * * One Hundred * * * Dollars each month, and to waive payment of premiums as provided herein." The sections pertinent to the question of Jackson's right under the policy provide:

"In event of default in payment of premium after the Insured has become totally disabled as above defined, the policy will be restored and the benefits shall be the same as if said default had not occurred, provided due proof that the Insured is and has been continuously from date of default so totally disabled and that...