Ambrose v. Acacia Mut. Life Ins. Co
| Decision Date | 21 November 1949 |
| Citation | 190 Va. 186,56 S.E.2d 372 |
| Parties | AMBROSE. v. ACACIA MUT. LIFE INS. CO. |
| Court | Virginia Supreme Court |
Action by Richard Gerald Ambrose, an infant, etc, against Acacia Mutual Life Insurance Company, etc, to recover as beneficiary under a life policy issued by defendant.
The Circuit Court of the City of Norfolk, Clyde H. Jacob, J, entered judgment for defendant and plaintiff brought error.
The Supreme Court of Appeals, Miller, J, held that since policy omitted provision required by statute as to contestability for fraud incident to reinstatement, it was not contestible after one year from date of issue for such fraud and reversed the judgment and entered final judgment for plaintiff.
White, Ryan & Holland, Norfolk, for plaintiff in error.
Williams, Cocke & Tunstall, Norfolk, for defendant in error.
Before HUDGINS, C. J., and GREGORY, EGGLESTON, SPRATLEY, BUCHANAN, STAPLES, and MILLER, JJ.
On December 17, 1943, Elizabeth Patrick made written application to an agent of the Acacia Mutual Life Insurance Company for life insurance in the sum of $2,000. A policy on her life was issued on February 28, 1944, in which her son, Richard Gerald Ambrose, was named beneficiary. The policy was allowed to lapse on May 28, 1945, for non-payment of premiums. On July 17, 1945, written application for reinstatement was made by insured and upon payment of past due premiums and accrued interest, it was reinstated. For non-payment of premiums, it lapsed again on January 28, 1946, but a second written application for reinstatement was made on March 28, 1946, and upon payment of past due premiums with interest, the application was approved April 1, 1946, and the policy again reinstated.
Insured died October 4, 1946. Upon refusal to pay the $2,000, provided for in the policy, the beneficiary instituted this action against the company. At the trial, defendant's motion to strike out plaintiff's evidence was sustained. After return of the jury's verdict, a judgment was entered in favor of defendant company and from that judgment this writ of error was awarded.
The Company says that false statements and representations material to the risk were made by Elizabeth Patrick when she first secured the policy and when each application for reinstatement was made, which were relied upon by it and constituted fraud in each instance. It contends that not only could the validity of the policy have been contested for fraud within a year after its date, but that it may be contested within a year after each reinstatement, for fraud perpetrated upon the company to secure the reinstatements.
The pertinent parts of the respective statutes of Virginia limiting the time within which (a) the validity of a policy of life insurance may be contested for any cause other than non-payment of premiums, and (b) the circumstances and conditions under which a lapsed life insurance policy may be reinstated, read:
The material provisions contained in the policy incident to (1) the period of con-testability, and (2) the conditions upon which reinstatement may be had in case the policy is allowed to lapse are:
Insured died within a year after the last application was made for reinstatement and within a year after that reinstatement actually took place and became effective. It was shown in evidence that the Company instituted a suit in equity against the beneficiary on the 20th day of March, 1947, contesting the validity of the insurance policy. In that proceeding, which was brought in Pennsylvania, jurisdiction was obtained of the beneficiary where he then resided, and tender of $314.27, alleged to be the amount of premiums paid with accrued interest, was made. The Company sought cancellation of the policy on the ground that fraud had been perpetrated by insured upon it when the last reinstatement of the policy was obtained. It now says that by the institution of that suit it complied with the time limit fixed in the statute and policy within which contest must be made.
The beneficiary asserts that the policy is incontestable for fraud after one year from its date provided insured survives its issuance for such period and so meets the requirements of section 4228 of the Code. In other words, he says that a period of one year within which to question the validity of the policy for fraud is not allowed after each reinstatement, but is limited to the year next following the date of the original policy. The beneficiary also contends that the suit instituted by the company should have been against the administrator of the insured and not against the beneficiary alone, that tender of $314.27 was insufficient and not a proper tender, and that fraud in the procurement of the last reinstatement was not conclusively proved but was a controverted question of fact to be determined by the jury.
We will not now stop to consider the sufficiency of the tender, or whether the chancery suit omitted a necessary party, or whether fraud in the procurement of the reinstatement was conclusively proved. For if plaintiff be correct in his assertion that fraud perpetrated to secure the reinstatement is not a good defense in this action, decision of those other questions is rendered unnecessary.
We now give our attention to the primary and immediate legal question, which is--
If the policy be in force for more than a year during the lifetime of insured and is allowed to lapse, and its reinstatement is obtained upon false representations material to the risk, is the company entitled to another year after the reinstatement within which to contest the validity of the policy for fraud perpetrated so secure the reinstatement?
Plaintiff relies upon sections 4228 and 4251c of the Code to sustain his positionthat fraud in the procurement of this reinstatement is not a defense to his action because no provision was contained in the policy or written application for reinstatement reciting that the policy shall be contestable for fraud or misrepresentation pertaining to the reinstatement.
The original policy, dated February 28, 1944, was never surrendered to the company or cancelled. No new policy was ever issued, but in each instance the old policy was reinstated. It is wholly devoid of any provision asserting a right to contest its validity for fraud pertaining to the reinstatement though section 4251c, in unambiguous language, requires its presence unless a provision incident thereto more favorable to insured be contained therein.
It therefore appears that insurer knowingly elected to leave out of the policy the provision mentioned in the statute that expressly permitted a period ensuing after each reinstatement within which to contest the policy for fraud or misrepresentation pertaining to the reinstatement, and thereby purposely made its conditions incident to paragraph (a) Tenth of section 4251c obviously more favorable to the insured as contemplated and allowed by paragraph (b) of said section.
Defendant, having issued such policy omitting all reference to the right to contest for fraud incident to reinstatement, cannot now be heard to say that its provisions in that respect are not in the opinion of the State Corporation Commission more favorable than required by statute. Virginia Auto Mutual Insurance Co. v. Brillhart, 187 Va. 336, 46 S.E.2d 377.
In addition to containing a clause which recites part of the statutory language of paragraph (a) Tenth of section 4251c and is more favorable to insured than required, the policy, by brief, plain...
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