Chun Ngit Ngan v. Prudential Ins. Co. of America

• Decision Date: 16 November 1925
• Docket Number: No. 4660.,4660.
• Citation: 9 F.2d 340
• Parties: CHUN NGIT NGAN v. PRUDENTIAL INS. CO. OF AMERICA.
• Court: U.S. Court of Appeals — Ninth Circuit

9 F.2d 340 (1925)

CHUN NGIT NGAN v. PRUDENTIAL INS. CO. OF AMERICA.

No. 4660.

Circuit Court of Appeals, Ninth Circuit.

November 16, 1925.

Thompson, Catheart & Beebe, Frank E. Thompson, Eugene H. Beebe, and Marguerite K. Ashford, all of Honolulu, Hawaii, for plaintiff in error.

Frear, Prosser, Anderson & Marx, W. F. Frear, Mason F. Prosser, and Robbins B. Anderson, all of Honolulu, Hawaii, for defendant in error.

Before GILBERT, RUDKIN, and McCAMANT, Circuit Judges.

RUDKIN, Circuit Judge.

This was an action on a life insurance policy containing the familiar clause: "This policy shall be incontestable after one year from its date, except for nonpayment of premium, but if the age of the insured be misstated the amount or amounts payable under this policy shall be such as the premium would have purchased at the correct age." The policy was issued May 1, 1922, and the insured died of tuberculosis about nine months thereafter. After his death, but within the year from the date of the issuance of the policy, the insurance company tendered to the beneficiary all premiums theretofore paid and demanded a return of the policy on the ground that the insured had made false and fraudulent representations concerning his health in his application for the insurance. Beyond this tender, demand, and notice, no action was taken by the insurance company to contest the policy within the year, either by way of defense to an action at law on the policy or by independent suit in equity to cancel it because of fraud in its procurement. Did the tender, demand, and notice constitute a contest within the meaning of the policy? The Supreme Court of the territory answered this question in the affirmative, the chief justice dissenting, and the case has been brought here by writ of error. The overwhelming weight of authority supports the rule that the incontestable clause commonly found in life insurance policies is in effect a short period of limitation, and that a policy can only be contested within the meaning of the clause by proceedings in court to which the insurer and the insured, or his representative or beneficiary, are parties. A mere attempt on the part of one of the parties to the contract to cancel it for fraud where no such right or power is reserved in the contract itself is futile. Indiana Nat. Life Ins. Co. v. McGinnis, 180 Ind. 9, 101 N. E. 289, 45 L. R. A. (N. S.) 192; American Trust Co. v. Life Ins. Co., 173 N. C. 558, 92 S. E. 706; Murray v. State Mut. Life Ins. Co., 22 R. I. 524, 48 A. 800, 53 L. R. A. 742; Lavelle v. Metropolitan Life Ins. Co., 209 Mo. App. 330, 238 S. W. 504; Mutual Life Ins. Co. v. Buford, 61 Okl. 158, 160 P. 928; Monahan v. Metropolitan Life Ins. Co., 283 Ill. 136, 119 N. E. 68, L. R. A. 1918D, 1196; Ramsey v. Old Colony Life Ins. Co., 297 Ill. 592, 131 N. E. 108; Northwestern Mutual Life Ins. Co. v. Pickering (C. C. A.) 293 F. 496; Jefferson Standard Life Ins. Co. v. McIntyre (C. C. A.) 294 F. 886; Jefferson Standard Life Ins. Co. v. Keeton (C. C. A.) 292 F. 53.

In Northwestern Mutual Life Ins. Co. v. Pickering, supra, the court said: "An effect of the provision in question was to fix a time limit for a contest of the policy by the insurer on a ground other than the nonpayment of premium. A contest so provided for imports litigation, the invoking of judicial action to cancel or prevent the enforcement of the policy, either by a suit to that end or by a defense to an action on the policy. A mere denial or repudiation by the insurer of its liability under the policy, accompanied by a tender of the premium paid, is not a contest, within the meaning of the provision." Certiorari denied, 263 U. S. 720, 44 S. Ct. 229, 68 L. Ed. 524.

In Great Western Life Ins. Co. v. Snavely, 206 F. 20, 124 C. C. A. 154, 46 L. R. A. (N. S.) 1056, this court said: "The incontestable clause in the present policy is very general, excepting nothing from its scope, and by the strong current of authority precludes any defense after the expiration of one year on account of false statements, warranted to be true, although they may have been made for a fraudulent purpose. This is true as spoken of the original policy. The grounds for its support are that insurance companies, in order to obtain business, represent that they will issue policies incontestable as to certain matters after a...