Connecticut General Life Ins. Co. v. Levin
| Decision Date | 07 October 1947 |
| Citation | 55 A.2d 127,115 Vt. 170 |
| Parties | CONNECTICUT GENERAL LIFE INS. CO., v. HAROLD M. LEVIN ET AL |
| Court | Vermont Supreme Court |
May Term, 1947.
Life Insurance.
1. A demurrer admits, for purposes of its consideration, the plaintiff's allegations.
2. Where suit is brought on a life insurance policy for claimed disability benefits and the company seeks to enjoin such action and to have the double indemnity and disability clauses of the policy cancelled on the ground of fraud chancery will assume jurisdiction when it appears that in the event of the death of the insured by accident at some future time a bona fide controversy might arise, from litigation of which the then beneficiary could not be barred by a prior judgment in a law action to which he was not a party.
BILL seeking cancellation and injunction. In Chancery, Chittenden County, September Term, 1946, Adams, Chancellor. Decree overruling the defendant's demurrer.
Decree overruling the defendant's demurrer affirmed.
McNamara & Larrow for the defendants.
Austin & Edmunds for the plaintiff.
Present MOULTON, C. J., SHERBURNE, BUTTLES, STURTEVANT and JEFFORDS JJ.
The plaintiff in 1929 issued a policy of insurance on the life of the defendant Levin which contained a provision for the payment of double indemnity in case of the death of the insured by accident and a provision for waiver of premiums and payment of benefits in the event of the insured's becoming permanently and totally disabled, extra stated premiums being required to cover these benefits. The policy lapsed for failure to pay the premium due Sept. 16, 1942, and the extended insurance provision of the policy became operative. Thereafter the policy was reinstated upon written application of the insured dated Nov. 4, 1942. This application contained certain statements and answers to questions which the plaintiff alleges were false and fraudulent although it believed them to be true and acted upon them in reinstating the policy.
As of Jan. 28, 1944, the insured made application for disability benefits under the policy, claiming total disability from Oct. 30, 1943. An investigation followed which disclosed, the plaintiff alleges, that the statements and answers made by the insured in his application were false and fraudulent. It therefore elected to rescind the reinstatement and tendered to the insured all premiums that had been paid in connection therewith with accrued interest, which tender was refused. On Feb. 7, 1946, the defendant Levin brought an action at law in Chittenden County Court for claimed disability benefits. The plaintiff in the present chancery suit begun thereafter prays the cancellation of both the double indemnity and disability provisions of the policy, and that the defendants be enjoined from further prosecution of the action at law or any other action seeking to recover such disability or double indemnity benefits.
The defendant demurred to the complaint on the grounds that the plaintiff has an adequate remedy by way of defense to the defendant's action at law, and that the cancellation of the double indemnity clause of the policy is not here a matter in controversy between the parties or any of them. The case comes here on defendant's exception to the decree of the chancellor overruling the demurrer. The demurrer of course admits, for purposes of its consideration, the plaintiff's allegations that the statements of the insured were fraudulent and material and were relied upon by the insurer in reinstating the policy. Bowen v. Grand Trunk Ry. Co., 86 Vt. 483, 86 A. 306. The jurisdiction of equity to give relief in a proper case of this kind by injunction, cancellation or otherwise is not questioned.
The facts in the case of New York Life Ins. Co. v McLaughlin, 112 Vt. 402, 26A.2d 108, 112, were very similar to those in the present case. Two policies issued by the plaintiff in 1925 on the life of the insured defendant provided for double indemnity and disability benefits, for each of which an extra premium was payable. Each of the policies, like the one in the present case, provided that it should be incontestable after two years from its date of issue except for non-payment of premiums and except as to provisions and conditions relating to disability and double indemnity benefits. The McLaughlin policies lapsed for failure to pay premiums due Sept. 2, 1937. Soon thereafter they were reinstated upon written application of the insured. Some time later the insured made application for total and permanent disability benefits, and upon the application being refused commenced an action at law for the recovery of such benefits. Following this the insurer brought suit in chancery praying that the double indemnity and disability provisions of the policies be cancelled, that the insured be enjoined from prosecuting his action at law and that all of the defendants be enjoined from beginning any action to enforce these provisions, on the ground that the insured had made false and fraudulent representations in...
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