Fed. Life Ins. Co. v. Relias

• Decision Date: 20 April 1933
• Docket Number: No. 14345.,14345.
• Citation: 185 N.E. 319,99 Ind.App. 115
• Parties: FEDERAL LIFE INS. CO. v. RELIAS.
• Court: Indiana Appellate Court

99 Ind.App. 115

185 N.E. 319

FEDERAL LIFE INS. CO.

v.RELIAS.

No. 14345.

Appellate Court of Indiana, in Banc.

April 20, 1933.

Appeal from Superior Court, St. Joseph County; J. Fred Bingham, Judge.

Action by Katie Relias against the Federal Life Insurance Company, wherein defendant cross-complained. From judgment for plaintiff, defendant appeals.

Affirmed.W. S. Carlisle, Parker, Crabill, Crumpacker & May, and Geo. N. Beamer, all of South Bend, for appellant.

W. A. Slick, of South Bend, for appellee.

CURTIS, Chief Judge.

This was an action on a life insurance policy on the life of one Phoebe Jane Schroeder, brought by the appellee, her sister, who was the beneficiary therein against the appellant, insurance company, who issued the policy. The policy was dated January 9, 1930. There was a written application for the policy which was dated December 22, 1929.

The policy was executed without medical examination on the application. In the application the insured stated that she was in sound health; that she had had no illness within ten years; that she never sought medical or surgical advice nor had she ever undergone any operation; that she never had cancer or tumor; that she never had any disease of the womb or ovaries and had never had a miscarriage. The application stated that the policy would not take effect unless delivered and received while the insured was in good health. The insured died April 24, 1930, of carcinoma (cancer) of the cervix of the uterus and compression of the ureters. The appellant tendered a return of the insurance premium and demanded a cancellation of the policy, which was refused. This action then followed. There was an answer in three paragraphs: (1) General denial; (2) fraud and bad health of appellee at the time of the application and when the policy was delivered; (3) a cross-complaint in equity to cancel the policy. The appellee replied in two paragraphs to the second paragraph of answer, the first being a general denial and the second relying upon waiver. She filed a demurrer to the third paragraph of answer or cross-complaint on the ground that the appellant had a legal remedy and could not plead the equitable remedy of cancellation. This demurrer was sustained with an exception to the appellant. The cause was tried before a jury upon the complaint in one paragraph, the first and second paragraphs of answer, and the first and second paragraphs of reply.

The jury returned a general verdict in favor of the appellee in the sum of $2,500 and also answered certain interrogatories. The judgment was upon the general verdict and in accordance therewith. A motion for a new trial was seasonably filed and overruled with an exception to the appellant and this appeal prayed and perfected.

The errors relied upon for reversal are: “(1) The Court erred in sustaining the demurrer of the appellee to the cross-complaint of the appellant. (2) The Court erred in overruling the motion of the appellant for a new trial.”

The motion for new trial contains fifteen causes or grounds which may be summarized as follows: Verdict contrary to law and not sustained by sufficient evidence; error as to the admission and exclusion of certain evidence; error in the giving of each of instructions numbered 4, 5, 6, 7, 8, 9, 11, and 12 tendered by the appellee, and in refusing to give each of instructions numbered 5 and 6 tendered by the appellant.

[1] Under propositions, points, and authorities in the appellant's brief, it has only discussed the ruling on the demurrer heretofore mentioned; that the verdict is contrary to law and is not sustained by sufficient evidence; the giving of each of the appellee's instructions numbered 4, 5, and 9, and the refusal to give the appellant's instruction numbered 6. All other alleged errors are therefore waived. We will consider the errors not waived in the order above mentioned.

[2] Section 370 of Burns' Ann. St. 1926, among other things, provides that: “The defendant may set forth in his answer as many grounds of defense, counter-claim and set-off, whether legal or equitable, as he shall have. Each shall be distinctly stated in a separate paragraph, and numbered, and clearly refer to the cause of action intended to be answered.” The pleading referred to as the third paragraph of answer or counterclaim to which the demurrer was sustained in the instant case obviously sought to present a defense directly connected with the transaction upon which the appellee must rely in her cause of action. It sought to cancel the contract, for fraud, upon which she based her action to recover. It is such a pleading as is recognized by our statute, supra, and is withinour Code definition of a counterclaim and we shall so regard it. See New York Life Insurance Company v. Adams, 202 Ind. 493, 176 N. E. 146. In the above case it was held that in a suit by the beneficiary, on a life policy, it was error for the court to strike out the insurer's so-called cross-complaint which was in fact a counterclaim to rescind the policy for misrepresentations regarding the insured's health, but that said error was harmless and not reversible where the defense of fraud was barred by the incontestable clause contained in the policy. In the instant case it is not claimed that the defense of fraud is barred by the incontestable clause in the policy.

In the case of Ebner, Administrator, v. Ohio State Life Insurance Company, 69 Ind. App. 32, 121 N. E. 315, 321, the court said: “We conclude that under proper circumstances an insurance company, after the loss has occurred, may proceed by affirmative action to avoid the policy, provided it takes proper steps to that end within the period named in the incontestability clause.” In the case of Indiana National Life Insurance Company v. McGinnis, 180 Ind. 9, 101 N. E. 289, 45 L. R. A. (N. S.) 192, the court collected together a large number of authorities in this country supporting the almost universal rule that every defense to a policy of insurance embraced within the terms of the “incontestable clause” is completely barred and lost to the insurer if it fails to make the defense or fails to take affirmative action within the time limited in the policy. We cite the last-mentioned case and the large number of authorities therein cited as showing that the insurance company may make the defense or take affirmative action within the time limited in the policy. In other words, the insurance company may avail itself of its remedy either by making such defense or taking affirmative action within the time limited in the policy. This, of course, does not mean that the issue thus tendered by way of defense or by way of affirmative action must be determined within the time limited by the policy, but means that such issue when tendered within such time may be determined by the court under its usual procedure. See Ebner, Administrator, v. Ohio, etc., Insurance Company, supra.

[3] Under the authorities we believe that the trial court erred in sustaining the demurrer to the said counterclaim, but was it such error as was harmful, requiring a reversal? We think not. An examination of the pleadings shows that the allegations of fraud in the appellant's second paragraph of answer and in its counterclaim are in legal effect identical. When the demurrer to the counterclaim was sustained, the appellant had the right to amend, of which right it did not avail itself. The appellant has made no showing that any of its evidence as to the alleged fraud of the appellee was excluded by reason of the ruling on the demurrer. There were certain causes in the motion for a new trial that related to the admission and exclusion of evidence, but these alleged errors were all waived by the appellant's failure to present them under its propositions, points, and authorities in its brief.

[4] We believe the law to be that ordinarily where, as in the instant case, the issues at law and in equity are identical and the law issue is tried, there is no right to a retrial of the equity issue. The litigant has had his remedy at law and equity will not interfere with the result, and this is especially true if the remedy at law is not inadequate. There is no showing in the instant case of any inadequacy of the remedy at law of the appellant. To sustain the position of the appellant would be to sanction a practice by which the plaintiff in every action upon an insurance policy may be deprived of his constitutional right to have his cause submitted to a jury. See Northern Life Insurance Company v. Walker, 123 Wash. 203, 212 P. 277;Biermann v. Guaranty Company, 142 Iowa, 341, 120 N. W. 963;New York Life Insurance Company v. McCarthy (C. C. A.) 22 F.(2d) 241;Untermyer v. Beinhauer, 105 N. Y. 521, 11 N. E. 847; 21 C. J. 68.

[5] The law is also well settled in this state that where a demurrer is erroneously sustained to a good paragraph of answer, but the same facts could as well be proven under another paragraph of answer, no injury results to the defendant and the ruling is harmless. It appears to us that the same facts concerning the alleged fraud of the appellee could as well have been proven under the first and second paragraphs of answer which were allowed to stand as under the counterclaim to which the demurrer was sustained, and that therefore there was no reversible error in the ruling on the demurrer. See Racer v. State, for use of Rhine, Drainage Commissioner, 131 Ind. 393, 31 N. E. 81;City of Valparaiso v. Spaeth, 166 Ind. 14, 76 N. E. 514, 8 Ann. Cas. 1021; and the long line of unbroken authorities following the above cases which we deem unnecessary to cite.

The appellant submitted to the jury 8 interrogatories, which together with the answers by the jury are as follow:

“(1) Did the insured Phoebe Jane...