Harris v. Security Life Insurance Company of America
| Decision Date | 28 February 1913 |
| Citation | 154 S.W. 68,248 Mo. 304 |
| Parties | S. WINIFRED HARRIS v. SECURITY LIFE INSURANCE COMPANY OF AMERICA, Appellant |
| Court | Missouri Supreme Court |
Appeal from Jackson Circuit Court. -- Hon. Thomas J. Seehorn, Judge.
Affirmed.
Yates & Mastin for appellant.
(1) This policy is to be interpreted by the laws of Illinois. According to the decisions of the Supreme Court of Illinois such a clause as that contained in the policy sued on, does not make the contract absolutely incontestable in cases where false and fraudulent answers are given by the insured in his application. It is only where the incontestable stipulation gives to the insurer a period for investigation and ascertainment of the truth of the representations made in the application, sufficient to enable the company, by the exercise of proper diligence to find out whether fraud has been practised or not. Flanigan v. Ins. Co., 231 Ill. 399; Royal Circle v. Achterrath, 204 Ill. 549. It has always been the law, everywhere, and it ought to be the law, that fraud vitiates every contract. There is much respectable authority to the effect that such a clause (but without a time limit), as that contained in the policy sued on in this case, does not preclude the company from showing fraud. Bliss on Life Insurance (2 Ed.), p. 431; Welton v Hardisty, 8 E. & B. 232; In re Life Assurance Co., 18 Weekly Rep. 396; Welsh v. Life Ins Co., 108 Ia. 224. "An indisputable policy is not in fact really indisputable for it leaves open the question whether the statement or omissions complained of were fraudulent or not." Bunyon on Life Insurance, p. 85. (2) Plaintiff's instruction 1 is unquestionably erroneous, no matter what view we may take of the other questions presented by this appeal. It is, in fact, a peremptory instruction for plaintiff. By its terms the jury must find for the plaintiff subject only to the following conditions: 1, That they find plaintiff was, when the policy was issued, the wife of Robert H. Harris; 2, That proofs of death of Robert H. Harris were furnished to the defendant; 3, That defendant thereafter failed or refused to pay plaintiff the amount specified in the policy. The instruction, of course, is bottomed on the theory that the policy is absolutely incontestable and that this incontestability is subject to no contingency whatever. It is so pleaded by plaintiff in her reply, but such is not the condition contained in the contract in evidence; by its terms the policy is incontestable after one year "provided the premiums are duly paid." No evidence was offered with reference to the payment of the second premium due on Dec. 20, 1906, nor does the instruction submit this policy qualification to the jury, although the policy, by its terms, promises to pay unto the plaintiff the indemnity only in consideration of the payment of "two hundred and twenty-five dollars and no cents in advance and of a like sum on the 20th day of December in each year for five years from the date hereof." Plaintiff's petition pleads compliance with all of the conditions of the contract which includes the above, yet no proof is offered in support of the issue, nor is it submitted to the jury. Clearly respondent cannot take advantage of this clause by which the company surrendered valuable rights without any proof of compliance with the terms of the stipulation. The payment of premium, when due, was a condition precedent and upon the fulfillment thereof the incontestability clause of the policy depended. "The distinction between warranties and conditions precedent is well pointed out in Redman v. Ins. Co., 49 Wis. 431, where the court says that a condition precedent calls for the performance of some act or the happening of some event after the terms of the contract have been agreed on and before the contract takes effect." 2 Cooley's Briefs on Law of Insurance, p. 1151 (O). "In view of the essential characteristics of conditions precedent, it is elementary that a breach of such a condition avoids the policy absolutely." 2 Cooley's Briefs on Law of Insurance, p. 1169 (I). According to the great weight of latter day authority in this country, a policy of life insurance which provides that it shall be incontestable after some mentioned term, cannot be attacked, even though the insured shall have practiced the most flagrant and glaring fraud upon the insurer. Some of the modern courts seem to justify these decisions, which we think are at varance with good morals, sound public policy, and sound reason, by denominating such a condition a short statute of limitation, applicable to the policy contract. All of the modern decisions that we have read upon the subject are more specious than sound. It does not lie within the compass of any judge, however learned, to justify the literal and technical enforcement of contract language which violates the time honored and universally approved legal aphorism: "Fraud vitiates all contracts." To literally and technically enforce this modern legal rule, is to place a very high premium upon rascality and criminal conduct. This is well illustrated by the facts in the very case that we have under consideration. We venture to say there is no insurance company in Christendom that would knowingly insure an ex-convict, who had served a term for the commission of a crime involving moral turpitude, relying upon the statements and warranties made by him in his written application for the policy, as the foundation of the contract. If one induces another to enter into a contract through his fraudulent acts, there is no contract and by all of the rules of right, it ought to be impossible that there should be a contract under such circumstances. No living man can justify a decision upholding the incontestability of a contract where the making of that contract has been brought about through the absolute fraud and chicanery of the party whose beneficiary seeks to profit by it. He may be able to satisfy sophistry, but he will never be able to satisfy his own conscientious perceptions of what is the right of the matter. (3) The court erred in refusing to give defendant's instruction 7. If plaintiff was suffering from any brain or nervous disorder at the time of the application, which was the 17th day of December, 1906, and there is abundant evidence from which this inference may well have been drawn by the jury, then it goes without the saying that he was not in good health at the time the policy was delivered, within the meaning of its conditions in that regard. If Harris was not in good health when the policy was delivered to him, then the contract never attached. When an insurance application provides, as here, that the policy shall not become binding on the company issuing it until the first premium has been actually paid during the good health of the applicant, it has always been held that this condition must be observed before the contract becomes effective. Volker v. Ins. Co., 21 N.Y.S. 456; Reese v. Ins. Co., 111 Ga. 482; Anders v. Ins. Co., 62 Neb. 585; Langstaff v. Ins. Co., 69 N.J.L. 54; Life Ins. Co. v. Willis, 37 Ind.App. 48. Where it is shown that the insured was not in good health at the delivery of the policy containing such condition, it never attaches. "It is like insuring a building already on fire." Powers v. Ins. Co., 50 Vt. 637; Thompson v. Ins. Co., 101 N.W. (N. Dak.) 901; Ins. Co. v. Howle, 62 Oh. St. 204. "The question of sound health is for the jury." Dorey v. Ins. Co., 172 Mass. 234.
J. C. Rosenberger and Kersey Coates Reed for respondent.
(1) Each and every one of appellant's defenses are foreclosed by the incontestable clause of the policy. By an unbroken and unanimous line of authority it has been held everywhere that where, as here, the clause provides that after a specified time the policy shall be incontestable and the policy matures by death after that time, the liability of the company is absolute and the policy cannot be contested for fraud or any other cause not excepted by the clause. 25 Cyc. 873; Royal Circle v. Achterrath, 204 Ill. 549; Flannigan v. Ins. Co., 231 Ill. 399; Ins. Co. v Robinson, 104 Ga. 256; Ins. Co. v. Montgomery, 116 Ga. 799; Vetter v. Ins. Co., 29 A.D. 72; Wright v. Ins. Co., 118 N.Y. 237; Patterson v Ins. Co., 100 Wis. 118; Austin v. Mutual Reserve Ass'n, 132 F. 555; Reagan v. Ins. Co., 189 Mass. 555; Murray v. Ins. Co., 22 R. I. 524; Mohr v. Ins. Co., 32 R. I. 177; Clement v. Ins. Co., 101 Tenn. 22; Ins. Co. v. Fox, 106 Tenn. 347; Ins. Co. v. McClure, 138 Ky. 138; Wood v. Dwarris, 11 Exch. 493, 25 L.J. 129; 25 Cyc. 873. (2) Plaintiff prima-facie showed that all of the premiums had been duly paid when she produced and offered the policy and it then devolved on defendant to overthrow this showing with proof to the contrary. This it could not and did not do. It did not even plead non-payment of premium, which is an affrmative defense, in its answer. The burden of showing non-payment of premium rested on defendant. 25 Cyc. 925, 927; Mulroy v. Sup. Lodge, 28 Mo.App. 463; Forse v. Sup. Lodge, 41 Mo.App. 117; Laessig v. Ins. Co., 169 Mo. 281; Crenshaw v. Ins. Co., 71 Mo.App. 281; McCullough v. Ins. Co., 113 Mo. 616; Winn v. Ins. Co., 83 Mo.App. 123. And this is also the law in Illinois: Achterrath v. Loyal Circle, 204 Ill. 549; Ins. Co. v. Cannon, 103 Ill.App. 534, 201 Ill. 260; Ins. Co. v. March, 118 Ill.App. 261. (3) The acceptance by defendant of a sixty-day note in payment of the first premium and the issuance by the company's secretary of a binding receipt, the terms of which put the policy in effect "from the date of approval of the application by the company's medical director," was a waiver of prepayment of the premium and did not delay or postpone the running of the period of contestability until payment of the note. ...
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