Head v. New York Life Ins. Co.

• Decision Date: 09 September 1930
• Docket Number: No. 246,245.,246
• Citation: 43 F.2d 517
• Parties: HEAD et al. v. NEW YORK LIFE INS. CO. HEAD v. HARTFORD ACCIDENT & INDEMNITY CO.
• Court: U.S. Court of Appeals — Tenth Circuit

43 F.2d 517 (1930)

HEAD et al. v. NEW YORK LIFE INS. CO.

HEAD v. HARTFORD ACCIDENT & INDEMNITY CO.

Nos. 246, 245.

Circuit Court of Appeals, Tenth Circuit.

September 9, 1930.

James C. Cheek and Albert L. McRill, both of Oklahoma City, Okl., for appellants.

W. F. Wilson, W. F. Wilson, Jr., R. E. Owens and Mr. Louis H. Cooke, all of Oklahoma City, Okl., for appellee New York Life Ins. Co.

F. A. Rittenhouse, Frank E. Lee, and John F. Webster, all of Oklahoma City, Okl., for appellee Hartford Accident & Indemnity Co.

Before LEWIS, PHILLIPS, and McDERMOTT, Circuit Judges.

PHILLIPS, Circuit Judge.

Appeal No. 246.

Harry B. Head and Tillie O. Head brought this action against the New York Life Insurance Company to recover upon a policy of life insurance.

The petition alleged in part the following: That on August 27, 1926, the insurance company issued to Arthur G. Head a certain life insurance policy by which it agreed to pay $5,000 to the beneficiaries named in such policy, upon receipt of due proof of the death of the insured, and the further sum of $5,000 if such death resulted from accident, as defined in the double indemnity clause of the policy; that plaintiffs are the father and mother of the insured and the beneficiaries named in such policy; that for some time prior to May 4, 1929, the insured had been engaged in the insurance business in Oklahoma City and on such day had gone to an airport near that city, at the request of the owner of an airplane, to inspect and to get information concerning such airplane, preparatory to writing a policy insuring it against fire, theft and tornado; that the pilot of such airplane suggested that insured take a ride in the airplane for the purpose of gathering such information as might be needed in preparing the application for and writing such insurance; that the insured boarded such airplane and the pilot set it in motion; that, after such airplane had been in the air about six minutes, it dived sharply to the ground and was wrecked, and as a result thereof insured sustained injuries from which he died three hours later; and that the insurance company had paid to the beneficiaries $5,000 but denied liability under the double indemnity clause.

The policy, a copy of which was attached to the petition, contained, among other things, the following provisions:

"The double indemnity provided on the first page hereof shall be payable upon receipt of due proof that the death of the insured resulted directly and independently of all other causes from bodily injury effected solely through external, violent and accidental means and occurred within ninety days after such injury.

"Double indemnity shall not be payable if the insured's death resulted * * * from participation as a passenger or otherwise in aviation or aeronautics.

"Payment of Premiums. — All premiums are payable on or before their due date at the Home Office of the Company or to an authorized agent of the Company. * * *

"All benefits under this policy are payable at the Home Office of the Company in the City and State of New York."

The Insurance Company demurred to the petition upon the ground that it did not state facts sufficient to constitute a cause of action. The court sustained the demurrer. Plaintiffs elected to stand upon their petition. From an order dismissing the petition plaintiffs have appealed.

Section 6707, C. O. S. 1921, in part provides:

"Life Insurance — Definition — Regulation. All corporations, associations, partnerships and individuals doing business in this State under any charter, compact, agreement or statute of this or any other state, involving the payment of money or other thing of value to families or representatives of policy holders or members, conditioned upon the continuation or cessation of human life, or involving an insurance, guaranty, contract or pledge for the payment of endowments or annuities, shall be deemed to be life insurance companies. * * *"

Section 6731, C. O. S. 1921, in part, provides:

"Life Policy — Contents and Provisions Necessary. No policy of life insurance shall be issued or delivered in this State or be issued by a life insurance company organized under the laws of this State unless the same shall at least provide in substance the following: * * *

"Third. That the policy, together with the application therefor, a copy of which application shall be endorsed upon or attached to the policy and made a part thereof, of, shall constitute the entire contract between the parties and shall be incontestable after two years from its date, except for nonpayment of premiums and except all violations of the conditions of the policy relating to the naval or military service in time of war; Provided, that the application therefor need not be attached to any policy containing a clause making the policy incontestable from date of issue."

Counsel for plaintiffs contend that the policy is a life insurance policy within the meaning of section 6707, supra, and that the provision in the policy that double indemnity shall not be payable if the insured's death resulted "from participation as a passenger or otherwise in aviation or aeronautics" violates section 6731, supra, and is therefore void.

Section 6731, supra, by its express terms, only applies to policies of life insurance issued or delivered in the state of Oklahoma or issued by a life insurance company organized under the laws of Oklahoma. There is nothing on the face of the policy here involved or in the allegations of the petition to show that this policy was either issued or delivered in the state of Oklahoma. It affirmatively appears that it was issued by a corporation organized under the laws of the state of New York, and that the premiums and the benefits were payable at the office of the insurance company in the city and state of New York. Under these facts, the laws of New York rather than of Oklahoma would govern. In the case of Metropolitan L. I. Co. v. Conway, 252 N. Y. 449, 169 N. E. 642, it was held that the following rider — "Death as a result of service, travel or flight in any species of aircraft, except as a fare-paying passenger, is a risk not assumed under this policy; but, if the insured shall die as a result, directly or indirectly, of such service, travel or flight, the company will pay to the beneficiary the reserve on this policy" — was not inconsistent with the provisions of Insurance Law, § 101, subdivision 2 (Consolidated Laws of New York, c. 28), which provides that every policy "shall be incontestable after it has been in force during the lifetime of the insured for a period of two years from its date of issue except for non-payment of premiums and except for violation of the conditions of the policy relating to military or naval service in time of war," for the reason that the "Incontestable Clause" of such statute was not a definition of the hazard to be borne by the insurer but a limitation as to defenses based on a breach of condition rendering the policy invalid.

The "incontestable" provision in section 6731, supra, is not a mandate as to coverage nor a definition of the hazards to be borne by the insurer. It provides rather that, after the expiration of the two year period, the policy, within the limits of the coverage, shall stand unaffected by any defense that it was invalid in its inception or thereafter became invalid by reason of a condition broken. The exceptions to the "incontestable" provision of the statute do not militate against this construction. Here, again, the distinction must be made between limitation on the coverage and limitation on a defense of invalidity. A policy may provide that default in the payment of a premium or the entry of the insured into the military or naval service shall forfeit the insurance. Such a condition is more than a limitation of the risk. It is a provision for forfeiture upon a condition broken. In the event of its violation, the policy, at the election of the insurer, is avoided altogether and this, notwithstanding the death of the insured is unrelated to the breach. No such result follows when there is mere restriction as to coverage. The policy is still valid and enforceable in respect to the risks assumed. Such being the nature and purpose of an "incontestable" provision, it is clear that such a clause does not preclude the insurer from asserting that the risk producing the death of the insured was not within the coverage of the policy. Jolley v. Jefferson Standard L. I. Co. (N. C.) 154 S. E. 400, decided August 20, 1930; Sanders v. Jefferson S. L. Co. (C. C. A. 5) 10 F.(2d) 143; Metropolitan L. I. Co. v. Conway, 252 N. Y. 449, 169 N. E. 642.

Counsel for the plaintiffs further contend that the death of the insured did not result "from participation as a passenger or...