Indiana Nat. Life Ins. Co. v. McGinnis

• Decision Date: 28 March 1913
• Docket Number: No. 22,372.,22,372.
• Citation: 180 Ind. 9,101 N.E. 289
• Parties: INDIANA NAT. LIFE INS. CO. v. McGINNIS.
• Court: Indiana Supreme Court

180 Ind. 9

101 N.E. 289

INDIANA NAT. LIFE INS. CO.

v.McGINNIS.

No. 22,372.

Supreme Court of Indiana.

March 28, 1913.

Appeal from Superior Court, Marion County; Vinson Carter, Judge.

Action by Melissa McGinnis against the Indiana National Life Insurance Company. From a judgment for plaintiff, defendant appealed to the Appellate Court (99 N. E. 751). On transfer of the cause under Burns' Ann. St. 1908, § 1394. Judgment of superior court affirmed.

Ulric Z. Wiley, of Indianapolis, and Arthur H. Jones, of Anderson, for appellant. Morton C. Embree and Harvey Hannon, both of Princeton, Oscar L. Pond, of Indianapolis, and Lucius C. Embree, of Princeton, for appellee.

SPENCER, J.

This suit was brought in June, 1909, to recover upon a life insurance contract issued on December 9, 1907, to John R. McGinnis of Gibson county, Ind., and payable $3,000 to appellee, the mother of the insured, and $2,000 to Emily S. McGinnis, the wife of the insured. John R. McGinnis died in Colorado on January 16, 1909. The contract or policy in suit contained, among others, the following provisions: “Incontestability. After one year from date of issue this policy shall be incontestable if the premiums have been duly paid.” “The insured may at any time during the continuance of this policy, provided the policy is not then assigned, and subject to the rules of this company regarding assignments and beneficiaries, change the beneficiary or beneficiaries by written notice to the company, at its head office; such change to take effect on the indorsement of the same on the policy by the company.” In answer to appellee's complaint seeking to recover on this policy, the appellant set up an affirmative defense in seven paragraphs, to the first, third, fourth, and sixth of which demurrers were sustained. These rulings are here assigned as errors, together with the trial court's action in overruling appellant's demurrer to the amended second paragraph of appellee's reply to appellant's fifth paragraph of answer.

The first paragraph of appellant's answer admitted the issuance and delivery of the policy sued on and the death of the insured, but denied that appellant was liable on such policy. It was alleged that by mutual agreement between appellant and the insured the contract had been canceled prior to his death by an instrument in writing under date of November 30, 1908, which was executed by the insured in consideration of the sum of $140.45 paid to him by the appellant. It was also alleged that certain answers made by the insured in his application for insurance were false and made for the purpose of fraudulently having the contract of insurance issued; that as soon as appellant learned such facts it located the insured at a sanitarium in Colorado, and there paid him the named consideration to release it from liability upon said contract; that the insured in making his application for insurance had stated that he was in good health; that he had never had any of certain enumerated diseases; that he never used intoxicating liquors; that he did not use tobacco to excess; that all of these answers were false and fraudulent; that at the time of making said answers McGinnis was not in good health, but had consumption and knew it; that he was addicted to the use of intoxicating liquors to the extent that he frequently became intoxicated; that he was an habitual user of tobacco to excess, so that its use had impaired his health; that his application contained the following clause: “On behalf of myself, and of any person who shall have or claim any interest in any policy that may be issued under this application, I hereby declare and agree that all the foregoing statements and answers, together with those contained in the declarations to the Indiana National Life Insurance Company's medical examiner are warranted to be full, complete and true, and they are offered to the company as a consideration for, and as a basis of, the contract with said company, under any policy issued under this application, which, if issued, I hereby agree to accept. *** That no liability on the part of said company shall arise until a policy shall be issued, and delivered to me, nor until the first premium thereon shall be actually paid, while I am in good health.”

The third paragraph of answer avers the questions and answers set out in the first, the part of the application for insurance in which the insured certified that his answers were correctly recorded by the medical examiner and that they were true, and his warranty as to all statements and answers made by him; that the application was duly executed and made a part of the policy; that appellant relied upon the warranties; and that because of the fraud therein said contract was void.

The fourth paragraph of answer asserts, in addition to the warranties alleged in the first and third, the alleged false and fraudulent representations of the insured, the return to him of the premium he had paid in consideration of his executing the release to appellant, said release being as follows: “This is to certify that I have this day received from the Indiana National Life Insurance Company, of Indianapolis, Indiana, the sum of one hundred forty and 45/100 dollars ($140.45) which is the amount of my first annual premium, together with six per cent. (6 per cent.) interest thereon, on policy No. 2931, issued to me by said company December 9, 1907. I hereby accept the above amount in full satisfaction of said policy, and release said company from further obligation upon aforesaid policy. In witness whereof, I hereunto set my hand, this 30th day of November, 1908, at Y. M. C. A. Farm, Edgewater, Colo. John R. McGinnis.”

The sixth paragraph of answer, in addition to the averments of the first as to answers to questions in the medical examination, warranties, etc., alleges fraud based upon answers to certain other questions, and that prior to the making of said application for insurance the insured was afflicted with a certain venereal disease, and falsely and fraudulently answered that he was not so afflicted, and did so knowingly; that appellant was thereby induced to issue to him the contract of insurance.

[1] The fifth paragraph of answer pleads the failure to pay the second annual premium due on said policy on December 9, 1908. The amended second paragraph of reply to this paragraph of answer alleges that the beneficiaries in said policy and the insured through an agent at Princeton, Ind., made an offer to pay said premium due on said policy by tendering a check, which was good, in compliance with a request of the notice of the company to the insured to “make all checks payable to the company” by mailing the check to the company; that it was received and returned to the agent with a notice to him that the policy had been canceled, and inclosing to him a copy of the alleged cancellation, and requesting such alleged agent to return the policy to the company.

To reverse the lower court by this appeal, appellant insists that the several paragraphs of answer to which demurrers were sustained were sufficient to constitute a good defense, and that appellee's amended second paragraph of reply to the fifth paragraph of answer does not state facts sufficient to avoid said paragraph; that, under the terms of the insurance contract, the application for insurance by the insured, with his answers to the questions and the medical examination, were warranties as true and appellant had the right to rely thereon; that the answers as made by the insured were made knowing they were false and with fraudulent intent; that the contract of insurance was legally canceled, and the liability of the appellant terminated by the agreement between the insured and appellant. Appellee, to sustain the rulings and judgment, contends that the contract of insurance was executed, delivered, and accepted on December 7, 1907; that it matured by the death of the insured on January 16, 1909; that such contract specifically provided that “after one year from date of issue this policy shall be incontestable if the premiums have been duly paid”; that the premiums were duly paid or payment duly tendered; that the defense of breach of warranty was attempted after June 16, 1909, and in view of the incontestable clause comes too late; that first, third, fourth, and sixth paragraphs of appellant's answer are therefore each fatally defective, for the reason that neither of them states facts sufficient to avoid the effect of the incontestable clause; also, that the first and fourth paragraphs of answer are bad because they are based upon an alleged cancellation of the insurance contract by the insured and the appellant without the knowledge or consent of appellee; that as such beneficiary in such insurance contract appellee had such an interest therein at the time of its execution, delivery, and acceptance as could be affected by the acts, statements, or admissions of the insured and appellant only in the manner as therein specifically provided; that the amended second paragraph of reply to the fifth paragraph of answer was sufficient to avoid such answer because the fifth paragraph of answer charged the nonpayment of the second annual premium on such insurance contract, and the challenged reply thereto asserts the delivery to appellant of a check drawn upon a bank at Princeton, Ind., by an authorized agent of the appellee and the insured, which check was for the full amount of such premium, and was payable to appellant; that there were funds in the bank on which the check was drawn to the credit of the drawer of the same sufficient to pay it in full upon presentation of the same; that appellant did not decline or refuse to accept the payment as tendered because of the form thereof, but returned such check to the agent, with the declaration that the insurance contract had been canceled by an agreement between the appellant and the insured, which was in writing, and...