Indianapolis Life Ins. Co. v. Aaron

• Decision Date: 14 March 1924
• Docket Number: No. 23665.,23665.
• Citation: 158 Minn. 359,197 N.W. 757
• Parties: INDIANAPOLIS LIFE INS. CO. v. AARON et al.
• Court: Minnesota Supreme Court

158 Minn. 359

197 N.W. 757

INDIANAPOLIS LIFE INS. CO.

v.AARON et al.

No. 23665.

Supreme Court of Minnesota.

March 14, 1924.

Appeal from District Court, Hennepin County; W. W. Bardwell, Judge.

Action by the Indianapolis Life Insurance Company against Theodore Aaron and others. The court overruled a demurrer to the complaint and certified the question as important and doubtful, and defendants appeal. Reversed.

Syllabus by the Court

Where the holder of a life insurance policy, issued by a company duly licensed to do such business, dies before the policy by its terms becomes incontestable, as provided by subdivision 3, § 3477, Gen. St. 1913, there is a plain, speedy, and adequate remedy at law to the company, and an action in equity to cancel the policy on the ground of fraud will not be entertained, following Mutual Life Insurance Co. v. Stevens (Minn.) 195 N. W. 913. Martin Kahner, of Minneapolis, for appellants.

John G. Priebe, of Minneapolis, for respondent.

HOLT, J.

In overruling a demurrer to the complaint the court certified the question decided to be important and doubtful. Defendant appeals.

The complaint set out, in substance, that plaintiff is a life insurance company duly licensed to do business in this state; that on September 15, 1922, upon the written application of Harry Aaron, plaintiff issued a policy insuring his life for the benefit of his estate in the sum of $5,000, and that the application contained representations as to age, health, physical condition, other insurance, and the result of prior applications for insurance in other insurance companies, setting them out in detail. Then follow allegations to the effect that the representations were false and untrue, and were made to defruad plaintiff, and that defendants were parties to the fraud; that plaintiff relied on the representations in issuing the policy, and had not knowledge or notice of their falsity until after the death of the assured and the appointment of the executors of his estate; that immediately the premium paid was tendered the executors and a demand made for a return of the policy for cancellation. The prayer is for a decree compelling cancellation of the policy. It is not necessary to set out the allegations in full, except to state that the assured died on January 22, 1923, testate, and defendants were appointed executors on February 26, 1923, so that the attempted rescission was within one year of the issuance of the policy. The allegation that the fraud was practiced with the consent and connivance of defendants does not enter into the question presented for decision, for they are in no better or worse position than the assured. The sufficiency of the complaint, had it been lodged against the assured in his lifetime, could not have been questioned. However, the demurrer is grounded upon the doctrine that, the loss having occurred under the policy, there is now a plain, speedy, and adequate remedy at law under the decisions of Bankers' Reserve Life Co. v. Omberson, 123 Minn. 285, 143 N. W. 735,48 L. R. A. (N. S.) 265, and Kanevsky v. National Council, etc., 132 Minn. 422, 157 N. W. 646.

But plaintiff asserts the incontestability clause contained in the policy, conformable to subdivision 3, § 3477, G. S. 1913, presents a situation which compels the insurer, if relief from the assured's fraud is to be had, to have recourse to an equitable action before the time limit fixed in the...