Intersouthern Life Ins. Co. v. Hughes' Committee

• Court: Kentucky Court of Appeals
• Writing for the Court: LOGAN, J.
• Citation: Intersouthern Life Ins. Co. v. Hughes' Committee, 6 S.W.2d 447, 224 Ky. 405 (Ky. Ct. App. 1928)
• Decision Date: 08 May 1928
• Parties: INTERSOUTHERN LIFE INS. CO. v. HUGHES' COMMITTEE.

6 S.W.2d 447

224 Ky. 405

INTERSOUTHERN LIFE INS. CO. v. HUGHES' COMMITTEE.

Court of Appeals of Kentucky

May 8, 1928

Appeal from Circuit Court, McCracken County.

Action by E. C. Hughes' Committee against the Intersouthern Life Insurance Company. From the judgment, defendant appeals and plaintiff cross-appeals. Affirmed on the original appeal, and reversed on the cross-appeal and remanded.

Wheeler & Hughes, of Paducah, and Julien Erwin, of Louisville, for appellant.

W. A Berry and A. S. Gardner, both of Paducah, for appellee.

LOGAN J.

The appellee shows in his petition seeking relief in this action in the lower court that the appellant, prior to September 30 1922, issued to E. C. Hughes a life insurance policy for the sum of $5,000, payable to his estate in case of the death of the assured; that the policy contained a disability clause in which appellant agreed to pay Hughes, in case of total disability, the sum of $50 per month from the beginning of such disability to the end of his life; that the policy contained a provision to the effect that, in the event of total disability, Hughes would not be required to pay any further premiums on the policy after the beginning of such disability, and that the policy would be carried by the appellant in full force and effect without the payment of premiums during such disability. The appellee further shows in his petition that Hughes became totally disabled, both mentally and physically, after the issuance of the policy while same was in full force; that on December 29, 1922, he was adjudged of unsound mind and a committee had been appointed for him whose name was A. S. Lindsey, who soon thereafter resigned, when Daisy Drennon was appointed and qualified as committee; that on February 23, 1923, Daisy Drennon and E. C. Hughes intermarried, thereby becoming husband and wife; that in September, 1923, another inquest was held and Hughes was adjudged of sound mind and capable of attending to his business.

Appellee further shows in his petition that after Daisy Drennon qualified as committee, and before he was adjudged of sound mind, the appellant by some fraudulent means, as is alleged procured the possession of the insurance policy, and that it held the policy wrongfully after having unlawfully wrongfully, and fraudulently obtained possession of it. He shows, by his petition, that appellant retains possession of the policy and refuses to deliver it to appellee. He shows by his petition that appellant owed appellee $50 per month from the time the disability occurred and as long as the disability shall continue, and that by reason of such total disability and the provisions of the policy he is entitled to recover $50 a month since December, 1922, or a total sum of $850, and that he is further entitled to recover the sum of $50 per month during the continuance of such disability; that he had paid certain premiums on the policy after the beginning of such disability which premiums were wrongfully received by the company; and that he should recover the amount of premiums so paid. His prayer is that appellant be required to deliver possession of the policy to appellee, and that it be adjudged that E. C. Hughes is the sole owner of the policy, and further, that he have judgment for $892.05 for accrued benefits and for $50 per month during the continuance of the disability.

The appellee, after filing his petition, entered a motion asking the court to require appellant to file the policy of insurance. The appellant filed an answer in which it denied the allegations of the petition to the effect that it fraudulently obtained possession of the policy, and that it was wrongfully and fraudulently refusing to deliver the possession thereof to the appellee. It also denies that the policy is in full force or effect, or that it belonged to the appellee, or that appellee had any interest in it. There was no denial of the allegations in the petition relating to the payment of benefits in case of total disability. In a separate paragraph of the answer it is alleged that in the application made by Hughes for the policy he untruthfully answered certain questions in the application, and that his false answers were material to the risk, and that the policy would not have been issued but for the making of the false answers by Hughes. It is alleged that he answered that he was in good health, when he was not; that he answered that he had never had appendicitis, when he had; that he answered that he had not consulted any physician or specialist for any ailment or disease, when he had consulted a physician or specialist; that he answered that no physician had ever given an unfavorable opinion on his health, when a physician had given such an opinion; that he answered that none of his uncles or aunts had suffered from insanity, when uncles and aunts had been so afflicted. It is alleged that after appellant discovered the untruthful answers, which discovery was made at the time Hughes made claim for benefits under the policy, it declined to pay the benefits and entered into a compromise agreement with Hughes and his committee whereby it paid to him the sum of $700 in satisfaction of any claim that he might then have, or ever have, under the policy, and that in consideration of such settlement and payment Hughes and his committee surrendered the policy for cancellation, and for these reasons it was no longer in effect.

The appellee replied to the affirmative allegations in the answer, and his reply is a denial of the allegations that he made false answers to any questions in the application, or that the alleged false answers were material to the risk. He also denies that he consented to the stetlement or that he accepted $700 in full settlement of any claim that he might then have, or thereafter have, under the terms of the policy, and in avoidance of the alleged settlement he pleads his mental incapacity at the time of the alleged settlement. Further, he pleads that the application made for the policy was executed and delivered to appellant before the issuance of the policy, and that the application is not attached thereto, and for that reason appellant cannot rely upon any statements in the application to defeat the provisions of the policy.

Appellant filed an amended answer alleging that a photographic copy of the application for the policy is attached to and made a part of the policy and was so attached when the policy was delivered to and accepted by Hughes. Appellee filed a reply to the amended answer denying that a copy of the application was attached to the policy, and alleging that the application was not made in print of type of not less size than brevier. Another amended reply was filed by appellee in which it is alleged that it is provided in the policy that it shall be incontestable after the expiration of twelve months and the payment of two premiums from the date of the issuance of the policy contract, and that the only ground for cancellation after such time is the nonpayment of premiums; that the policy was issued February 1, 1922, and at the time of the alleged settlement more than a year had expired and more than two premiums had been paid on the policy.

Proof was taken on the issues made by the pleadings, and the chancellor awarded judgment in favor of appellee for the restoration of the policy and directed that the posssession of the policy be delivered to appellee. The judgment recites that the policy is in the possession of the circuit court clerk, and the clerk is ordered to deliver it to appellee. The chancellor held that the settlement made by appellant with Hughes and his then committee on June 13, 1923, is void and of no effect, and the receipt executed by them on the policy was canceled and held for naught. It was further held by the chancellor that at the time of the alleged settlement Hughes was of unsound mind and not capable of entering into it or transacting any business of any character, and that his committee, Daisy Hughes, had no authority or power as committee to make the settlement. The chancellor further held that by reason of the fact that Hughes became afflicted of complete mental disability on October 27, 1922, he was entitled to receive benefits under the policy to the extent that appellant should not collect premiums from him on the policy during the continuance of such...