Killian v. Metro. Life Ins. Co.

• Decision Date: 28 May 1929
• Citation: 166 N.E. 798,251 N.Y. 44
• Parties: KILLIAN et al. v. METROPOLITAN LIFE INS. CO.
• Court: New York Court of Appeals Court of Appeals

251 N.Y. 44

166 N.E. 798

KILLIAN et al.

v.METROPOLITAN LIFE INS. CO.

Court of Appeals of New York.

May 28, 1929.

Action by Catherine Killian and others against the Metropolitan Life Insurance Company. An order of the Special Term (132 Misc. Rep. 892, 230 N. Y. S. 725), in so far as it denied plaintiffs' motion for severance and for judgment was reversed (225 App. Div. 781, 232 N. Y. S. 280), and defendant appeals.

Affirmed.Appeal from Supreme Court, Appellate Division, Fourth Department.

Richard C. S. Drummond, of Auburn, and Martin T. Nachtmann, of Albany, for appellant.

John J. Finn, of Yonkers, for respondents.

CARDOZO, C. J.

The defendant issued to George Killian its policy of insurance upon his life, dated November 28, 1923, payable to Victoria Killian, his wife, the insured being at liberty to change the beneficiaries. He did change them thereafter by indorsement on the policy. The insurance thus became payable to his wife and his four children, or the survivors, in equal shares. One of the clauses of the policy was the following: ‘Incontestability-This policy (and the application therefor) constitutes the entire contract between the parties and, except for nonpayment of premiums, shall be incontestable after two years from the date of its issue’-i. e., after November 28, 1925.

The insured died October 20, 1924, survived by his wife and his four children. Proof of claim was filed by the wife. Promptly, in November, 1924, the defendant gave notice that it denied liability on the ground of breach of warranty and fraud. Thereafter, in March, 1925, the defendant received from the wife a general release and paid her in return $107, the premiums collected during the life of the insured. No money was paid to the children, who were minors, ranging in age from 10 to 18 years. No re-lease or other document was signed by the children or by any one in their behalf. The accord and satisfaction, even if binding on the wife, was ineffective as to them. Foley v. Mutual Life Ins. Co., 138 N. Y. 333, 34 N. E. 211, 20 L. R. A. 620, 34 Am. St. Rep. 456.

This action was begun on February 23, 1928. The plaintiffs were the wife, the three children then surviving, and the administratrix of a child who had died in 1926. Judgment was demanded for the amount of the policy, with interest. The defendant answered with defenses of fraud, breach of warranty, and accord and satisfaction. Thereupon the surviving children and the administratrix of the deceased child moved to sever their cause of action from the cause of action, if any, belonging to the wife, and for judgment in their favor to the extent of their proportion of the policy. The motion was denied at the Special Term, but granted at the Appellate Division, which rendered judgment accordingly. An appeal followed to this court.

[3] The rule is now settled that under a policy in this form a contest by the insurer is too late if begun after two years from the date of issue, though within the time allowed for contest the insured has died. Piasecki v. Metropolitan Life Ins. Co., 243 N. Y. 637, 154 N. E. 637;Mutual Life Ins. Co. of New York v. Hurni Packing Co., 263 U. S. 167, 44 S. Ct. 90, 68 L. Ed. 235, 31 A. L. R. 102. In reaching that conclusion, there has been adherence to the rule that ‘in case of ambiguity that construction of the policy will be adopted which is most favorable to the insured.’ Mutual Life Ins. Co. of New York v. Hurni Packing Co., supra. The question is still open how a ‘contest’ may begin. For the defendant, the contention is that a definitive notice of rejection without more will make out a contest within the meaning of the policy. Support for that view will be found in some decisions. New York Life Ins. Co. v. Feicht (D. C.) 29 F.(2d) 318;Great Southern Life Ins. Co. v. Russ (C. C. A.) 14 F.(2d) 27;Feierman v. Eureka Life Ins. Co. of Baltimore, Md., 279 Pa. 507, 124 A. 171, 32 A. L. R. 646. For the plaintiffs, the contention is that notice of rejection is unavailing unless followed within the prescribed time by contest in a court. This view is upheld by most of the decisions in which the point has been considered. Northwestern Mut. Life Ins. Co. v. Pickering (C. C. A.) 293 F. 496; cert. denied, 263 U. S. 720, 44 S. Ct. 229, 68 L. Ed. 524; Rose v. Mutual Life Ins. Co. of New York (C. C. A.) 19 F.(2d) 280; Powell v. Mutual Life Ins. Co. of New York, 313 Ill. 161, 144 N. E. 825, 36 A. L. R. 1239;Thistle v. Equitable Life Assur. Soc. of United States, 149 Tenn. 667, 670, 261 S. W. 667;American Trust Co. v. Life Ins. Co. of Virginia, 173 N. C. 558, 568, 92 S. E. 706;Wolpin v. Prudential Ins. Co. of America, 223 App. Div. 339, 228 N. Y. S. 78;Travelers Ins. Co. v. Snydecker, 127 Misc. Rep. 66, 215 N. Y. S. 276;Dee v. Metropolitan Life Ins. Co., 219 App. Div. 790, 220 N. Y. S. 845;Telford v. Metropolitan Life Ins. Co., 223 App. Div. 175, 228 N. Y. S. 54, dictum; Wright v. Mutual Ben. Life Ass'n, 43 Hun, 61, Id., 118 N. Y. 237, 23 N. E. 186, 6 L. R. A. 731, 16 Am. St. Rep. 749, dictum. Choice must now be made between the one view and the other.

We think a notice of rejection without more is not the beginning of a contest within the meaning of the contract. Much can be said in favor of a different holding. In the presence of ambiguity we adhere to the construction adverse to the insurer. Repudiation of a policy is notice that a contest will ensue if insured or beneficiary shall make attempt thereafter to enforce a claim of right. It is not a contest of itself. Repudiation before maturity (the subject of the contract being a policy of insurance) is not even such a breach as will sustain a remedy at law for the recovery of damages (Kelly v. Security Mut. Life Ins. Co., 186 N. Y. 16, 78 N. E. 584,9 Ann. Cas. 661), though it may be the occasion for a declaratory judgment or other remedy in equity. Repudiation after maturity is a step closer to resistance, but it is not resistance by course of law. From the viewpoint of the law, a contest in its proper meaning is still the contestatio of the Romans, or something close thereto. The word is redolent of association with witnesses and...