Lockett v. National Life & Acc. Ins. Co.

• Decision Date: 22 January 1942
• Docket Number: 13884.
• Citation: 18 S.E.2d 550,193 Ga. 372
• Court: Georgia Supreme Court
• Parties: LOCKETT v. NATIONAL LIFE & ACCIDENT INS. CO.

18 S.E.2d 550

193 Ga. 372

LOCKETT v. NATIONAL LIFE & ACCIDENT INS. CO.

No. 13884.

Supreme Court of Georgia

January 22, 1942

[Copyrighted Material Omitted]

On February 24, 1941, National Life and Accident Insurance Company filed a suit in equity against Mrs. Esther Mae Lockett, praying for cancellation of four reinstatements of a described policy of life insurance for $1,000 issued on the life of Herbert E. Lockett, deceased husband of the defendant, she being the beneficiary therein named; and for other relief. A demurrer containing four general and two special grounds was filed by the defendant, Mrs. Lockett. In response to a ground of special demurrer, the petitioner attached a copy of the policy in question. The court then overruled all grounds of demurrer, and the defendant excepted.

The petition alleged: The policy was issued on June 18, 1931, the premium being $1.90 monthly. The insured failed to pay the premiums due October 1 and November 1, 1939, and the policy lapsed according to its terms. On December 12, 1939, the insured signed an application to reinstate the policy. In this application, he stated: "As the basis of this application, and as a part of the contract of reinstatement applied for, in behalf of myself and of every person who shall have or claim any interest in the reinstated policy, I hereby warrant and agree: (1) That all statements and answers contained in either section of my application for insurance, in consequence of which said policy was originally issued, were, on the date of said application or section thereof, full, complete, and true as therein written; (2) that all my statements hereinafter contained are full complete, and true, each printed statement to which no written exception is made being wholly true without exception; (3) that said policy shall not be reinstated, and the insurance therein provided for shall not be in force until the company shall signify its acceptance of this application by mailing to me a notice thereof during my life and good health; (4) that if my death shall occur within two years after the reinstatement of said policy, the insurance thereby provided shall be avoided by any breach of any of my warranties or agreements herein contained."

In the application for reinstatement, Herbert E. Lockett made also the following statement: "Since the date of my original application, I have not been attended by any physician and have not consulted any physician regarding my health, excepting: None." Relying on the truthfulness of said representation made by Lockett, petitioner reinstated said policy of insurance on or about January 11, 1940.

The petition then sets out three subsequent lapses and reinstatements, on the same bases as the foregoing, the last reinstatement having been made on September 13, 1940.

Other allegations were as follows: Said "policy of insurance contains a grace period of thirty-one (31) days, during which time the insured may pay a premium, but it expressly provides in paragraph 6: 'In the event of default of premium payments, unless the cash surrender value has been paid, it is agreed that this policy may be reinstated upon presentation at its home office of evidence of insurability satisfactory to the company and payment of arrears of premium and payment or reinstatement of any indebtedness to the company hereon or secured hereby, with interest at a rate not exceeding six per cent. per annum."' After the reinstatement in September, 1940, said insured continued to pay the monthly premium of $1.90 through November, 1940. On December 29, 1940, the insured died of a cerebral hemorrhage.

The defendant herein, the beneficiary, did furnish to petitioner certain forms showing the cause of death, and petitioner then learned for the first time that the insured had suffered a cerebral hemorrhage which was secondary to a fracture of the skull sustained by the insured in July, 1938. "Your petitioner learned for the first time that the insured had suffered a fall from a truck in July, 1938, from which injury he was sent to a hospital on July 30, 1938, and that he remained there constantly under the treatment of a physician until August 14, 1938, and that he was subsequently treated by said physician at various times after August 14, 1938, all of which was well known to the insured and none of which had been disclosed to your petitioner in any of the various applications for reinstatement of said policy which he had made. *** A copy of the first application for reinstatement of said policy is attached hereto, marked Exhibit A and made a part hereof. The remaining applications for reinstatement are identical except as to dates. *** That your petitioner had no notice or knowledge of said accident sustained by the insured on July 30, 1938; that said injury was a serious one; that the information about it was material to the risk; that the insured, in his application for reinstatement, wilfully concealed said information from your petitioner, and that by reason thereof, each one of said reinstatements granted the insured upon said applications for reinstatements, is null and void, and that said policy lapsed as of October 1, 1939."

The petition alleged that certain loans were made to the insured on the policy, and that it had in addition thereto a paid-up insurance value of $116, and that petitioner had tendered this sum, together with premiums paid by the insured since October 1, 1939, and interest thereon, to the defendant, which tender she had refused. "Petitioner herewith tenders said sum into the registry of this court to the defendant." "That your petitioner has not been sued on said claim."

In addition to what was quoted in the petition, the application for reinstatement, as shown by an exhibit, provided: "that except as modified by this application, the insurance provided for by said policy when reinstated shall be subject to all the terms and conditions thereof, as if no default had occurred in the payment of a premium thereon."

Paragraph 7 of the policy contained the following: "Except for non-payment of premiums when due [and other exceptions not here material], this policy shall be incontestable after two years from its date of issue."

C. N. Davie and C. D. Stewart, both of Atlanta, for plaintiff in error.

Wm. F. Buchanan, of Atlanta, for defendant in error.

BELL Justice.

The insurance company, as plaintiff, sought the equitable relief of cancellation of four reinstatements of a policy issued upon the life of the defendant's husband, and of which she was made the beneficiary; all of such reinstatements having been made within two years before the suit was filed. The court overruled a general and special demurrer filed by the defendant beneficiary, and she excepted. Still other relief was prayed, but in our view of the case it is sufficient here to deal with it as if cancellation had been the only relief sought, and even as to that, we will limit our ruling to the last reinstatement. We may properly do this, because if the petition stated a cause of action for any of the relief prayed, that is, for cancellation of even the last reinstatement, as we think it does, it was not error to overrule the general demurrer. Blaylock v. Hackel, 164 Ga. 257(5), 138 S.E. 333. It would seem that except for the last reinstatement, the plaintiff could not be in need of equitable relief, as each previous reinstatement was followed by a lapse for non-payment of premiums.

The only contention presented in the brief of counsel for the beneficiary, the plaintiff in error, is that under the allegations of fact, the plaintiff would have an adequate remedy at law by contesting liability on the ground of fraud in the procurement of the reinstatement, by way of defense to an action at law upon the policy.

While in part one of the brief counsel did refer to one ground of special demurrer, and stated that this ground was not abandoned, still there was no reference to it in part two containing the brief of law and argument, and therefore it must be treated as abandoned.

The original policy contained a clause providing in effect that as to fraud "the policy shall be incontestable after two years from its date of issue." The policy having been attached to the petition as an exhibit and made a part thereof, the incontestable clause so appearing is pleaded...