Metro. Life Ins. Co. v. Conway

• Decision Date: 07 January 1930
• Citation: 252 N.Y. 449,169 N.E. 642
• Parties: METROPOLITAN LIFE INS. CO. v. CONWAY, Superintendent of Insurance.
• Court: New York Court of Appeals Court of Appeals

252 N.Y. 449

169 N.E. 642

METROPOLITAN LIFE INS. CO.

v.CONWAY, Superintendent of Insurance.

Court of Appeals of New York.

Jan. 7, 1930.

On application by the Metropolitan Life Insurance Company, the predecessor of Albert Conway, as Superintendent of Insurance, refused approval of a formal rider to be attached by petitioner to its life insurance policy, and from an order of the Appellate Division Third Department (226 App. Div. 408, 235 N. Y. S. 501), reversing the determination of the Superintendent of Insurance, Albert Conway, present Superintendent of Insurance, appeals.

Affirmed.

Appeal from Supreme Court, Appellate Division, Third department.

Hamilton Ward, Atty. Gen. (Joseph C. H. Flynn, of Brooklyn, of counsel), for appellant.

Frederic G. Dunham and Leroy A. Lincoln, both of New York City, for respondent.

CARDOZO, C. J.

Metropolitan Life Insurance Company, the petitioner, applied to the superintendent of insurance, the predecessor of the present appellant, for his approval of a rider to be attached to its policies. The rider submitted was in the following form: ‘Death as a result of service, travel or flight in any species of air craft, except as a farepaying passenger, is a risk not assumed under this policy; but, if the insured shall die as a result, directly or indirectly, of such service, travel or flight, the company will pay to the beneficiary the reserve on this policy.’ The superintendent of insurance refused his approval upon the ground that the proposed rider in his judgment was inconsistent with Insurance Law, § 101, subd. 2 (Consol. Laws, c. 28), which reads into every policy a provision that it ‘shall be incontestable after it has been in force during the lifetime of the insured for a period of two years from its date of issue except for non-payment of premiums and except for violation of the conditions of the policy relating to military or naval service in time of war.’ In certiorari proceedings to review this refusal, the Appellate Division found the conflict between rider and statute to be unreal, and reversed the determination.

The Insurance Law of this state prescribes certain terms which must be embodied in every policy of life insurance, but does not otherwise limit the terms of the policy or of any rider to be attached to it except by the exaction that policy and rider shall be approved by the superintendent of insurance. Insurance Law, § 101. The purpose of such approval is to avoid the risk of a departure from the terms of the statute with its enumerated restrictions. Hopkins v. Connecticut General Life Ins. Co., 225 N. Y. 76, 121 N. E. 465. If approval is omitted, the policy or the rider is not invalid ipso facto, unless in conflict with the provisions exacted by the statute. It is invalid even then to the extent of the conflict, and no farther. Insurance Law, § 101, last paragraph; Hopkins v. Connecticut General Life Ins. Co., supra, page 82 of 225 N. Y.,121 N. E. 465. The statute reads itself into the contract, and displaces inconsistent terms.

We agree with the Appellate Division in its holding that rider and statute in this instance are consistent and harmonious. The provision that a policy shall be incontestable after it has been in force during the lifetime of the insured for a period of two years is not a mandate as to coverage, a definition of the hazards to be borne by the insurer. It means only this, that within the limits of the coverage the policy shall stand, unaffected by any defense that it was invalid in its inception, or thereafter became invalid by reason of a condition broken. Like questions have arisen in other jurisdictions and in other courts of this state. There has been general concurrence with reference to the answer. Sanders v. Jefferson Standard Life Ins. Co. (C. C. A.) 10 F.(2d) 143;Flannagan v. Provident Life & Accident Ins. Co. (C.C. A.) 22 F. (2d) 136;Wright v. Philadelphia Life Ins. Co. of Philadelphia, Pa. (D. C.) 25 F.(2d) 514;Scarborough v. American Nat. Ins. Co., 171 N. C. 353, 88 S. E. 482, L. R. A. 1918A, 896, Ann. Cas. 1917D, 1181;Myers v. Liberty Life Ins. Co., 124 Kan. 191, 257 P. 933, 55 A. L. R. 542;Childress v. Fraternal Union of America, 113 Tenn. 252, 82 S. W. 832,3 Ann. Cas. 236;Brady v. Prudential Ins. Co., 168 Pa. 645, 32 A. 102;Illinois Bankers' Life Ass'n v. Byassee, 169 Ark. 230, 275 S. W. 519, 41 A. L. R. 379;Woodbery v. New York Life Ins. Co., 129 Misc. Rep. 365, 221 N. Y. S. 357;Id., 223 App. Div. 272, 227 N. Y. S. 699.

The meaning of the statute in that regard is not charged by its exceptions. A contest is prohibited in respect of the validity of a policy, ‘except for nonpayment of premiums and except for violation of the conditions of the policy relating to military or naval service in time of war.’ Section 101, subd. 2. Here again we must distinguish between a denial of coverage and a defense of invalidity. Provisions are not unusual that an insured entering the military or naval service shall forfeit his insurance. A condition of that order is more than a limitation of the risk. In the event of violation, the policy, at the election of the insurer, is...