Metro. Life Ins. Co. v. Lodzinski

• Decision Date: 17 December 1936
• Citation: 188 A. 681
• Parties: METROPOLITAN LIFE INS. CO. v. LODZINSKI et al.
• Court: New Jersey Court of Chancery

188 A. 681

METROPOLITAN LIFE INS. CO.

v. LODZINSKI et al.

Court of Chancery of New Jersey.

Dec. 17, 1936.

Syllabus by the Court.

1. To avoid the force and effect of an "incontestability" clause in a life insurance policy, the company must, within the specified period, commence a contest in court proceedings, either by instituting suit to avoid liability or by filing answer in a suit brought to recover under the policy.

2. Where the company institutes a suit in chancery to avoid liability, no contest is begun until the bill is filed.

3. A suit in chancery is not commenced by the issuance of subpœna without bill filed; it is not commenced until the filing of the bill and the issuance of process have both occurred.

4. In the absence of satisfying proof to the contrary, the date of the filing of the bill must be deemed to be that stated in the clerk's indorsement.

5. Where, in substitution for a prior policy, a new policy is issued in which the date specified as "the date hereof" is the date of the old policy, that date must be taken to be the date referred to as "the date hereof" in other provisions of the policy.

6. An agreement by the insured in the application for the policy that the policy shall not be effective unless the insured is in sound health on the delivery of the policy cannot avail the company where no copy of the application is attached to the policy and no such agreement is otherwise contained in the policy.

7. Where, in a bill to avoid a life insurance policy, the company alleges actual fraud in the procurement, such allegation must be proven or the bill be dismissed, notwithstanding the proofs show such misrepresentation (not constituting actual fraud) as would otherwise be sufficient to avoid the policy.

8. Fraudulent misrepresentation or concealment of material facts in the procurement of such a policy is ground for avoiding the policy, notwithstanding the false and fraudulent statements in the application for the policy are not copied into or annexed to the policy.

9. The signature of the applicant for such policy, to the questions and answers in the application, is conclusive proof, in the absence of fraud, that the applicant read and knew the same.

10. One who signs an application for insurance without reading the same (in the absence of having been fraudulently induced so to do) is guilty of actual fraudulent misrepresentation to the company.

Suit by the Metropolitan Life Insurance Company against Magdalena Lodzinski and others, wherein defendants filed a counterclaim.

Decree in accordance with opinion.

McCarter & English, of Newark, for complainant.

Nathan Reibel, of Elizabeth, for defendants.

BUCHANAN, Vice Chancellor.

Complainant's bill seeks to have two insurance policies set aside and declared void on the ground of their having been obtained as a result of misrepresentation on the part of the assured. The first cause of action deals with a policy for $1,000 issued on the life of Bertha T. Lodzinski on February 21, 1933, in favor of her mother, Magdalena Lodzinski. The second cause of action deals with an industrial whole life policy for $584 on the life of Bronislawa Lodzinski, in favor of her executor or administrator, actually issued December 24, 1934, but dated February 20, 1928, which was the date of a prior policy for which this one was substituted.

As to the first cause of action, the proofs show that there were in fact material misrepresentations in the application for the policy. It is unnecessary to determine whether or not it was requisite for complainant to prove actual, conscious fraud, or whether or not the proofs establish such actual, conscious fraud, because it is concluded that complainant is barred under the "incontestability clause" of the policy, from endeavoring to avoid liability thereunder.

This clause provides that the policy "shall be incontestable after it has been in force for a period of two years from its date of issue, except for non-payment of premiums" (and another exception not here material). There is no exception, such as is found in some of these clauses, for either misrepresentation or actual fraud.

The date of issue of the policy was February 21, 1933. The last day on which the policy might be contested was February 20, 1935, Travelers Life Ins. Co. v. Leonard, 120 N.J.Eq. 6, 183 A. 686, as complainant concedes.

Admittedly, no contest of this policy was set up or attempted by complainant in any suit or court procedure prior to the institution of the present suit. Complainant introduced evidence tending to prove that it had, prior to this suit, notified defendant that it denied and contested liability on the policy, and contends that this was an act of contest sufficient to avoid the bar of the clause. This question seems not hitherto expressly decided in this state. There is some authority in other states in support of complainant's contention; but the determination by the New York Court of Appeals in Killian v. Metropolitan Life Ins. Co, 251 N.Y. 44, 166 N.E. 798, 64 A.L.R. 956, that a contest (under the meaning of such a clause) occurs or begins only when the insurer institutes a suit to avoid liability or files answer in a suit brought by the insured or the beneficiary, not only is supported by the weight of authority, but is based upon reasoning in which this court concurs. A similar view is obviously inherent in the opinion in New York Life Ins. Co. v. Steinman, 103 N.J.Eq. 403, 143 A. 529. That rule therefore is hereby adopted.

The bill in this suit is marked by the clerk "Filed Feb. 21, 1935." There is no other proof as to the date of its filing, except proof that it was, on February 19, 1935, mailed at Newark by complainant's solicitors addressed to the clerk at Trenton. This is not sufficient to prove that it was in fact received by the clerk prior to February 21st. It is the duty and the practice of the clerk to mark the filing of papers on the date they are actually received by him (assuming them to be in proper condition for filing under the rules of this court). In the absence of clear proof to the contrary, it must be presumed that the clerk did so act.

It was, in former times, the practice of the clerk to mark the filing date of bills as of the date they were placed in the mail or the day before they were actually received by the clerk. This was improper and illegal. A bill cannot be deemed filed until it is actually received by the clerk. Schenck v. Yard (N.J.Ch.) 86 A. 81 (not reported in N.J.Eq.Reports).

It must be held that the bill in the present case was filed on February 21, 1935, and not prior thereto.

It further appears that the subpoena ad respondendum was issued and actually served on defendants on February 20, 1935. Complainant contends that the suit was therefore commenced on that day, and that hence the bar of the clause is thereby avoided. This contention is deemed unsound for two reasons.

In the first place, two things are requisite as to the commencement of a suit in chancery, the filing of the bill and the issuance of subpoena. Crawford v. Township of Maplewood, 105 N.J.Eq. 416, 148 A. 198, and cases cited. The regular and proper procedure is, of course, that the bill be first filed and then the subpoena issued and served thereafter. The statute so prescribes. Chancery Act, §3(1 Comp. St. 1910, p. 411, § 3). The bill prays that process issue. The subpoena, by its terms, notifies the defendant that the bill has been filed and requires the defendant to answer the bill so filed. The cases cited hold that a suit is not commenced by the mere filing of the bill, is not commenced unless and until subpoena issues; but they do not hold that suit is commenced by the issuance of subpoena, ipso facto, irrespective of whether or not bill had then been filed. The statement in Hermann v. Mexican Petroleum Corp, 85 N.J.Eq. 367, at page 370, 96 A. 492, that the issuance of the writ is the commencement of the suit, must be read in connection with the fact also therein mentioned, of the statutory requirement that bill be filed before the issue of process. So considered, the holding obviously is that suit is not commenced by the filing of the bill, but by the. issuance of subpoena thereafter; and such is the statement in Delaware River Quarry Co. v. Mercer Freeholders, 88 N.J.Eq. 506, at page 511, 103 A. 18; Lehigh Valley R. R. Co. v. Andrus, 91 N.J.Eq. 225, at page 229, 109 A. 746; West Jersey & S. S. R. R. Co. v. Cape May County, 100 N.J.Eq. 181, at page 184, 135 A. 74; Bitties v. West Ridgelawn Cemetery, 108 N. J.Eq. 357, at page 358, 155 A. 130. (The additional requisite, of prompt, bona fide effort to serve the process, is not involved in the instant case.)

True it is that the statutory requirement that bill be filed before issuance of process is deemed directory, not mandatory, and that issuance of process before filing the bill is deemed a mere technical irregularity which may be waived by defendant, Crowell v. Botsford, 16 N.J.Eq. 458; Berenbroick v. Hofstetter, 93 N.J. Eq. 542, 118 A. 345, and which in fact was waived by defendants in the instant case by the filing of answer without objection to the irregularity. But it by no means follows therefrom that suit is to be deemed commenced by the issuance of subpoena without any bill on file, any more than it is deemed commenced by the filing of the bill without subpoena issued. In the latter case, bill stating complainant's cause of action has been filed, but nothing has been done to call it to defendant's attention; in the former case, defendant has been called on to answer complainant's bill, but no bill or anything else has been filed to inform defendant as to what he is called upon to answer. In such case how can it be held that suit has been commenced? What suit has been commenced, what is the cause of action which has been instituted? At the time he issues process, a complainant might have drawn, and intend to file, a bill setting forth...