Monahan v. New York Life Ins. Co.

• Decision Date: 02 March 1939
• Docket Number: 6300,No. 6386,1898.,6386
• Court: U.S. District Court — Western District of Oklahoma
• Parties: MONAHAN v. NEW YORK LIFE INS. CO. (two cases). MUTUAL LIFE INS. CO. OF NEW YORK v. MONAHAN.

26 F. Supp. 859

MONAHAN v. NEW YORK LIFE INS. CO. (two cases).

MUTUAL LIFE INS. CO. OF NEW YORK v. MONAHAN.

Nos. 6386, 6300, 1898.

District Court, W. D. Oklahoma.

March 2, 1939.

Suits & Lewis, of Oklahoma City, Okl., for Monahan.

Embry, Johnson, Crowe & Tolbert, of Oklahoma City, Okl., for Mutual Life Ins. Co. of New York.

Wilson & Wilson, of Oklahoma City, Okl., for New York Life Ins. Co.

MURRAH, District Judge.

Suit No. 1898 Equity was instituted by Mutual Life Insurance Company of New York, hereinafter called Company, against Donnie Monahan, as beneficiary of Ed Monahan, Jr., hereinafter called Beneficiary, under the Federal Declaratory Judgment Act, Title 28 U.S.C.A. § 400. Suits No. 6300 Law and No. 6386 Law were instituted by Donnie Renegar, formerly Donnie Monahan, also hereinafter called Beneficiary against the New York Life Insurance Company of New York, also hereinafter called Company.

The last two suits were filed in the District Court of Oklahoma County, and removed to this Court by reason of diversity of citizenship. The three suits involve the construction of the double indemnity clause of six contracts of insurance, issued by these insurance companies upon the life of Ed Monahan, Jr. The same facts and substantially the same questions of law are involved in all the suits and policies constituting the subject matter of the suits. The suits were consolidated for trial; evidence was heard; at the conclusion of which, the Court directed a verdict for plaintiff in case No. 1898 Equity and for the defendants in cases No. 6300 Law and No. 6386 Law; the judgment of the Court applying similarly to all the contracts of insurance involved. The beneficiary under rule 50 of Federal Rules of Procedure, 28 U.S.C.A. following section 723c, filed a motion for judgment, notwithstanding the directed verdict, and for a new trial in the alternative.

Because of the nicety of the questions of law involved the Court deems it advisable to set forth its opinion and conclusions.

Four of the contracts of insurance involved contained the same or substantially the same provisions and conditions relating to double indemnity benefits and incontestability. These policies will be classified and referred to herein as group "A". Two of the contracts of insurance, although having the same, or substantially the same, provisions and conditions relating to double indemnity benefits, do not contain identically the same conditions and provisions in the incontestable clause and they will be classified and referred to herein as group "B".

Ed Monahan, Jr., during his lifetime, made application for the contracts of insurance, in question, in the state of Arkansas; the same were issued by the Companies and upon the payment of the stipulated premiums therefor, were delivered to the insured in the state of Arkansas. These contracts of insurance were for various amounts, not material here.

The insured was deceased more than two years after the issuance of said contracts of insurance and the face amount, provided therein, was paid by the Companies to the designated Beneficiaries without contest. The Companies denied liability on the double indemnity provision contained in each of said contracts of insurance for the reason that the insured met his death by self-destruction, a risk specifically exempted from the provisions in the contracts of insurance relating to double indemnity and excepted in the incontestable clause in all the contracts of insurance included in Group "A" herein. Double indemnity for self-destruction was excepted in the Double Indemnity clause but not excepted or mentioned in the Incontestable clause in the contracts referred to as Group "B".

The Beneficiaries contend that more than two years having elapsed since the date of issuance of said contracts the Companies are precluded from setting up any defense of suicide by reason of the incontestable clauses contained in each of the contracts.

The applicable provisions of the contracts, designated herein as Group "A" are as follows:

After providing for payment of face amount of the contract of insurance upon due proof of death of insured, it provides for double the face amount of the contract "if such death resulted from accident as defined under `Double Indemnity' and subject to the provisions therein set forth."

Under "Double Indemnity" (set forth in bold letters) the contracts provide: "* * * that such double indemnity shall not be payable if insured's death resulted from self-destruction, whether sane or insane. * * *"

Under sub-head "Contract" it is provided: "* * * all benefits under this policy are payable at the Home Office of the Company in the city and state of New York and the surrender of the policy will be required in any settlement thereof."

Under the sub-head "Incontestability" it is further provided: "This policy shall be incontestable after two years from its date of issue except for non-payment of premium and except as to provisions and conditions relating to disability and double indemnity benefits."

One of the contracts of insurance issued by the Mutual Life Insurance Company of New York and considered under Group "A" under sub-head "Incontestability" provides: "Except for non-payment of premiums and except for the restrictions and provisions applying to the double indemnity and disability benefits as provided in Section 1 and 3, respectively, this policy shall be incontestable after one year of its date of issue unless the insured dies in such year, in which event it shall be incontestable after two years from its date of issue."

Section 1 referred to in said clause is the clause providing for double indemnity and specifically provides: "* * * that double indemnity shall not be payable if death resulted from self-destruction whether sane or insane. * * *"

All of the contracts herein specifically provide for the payment of premiums at the Home Office and for payment of the benefits accruing under said contracts of insurance at the Home Office. We, therefore, conclude that the place of performance is at the Home Office in the state of New York. Head v. New York Life Insurance Company, 10 Cir., 43 F.2d 517. The application having been made, premiums paid thereon and the contracts delivered in the state of Arkansas, the contracts are Arkansas contracts and governed by the law of the place of making, lex loci contractus. The Courts having said in effect that the obligation of a contract undoubtedly depends upon the law of the place under which it is made, and that the place of delivery or where the last act is performed will constitute the place of the making of the contracts.

The suits were instituted and prosecuted in the state of Oklahoma; this Court having jurisdiction of the parties; therefore, the contracts were made in the state of Arkansas, to be performed in the state of New York and the jurisdiction of this Court is invoked to enforce the rights and remedies of the parties. Under the well established rule, "the performance of a contract is governed by the law where it is to be performed and the remedy by the law where suit is brought, all matters which bear upon the execution, interpretation, and validity of the contract are determined by the laws of the place where it is made." Brown v. Ford Motor Co., 10 Cir., 48 F.2d 732, 734; Scudder v. Union National Bank, 91 U.S. 406, 23 L.Ed. 245; Northwestern Mutual Life Insurance Company v. McCue, 223 U.S. 234, 32 S. Ct. 220, 56 L.Ed. 419, 38 L.R.A.,N.S., 57; Mutual Life Insurance Company of New York v. Hill, 193 U.S. 551, 24 S.Ct. 538, 48 L.Ed. 788; Federal Surety Company v. Minneapolis Steel and Machinery Company, 8 Cir., 17 F.2d 242, and Equitable Life Assurance Society v. Clements, 140 U.S. 226, 11 S.Ct. 822, 35 L.Ed. 497. Restatement of the Law, Sections 332 and 358 in Conflict of Laws.

Recognizing the rule now well established by Erie Railroad Company v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, the applicable decisions of the state courts are controlling and binding upon this Court but we are not aided by the rule in determining the important question here except insofar as we must follow the rule of every state where it is applicable. In this connection there is some question as to the meaning of the footnote #2 by Justice Reed in the case of John G. Ruhlin et al. v. New York Life Insurance Company, 304 U.S. 202, 58 S.Ct. 860, 862, 82 L.Ed. 1290, wherein he stated: "Under the general doctrine the interpretation of an insurance contract depends on the law of the place where the policy is delivered. Mutual Life Insurance Co. v. Johnson, 293 U. S. 335, at page 339, 55 S.Ct. 154, 156, 79 L.Ed. 398. We do not now determine which principle must be enforced if the Pennsylvania courts follow a different conflict of laws rule." In that case the Pennsylvania court was the court of the Forum.

"Obligations, in respect to the mode of their solemnization, are subject to the rule locus regit actum; in respect to their interpretation, to the lex loci contractus; in respect to the mode of their performance, to the law of the place of their performance. But the lex fori determines when and how such laws, when foreign, are to be adopted, and, in all cases not specified above, supplies the applicatory law." Wheaton on Conflict of Laws, section 401; cited in Scudder v. Union National Bank, supra. Therefore, in determining the law of what state shall govern the interpretation of these contracts we must determine the application of the law of the forum.

It is urged by the beneficiaries that the contracts having been made under the laws of the state of Arkansas this Court, as the Forum of the action, under the rule of conflict of laws, shall apply the law of the state of Arkansas, under which the beneficiaries are entitled to recover the double indemnity provided in the contracts of insurance. The companies contend that, under the rule of conflict of laws, this Court, as...