National Life Ins. Co. v. Jayne

• Decision Date: 11 December 1942
• Docket Number: No. 2570.,2570.
• Citation: 132 F.2d 358
• Parties: NATIONAL LIFE INS. CO. v. JAYNE et al.
• Court: U.S. Court of Appeals — Tenth Circuit

132 F.2d 358 (1942)

NATIONAL LIFE INS. CO. v. JAYNE et al.

No. 2570.

Circuit Court of Appeals, Tenth Circuit.

October 30, 1942.

As Corrected on Denial of Rehearing December 11, 1942.

Roy C. Lytle, of Oklahoma City, Okl. (D. I. Johnston and Keaton, Wells & Johnston, all of Oklahoma City, Okl., and Deane C. Davis, of Montpelier, Vt., on the brief), for appellant.

John H. Cantrell, of Oklahoma City, Okl. (Joe A. McCloud, B. H. Carey, and E. J. Flinn, all of Oklahoma City, Okl., on the brief), for appellees.

Before PHILLIPS, HUXMAN, and MURRAH, Circuit Judges.

PHILLIPS, Circuit Judge.

On January 30, 1930, the National Life Insurance Company¹ issued its policy of life insurance on Morris I. Jayne.² The policy provided for total disability benefits.³

The Insurance Company brought this action against the insured, Lelia G. Jayne, his wife, the beneficiary, and Lelia Jayne, guardian of the person and estate of the insured, an incompetent. In its complaint the Insurance Company set up the issuance of the policy and the disability provisions thereof, and further alleged that on May 23, 1930, Lelia Jayne was appointed guardian of the person and estate of the insured, an incompetent, and duly qualified as such guardian; that thereafter as such guardian she filed a claim with the Insurance Company representing that the insured was totally and permanently disabled; that subsequently and as often as the Insurance Company requested, Lelia Jayne, as guardian, represented in writing to the Insurance Company that the insured was totally and permanently disabled; that since June 18, 1930, the Insurance Company has paid to the guardian $100 monthly payments aggregating $13,200; that the Insurance Company has waived payment of premiums since June 18, 1930, aggregating $3,879.70; that the insured is not now totally and permanently disabled and has not been so totally and permanently disabled since prior to June 18, 1936; that insured is actively engaged in the business of producing oil and gas and in brokering oil and gas leases; that he is competent to and does negotiate for and purchase oil and gas leases and other property, but as a part of the plan or scheme to defraud the Insurance Company, he habitually causes the lease contracts or other evidences of title of property to be taken in the name of Lelia G. Jayne; that the insured conducts himself as an ordinary, normal, healthy, business man; that Lelia G. Jayne, as guardian and as beneficiary, has conspired to represent that the insured is and was on all dates subsequent to June 18, 1936, totally and permanently disabled and entitled to the total disability benefits; that the Insurance Company is entitled to recover from the guardian the sum of $6,000, monthly disability benefits paid since June 18, 1936, and to recover the premiums waived since June 18, 1936, aggregating $1,763.50. It prayed judgment against the guardian for $6,000, disability benefits paid, and $1,763.50, premiums waived, and sought a declaratory judgment adjudging the policy canceled for nonpayment of premiums and that the Insurance Company has no further liability thereunder to the insured or the guardian. The trial court sustained a motion to dismiss the action. The Insurance Company has appealed.

58 O. S. A. § 851 provides that when it is represented to the county court, upon verified petition of any relative or friend, that any person is insane, or from any cause mentally incompetent to manage his property, the judge must cause notice to be given to the supposed insane or incompetent person, of the time and place of hearing the case, not less than five days before the time so appointed, and that such person, if able to attend, must be produced before the judge on the hearing.

58 O. S. A. § 852 provides if, after a full hearing and examination upon such petition, it appears to the judge of the county court that the person in question is incapable of taking care of himself and managing his property, the judge must appoint a guardian of his person and estate.

58 O. S. A. § 853 provides that every guardian so appointed has the care and custody of the person of his ward, and the management of all his estate, until such guardian is legally discharged.

58 O. S. A. § 854 provides for a proceeding to determine restoration to capacity.

15 O. S. A. § 24 provides that

"After his incapacity has been judicially determined, a person of unsound mind can make no conveyance or other contract, nor designate any power, nor waive any right, until his restoration to capacity is judicially determined. But if actually restored to capacity, he may make a will, though his restoration is not thus determined."

Under this section where a person has been adjudged incompetent, any conveyance or other contract attempted to be made by such person and any attempt by such person to designate a power or waive a right during the time he remains under actual guardianship is void.⁴

At common law and in many jurisdictions an adjudication of insanity is admissible as evidence of insanity at a later date, though not conclusive. Ordinarily, it substitutes for the general presumption of sanity the presumption of insanity.⁵

In certain jurisdictions, including Oklahoma, by force of statute an adjudication of insanity is conclusive as to the existence of insanity during the continuance of the adjudication with respect to the right of the person so adjudicated to exercise his civil right; and civil acts transacted by the person adjudged insane after the adjudication and before he has been adjudged to be restored to reason are void and not merely voidable.⁶

No case has been cited, and, after an exhaustive search of the authorities, we have been unable to find any case applying the conclusive presumption rule other than in actions involving the validity of civil acts of the person adjudged insane after adjudication and before he has been adjudged to be restored to reason. All the cases applying the rule involved the validity of civil acts and arose in jurisdictions having statutes which in effect declare that conveyances made, contracts entered into, and other civil acts transacted by a person after he has been adjudged insane and before he has been adjudged restored to capacity are void.

It cannot be doubted that a state, for the protection of its incompetents, may, as a public policy, by force of statute adopt the rule that civil acts of a person judicially adjudged insane after such adjudication and until the adjudication is set aside in a direct proceeding, or until he is adjudged to be restored to capacity, shall be void. Nevertheless, it is a well-known fact that many types of insanity are curable and it would be strange, indeed, for a state to adopt the rule that, in a collateral proceeding not involving the exercise of civil rights, a person adjudged to be insane shall be conclusively presumed to be insane at a date substantially subsequent to the date of such adjudication. Adjudication of insanity is a determination of want of mental capacity at the time of the adjudication. Necessarily, in cases where the insanity is curable, it cannot be an adjudication that the person adjudged to be insane shall be insane for all future time. At most, it can be presumptive evidence only of subsequent insanity.

The instant case involves the rights of the insured or his guardian under a contract entered into prior to adjudication. The adjudication here is an evidentiary fact tending to establish total disability on June 18,...