New York Life Ins Co. v. Buchberg

• Decision Date: 24 January 1930
• Docket Number: No. 76.,76.
• Citation: 228 N.W. 770,249 Mich. 317
• Parties: NEW YORK LIFE INS CO. v. BUCHBERG et al.
• Court: Michigan Supreme Court

249 Mich. 317

228 N.W. 770

NEW YORK LIFE INS CO.

v.BUCHBERG et al.

No. 76.

Supreme Court of Michigan.

Jan. 24, 1930.

Appeal from Circuit Court, Wayne County, in Chancery; Russell R. McPeek, Judge.

Action by the New York Life Insurance Company against Max Buchberg and others, to secure the cancellation of the reinstatement of a life insurance policy. From a decree denying the relief sought, plaintiff appeals. Reversed and rendered.

Argued before the Entire Bench.

Thomas A. E. Weadock, of Detroit, for appellant.

I. M. Smullin, of Detroit, for appellees.

Miller, Canfield, Paddock & Stone, of Detroit, amicus curiae.

NORTH, J.

In 1919 the defendant took out a $1,500 20-payment life policy in plaintiff company. Plaintiff claims there was default in payment of a premium which fell due October 3, 1924, that the 30 days of grace passed, that the payment was not made until November 5, 1924, and that the receipt of payment was then conditional upon the reinstatement of the insured; and further that on December 3, 1924, defendant filed an application for reinstatement and represented therein that he was then, to the best of his knowledge and belief, in good health, and that within the past 12 months he had not had any illness, consulted with or been treated by any physician. The plaintiff relied upon these representations and reinstated the insured.

The policy contained a disability provision; and in October, 1926, the insured, who was then afflicted with Bright's disease, made application for the disability benefit. Incident to this disability claim, Dr. Rivkin, in behalf of the insured, made a written representation to plaintiff wherein it was stated that the doctor had treated the insured for Bright's disease in August, 1924. This being within the 12 months next preceding defendant's application for reinstatement, the the insurance company tendered the repayment of the amounts the insured had paid to it incident to reinstatement and as subsequent premiums together with interest thereon. This bill of complaint was then filed to secure cancellation of the reinstatement on the ground that it was secured by false representations of the insured that at the time of his application he was in good health and that within 12 months prior thereto he had not consulted or been treated by a physician. Cancellation would relieve plaintiff of its obligation incident to the disability clause in the policy, and automatically convert the policy into one of continued or extended life insurance for a period of years fixed by the terms of the policy.

Defendant denied in his answer that he at any time defaulted in the payment of his premium, and denied that he had made application for reinstatement or that he had made the alleged misrepresentations incident thereto. It was and is defendant's claim that his brother paid on October 30, 1924, the premium which fell due October 3, 1924; this being within the 30 days of grace. The insurance company's receipt for payment of this premium dated October 3, 1924, was produced by the defendant; but this was explained by the company's claim that this receipt purporting to be for the premium due October 3, 1924, and bearing that date, was postdated and delivered after defendant's reinstatement. Dr. Rivkin, as plaintiff's witness, testified he was mistaken about his having treated the defendant in 1924; that instead, it was in 1925. Plaintiff was denied the relief sought, and it has appealed.

The opinion of the trial court, in part, is as follows:

‘After careful consideration of the facts, and such authorities as have been presented, I have reached the conclusion that the case turns upon the question of admissibility of the application for reinstatement, which was not attached to nor indorsed on the policy, and is, therefore, claimed by defendant to have been inadmissible. In other words, I think that the plaintiff company has failed to show by competent evidence that the defendant did not pay in time the premium upon his policy if the admissions in the application are excluded. * * * This leaves the plaintiff dependent upon the admission of default contained in the application for reinstatement, and indicates the importance of the question first suggested herein, viz: Was this document admissible in evidence? The question was reserved by the court, and the finding will rest upon its determination.

‘The objection of the defendant rests on the following provision of the insurance laws of Michigan, viz. (C. L. 1915, § 9360):

“Section 1. No policy of life insurance shall be issued in this state, unless the same shall contain the following provisions: * * *

“Fourth, A provision that all statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties, and that no such statement shall avoid the policy unless it is contained in a written application and a copy of such application shall be endorsed upon or attached to the policy when issued.”

The trial judge held that because of the above-quoted statutory provisions, he could not consider the insured's application for reinstatement, since a copy thereof was not ‘endorsed upon or attached to the policy.’ In this we think he was in error. By its terms the statute plainly contemplates only the written application made incident to the original issuing of the policy. The statute requires such ‘written application’ to be ‘attached to the policy when issued.’ Clearly it was not intended by this statute to require the insurance company to attach to the policy ‘when issued’ representations made incident to an application for the reinstatement of lapsed insurance. In almost every instance the policy for such insurance at the time of reinstatement is not in the possession of the insurer, but instead is under the control of the insured. The reinstatement of a policy is not a new contract of insurance, nor is it the issuance of a policy of insurance; but rather it is a contract by virtue of which the policy already issued, under the conditions prescribed therein, is revived or restored after its lapse. Reidy v. John Hancock Life Ins. Co., 245 Mass. 373, 139 N. E. 538, and Wastum v. Lincoln Natl. Life Ins. Co. (C. C. A.) 12 F.(2d) 422. Provision relative to reinstatement of a lapsed policy is found in a subsequent paragraph of section 9360 of C. L. of 1915. This paragraph provides that no policy of life insurance shall issue in this state unless the same shall contain the following provision: ‘Tenth, A provision that if, in event of default in premium payments, the value of the policy shall be applied to the purchase of other insurance, and if such insurance shall be in force and the original policy shall not have been surrendered to the company and canceled, the policy may be reinstated within three years from such default, upon evidence of...