New York Life Ins. Co. v. Bonasso

• Decision Date: 21 March 1939
• Docket Number: C. C. No. 600.
• Parties: NEW YORK LIFE INS. CO. v. BONASSO et al.
• Court: West Virginia Supreme Court

2 S.E.2d 260

121 W.Va. 143

NEW YORK LIFE INS. CO. v. BONASSO et al.

C. C. No. 600.

Supreme Court of Appeals of West Virginia.

March 21, 1939

Alfred Neely and M. M. Neely, both of Fairmont for plaintiff.

J. C McManaway, of Clarksburg, for defendants.

FOX President.

This case comes to this court on certification from the circuit court of Harrison County, and involves the correctness of a ruling of that court by which the demurrer of the defendants to the amended bill of the plaintiff was overruled.

On June 7, 1928, Pietro Bonasso made a written application to the New York Life Insurance Company for a policy of insurance in the sum of $10,000, and in said application, in answer to certain questions, made certain statements which the amended bill alleges were false, and by him known at that time to be false. On this application a policy of insurance on the life of the said Bonasso was issued, payable to Kate Bonasso, his wife, in the sum of $10,000, with a double indemnity provision should the death of the insured result from accident, as defined in the policy, and the further provision that upon a showing of presumably permanent disability, before the age of sixty years, there should be paid to the insured the sum of $100 per month, and payment of premiums on the policy waived. This policy was countersigned at Wheeling, West Virginia, on June 29, 1928, by F. E Ambruster, agency director.

The policy contains this further provision: "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."

The controversy before us is based upon the interpretation and application of this clause and its relation to the policy as a whole.

Accepting the allegations of the amended bill as true, and this upon demurrer we must do, it appears that the application above mentioned, which was made a part of the policy issued thereon, contained the following questions and answers.

"7A. Have you had any accident or injury or undergone any surgical operation?" "No".

"B. Have you been under observation or treatment in any hospital asylum or sanitarium?" "No".

"8C. Have you consulted a physician for or suffered from any ailment or disease of the stomach or intestines, liver, kidneys or bladder?" "No".

"11. What physician or physicians, if any, not named above, have you consulted, or been examined or treated by within the past five years?" "Not treated".

It will be apparent that these questions and answers were material and important, and bore not only on the provision of the policy as to payment thereunder on the death of the insured, from natural causes, but payments provided therein to be made in case of disability. The amended bill avers that the answers to these questions were falsely and fraudulently made, and seeks to cancel the disability and double indemnity features of the policy.

The joint demurrer of Pietro Bonasso and Kate Bonasso is based on the fact appearing on the face of the amended bill that this suit was instituted after two years from the date of the issue of the policy, and raises the clear-cut question of whether or not the exceptions in the incontestability clause apply to all provisions and conditions of the policy relating to disability and double indemnity benefits, or only those affecting the collection of benefits after the expiration of two years.

The question has not been heretofore presented to this court, and we are therefore forced to rely on authority from other jurisdictions. While we are of the opinion that the policy under consideration, having been countersigned and delivered in this state, should be interpreted under the laws of this state (Code 33-2-24; Equitable Life Assur. Soc. v. Pettus, 140 U.S. 226, 11 S.Ct. 822, 35 L.Ed. 497; U.S. Mortgage & Trust Co. v. Ruggles, 258 N.Y. 32, 179 N.E. 250, 79 A.L.R. 802; Mutual Life Ins. Co. v. Johnson, 293 U.S. 335, 55 S.Ct. 154, 79 L.Ed. 398; Equitable Life Assur. Soc. v. Deem, 4 Cir., 91 F.2d 569; New York Life Ins. Co. v. Ruhlin, D.C., 25 F.Supp. 65; 2 Cooley's Briefs on Insurance 1042), this, in view of the lack of announced law on the subject in this state, is not of controlling importance.

The defendants to support their demurrer, strongly rely on Ness v. Mutual Life Ins. Co., 4 Cir., 70 F.2d 59. In this case the clause of the policy under consideration was: "Incontestability.--Except for nonpayment of premiums and except for the restrictions and provisions applying to the Double Indemnity and Disability Benefits as provided in Sections 1 and 3 respectively, this Policy shall be incontestable after one year from 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." And it was held that the incontestability clause was applicable to the double indemnity and disability provisions. The ruling in this case was followed in Mutual Life Ins. Co. v. Markowitz, 9 Cir., 78 F.2d 396; New York Life Ins. Co. v. Kaufman, 9 Cir., 78 F.2d 398; New York Life Ins. Co. v. Yerys, 4 Cir., 80 F.2d 264; Horwitz v. New York Life Ins. Co., 9 Cir., 80 F.2d 295; New York Life Ins. Co. v. Truesdale, 4 Cir., 79 F.2d 481; Kiriakides v. Equitable Life Assur. Soc., 174 S.C. 140, 177 S.E. 40; Mutual Life Ins. Co. v. Margolis, 11 Cal.App.2d 382, 53 P.2d 1017. The language of the clause considered in the Ness case is distinguishable from that used in the clause before us, being "except for the restrictions and provisions applying to the Double Indemnity and Disability Benefits as providedin Sections 1 and 3 respectively" (italics ours), thus defining as well as limiting the scope of the exceptions, and this distinction might, considering this case alone, explain the apparent conflict between that case and those to be hereafter considered. But we find that while some of the cases which follow the ruling in the Ness case are based on the clause considered in that case, in other cases provisions substantially the same and in some instances identical with the clause in the case at bar were considered and held to be governed by the Ness case. In Stroehmann v. Mutual Life Ins. Co., 300 U.S. 435, 57 S.Ct. 607, 81 L.Ed. 732, on a clause identical with that in the Ness case, the rule announced in that case was followed. In the Stroehmann case, as well as other cases supporting the theory of the demurrants, the ambiguity of the clause considered is stressed, and the rule that policies containing ambiguities will be construed in favor of the insured is invoked. There is, of course, no question that such rule is supported by the decisions of this court, however much we might be inclined to waive its strict application in cases where it would tend to prevent the uncovering of fraud.

Another line of cases supports a rule directly opposite to that of the Ness case. In Greber v. Equitable Life Assur Soc., 43 Ariz. 1, 28 P.2d 817, 821, involving a clause which provided "This policy, except as to the provisions relating to Disability and Double Indemnity, shall be (2) incontestable after it has been in force during the lifetime of the Insured for a period of one year from its date of issue provided premiums have been duly paid", it was held that the policy was contestable as to disability and double indemnity provisions, after the expiration of one year. Judge Parker, in the Ness case, says the language considered in the Greber case is "very different from that here involved." In New York Life Ins. Co. v. Davis, D.C., 5 F.Supp. 316, on a clause identical with that here involved, it was held that, under the exception made, the disability and double indemnity provisions could be cancelled for false representations in a suit brought after the expiration of the contestable period mentioned. In Pyramid Life Ins. Co. v. Selkirk, 5 Cir., 80 F.2d 553, the clause considered is substantially the same as that before us and was held to preserve to the insurer the right of contest as to disability and double indemnity benefits, and the clause was distinguished from that involved in the Ness case. In Connecticut General Life Ins. Co. v. McClellan, 6 Cir., 94 F.2d 445, 446, where the exception was "provisions and conditions relating to benefits in the event of total and permanent disability", it was held that the incontestability clause did not bar suit to cancel provisions as to disability, and the...