New York Life Insurance Company, a Corp. v. Cobb

• Decision Date: 06 April 1926
• Citation: 282 S.W. 494,219 Mo.App. 609
• Parties: NEW YORK LIFE INSURANCE COMPANY, a Corporation, Appellant, v. GEORGIA MARIE CANADA COBB, Respondent.
• Court: Missouri Court of Appeals

282 S.W. 494

219 Mo.App. 609

NEW YORK LIFE INSURANCE COMPANY, a Corporation, Appellant, v. GEORGIA MARIE CANADA COBB, Respondent.

Court of Appeals of Missouri, St. Louis

April 6, 1926

Appeal from the Circuit Court of Audrain County.--Hon. E. S. Gantt Judge.

REVERSED AND REMANDED.

Judgment reversed and cause remanded.

Clarence A. Barnes and Jones, Hocker, Sullivan & Angert for appellant.

Where a policy of life insurance is, by its terms, incontestable after a certain period, and all defenses of false representations made in the application are foreclosed to the insurer after the expiration of the period of contestability a suit in equity during the period of contestability will lie to cancel said policy on the ground of false representations made in the application therefor, notwithstanding the prior death of the insured. Mutual Life Ins. Co. v Weigman, 256 S.W. 505; Lavelle v. Metropolitan Life, 209 Mo.App. 330; Monahan v. Metropolitan Life Ins. Co., 119 N.E. 68; Mutual Life v. Hurni Packing Co., 263 U.S. 167; Jefferson Standard Life Ins. Co. v. McIntyre, 294 F. 886; Jefferson Standard Life v. Keeton, 292 F. 53; Northwestern Mutual Life v. Pickering, 293 F. 496; Priest v. Kansas City Life, 237 P. 938; Becker v. Illinois Life, 198 N.W. 884; Humpston v. State Mutual Life, 256 S.W. 438; Thistle v. Equitable Life, 261 S.W. 667; Repala v. John Hancock Life Ins. Co., 201 N.W. 465; Powell v. Mutual Life, 144 N.E. 825; American Trust Co. v. Life Ins. Co., 92 S.E. 706; Missouri State Life v. Crawford, 257 S.W. 66; Fierman v. Eureka Life, 124 A. 171; Reliance Life v. Thayer, 203 P. 190; New York Life v. Adams, 145 N.E. 499.

Rodgers & Buffington for respondent.

BENNICK, C. Daues, P. J., and Becker & Nipper, JJ., concur.

OPINION

BENNICK, C.--

This is a suit in equity instituted on December 27, 1924, for the cancellation of two policies of life insurance, each in the sum of $ 1,000, issued respectively on January 23, 1923, and February 7, 1923, to Mary F. Canada upon her written applications, and payable to her daughter, the defendant herein, as beneficiary.

The petition in two counts alleges that in her applications for said policies, Mary F. Canada stated and represented to the plaintiff, among other things, that she had never consulted a physician for and had never suffered from any ailment or disease of the heart or blood vessels; that she stipulated and agreed in her applications that said statements and representations were made by her to obtain policies of life insurance in plaintiff company; that each of said statements and representations was material to the risk, and that, relying upon such representations and statements in the belief that the same were true, plaintiff issued both policies.

The petition further states that Mary F. Canada died on November 17, 1924; that the representations and statements made by her in her applications for said policies were false and untrue; that at and prior to the time of making said applications, she was afflicted with ailments and diseases of the heart and had consulted and had been treated by a physician for such ailments and diseases during the five years prior to her applications for said policies; that as a result of said ailments and diseases of the heart she was not a fit subject for life insurance at the time she applied to plaintiff for both policies; that she knew at the time of making said applications that she was then, and for a long time prior thereto had been, afflicted with heart disease, all of which she fraudulently and intentionally concealed from the plaintiff for the purpose of inducing the plaintiff to accept her applications for insurance; that if plaintiff had known of the falsity of the representations and statements so made by her in her applications, it would not have accepted or approved such applications and would not have issued the policies; that the disease of the heart with which she was afflicted at and prior to her applications for the policies caused or contributed to her death.

There is a further allegation that plaintiff did not know and did not learn of the falsity of the representations and statements made by Mary F. Canada in her applications, until after her death; that upon learning and being advised of the falsity of the statements in the applications, plaintiff tendered to the administrator of the estate of Mary F. Canada the premiums theretofore paid on said policies with interest, which the said administrator refused and declined to accept.

Plaintiff further alleges that it was provided in and by the terms of said policies that the same should be incontestable after two years from the date of issue, except for the non-payment of premiums, as a result of which no contest could be made or defense asserted by plaintiff in an action instituted by defendant on the policies after the expiration of said contestable period, and which required plaintiff to institute a suit in equity to cancel said policies before the expiration of said contestable period in order to avoid the policies on the ground of false and fraudulent representations made in the applications therefor; and that no contest or action had been filed upon said policies by defendant. Wherefore, plaintiff prayed the court to adjudge and decree that said policies were procured by fraud and false and fraudulent representations on the part of Mary F. Canada in her applications therefor, and that said policies be ordered canceled.

Defendant filed a motion to strike out plaintiff's petition and cause of action alleged therein for the reasons: First, that the petition did not state facts sufficient to constitute a cause of action against defendant; second, that the averments and allegations stated and contained in said petition did not state any cause of action which was maintainable under the laws of this State; and third, that under the laws of this State a suit to cancel a policy of insurance might not be brought after the death of the insured. This motion was sustained by the court and, plaintiff declining to plead further, the court dismissed the cause and rendered judgment in favor of defendant, from which plaintiff has appealed.

Inasmuch as both policies of insurance referred to in the petition contained clauses providing that the same should be incontestable after two years from the date of issue, except for the nonpayment of premiums, the sole question before us for our determination is whether a suit in equity may be maintained after the death of the insured but within the contestable period to cancel such policies for alleged fraudulent misrepresentations of the insured in the procurement thereof. This precise point has until now never been before an appellate court of this State for decision.

While the courts of the several States are not in full accord on this proposition, the weight of authority is so strongly in favor of the propriety of the maintenance of such a suit as to be practically controlling. This court has heretofore taken equitable cognizance of such a suit brought on an Illinois contract of insurance, the validity and construction of which were necessarily to be determined by the law of that State. [Mutual Life Ins. Co. v. Wiegmann, 214 Mo.App. 54, 256 S.W. 505; See, also, Lavelle v. Met. Life Ins. Co., 209 Mo.App. 330, 238 S.W. 504.]

As a general proposition it may not be denied that the courts of this State have uniformly held that, after the death of the insured, a suit in equity to cancel the policy is not the proper remedy. [Schuermann v. Life Ins. Co., 165 Mo. 641, 65 S.W. 723; Kern v. Legion of Honor, 167 Mo. 471, 67 S.W. 252; Keller v. Life Ins. Co., 198 Mo. 440, 95 S.W. 903; State ex rel. v. Trimble, 292 Mo. 371, 239 S.W. 467; Mutual Life Ins. Co. v. Wiegmann, supra.] Nor when an action has been brought on a policy of insurance, may the insurance company convert it into a case in equity by alleging, in its answer, fraudulent misrepresentations of the insured in the application for the policy and by praying for its cancellation. [Schuermann v. Life Ins. Co., Kern v. Legion of Honor and State ex rel. v. Trimble, supra; State ex rel. v. Allen, 306 Mo. 197, 267 S.W. 832; Cradick v. Mutual Life Ins. Co., Mo.App. 256 S.W. 501; O'Donnell v. Life Ins. Co., Mo.App. , 251 S.W. 82; Mueller v. Life Ins. Co., Mo.App. , 261 S.W. 709; Mutual Life Ins. Co. v. Wiegmann, supra.] In none of these cases, however, was the effect of an incontestability clause in the policy considered, and for such reason none of them are controlling in the case at bar.

In some jurisdictions (particularly in Illinois) incontestable provisions in insurance policies have been construed as creating a short Statute of Limitations in favor of the insured, the effect of such provisions being to fix a limited time within which the insurer must ascertain the truth of the representations made in the policy. [Monahan v. Met. Life Ins. Co., 283 Ill. 136, 119 N.E. 68; Powell v. Mut. Life Ins. Co., 313 Ill. 161, 144 N.E. 825.] Other jurisdictions (having regard for particular statutes which invalidate any agreement for a different time for the commencement of actions than that provided in the Statute of Limitations) take the view that it is the incontestability of the policy and not the limitation that bars the defense; that an insurance company, if it should choose, might agree that its liability on a policy should be absolute from the beginning, notwithstanding false and fraudulent misrepresentations of the insured, and that, consequently, the period of contestability does not represent a deduction of all but that much of the period of limitation, but to the contrary adds such period to the time when the right of the insurer to contest the validity of the policy is to...