Pacific Mut. Life Ins. Co. of California v. Strange

• Decision Date: 27 October 1932
• Docket Number: 6 Div. 57.
• Citation: 226 Ala. 98,145 So. 425
• Parties: PACIFIC MUT. LIFE INS. CO. OF CALIFORNIA v. STRANGE.
• Court: Alabama Supreme Court

145 So. 425

226 Ala. 98

PACIFIC MUT. LIFE INS. CO. OF CALIFORNIA v. STRANGE.

6 Div. 57.

Supreme Court of Alabama

October 27, 1932

Rehearing Denied Jan. 27, 1933.

Appeal from Circuit Court, Jefferson County; Wm. M. Walker, Judge.

Bill in equity by the Pacific Mutual Life Insurance Company of California against George Howell Strange, to cancel a policy or certificate of insurance. From a decree sustaining a demurrer to the bill as amended, and dismissing it complainant appeals.

Affirmed.

London Yancey & Brower and Jim C. Smith, all of Birmingham, for appellant.

Harsh Harsh & Hare, of Birmingham, for appellee.

THOMAS J.

The bill was promptly filed, and within the time required, for rescission of a certificate of health and accident insurance on the ground that its issue was procured by vitiating fraud perpetrated by the insured.

The first trial was had on materially different pleadings and in the absence of the policy alleged to have been exhibited. The policy now before the court is to a contrary effect, and militates to a different result. Pacific Mut. Life Insurance Co. v. Strange, 223 Ala. 226, 135 So. 477.

The trial court appreciated this change in the pleading and did not follow the former decision, for that the policy when exhibited was of materially different effect; he rested the last decree on different grounds; the second decree being rested on the ground of demurrer that there was a complete and adequate remedy at law.

The certificate contained, among other things, the following clear and unambiguous provisions:

"Non-Cancellable Income Policy.

"This policy provides indemnity for loss of time through accidental means, and for loss of time by sickness; to the extent herein provided.

"Founded 1868.

"The Pacific Mutual Life Insurance Company of California.

"(Herein called Company)

"Hereby insures *** George Howell Strange *** (Herein called Insured and described in the application), subject to all provisions and limitations herein contained:

"Against disability commencing while this policy is in force and resulting from bodily injury effected through accidental means; and against disability commencing while this policy is in force and resulting from sickness," etc.

"Insurance under this policy is effective in consideration of the payment in advance of the premiums herein provided for and in further consideration of the statements made in the application for this policy, copy of which application is attached hereto and is hereby made a part of this policy. The falsity of any statement in the application, materially affecting either the acceptance of the risk or the hazard assumed hereunder, or made with intent to deceive shall bar all right to recovery under this policy."

The application for the benefit certificate contained the express provisions:

"I hereby apply for Non-Cancellable Life Insurance to _____ on the following representations and on the representations that I shall make in answer to the questions to be made by the Company Medical Examiner in continuation of this application. ***

"17. Do you agree that the falsity of any answer in this application for insurance or any answer made to the Company's Medical Examiner in continuance of this application for insurance or any answer made to the Company's Medical Examiner in continuance of this application for insurance shall bar the right to recover thereunder if such answer is made with intent to deceive or materially affects either the acceptance of the risk or the hazard assumed by the Company?

"Yes."

The averred false answers were of material fact, made to deceive, had that effect, and caused the certificate to issue because of such fraud.

The terms "non-cancellable" and "non-contestable" are not synonymous terms in life or health and accident insurance. The former designation "non-cancellable," did not and was not intended by the parties to qualify the express limitations we have set out above. Maryland Casualty Company v. Massey (C. C. A.) 38 F. (2d) 724, 71 A. L. R. 1428. The material inducement to the issue of the contract certificate was subject to all its "provisions and limitations" which we have set out and which are expressed in unambiguous terms, and were amply sufficient to notify the assured of the measures of protection respectively contained and provided. The term "non-cancellable," as used, merely limited the right of assurer to cancel after an illness or accident, so long as the premium was paid (Pennsylvania Casualty Company v. Perdue, 164 Ala. 508, 51 So. 352), and gave the assured material aid in this continued protection against repeated illnesses and injuries and cancellation therefor; whereas "non-contestable" or rescission for fraud or mistake after a given time secured to the assured indemnity by way of short limitations by contract against belated charges of fraud and mistake, and rescission therefor, when...