Pacific Mut. Life Ins. Co. v. Galbraith

• Decision Date: 27 December 1905
• Citation: 91 S.W. 204
• Parties: PACIFIC MUT. LIFE INS. CO. v. GALBRAITH.
• Court: Tennessee Supreme Court

91 S.W. 204

PACIFIC MUT. LIFE INS. CO. v. GALBRAITH.

Supreme Court of Tennessee.

December 27, 1905.

Error to Circuit Court, Hawkins County; A. J. Tyler, Judge.

Action by E. A. Galbraith against the Pacific Mutual Life Insurance Company. Judgment in favor of plaintiff, and defendant brings error. Reversed.

J. O. Phillips, for plaintiff in error. S. F. Powell and Susong & Biddle, for defendant in error.

BEARD, C. J.

This suit was brought by defendant in error, as assignee, to recover on an insurance policy issued by plaintiff in error on the life of one Harry M. Johnson for the sum of $2,000. The policy bears date the 1st of January, 1902, and the assured died on the 14th of February, 1904.

The declaration, after setting out the issuance of the policy and the death of the assured, alleges that at the time of the death the policy was in full force and effect. To this declaration the insurance company filed three pleas. The first of these raised the general issue. The second averred that the policy was issued pursuant to a written application made by Johnson to the company, which application, by the terms of the policy, was made a part thereof, wherein he made certain representations and guaranties with regard to his occupation, habits, and health, all of which were material to the risk, and were at the same time false and fraudulent in fact.

The third plea averred that it was a part of the contract that the annual premium provided for in the policy should be paid on the 1st day of January in each year, and on failure to make prompt payment of any such premium the policy should lapse; that on January 1, 1903, this being the day on which the second annual premium was due, Johnson failed to pay the same as stipulated, and thereby the policy became lapsed and of no effect; that on January 10, 1903, Johnson, in order to procure reinstatement and revival of the policy, furnished to the plaintiff in error a certificate containing a warranty of present good health; that relying upon the truthfulness of this certificate, and without any knowledge of its falsity, the plaintiff in error accepted the premium then overdue and reinstated the policy. It is then averred that the warranty contained in this certificate was false, in this: "That the said Johnson was not at its date * * * in all respects in good, sound, and unimpaired condition," but, on the contrary, he was then greatly impaired in health, suffering with the disease known as "tuberculosis" or "consumption," complicated with Bright's disease, from which he died on February 14, 1904. Wherefore it was averred that, the reinstatement having been procured by this false and fraudulent statement, the plaintiff in error was not bound on the policy.

To the third plea the defendant in error filed a replication, in which it was said that it was not true that Johnson made false representations and warranties in the certificate furnished by him for the reinstatement of the policy. Again, and for additional replication, it was averred that it was expressly stipulated in the policy sued on that it should be indisputable, for any reason, after two years from its date of issuance, and that the policy was issued January 1, 1902, and two years had lapsed at the date of the death of the assured, and, this being so, the defendant in error relied upon and pleaded as a bar to the contest attempted by the plaintiff in error.

A demurrer was interposed to the second plea, the grounds of which it is unnecessary to state.

To the third replication set out above, the plaintiff in error filed a demurrer, in which it was insisted that the "two years incontestable clause referred to therein had no application to the certificate of good health made by Johnson for the purpose of procuring a reinstatement of the policy then lapsed, * * * because it appears from the declaration and defendant plea, to which the third replication is responsive, that the certificate of good health in question was made on January 10, 1903, and that the assured died on February 14, 1904; wherefore, it appears that the period of two years from the date of making the certificate and reinstatement of the policy had not expired at the time of the death of the assured, and defendant is not, therefore, debarred from showing fraud in the making of the certificate and contesting the policy because thereof."

The demurrer to the defendant's second plea, and also the demurrer to the plaintiff's third replication, were overruled, and thereupon, by way of replication to the second plea, the plaintiff averred in substance the same as had been replied by him to the third plea; that is, again he interposed as a bar to the contest bound to be made with regard to the alleged fraudulent statement of the assured, upon which the policy was reinstated, the two years incontestable stipulation of the policy, insisting that this period ran from the date of the policy, and not from the date of the reinstatement.

The plaintiff in error then confessing it could no further go by way of rejoinder to the second replication to the second plea, or to the third replication to the third plea, these replications were therefore taken for confessed, and the circuit judge, sitting without the aid of the jury, then proceeded to hear the cause, and upon the pleading and the evidence adduced adjudged that the defendant in error, as assignee, was entitled to recovery the full face of the policy, with interest from the death of the assured, and the cost of the cause.

The case being now before us for review, it is insisted by the defendant in error that the judgment should be sustained, first, because there was in fact, as appears upon the face of the record, no lapse at the time this certificate was made by the assured on the 10th of January, 1903, or at the time he paid his annual premium on that day, and, this being so, the certificate was of no force or effect on the relations of the parties growing out of the issuance of the policy; and, second, that conceding a lapse the trial judge was right in his ruling that the incontestable clause was operative from the date of the policy, rather from that of the reinstatement.

The first of these contentions is rested on the ground that, while the policy bears date 1st of January, 1902, yet it is assumed to be apparent from the record that the policy in fact was not issued until the 15th of that month and that year, and counting from this later date there was no lapse at the time the certificate was issued on which the reinstatement was based. In the face of the pleading of the defendant in error this contention cannot be maintained. In the replication to the second and third pleas, it is distinctly stated "that said policy was issued on the 1st of January, 1903." This contention, therefore, may be dismissed without discussion of the cases cited in its support.

This leaves open for determination the real question, presented in the record, as...