Prudential Ins. Co. of America v. Stone

• Decision Date: 03 March 1936
• Citation: 270 N.Y. 154,200 N.E. 679
• Parties: PRUDENTIAL INS. CO. OF AMERICA v. STONE et al.
• Court: New York Court of Appeals Court of Appeals

270 N.Y. 154

200 N.E. 679

PRUDENTIAL INS. CO. OF AMERICA

v.STONE et al.

Court of Appeals of New York.

March 3, 1936.

Action by the Prudential Insurance Company of America against Dorothy Stone and Dorothy Stone as administratrix of the goods, chattels, and credits which were of William Stone, deceased. From a judgment of the Appellate Division (244 App.Div. 789, 280 N.Y.S. 967), affirming the judgment of the Special Term in favor of the plaintiff, the defendants appeal.

Affirmed.

Appeal from Supreme Court, Appellate Division, First Department.

Irwin N. Wilpon and Burton B. Turkus, both of Brooklyn, for appellants.

Merwin F. Le Vine, Solon Weit, and Howard S. Levie, all of New York City, for respondent.

FINCH, Judge.

This is an action to rescind a contract of life insurance on the ground of misrepresentation by the insured in the application for the policy.

On May 25, 1930, William Stone applied to the plaintiff for a policy of life insurance, naming his wife, Dorothy Stone, as beneficiary. The application was accepted and on June 13, 1930, a policy was issued. By the terms of the policy the insured reserved the right to change the beneficiary. The premiums on the policy were paid by William Stone.

The policy contained the following clause: ‘Incontestability. This Policy shall be incontestable after one year from its date of issue, except for non-payment of premium, but if the age of the insured be misstated the amount or amounts payable under this Policy shall be such as the premiumwould have purchased at the correct age.’

On April 24, 1931, the plaintiff brought this action to rescind the policy, naming as defendants Dorothy Stone and William Stone. On that date service of the summons and complaint was made on Dorothy Stone. The plaintiff was unable to effect service upon the insured, William Stone, before his death which occurred July 14, 1931. Thereafter letters of administration were issued on the estate of William Stone to Dorothy Stone. The action was predicated upon certain misrepresentations contained in the application for the policy concerning the health of William Stone, his prior medical treatment, his hospitalization, and the rejection of his application by another insurance company. The trial court found and the appellants do not question that said misrepresentations were overwhelmingly established. The trial court further found that the action was commenced within the period of contestability. The Appellate Division unanimously affirmed the judgment of the trial court.

The chief problem is whether the statute of limitations bars the action. This depends on whether the plaintiff commenced the action within the year fixed by the aforesaid incontestability clause. This in turn depends upon the interpretation of the language of section 16 of the Civil Practice Act, which governs the commencement of an action both as to contractual and statutory limitations.

Section 16 of the Civil Practice Act reads as follows: ‘§ 16. When action deemed to be commenced. An action is commenced against a defendant, within the meaning of any provision of this act which limits the time for commencing an action, when the summons is served on him or on a co-defendant who is a joint contractor or otherwise united in interest with him.’

The words of the section with which we are here particularly concerned are, ‘or on a co-defendant who is a joint contractor or otherwise united in interest with him.’ The language in this section must receive a liberal construction. Civil Practice Act, §§ 2, 3.

To be ‘united in interest’ it is not necessary to be joint contractors or to have a joint interest. If the interest of the parties in the subject-matter is such that they stand or fall together and that judgment against one will similarly affect the other, then they are ‘otherwise united in interest.’

In Croker v. Williamson, 208 N.Y. 480, 484,102 N.E. 588, 589, this court held that in an action brought to determine the validity of a will and its probate, all the legatees were united in interest. The court said: ‘Their interests [referring to the various legatees] under the will must stand or fall together, and it would seem to be pretty clear that they are, therefore, ‘united.” These words were used in construing section 398 of the Code of Civil Procedure which was in the language of the present section 16 of the Civil Practice Act.

In Wait's New York Practice (vol. 1 [3d Ed.], p. 88) it is said: ‘If a judgment * * * will substantially affect the other defendant in a similar manner, service upon one will be regarded as service upon the other.’

The derivation of section 16 of the Civil Practice Act supports the construction generally accorded to it. Section 16 of the Civil Practice Act is in the language of section 398 of the Code of Civil Procedure. This latter section was taken from similar language contained in section 99 of the old Code of Procedure. This section 99 of the old Code of Procedure was substituted in 1851 for an earlier section 99 of the Code which had...