Prudential Ins. Co. of Am. v. Connallon, 86.

• Court: United States State Supreme Court (New Jersey)
• Writing for the Court: DALY, J.
• Citation: 154 A. 729
• Parties: PRUDENTIAL INS. CO. OF AMERICA v. CONNALLON.
• Docket Number: No. 86.,86.
• Decision Date: 18 May 1931

154 A. 729

PRUDENTIAL INS. CO. OF AMERICA
v.
CONNALLON.

No. 86.

Court of Errors and Appeals of New Jersey.

May 18, 1931.

This is true, notwithstanding that insurance might take effect from date of application.

Appeal from Court of Chancery.

Suit by the Prudential Insurance Company of America against William Connallon. Decree for defendant (106 N. J. Eq. 251, 150 A. 564), and complainant appeals.

Reversed.

Perkins & Drewen, of Jersey City, for appellant.

Donald M. Waesche, of Ridgefield Park (James F. Maloney, of Jersey City, of counsel), for appellee.

DALY, J.

The complainant issued a policy of insurance, dated August 6, 1928, on the life of Martin Connallon, wherein the defendant William Connallon, his brother, is named as beneficiary.

The insured died June 23, 1929, and the complainant, by its bill filed August 2, 1929, sought a decree that the policy never took effect, because at its date the insured was not in sound health, and that the policy was obtained through fraudulent representations made by the insured as to his condition of health and freedom from certain diseases, and prayed a restraint against the beneficiary from bringing suit on the policy and for the surrender of the policy for cancellation. A decree was entered in chancery dismissing the bill (106 N. J. Eq. 251, 150 A. 564), and this appeal is taken from such decree.

The policy of insurance contains a clause which reads: "This policy shall not take effect if on the date hereof the insured be not in sound health." The Vice Chancellor who heard this case properly held that the insured was not in sound health either at the date of the application of the policy or at the date of the policy, and that the statements made by him at the date of the application of the policy were knowingly false. The insured died about a year after making the application, and the testimony conclusively shows that he had been a heavy drinker for many years before his death; that he had been placed in a hospital several times because of acute alcoholism; that he was affected with progressive pulmonary tuberculosis; and that his appearance was such it did not require a doctor to inform his brother, the beneficiary, or any intelligent observer that this unfortunate man was a physical wreck at the time and long before the policy of insurance was issued. The form of policy in this case is one issued by the complainant without medical examination.

One of the general provisions of the policy is as follows: "This policy shall be incontestable after one year from its date of issue, except for non-payment of premium." The complainant contends this provision cannot be given effect because the policy did not take effect, since the insured was not in sound health on the date of the policy; that for this reason the policy was ab initio void and no provision thereof could become operative.

In answer to this contention, the Vice Chancellor clearly reasoned and soundly concluded in the following language: "The substance of the complainant's first contention is that the incontestability clause was intended to be conditional, that is, conditional upon the policy taking effect. Under such construction the clause is deceptive, meaningless, and ineffectual to the insured, because, although it purports to state that the policy shall be incontestable for any reason after one year, it shall nevertheless be contestable at any

154 A. 730

time on the ground here urged. If the policy is to be regarded as never in force so as to permit the insurer to show that the insured was not in sound health at its date, although the insured's death may not occur until many years after the policy date, then an incontestability clause is of but little value and is a deceptive inducement to an insured to accept it. I think the sound health clause here in question must be read with the incontestability clause, and that the two, taken together, must be construed to mean that, if within one year after the complainant issued its policy it discovered that the insured was not in sound health at its date, the contract could be rescinded, but that when one year had elapsed the policy would be considered in force and incontestable for any reason, except nonpayment of premium."

Our Supreme Court, in the case of Drews v. Metropolitan Life Insurance Co., 79 N. J. Law, 398, 75 A. 167, substantially held that such an...