Reed v. Home State Life Ins. Co.

• Decision Date: 14 November 1939
• Docket Number: Case Number: 28974
• Citation: Reed v. Home State Life Ins. Co., 97 P.2d 53, 186 Okla. 226, 1939 OK 491 (Okla. 1939)
• Parties: REED v. HOME STATE LIFE INS. CO.
• Court: Oklahoma Supreme Court

1939 OK 491

97 P.2d 53

186 Okla. 226

REED v. HOME STATE LIFE INS. CO.

Case Number: 28974

Supreme Court of Oklahoma

Decided: November 14, 1939

Syllabus

¶0 1. INSURANCE--Life policies--Scope of incontestability statute defined.

Subdivision 3, section 10524, O. S. 1931, 36 Okla. Stat. Ann. § 218, dealing with policies of life insurance, and known as the incontestability statute, purports neither to prescribe the risks to be assumed by the insurer nor to convert after a given time a life policy of limited coverage into one of full protection against any and all hazards, but operates to eliminate after two years all defenses based upon alleged invalidity of contract and conditions of forfeiture contained therein.

2. SAME--Double indemnity benefit payable in case of accidental death--Aviation hazards excepted by policy provision.

In a policy of life insurance, where the insurer agrees to pay double the face of the policy if death results from accidental means, a clause providing that "the double indemnity benefit shall not be payable if the insured's death resulted * * * from engaging as a passenger or otherwise in submarine or aeronautic operations," served to exclude from the double indemnity agreement the risk of accidental death occurring as a result of the insured's engaging in any manner in the pursuits so designated.

Appeal from District Court, Oklahoma County; Clarence Mills, Judge.

Action by Maude E. Reed against Home State Life Insurance Company. Judgment for defendant, and plaintiff appeals. Affirmed.

Fred E. Suits, of Oklahoma City, for plaintiff in error.

Hemry & Hemry and Embry, Johnson, Crowe & Tolbert, all of Oklahoma City, for defendant in error.

GIBSON, J.

¶1 This is an action to recover under the double indemnity provision of a policy of life insurance.

¶2 Plaintiff below has appealed from an adverse judgment entered on sustaining demurrer to her petition.

¶3 According to the petition the policy was issued in 1930, and the insured was killed in a commercial aeroplane accident in 1937 while engaged as a copilot. The principal amount, or face, of the policy was immediately paid to plaintiff as beneficiary, but the defendant insurance company denied liability under the double indemnity feature.

¶4 Primarily, the policy is one of ordinary life in the face amount of $1,000, and insures fully against all hazards except those arising from certain pursuits engaged in during the first two years whereby if death should result the insurance is to be a sum equal to the premiums paid, all of which is hereinafter set out. It contains the following incontestability clause:

"Incontestability. This policy will be incontestable after two years from date of issue except for the nonpayment of premium and except as to provisions and conditions relating to disability benefits and those granting additional insurance, specifically against death by accident, if any."

¶5 The clause containing the hazards not fully insured against during the first two years as aforesaid reads as follows:

"Aviation Hazards. In the event of the death of the insured during the first two insurance years as a result of participating or engaging in aviation or aeronautics, the insurance under this policy shall be equal to the premiums hereon which have been paid to and received by the Company and no more; provided, however, that if such death shall result from an accident occurring between the hours of 8 A.M. and 5 P.M. Standard time and while the Insured is riding as a fare-paying passenger in an aeroplane operated by an incorporated common carrier for passenger service between recognized established airports and piloted by a licensed transport pilot, and within thirty days from the date of accident, this restriction shall not apply."

¶6 Then follows that portion of the insurance contract which in the main forms the subject of this controversy. It is titled "Double Indemnity Benefit," and the material portion thereof reads as follows:

"Double Indemnity Benefit

"The Company will pay two thousand dollars, less any indebtedness to the Company on account of this policy, in lieu of the face amount thereof * * * upon receipt of due proof that the death of the Insured occurred * * * and that such death resulted directly and independently of all other causes, from bodily injury effected solely through external, violent and accidental means, and within sixty days after sustaining such injury.

"This Double Indemnity Benefit shall not be payable if the insured's death resulted * * * from engaging as a passenger or otherwise in submarine or aeronautic operations; * * *

"The premium set out on the first page of this policy includes an extra annual premium of $1.50 for the above Double Indemnity Benefit. * * "

¶7 The sole question is whether the double imdemnity portion of the policy covered death by aeroplane accident. Plaintiff insists that it did, and that by reason of section 10524, subdivision 3, O. S. 1931, 96 Okla. Stat. Ann. § 218, the aforesaid incontestability clause was illegal and inoperative, and that the policy as to this particular feature was incontestable after two years from the date of issuance.

¶8 Defendant contended that the double indemnity provisions did not cover death by aeroplane accident, and its demurrer to the petition was sustained as aforesaid.

¶9 Said section 10524 provides in effect that each life insurance policy issued or delivered in this state shall at least provide in substance "that the policy, together with the application therefor, * * * shall constitute the entire contract between the parties and shall be incontestable after two years from its date, except for nonpayment of premiums and except all violations of the conditions of the policy relating to the naval or military service in time of war. * * *"

¶10 Said section does not purport to limit the risks to be assumed by the insurer, and does not operate to convert a life policy of limited coverage to one of full protection against any and all hazards after two years by eliminating all defenses. The statute operates only upon the risks actually assumed, and no more; it eliminates after two years defenses based upon covenants or conditions the violation of which might defeat the policy within the two-year period. It does not deprive the insurer of the right after two years to contest a claim of indemnity for death arising from a hazard or risk not assumed.

¶11 The above appears to be supported by the weight of authority. See Metropolitan Life Ins. Co. v. Conway, 252 N. Y. 449, 169 N. E. 642, and cases there cited. In that case, when considering an incontestability statute entirely similar to our own, the court said:

"The provision that a policy shall be incontestable after it has been in force during the lifetime of the insured for a period of two years is not a mandate as to coverage, a definition of the hazards to be borne by the insurer. It means only this, that within the limits of the coverage the policy shall stand, unaffected by any defense that it was invalid in its inception, or thereafter become invalid by reason of a condition broken. * * *"

¶12 We agree with that statement.

¶13 In the Conway Case, above, it was held that a provision or rider in a life policy providing that risk should not be assumed for death as a result of service, travel, or flight in an aircraft, except as a fare-paying passenger, was not inconsistent with the incontestability statute. The rule in this regard as stated by the court reads as follows:

"Proposed rider for life policy providing risk should not be assumed for death as result of service, travel, or flight in air craft, except as fare-paying passenger, held not inconsistent with Insurance Law (Consol. Laws, c. 28) see. 101, subd. 2, providing for incontestability after two years, since such provision is not definition of hazard to be borne by insurer, and, where there has been no assumption of risk, there can be no liability."

¶14 To support her argument plaintiff has cited numerous decisions bordering upon the particular question here involved. Many are helpful; many are not in point. We think that a discussion of each case is unnecessary in the circumstances.

¶15 We agree, however, that the double indemnity provision constitutes a policy of life insurance within the meaning of said section 10524. See Aetna Life Ins. Co. v. Braukman, 70 F. 2d (10th Cir.) 647. In fact, it is a special type of life policy contained within or attached to an ordinary life policy, both, of course, constituting one insurance contract; a single contract embodying two separate and distinct subjects. The one obligates insurer to pay for the death of the insured resulting from any cause, with certain exceptions relating to amount where death occurs from a particular kind of accident suffered within the first two years; the other obligates the insurer to pay, in lieu of all other benefits named in the contract, a certain sum if insured's death resulted from accidental means only. The contracting parties have full legal right to agree upon what accidents shall be covered by the contract and the kind that...