Repala v. John Hancock Mut. Life Ins. Co.

• Decision Date: 31 December 1924
• Docket Number: No. 60.,60.
• Citation: 229 Mich. 463,201 N.W. 465
• Parties: REPALA v. JOHN HANCOCK MUT. LIFE INS. CO.
• Court: Michigan Supreme Court

229 Mich. 463

201 N.W. 465

REPALA

v.JOHN HANCOCK MUT. LIFE INS. CO.

No. 60.

Supreme Court of Michigan.

Dec. 31, 1924.

Appeal from Circuit Court, Wayne County, In Chancery; Guy A. Miller, Judge.

Action by Victoria Repala against the John Hancock Mutual Life Insurance Company. Judgment for plaintiff, and defendant appeals. Affirmed.

Argued before CLARK, C. J., and McDONALD, BIRD, SHARPE, MOORE, STEERE, FELLOWS, and WIEST, JJ. Campbell, Bulkley & Ledyard, of Detroit (Edward P. Wright, of Detroit, of counsel), for appellant.

Fred H. Aldrich and O. Z. Ide, both of Detroit, for appellee.

BIRD, J.

Plaintiff brought suit to recover on a life insurance policy issued by defendant, agreeing to pay her as beneficiary $1,000 in the event of the death of her husband, Joseph Repala. When the proofs were concluded the trial court directed a verdict for the plaintiff for the amount of the policy, with accrued interest.

The policy was issued on May 27, 1921, and contained the following clause, which is material to this controversy:

‘This policy contains no restrictions, etc., * * * and shall be incontestable after one year from its date of issue except for nonpayment of premium.’

The insured, Joseph Repala, died November 18, 1921. Proofs of death were perfected and delivered to the company, but it declined to pay, on the ground that the insured obtained the policy by means of false statements concerning his health. With this declination it tendered to plaintiff the premiums which had been paid by the insured.

Plaintiff filed her suit on June 13, 1922. On October 2, 1922, defendant filed its plea of the general issue, and gave notice of its special defenses of fraud. At the trial plaintiff introduced the policy and the proofs of death, and rested. Defendant offered to show that:

‘On January 3, 1922, the premiums paid on the policy were tendered to the plaintiff, and she was at that time notified that the policy was considered void, by reason of the fact that the company had been induced to enter into it through the misrepresentations of the deceased, as to the condition of his health at the time of the application for insurance.’

This offer was objected to by the plaintiff under the incontestable clause of the policy. The court sustained the objection, and this raises one of the principal questions of the case; namely, whether a tender of the premiums to plaintiff within the year, with the statement that the policy was obtained by the misrepresentations of the insured, was a contest within the meaning of the incontestable clause of the policy.

1. It is clear from the holding in Becker v. Illinois Life Insurance Co., 227 Mich. 388, 198 N. W. 884, that the trial court was right in excluding defendant's offer, unless it can be said that a denial of liability on the ground of misrepresentations in the application concerning the insured's health and a tender of the premiums paid was so far in the nature of a contest that the defense was permissible.

It appears to be settled by many federal and state courts that a denial of liability and a tender of the premiums paid is not a contest within the meaning of those clauses. In Northwestern Mutual Life Insurance Co. v. Pickering (C. C. A.) 293 F. 496, the situation was very similar to the one in the present case. Within the contestable period the company repudiated the claim, and tendered the premiums paid. In discussing the effect of this the court said:

‘An effect of the provision in question was to fix a time limit for a contest of the policy by the insurer on a ground other than the nonpayment of premium. A contest so provided for imports litigation, the invoking of judicial action to cancel or prevent the enforcement of the policy, either by a suit to that end or by a defense to an action on the policy. A mere denial or repudiation by the insurer of its liability under the policy, accompanied by a tender of the...