Riley v. Industrial Life & Health Ins. Co.

• Decision Date: 27 September 1940
• Docket Number: 13416.
• Parties: RILEY v. INDUSTRIAL LIFE & HEALTH INS. CO.
• Court: Georgia Supreme Court

11 S.E.2d 20

190 Ga. 891

RILEY v. INDUSTRIAL LIFE & HEALTH INS. CO.

No. 13416.

Supreme Court of Georgia

September 27, 1940

Rehearing Denied Oct. 16, 1940.

Syllabus Opinion by the Court.

A provision in a life policy that policy shall be incontestable after specified years from its date, except as to conditions as to premiums, is valid, and such provision manifests intention of parties that all grounds of defense except nonpayment of premium, shall be cut off.

Where life policy contains provision that policy shall be incontestable after a certain number of years from its date except as to conditions concerning premiums, in action on policy insurer is, with exception concerning premiums, precluded from setting up any defense based upon misrepresentations or warranties made by insured in application, whether fraudulent or otherwise.

An incontestable clause in a life policy providing that policy shall be incontestable after specified years from its date, except as to conditions concerning premiums, excludes operation of an additional clause that, in order for policy to take effect, insured must have been in good health on date of policy, even though at that time insured was in bad health and was afflicted with an incurable disease from which he died after time limit stated in incontestable clause.

Where a life policy is comprehensive and prima facie protects against all causes of death, a provision that policy shall be incontestable after two years from its date, except for nonpayment of premiums, merely gives to insurer right to contest policy and have it declared inoperative on ground of nonpayment of premiums, and if insurer does not have policy declared inoperative within specified period allowed for absolute contestability, insurer "waives" any such right on its part.

Where life policy provided that policy should be incontestable after two years from its date, except for nonpayment of premiums, rule as to incontestability of policy after two years from its date was the same irrespective of whether insured's death occurred over two years from date of policy or within two years from such date.

Where insured dies within 2-year period of contestability provided by incontestable clause in a life policy, a mere refusal within 2-year period by insurer to pay a claim, on ground that insurer is not liable, because of another provision in policy, will not serve as a "contest" of liability, since such refusal to pay does not constitute an attack upon validity of continued protection afforded by contract of insurance.

Where life policy, in connection with issuance of which no physical examination was required or had, provided that no obligation was assumed by insurer for disease contracted by insured prior to date of policy nor unless on such date insured was in sound health and that policy should be incontestable after two years from its date, except for nonpayment of premiums, that insured was afflicted with a fatal disease on date of policy, which disease caused insured's death over two years from date of policy, was not a defense to action on policy.

Where life policy provided that no obligation was assumed by insurer for disease contracted by insured prior to date of policy nor unless on such date insured was in sound health, and that policy should be incontestable after two years from its date, except for nonpayment of premiums, if insured died within two years of date of policy and proof of death was filed immediately, and insurer refused to pay claim on ground that insured was afflicted with a fatal disease, on date of policy, from which disease insured died, the refusal to pay having been in ample time to allow action on policy to be filed before expiration of two years from date of policy, in action on policy after two years from its date insurer could not contest policy on ground that insured was afflicted with a fatal disease, on date of policy, from which insured died.

The Court of Appeals certified to this court for instruction the following questions:

"1. Where a life-insurance policy issued by an industrial life and health insurance company, in connection with the issuance of which no physical examination was required or had stipulated that one fourth of the face value of the policy would be paid to the beneficiary if the insured died within six calendar months from the date of the policy, one half if the insured died after six calendar months, and the full amount if the insured died after the contract had been continuously in force for one year, and under a heading (before the signatures of the officers of the company), 'Conditions, Privileges, and Limitations,' provided: '(11) No obligation is assumed by the company for any disease contracted prior to the date hereof, nor unless on said date insured is alive and in sound health,' and '(14) This policy shall be incontestable after two years from its date, except for nonpayment of premiums,' is it a good defense to a suit on the policy that the insured was afflicted with a fatal disease on the date of the policy,...