Silliman v. International Life Ins. Co.

• Decision Date: 27 March 1915
• Citation: 174 S.W. 1131
• Parties: SILLIMAN v. INTERNATIONAL LIFE INS. CO.
• Court: Tennessee Supreme Court

174 S.W. 1131

SILLIMAN v. INTERNATIONAL LIFE INS. CO.

Supreme Court of Tennessee.

March 27, 1915.

Appeal from Chancery Court, Giles County; W. S. Bearden, Chancellor.

Suit by Mattie I. Silliman against the International Life Insurance Company. From a decree of the chancellor overruling a demurrer to the bill, defendant appeals. Affirmed.

Childers & Woodward, of Pulaski, for appellant. E. E. Eslick, of Pulaski, for appellee.

NEIL, C. J.

This case is before us on bill and demurrer, the bill setting forth the following facts:

In January, 1910, the Tennessee Life Insurance Company issued to William B. Silliman a policy of insurance on his life for the sum of twenty-five hundred dollars, payable to his wife Mattie I. Silliman. The consideration was the payment of "thirty-eight and 23/100 dollars in advance, being the premium for one year's term insurance, and the payment of a like sum of thirty-eight and 23/100 dollars on or before the 12th day of January in every year thereafter during four years of the life of the insured." The policy provided that it should be incontestable after the expiration of one year from the date of its issue except for nonpayment of premiums. It contained also the following "privilege of exchange."

"This policy is issued for a term of five years from the date hereof and no longer, but on any anniversary of this policy and while in force, the company will, upon its surrender, grant in exchange therefor, without medical re-examination a new policy on any plan then written for an amount not greater than the sum insured by this policy, and at the rate of premium required for this [the] kind of policy chosen at the age then attained, or at the premium rate required for the original age and date, upon the payment of the difference in premiums with 6 per cent. interest per annum."

The policy contained likewise the following condition:

"In case of suicide committed while sane or insane within one year of the date hereof, the liability of the company shall not exceed the amount of the premiums paid on this policy."

Between the date of the issuance of the policy above mentioned and the 12th day of January, 1914, the defendant, International Life Insurance Company, took over all of the assets of the Tennessee Life Insurance Company, and assumed and bound itself to carry out all of the contracts and obligations of the former company. Up to the time of this assumption the insured promptly paid his premiums to the former company, and on being informed of the assumption he thereafter paid his premiums to the latter company, and his policy was in full force, on the 12th day of January, 1914, when, to quote the bill:

"In accordance with the terms of said policy and upon the demand of the said W. B. Silliman therefor, the defendant company issued to the said W. B. Silliman its policy No. 26688, being a whole life or ordinary life policy, with the annual premium of $90.40, which said amount was paid in full by the said W. B. Silliman on said date, and said policy of insurance was made payable to the complainant, Mattie I. Silliman, in the sum of $2,500, upon the death of the insured. This policy of insurance was issued by defendant in accordance with the terms of the said first policy, and upon the demand of the said W. B. Silliman therefor. No new application was made for said policy, and the original application made to the Tennessee Life Insurance Company, above mentioned, or a photographic copy of the same, was attached to the new policy by the defendant. * * *"

There was also attached to said policy a rider in these words:

"This policy was issued in exchange for and in lieu of Tennessee Life policy No. 757 issued by the Tennessee Life Insurance Company."

It also contained a provision that it was nonforfeitable "from date of issue and incontestable after one year," and the following clause on the subject of suicide:

"In case of suicide, committed while sane or insane within one year from the date on which this insurance begins, the limit of the recovery hereunder shall be the premiums paid."

The bill continues:

"In the year 1910, the said W. B. Silliman was stricken with some disease of the stomach and bowels, the exact nature of which the physicians were unable to determine, and was from that time and until the time of his death in a helpless and hopeless condition, being unable to leave his home or to take any nourishment except liquids. During this period he continued to suffer the greatest agony of mind and body, and was thought by his physicians to be at all times in imminent danger of death. This condition was well known to the defendant company at the time the said W. B. Silliman made the demand for the policy to which he was entitled under his original contract. When demand was made by W. B. Silliman for the change in the form of his policy, the defendant company sent to him blanks upon which were to be made out a certificate of health. This application and this certificate of health he declined to execute, expressly demanding the issue of the new policy under the terms of the original contract and notifying the defendant company that he had taken the matter up with the Insurance Department of Tennessee, and their refusal to comply with their contract would result in a revocation of their license. The defendant company thereupon issued and changed the form of policy in accordance with the demand made upon them, and in accordance with their original undertaking, without any new application containing representations and warranties, and without medical examination, the same being issued upon the original application, and the representations and warranties and medical examination which had been made in 1909."

On July 1, 1914, the insured died as the result of suicide. Due proofs of loss were filed with the defendant, to which no objection was made. The company, however, immediately denied all liability under its policy "except for the amount of the premium which had been paid since the change in the form of the policy," and on September 10, 1914, tendered this sum, which was refused. Thereupon the present bill was filed.

The defendant filed a demurrer containing in varying forms the single defense that under the facts stated no cause of action was shown. The chancellor overruled the demurrer, but under the section of the Code applicable to the subject granted an immediate appeal to this court. Here the...