State ex rel. Republic Nat. Life Ins. Co. v. Smrha

• Decision Date: 19 July 1940
• Docket Number: 30993.
• Citation: 293 N.W. 372,138 Neb. 484
• Parties: STATE EX REL. REPUBLIC NAT. LIFE INS. CO. v. SMRHA ET AL.
• Court: Nebraska Supreme Court

293 N.W. 372

138 Neb. 484

STATE EX REL. REPUBLIC NAT. LIFE INS. CO. v. SMRHA ET AL.

No. 30993.

Supreme Court of Nebraska.

July 19, 1940

Syllabus by the Court.

1. The provisions of an incontestable clause, section 44-602 Comp.St.1929, providing that a policy of life insurance shall be incontestable after two years, except for nonpayment of premiums and violation of conditions relating to naval and military services in time of war, are exclusive and, after satisfactory proof of death, bar all other defenses where the contestable period has expired.

2. An action for a writ of mandamus will not lie against the department of insurance, or its officers, to compel the approval of a form rider which does not state in concise terms the exact coverage or liability prescribed by existing statutes.

Original mandamus proceeding by the Republic National Life Insurance Company against Charles Smrha, Director of the Department of Insurance of the State of Nebraska, and the Department of Insurance of the State of Nebraska, to compel the respondents to approve a form of rider which the relator intended to add to its life insurance policy forms for the purpose of restricting its liability in the event of the death of the insured as a result of engaging directly or indirectly in any form of aviation.

Writ of mandamus denied, and proceeding dismissed.

Herman Ginsburg, of Lincoln, for relator.

John S. Logan and Peterson & Devoe, all of Lincoln, for respondents.

Heard before SIMMONS, C. J., ROSE, EBERLY, PAINE, CARTER, MESSMORE and JOHNSEN, JJ.

CARTER, Justice.

This is an original action in which the Republic National Life Insurance Company seeks a peremptory writ of mandamus against the director of the department of insurance and the department of insurance itself, to compel the respondents to approve a form of rider which the company intends to add to its life insurance policy forms for the purpose of restricting its liability in the event of the death of the insured as a result of engaging directly or indirectly in any form of aviation. The defendants demurred generally to plaintiff's petition. The only question for determination is whether the petition states a cause of action.

The petition alleges that relator is an insurance corpora tion organized under the laws of the state of Texas and authorized to conduct a general life insurance business in the state of Nebraska. Relator alleges that the forms of its insurance policies and certificates heretofore issued or delivered in Nebraska have been approved by the department of insurance as required by section 44-1103, Comp.St.1929. The petition further states that, in the future, whenever the underwriting investigation made in connection with the issuance of any life policy discloses that the person to be insured " has been or is likely to operate or ride in any kind of aircraft, the relator intends to restrict, limit and exclude its liability for death arising therefrom under such policies; and relator proposes to execute and issue and attach to each such policy to be issued upon the lives of such persons a rider restricting relator's liability in the event of death of the insured resulting directly or indirectly from operating or being in, on, or riding in any kind of an aircraft." Relator alleges that it has submitted such a rider to the department of insurance and its director for approval and that approval has been arbitrarily, capriciously and wrongfully denied. Relator prays that a peremptory writ of mandamus be issued to compel the approval of the proposed rider by the respondents.

It is not questioned that a life insurance policy may lawfully restrict and limit the risk assumed by the insurer in the absence of statutory prohibition. Respondents urge, however, that relator is prohibited by two applicable statutes from limiting its policy as proposed. In this connection section 44-602, Comp.St.1929, provides in part: " No policy of life or endowment insurance * * * shall be issued or delivered in this state unless it contains in substance the following provisions: * * * 5. A provision that the policy shall be incontestable after it shall have been in force during the lifetime of the insured for two years from its date except for nonpayment of premiums and except for violations of the conditions of the policy relating to naval and military service in time of war."

The other statute, section 44-603, Comp. St.1929, pro vides: " No policy of life or endowment insurance shall be issued or delivered in this state if it contains in substance: * * * 2. A provision by which the settlement at the maturity of any policy after the expiration of the contestable period thereof, shall be of less value than the amount promised on the face of the policy plus dividend additions, if any, less any indebtedness to the company on or secured by the policy, and less any premium that may, by the terms of the policy be deducted."

The decision in this case must rest squarely upon the interpretation to be given to the two quoted statutes. Relator contends that the provision that a policy should be incontestable after being in force for two years is not a mandate as to coverage or a definition of the hazards to be assumed by the insurance company, and cites Matter of Metropolitan Life Ins. Co. v. Conway, 252 N.Y. 449, 169 N.E. 642, and Pacific Mutual Life Ins. Co. v Fishback, 171 Wash. 244, 17 P.2d 841.We have carefully examined these cases and have come to the conclusion that the better view is to the contrary. The legislature of the state of New York also appears to have disagreed with the...