Stean v. Occidental Life Ins. Co.

• Decision Date: 12 March 1918
• Docket Number: No. 2141.,2141.
• Citation: 24 N.M. 346,171 P. 786
• Parties: STEANv.OCCIDENTAL LIFE INS. CO.
• Court: New Mexico Supreme Court

24 N.M. 346

171 P. 786

STEAN

v.OCCIDENTAL LIFE INS. CO.

No. 2141.

Supreme Court of New Mexico.

March 12, 1918.

Syllabus by the Court.

The word “incontestable,” as used in life insurance policies providing that the policy shall be incontestable, means indisputable and amounts to a guaranty that no objection shall be taken to defeat the policy on the death of the person whose life is insured.

[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Incontestable.]

An incontestable clause in a policy of insurance does not preclude the defense of suicide, where the suicide clause in the policy is a part of the contract to pay, providing how much shall be due and payable in the event of death by self-destruction.

Appeal from District Court, Bernalillo County; Mechem, Judge.

Suit by Gussie I. Stean against the Occidental Life Insurance Company. Judgment for plaintiff, and she appeals. Affirmed.

An incontestable clause in a policy of insurance does not preclude the defense of suicide, where the suicide clause is a part of the contract to pay, providing how much shall be due and payable in the event of suicide.

Heacock & Cornell, of Albuquerque, for appellant.

A. B. McMillen, of Albuquerque, for appellee.

ROBERTS, J.

This suit was instituted in the court below by appellant to recover from appellee the sum of $2,000, alleged to be due appellant as beneficiary under a policy of insurance of $2,000 on the life of her husband, Earl R. Stean, issued by appellee. Appellee answered and admitted the execution of the policy and alleged that there was due thereon the sum of $76.80, which was tendered to appellant. The case was submitted to the court on stipulation of facts, substantially as follows:

The policy of insurance was issued on the 19th day of June, 1915, and, in consideration of an annual premium of $38.40 to be paid on the 18th day of June of each year, the company agreed to pay $2,000 to the beneficiary upon receipt of due proofs of the death of the insured should such death occur within ten years from the date of the policy and while the policy was in force. The policy contained two provisions which are involved in this case, which are as follows:

“1. This policy is incontestable after one year from date of issue except for nonpayment of premiums and is absolutely free from all conditions as to residence, occupation, travel or place of death. ***

7. Death by self-destruction, sane or insane, within two years of the date of the issue hereof, shall limit the amount payable by the company to the total premiums paid by the insured, and no more. This policy is issued on the nonparticipating plan. All statements made by the insured shall, in the absence of fraud, be deemed representations and not warranties.”

The insured had paid two annual premiums of $38.40 each, and on the 7th day of March, 1917, while the policy was in full force, the said Earl R. Stean died by self-destruction. The insured having died more than one year after the issuance of the policy but within less than two years from such time, the trial court found that under said paragraph 7 the beneficiary was entitled to only the annual premiums paid by the insured and entered judgment accordingly. To review this judgment this appeal is prosecuted.

[1][2] The sole question presented under the pleadings and stipulation of facts in this case is the proper construction of the policy and the amount to be recovered thereunder. That it was competent for the company to limit its liability in case of self-destruction by the insured is not questioned, and that it had such right is well settled. 25 Cyc. 878; Bigelow v. Berkshire Life Ins. Co., 93 U. S. 284, 23 L. Ed. 918. The provision in case of self-destruction within two years of the date of the issue of the policy, and its effect, is clear, and there can be no question as to its meaning; but appellant relies upon the incontestable clause of the policy to defeat the clause relative to self-destruction. Appellant contends that appellee has contested the policy, and her argument and the authorities cited are directed to this theory of the case. Of course, if it is true that the construction which appellee claims should be placed upon the policy amounts to a contest, clearly appellant would be right in her contention. It is beyond question that in the interpretation of a policy of insurance it must be liberally construed in favor of the insured, so as not to defeat,...