Thistle v. Equitable Life Assur. Soc. of U.S.

• Decision Date: 08 March 1924
• Citation: 261 S.W. 667,149 Tenn. 667
• Parties: THISTLE ET AL. v. EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES.
• Court: Tennessee Supreme Court

261 S.W. 667

149 Tenn. 667

THISTLE ET AL. v. EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES.

Supreme Court of Tennessee.

March 8, 1924

Appeal from Chancery Court, Hamilton County; W. B. Garvin Chancellor.

Suit by Archibald Thistle and others against the Equitable Life Assurance Society of the United States, in which defendant filed a cross-bill. Judgment for plaintiffs, and defendant appeals. Affirmed.

Joe V Williams, of Chattanooga, for appellant.

Samuel B. Smith, of Chattanooga, for appellees.

McKINNEY J.

This is a suit on a $10,000 life policy, which contains the following provision:

"This policy shall be incontestable after one year from its date of issue, provided premiums have been duly paid, subject to the provisions as to age stated on the third page hereof."

The defendant contends that the policy was issued September 7, 1921, and that it rescinded the policy, or took affirmative action to rescind it, on August 29, 1922, by giving notice, in writing, of its intention to cancel for fraud, and by tendering back the premium paid.

Suit was begun by complainant on September 9, 1922, and the cross-bill, by which the defendant sought a cancellation, was filed October 16, 1922, more than 13 months after the policy was issued.

This question was decided by this court adversely to the contention of the defendant in the case of Humpston v. State Mutual Life Assur. Co., 256 S.W. 440, in which it was said:

"As we view the case, only three questions need be determined, and, if determined in favor of the judgment of the Court of Civil Appeals, they are conclusive of the case. The first is, Did defendant's letter of January 30, 1920, in which it denied the justice of plaintiff's claim, and refused to pay the same, amount to a rescission of the policies? * * *

There is no merit in the first contention of defendant that its letter of January 30, 1920, had the effect of rescinding the policies. There was no evidence offered which tended to show that plaintiff consented to a rescission of the policies. His consent was necessary to accomplish such a result. On this point no authorities need be cited."

The only difference between that case and the one under consideration is that in the former the premium was not tendered back; but that would not affect the legal question involved. The notice of cancellation and a tender of the premium constituted a breach on the part of the defendant, usually designated as a breach of renunciation. American Trust Co. v. Insurance Co., 173 N.C. 558, 92 S.E. 706; 3 Page on Contracts, § 1436. It did not, in fact, constitute a rescission. Under many of the authorities it was necessary to tender back the premium as a condition precedent to the institution of an action to rescind.

The remedy of the defendant was to institute an action for cancellation within a year, and if it did not do so the policy was in force at the expiration of the year.

In disposing of this question the learned chancellor, in his opinion, said:

"It takes two to make a contract and likewise it takes two to rescind one (Ault v. Dustin, 100 Tenn. 366, 45 S.W. 981), or the judgment of a court of competent jurisdiction at the instance of the party having a good ground for rescission. It is true that the defendant undertook to rescind the contract in this case upon the ground of complainant's fraud in procuring it, on August 29, 1922, by delivering to complainant on that date a written notice to that effect and demanding the surrender of the policy. But complainant refused to agree to the rescission and refused to surrender the policy. The contract was therefore not rescinded merely by the act of the defendant in giving said notice. It was open to the defendant thereafter to repent of its act and treat the policy as in full force and effect, or it might elect to have its

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