United Sec. Life Ins. & Trust Co. Of Pa. v. Massey

• Decision Date: 12 January 1933
• Citation: 167 S.E. 248
• Court: Virginia Supreme Court
• Parties: UNITED SEC. LIFE INS. & TRUST CO. OF PENNSYLVANIA. v. MASSEY et al.

167 S.E. 248

UNITED SEC. LIFE INS. & TRUST CO. OF PENNSYLVANIA.

v.MASSEY et al.

Supreme Court of Appeals of Virginia.

Jan. 12, 1933.

Appeal from Circuit Court of City of Newport News.

On rehearing.

Original opinion (164 S. E. 529) reversed, and trial Court's decree affirmed.

Argued before CAMPBELL, C. J., and HOLT, EPES, HUDGINS, GREGORY, BROWNING, and CHINN, JJ.

Lett, Murray & Ford, of Newport News, for plaintiff in error.

J. Winston Read, J. Winston Read, Jr., and Jno. W. Massey, all of Newport News, for defendant in error.

HOLT, J.

Our original opinion is reported in 164 S. E. 529. The facts are there stated, and so a restatement is unnecessary.

It is perfectly plain that an insurance company is not liable for a loss not covered by its policy. To use an extreme illustration, if one were to die after the expiration of a term policy there would be no liability, and a company which undertook to defeat an attempt to saddle upon it a loss would not be contesting it. To use another illustration, if it were to declare that death due to an accident in an airplane was not covered, there could be no liability for such a loss, and a denial of liability would not constitute a contest. But it is also plain that, if liability were denied because of some condition subsequent broken, that would be a contest within tne purview of Code, § 4228, as amended by Acts 1926, c. 205. Whitfield v. Ætna Life Ins. Co., 205 U. S. 489, 501, 27 S. Ct. 578, 51 L. Ed. 895, 898.

We shall not undertake to discuss the two applications for insurance appearing in the record, but will adopt that of October 24, 1927, here relied upon by the company. It provides that, if the insured shall personally engage "in service on any railway train * * * any agreement under this application shall become null and void and that the statements and answers to the printed questions above, together with this declaration as well as those made to the company's medical examiner, are full, complete and true, and that they shall constitute the application and shall be made the basis of this contract and shall be regarded as a part of the contract."

This rider was proposed to New York life insurance policies: "Death as a result of service, travel or flight in any species of air craft, except as a farepaying passenger, is a risk not assumed under this policy; but, if the insured shall die as a result, directly or indirectly, of such service, travel or flight, the company will pay to the beneficiary the reserve on this policy."

It will be observed that it deals with "a risk not assumed." Cardozo, C. J., in Metropolitan Life Ins. Co. v. Conway, Superintendent of Insurance, 252 N. Y. 449, 169 N. E. 642, held this to be a valid rider provision, and said: "The provision [statutory] that a policy shall be incontestable after it has been in force during the lifetime of the insured for a period of two years is not a mandate as to coverage, a definition of the hazards to be borne by the insurer. It means only this, that within the limits of the coverage the policy shall stand, unaffected by any defense that it was invalid in its inception, or thereafter became invalid by reason of a condition broken."

The New York rider would not have been sustained had it gone beyond coverage. Ours nowhere undertakes to define risks not assumed, and has nothing at all to do with coverage. It does apply to conditions broken.

Judge Cardozo, in commenting upon Northwestern Mutual Life Ins. Co. v. Johnson, 254 U. S. 96, 41 S. Ct. 47, 65 L. Ed. 155, made this observation: "The clause there in question was not a limitation as to coverage. It was a provision for a forfeiture. In case of the suicide of the insured, whether sane or insane, the policy was to be 'void.' "

It was upon its face incontestable after one year, coupled with the further condition that It was to be void should the insured "die by his own hand." The insured committed suicide, and it was held that there could be a recovery because of the incontestable clause, and not because there was no coverage. Continuing, Cardozo, C. J., said: "* * * With such a clause the death of the insured, coupled with the payment of the premiums, will sustain a recovery in the face of a forfeiting condition. It is quite another thing to say that the same facts will prevail against a refusal to assume the risk."

This sound distinction appears in many cases.

Had the policy declared that "death from suicide is a risk not assumed, " a different conclusion would doubtless have been reached. Our application puts death from suicide and death from service on any railway train upon a common footing.

In Head v. New York Life Ins. Co. (C. C. A.) 43 F.(2d) 517, 519, the court said: "The 'incontestable' provision in section 6731, supra, is not a mandate as to coverage nor a definition of the hazards to be borne by the insurer. It provides rather that, after the expiration of the two year period, the policy, within the limits of the coverage, shall stand...