Cotton States Life Ins. v. Cunningham

106 So. 766 | Miss. | 1926

From a decree sustaining a demurrer to the amended bill filed by the Cotton States Life Insurance Company, appellant here, against Mrs. R.K. Cunningham, appellee, the life insurance company appeals.

The bill alleges: That Mrs. Ruby K. Cunningham was the widow of John Emmet Cunningham, and beneficiary under two policies of life insurance issued by it upon the life of John E. Cunningham, deceased. That he died on July 23, 1924, and that the defendant Burwell had been duly appointed administrator c.t.a. of the decedent's estate. That in August, 1923, John E. Cunningham made application and requested complainant to issue insurance upon his life in the amount of ten thousand dollars. That the medical examination was made by Dr. Turnipseed. That the medical examination, including Cunningham's answers thereto, to the medical examiner, was the basis upon which complainant issued the life insurance policies of five thousand dollars each. Copies of the policies were attached to the bill. The applications signed by Cunningham were a part of the policies, and were also attached. That the applications, including the answers to the medical examiner by Cunningham, the insured, were warranties. That the insured made the following answers to the following questions: "Are you now, and for the past five years have you been in good health?" To which the applicant answered, "Yes." "When did you last consult a physician, and for what disease? To which applicant answered "never." "Have you now or since childhood chronic hoarseness, tonsilitis, asthma, pneumonia, pleurisy, la grippe, spitting of blood or hemorrhages, shortness of breath or fainting spells, palpitation or any disease of the throat, lungs or heart?" To which applicant answered "No." "Have you had any disease or any injury, requiring a physician or surgeon, other than as stated above?" To which applicant answered "No." Disease requiring services of physician or surgeon for the past ten years?" To which applicant answered "None."

The bill alleged that all these answers were false and were untrue, and known to be false and untrue by the applicant, and made for the purpose of defrauding and cheating complainant; that the answers were warranties material, which warranties were the basis for the issuance of the polices described in the bill; that the policies would not have been issued if true answers had been made to the answers above quoted; and that about the same time the applicant had secured ten thousand dollars from another company.

The bill further charged that at the time the answers were signed by the applicant he was not in good health; that he had been in poor health for several years, and that for several years he had been suffering from fainting spells, a diseased and weak heart, and an extremely injurious and unhealthy high blood pressure, which was injuring his health and his life; that he had consulted various reputable physicians, and had been under their care and treatment; that he had been on a restricted diet, even receiving medicine from physicians, and purchased medicine upon the advice and prescription of a physician; and that this state of affairs as to his health had stood for five years — all of which was known to the applicant when he answered the questions as above set out.

The appellant tendered back four hundred thirty dollars in premiums which had been paid by the applicant. The policies involved in this litigation had been in force about eleven months when the applicant died.

The complainant further asserted that it had the right to have the policies canceled because of the fraud and injury perpetrated upon it; and that it had no other method of seeking said cancellation and surrender except in a court of equity, and prayed that the policies be canceled; that the original policies be ordered produced by the defendant in open court; that they then be canceled, annulled, and declared void; and that the defendants and all parties privy to them be enjoined from asserting any claim whatsoever upon said policies against complainants.

A demurrer raised the question that the bill showed on its face that the complainant had a full, complete, and adequate remedy at law, and the court below sustained the demurrer. A close study of this bill does not, in substance, differentiate it from the usual notice of special matter given by insurance companies seeking to avoid payment of a policy because of false answers made by the insured to questions propounded by the medical examiner, which answers were made warranties by the applicant who signed the application. No special reason is alleged for invoking the jurisdiction of equity in this case, and no reasons for ousting the law courts of jurisdiction of this cause, of which, unquestionably, under the Constitution, the circuit court has original jurisdiction. The counsel cites cases from Canada and Michigan wherein the jurisdiction of equity to cancel an insurance policy for fraud seems to have been upheld. We notice especially the case of the Mutual Life Insurance Co. v. HurniPacking Co., 263 U.S. 167, 44 S. Ct. 90, 68 L. Ed. 235, 31 A.L.R. 102. But it will be noted in that case that the special reason, as we view it, for the intervention of equity, was that the policy contained an incontestable clause provided that the company could interpose no contest after two years from the date of issuance of the policy, and the suit was brought within the two-year period, and which, as in most of the cases cited, are substantially as follows:

"Incontestability. This policy shall be incontestable except for nonpayment of premiums, provided two years have elapsed from its date of issuance."

The counsel for appellant cites the case of Williams v. NewYork Life Insurance Co., 132 Miss. 345, 96 So. 97, which involved a bill in equity, and which apparently had a clause to the same legal effect as quoted above. The bill was to cancel a policy on account of fraud and misrepresentation, and Mr. Justice SYKES said, "The policy provides that it shall be incontestable after two years. The suit was brought within the two years in the chancery court, but the subpoena for the defendant (appellant) was not issued or served until the expiration of this time;" and the only point decided in the case was that the filing of the bill in good faith is the beginning of the suit.

We have not here before us the incontestable clause which was considered by the supreme court of the United States and which is urged so strenuously upon us, nor the Williams case, quoted,supra, for this policy here involved contains the following as its incontestability clause:

"Incontestability — 15. This policy is nonforfeitable and incontestable after it shall have been continuously in force for two full years prior to the death of the insured, except for nonpayment of premium; provided, however, this incontestable clause neither applies to the total disability benefits nor to the accidental death indemnity clause, if either is attached hereto."

So it will be noted that this incontestable clause takes care of the insurance company in this case, as the defense of false and fraudulent warranties by the insured upon material matters is a good defense for and during the same period and for the same length of time as the original cause of action based on the insurance policy shall exist; and it is not true that the two-year incontestable clause applies in this case for the reason that the insured died within less than one year of the date of the policy, and for this clause to have any play in this case the policy must have been in force two years prior to the death of the insured, so the incontestability feature fades out of this case. In the note to the Woelfle case, found in 12 L.R.A. (N.S.) 881, is well stated the rule, and the overwhelming weight of authority sustains the rule laid down in the above case that a court of equity will not, after the loss insured against has occurred, cancel a policy of insurance and enjoin proceedings at law thereon merely upon the ground that the policy was procured through the fraud of the insured, since such a defense is fully available at law, there citing numerous cases.

The insurance company in this case sought to cancel this policy, alleging no other circumstances except the fraudulent and false statements of the applicant. No other reason is assigned, and no special injury can result, as it is not a case where the beneficiary in the policy may decline to bring suit until after two years, thereby depriving the defendant of a defense good at law. In other words, the incontestable features of the policies here involved do not arise in this case, and in that respect is differentiated from the Mutual Life Insurance Co. v. HurniPacking Co. case, cited above. There the incontestable clause was in effect under the contract; here it has no application, and no special injury is shown nor reason assigned for the intervention of equity save the alleged fraud of the deceased, which defense is unqualifiedly available to the insurance company in a court of law, the circuit court.

We must remember that our Constitution has established a well-defined line of demarcation between the courts of law and the equity courts, and we are unwilling to hold that merely upon a charge of fraud that all the litigation arising out of the issuance of insurance policies may thereby be diverted from the law court to the equity court, and thus deprive the litigant of the believed to be valuable right of trial by jury.

We conclude that this bill seeks to cancel the policy solely upon the ground of fraud, and that is the only basis of equity jurisdiction, which ground and which facts are all permissible as a defense by a proper pleading in a court of law, and therefore equity has no jurisdiction where no special injury or unusual circumstances requiring the intervention of equity is set up in such a bill.

The demurrer was properly sustained. The court below so held and dismissed the bill. Complainant having declined to further amend its bill, the action of the chancery court is approved by this court.

Affirmed.