116 N.E. 74 | NY | 1917
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *449 This is an action upon a policy of life insurance. The policy was issued in 1901 to John A. McCormack and was payable upon his death to the plaintiff, his wife. Premiums were due quarterly, but there was a period of thirty days grace. During this term of grace unpaid premiums bore interest at the yearly rate of five per cent. The assured made his payments promptly till December, 1910. He was then ill with a fatal malady which had made him helpless for years. His wife looked after his affairs. She had received on November 12, 1910, a notice which warned her that on December 12 a premium would be payable. The form of the notice is criticized as not conforming to the requirements of section 92 *451 of the Insurance Law (Cons. Laws, ch. 28). We shall deal with that subject later. The wife made out a check in due season, but neglected to mail it, and on January 11, 1911, the period of grace expired. On February 13 the defendant wrote the assured that the policy had lapsed, and suggested that reinstatement might be allowed if there was satisfactory evidence of good health. This letter came from the defendant's main office in Binghamton and was received by the assured at his home in Albany. Investigation followed and led to the discovery of the unmailed check. The defendant had an agency in Albany, and the plaintiff went there and saw Miss Hearley, the cashier. We state the plaintiff's version of the interview. Miss Hearley told her that application for reinstatement might be made to the home office, and showed her a form for signature. It contained a warranty that the assured was in good health. The plaintiff said to Miss Hearley that she could not sign the application truthfully, and was told that the defendant had no other form. She took the form away and showed it to her husband. With his consent and in his name she signed it. It warrants and declares that the assured has not received or required the services or advice of any physician since the date of the last payment to the company, and further warrants and declares that he is, to the best of his knowledge and belief, in sound health and free from any symptoms of disease. Having signed this application, the plaintiff sent it to Miss Hearley, who forwarded it to Binghamton. The trial judge found that its statements were false and were known by the assured and by the plaintiff to be false, and were made for the purpose of deceiving the defendant and thereby procuring the reinstatement of the policy.
The application had the desired effect. It reached the defendant on February 18, 1911. It was accompanied by a check for the overdue premium. On February 20 the medical director, believing its statements to be true, *452 approved it. The defendant thereupon ordered the policy reinstated, and signed a receipt for the premium in default. The trial judge has found that the defendant would have refused reinstatement if it had known the truth.
A few days later the plaintiff received a telephone message from Miss Hearley to call at the Albany agency. She went there on February 26 or 27 and met Miss Hearley and one Andrews, who was known as the defendant's general field superintendent. His duty was to assist agents in securing business. He had nothing to do with the issuing of policies or the waiver of forfeitures. He had not been commissioned by the defendant to deliver its renewal receipt. Indeed, he had left Binghamton on February 15, before the request for reinstatement was signed. The testimony is conflicting in respect of his interview with the plaintiff. We give the plaintiff's version. He told her, she says, that the company had done her a great favor in reinstating so sick a man, and suggested that she take out another policy herself. This she refused to do. He then handed her the receipt for the past due premium. It is marked "Reinstated," and bears date as of the day when the premium fell due.
On January 1, 1912, the assured died. The proofs of death informed the company that he had been ill for many years. This was its first notice that the application for reinstatement was false, unless it be chargeable with the knowledge of Miss Hearley or Mr. Andrews. Upon discovery of the truth, it announced its rescission of the contract. It tendered back all premiums received since December 12, 1910. It tendered also the surrender value of the policy less the amount of a loan which it had made to the assured.
On the defendant's disclaimer of liability, this action followed. The complaint demands judgment for the amount of the policy after deducting the loan, and also for an accounting as to dividends and accumulations. There *453
was, however, no occasion for an accounting in equity (Uhlman
v. N.Y. Life Ins. Co.,
The plaintiff insists that the policy never lapsed, and that there was no need of reinstatement. The argument is that the defendant did not comply with section 92 of *454
the Insurance Law (Cons. Laws, ch. 28). That section forbids the forfeiture of such a policy without notice within a prescribed time of the amount of the premium, the place where it shall be paid, and the person to whom it is payable. The defendant mailed a notice which fairly satisfies those requirements. To quote it at length is unnecessary. It will be found in the opinion of the Appellate Division (
The notice being adequate, there was need of reinstatement. The reinstatement was procured by false representations and warranties. Unless a forfeiture has been waived, the contract will not stand. We are told that the truth was known to Miss Hearley and Mr. Andrews; *456
that their knowledge is to be imputed to the company; and that from this a waiver follows. False representations and broken warranties are not so easily repaired. Neither Miss Hearley nor Mr. Andrews had power to waive forfeitures directly (Quinlan v.Providence W. Ins. Co.,
In these circumstances our decision in Butler v. Mich. Mut.Life Ins. Co. (
The plaintiff relies upon a provision of the policy which makes it incontestable under some conditions. The provision is that "after it shall have been in force one full year, provided any and all payments required from the insured shall be made on or before the date on which they become due, this policy shall be incontestable." There is authority for the proposition that a reinstated policy is to be viewed as a new contract, and that it is incontestable for fraud or breach of warranty in the application for reinstatement after it has been in force as reinstated for a year (Teeter v. United L. Ins. Assn.,
There was no error in limiting the recovery to the cash surrender value. The assured did not demand a paid-up policy or extended insurance within six months following the forfeiture. There is, it is true, a provision in the contract, that if no method of settlement is selected "within the six months specified, then this policy shall automatically become a paid-up policy for the amount stated in the table below, for the end of the last year for which *459
complete annual premiums have been paid, provided there be no unpaid loan thereon." There was an unpaid loan on this policy, and hence the table became inapplicable (Taylor v. N.Y. LifeIns. Co.,
The order of the Appellate Division should be reversed, and the judgment of the Trial Term affirmed, with costs in the Appellate Division and in this court.
HISCOCK, Ch. J., COLLIN, POUND, CRANE and ANDREWS, JJ., concur; CUDDEBACK, J., absent.
Order reversed, etc.