230 Minn. 529 | Minn. | 1950
This is an action to recover upon a life insurance policy which was reinstated after it had lapsed for nonpayment of premium. Decision below was for defendant upon the ground that the insured made false statements in the application for reinstatement concerning his insurability. Plaintiff appeals.
The questions for decision are:
(1) Whether statements by the insured concerning his insur-ability in an application for reinstatement of a life insurance policy lapsed for nonpayment of premium, not endorsed upon or attached to the policy, may be used as a defense by the insurer in an action to recover upon the policy under statutory and policy provisions to the effect that the'policy constitutes the entire contract between the parties; that, absent fraud, any statements of the insured shall constitute representations and not warranties; and that no such statements shall avoid the policy unless they are contained in a written application and a copy of the application shall be endorsed upon or attached to the policy when issued;
(2) Whether, where life insurance has become incontestable by lapse of the time specified in the policy, reinstatement of the policy may be shown to have been procured by the insured by false state
(3) Whether declarations of the insured as to his opinion concerning his health are admissible to show the immateriality of the insured’s false statements in an application for reinstatement of the policy as to whether he had suffered any disease or injury or had consulted a physician since the date of his last application for insurance or examination therefor by the company; and
(4) Whether, where the objection to a tender made by check went to the amount tendered and not the fact that it was by check, the creditor may afterward object to the tender upon the ground that the medium of the tender was a check rather than money.
On April 6,1942, defendant insured John W. Sellwood by a policy of endowment life insurance for $3,300 payable to plaintiff if she survived him. By the terms of the policy, premiums were payable annually on April 6, but by the terms of an “Extension Agreement For Payment Of Annual Premium In Monthly Installments” the second and subsequent annual premiums were payable in monthly installments on the last day of each month, subject to a stipulation therein that failure to pay such installments when due or within ten days thereafter should cause the policy “to immediately cease and determine.” Insured did not pay the monthly installment due on November 30, 1946, or within ten days thereafter. Seventeen days after the installment payment was due — seven days after the policy had lapsed for nonpayment of premium — insured applied in writing by an instrument entitled “Personal Report and Supplementary Application to the Equitable Life Insurance Company of Iowa” for reinstatement, representing therein that he had not suffered any disease or injury or consulted a physician or practitioner since the date of his last application for insurance or examination in the company. The application for reinstatement was made under a policy provision, which, so far as here material, gave the insured the right to be reinstated “upon receipt of evidence satisfactory to
The defense was that the reinstatement of the policy was procured by false representations, in that, while the insured represented that he had not consulted a physician after the policy had been issued, the fact was that he had done so during the period from February 17 to 26, 1946. The evidence showed that during such period the insured consulted two physicians at a hospital where he was a patient and at the office of one of the physicians. Upon objection by plaintiff, defendant was not permitted to show the nature of the illness or disease for which insured consulted the physicians. Questions by plaintiff’s counsel put to her and another witness as to insured’s “opinion” concerning his physical condition during the year 1946 were excluded upon defendant’s objection as hearsay and as incompetent, irrelevant, and immaterial.
The policy, in accordance with statute (see, M. S. A. 61.27, 61.30[4, 10]), contained provisions': (a) That the policy, together with the application therefor, constituted the entire contract between the parties; that all statements made by the insured, in the absence of fraud, should be deemed representations and not warranties ; and that no statement should avoid the policy or be used in defense to a claim thereunder unless it was contained in the written application and a copy of such application was attached to the policy “when issued”; and (b) that the policy should be incontestable after it had been in force for a period of two years from the date of issue, except for nonpayment of premiums.
After plaintiff furnished proofs of claim under the policy, defendant denied liability thereunder, except for the amount of $635.36, for which, if it was not liable for the face of the policy, it admittedly was liable. Defendant sent a check for the amount mentioned to plaintiff, which her attorney returned for the reason that it was not for the face of the policy, which she claimed.
Plaintiff contends: (1) That any statements made by the insured in the application for reinstatement could not be used by defendant as a defense, for the reasons that under the statutes and the policy
Defendant contends: (1) That the statutory and policy provisions in question require only the original application to be attached to the policy and not one for reinstatement after lapse for nonpayment of premiums, and that such intention is manifested by the words requiring the application to be attached to the policy “when issued”; (2) that, while the policy had become by the expiration of two years from its date incontestable as to defenses existing at the time it was issued and while thereafter statements in the original application for the policy itself could not be used in defense of an action brought on the policy, the reinstatement of the policy was contestable for false statements in procuring it; (3) that the deceased’s declarations concerning his opinions as to his health were hearsay and, as such, inadmissible; and (4) that under the circumstances the tender of the check was a good tender.
Reinstatement of a life insurance policy after lapse or forfeiture for nonpayment of premiums by performance of the conditions specified in the policy continues in force the original policy and is not the issuance of a new one. Brown v. State Automobile Ins. Assn. 216 Minn. 329, 12 N. W. (2d) 712; Robbins v. New York L. Ins. Co. 195 Minn. 205, 262 N. W. 210, 872. The authorities are in conflict as to whether an application for reinstatement is required to be attached to the policy and whether the failure to do so
“* * * By its terms the statute plainly contemplates only the written application made incident to the original issuing of the policy. The statute requires such ‘written application’ to be ‘attached to the policy %ohen issuedClearly it was not intended by this statute to require the insurance company to attach to the policy ‘when issued’ representations made incident to an application for the reinstatement of lapsed insurance.”
Accordingly, we hold that the statutory and policy provisions here involved require an application for the original issuance of a life insurance policy to be endorsed upon or attached to the policy, but not an application for reinstatement of the policy after lapse thereof for nonpayment of premiums. The words requiring an application to be so endorsed or attached to the policy “when issued” manifest such an intent.
Decision of the question whether the incontestable clause precludes the use of the defense by the defendant of the insured’s false answers in the application for reinstatement is not free of difficulty. On the one hand, a reading of the incontestable clause in the light of the other provisions of the policy shows that it applies only to the original application for the policy at the time it was
While there seems to be little or no dissent from the rules stated, the authorities have reached a variety of conclusions as to the rule applicable to the question now before us. Without enumerating all such rules, it is sufficient to say that the two principal ones are: (1) Reinstatement starts the incontestable clause running anew as to misrepresentations in procuring the reinstatement from the time of the reinstatement; and (2) reinstatement does not start the incontestable clause to run anew, and that, regardless of the reinstatement, the incontestable clause runs from the date of the policy itself, not that of the reinstatement. Under the first rule, defenses which were barred by the running of the incontestable clause before lapse of the policy remain barred; but as to new representations in ■the application for reinstatement, the right of defense is open the same as it was when the policy first became effective. Under the second rule, after the running of the incontestable period from the date of the policy itself, the insurer must determine at its peril in granting reinstatement whether any false answers have been made, and it is foreclosed afterward from asserting that any have been. See, 29 Am. Jur., Insurance, § 896. Some of the cases turn on the proposition whether the reinstatement is a continuation of the con
Except by a process of construction — by supplying what the parties must be presumed to have intended but did not state — an incontestable clause in a life insurance policy, because by its terms the period of contestability starts running from the date the policy was originally issued, cannot apply to a reinstatement of a policy which lapsed after it had become incontestable by the expiration of such period, where reinstatement is regarded, as it is here, as the continuation of the original policy and not the making of a new contract of insurance. New York L. Ins. Co. v. Seymour (6 Cir.) 45 F. (2d) 47, 73 A. L. R. 1523; Teeter v. United L. Ins. Assn. 159 N. Y. 411, 54 N. E. 72. The. authorities reason that, since it is fundamental that fraud vitiates everything into which it enters (see, Magee v. Odden, 220 Minn. 498, 20 N. W. [2d] 87; 3 Dunnell, Dig. & Supp. § 3834), it cannot be supposed that the parties intended that an insured should have what Judge Learned Hand in Tatum v. Guardian L. Ins. Co. (2 Cir.) 75 F. (2d) 476, 478, 98 A. L. R. 341, characterized as “a license forever to cheat the insurer”; and that the reasons for the public policy that, absent fraud, statements by an insured in an application for insurance should be deemed to be representations and not warranties and that a limit should be set on the time within which the insurer should have the right to contest the policy for false statements of the insured in an application, apply to an application for reinstatement the same as to one for the original issuance of the policy itself.
As we understand plaintiff’s contention, she does not controvert the rule of Harnischfeger Sales Corp. v. National L. Ins. Co. 195 Minn. 31, 35, 261 N. W. 580, 582, to the effect that, where it is shown that the insured has consulted a physician and that, because of such fact, his answer in his application that he did not do so is false, the burden is then on the plaintiff to show that the consultation was “for a matter of negligible importance”; but rather it is
As a general rule, the grounds of objection to a tender must be specified by the creditor. Objection upon specified grounds constitutes a waiver of others. Objection to the medium of the tender is waived where it is made upon other grounds. Moulton v. Kolodzik, 97 Minn. 423, 107 N. W. 154, 7 Ann. Cas. 1090; 52 Am. Jur., Tender, § 10. Here, the objection went to the amount of the tender, not the medium thereof. Hence, objection to the latter was waived.
Affirmed.
I
In New York L. Ins. Co. v. Seymour, supra, the court said (45 F. [2d] 48):
“* * * There is nothing expressed on this subject in the policy or in the reinstatement papers. . Clearly the original clause, with the original two-year limitation, cannot be literally reinstated in a case like this. It had performed its office, and this policy had been incontestable for several years before the lapse. Both by the proposal of the reinstatement application and by familiar principles of law, it must follow that fraud in obtaining the reinstatement would be a good defense to liability upon the contract so procured; and there must be a reasonable opportunity for the assertion of this defense. Nor, when we draw the conventional inference against the party*538 drafting the contract, can we think it intended that the policy should be always contestable — without any time limit. We think the fair construction iá that the incontestable clause took a fresh effect when the policy again came into force by the reinstatement, and that the right to contest because of fraud in the reinstatement would expire two years after that date. This conclusion cannot rest upon any precise language in the policy; but it is the reasonable inference as to what the parties intended by reinstating a policy containing this clause, and also providing [representation in application that any statements by insured were true and that insurer might rely on them], in effect, that liability should be defeated by showing fraud in the reinstatement application. This is held in Teeter v. United Life, 159 N. Y. 411, 54 N. E. 72, approved in Great Western v. Snavely (C. C. A.) 206 F. 20, 46 L.R.A. (N.S.) 1056; Mutual Life v. Dreeben (D. C.) 20 F. (2d) 394.”