Torrence v. American Home Mutual Life Insurance

52 S.E.2d 25 | Ga. Ct. App. | 1949

When an insured dies within the two-year period of contestability provided by an incontestable clause in the policy, a mere tender within the two-year period of the premiums paid by the insured, on the ground that the insurer is not liable for more than this amount, because of another provision in the policy, will not suffice to serve as a contest of liability. In order to do this, some affirmative or defensive action in court is required.

DECIDED FEBRUARY 24, 1949. Rosa Torrence, herein referred to as the plaintiff, brought suit on certain insurance policies in the Civil Court of Fulton County against The American Home Mutual Life Insurance Co., herein referred to as the defendant.

Originally this suit was based on two policies. By amendment the plaintiff also prayed for damages and attorney's fees. However, in their brief counsel for the plaintiff abandoned the claim for damages and attorney's fees as well as their client's claim for recovery on one of the insurance policies. Exceptions pendente lite were preserved to the overruling of demurrers of the plaintiff to the answer of the defendant and assigned as error here. However, no reference is made to this assignment of error in brief of counsel for the plaintiff. The same is therefore treated as abandoned. See York v. State, 172 Ga. 483 (4) (158 S.E. 53). Also the brief of counsel for the plaintiff contains a paragraph as follows: "The sole question is whether in view of the incontestable clause of the policy quoted above (policy No. 370104), the defendant in error can avoid liability by reason of the fraudulent representations made by the insured prior to the issuance of the policy." We therefore deal with the case on this sole question.

The defendant issued policy No. 370104 on December 1, 1944, in the amount of $500, to Scott Bradley, in which the plaintiff is named as beneficiary and which contained in substance provisions that after the policy has been continuously in force for a period of not less than 2 years, any natural death benefit payable under it shall be incontestable except for the nonpayment of premiums.

Also that if within 2 years prior to the date of the issuance of the policy, the insured thereunder has been a patient at, or an inmate in any institution for the treatment of any physical or mental disease, or has undergone any surgical operation, or has been attended by a physician, unless it shall be shown by such insured or claimant that such institutional, surgical or medical treatment or attention was not for a serious disease, injury, or physical or mental condition, then, and in such case, this policy shall be voidable by the company.

The brief of evidence as stipulated and agreed to by counsel sets forth that the insured, in obtaining the policy of insurance, signed a written application, in which he gave false and fraudulent answers to questions concerning his physical condition; that during the period of two years prior to the issuance of the policy the insured had been suffering from a serious disease; that on occasions during the years 1943 and 1944 the insured had been treated by several physicians and had been a hospital patient; and that the fraudulent representations made by the insured were made for the purpose and with the intent of deceiving the defendant in inducing it to issue the insurance policy.

The insured died on October 26, 1946. On November 5, 1946, the defendant tendered to the beneficiary the premiums that had been paid on the policy which were refused. The policy contained a provision as follows: "If this policy does not take effect, or is voided by the company, the refund by the company, without interest, of all premiums paid shall constitute settlement in full and relieve the company from further liability hereunder." This suit was filed more than two years after the issuance of the policy.

The case was tried before a Judge of the Civil Court of Fulton County without the intervention of a jury who rendered a judgment in favor of the plaintiff in the amount of the premiums paid by the insured only. Thereupon the plaintiff filed a motion for a new trial on the general grounds and exception here is to the judgment of the trial court overruling the same. Originally this suit was based on two insurance policies issued by the defendant to the same insured and providing for the same beneficiary. One of said policies, No. 367211-M in the amount of $431 contained the provision that it shall be incontestable after it shall have been in force during the lifetime of the insured for two years from the date of the issue. The other policy, No. 370104 in the amount of $500 contained the provision hereinbefore referred to that after the policy has been continuously in force for a period of not less than two years, any natural death benefit payable under it shall be incontestable except for the nonpayment of premiums.

Counsel for the plaintiff point out in their brief that they have abandoned their client's claim on policy No. 367211-M because of that part of the incontestable provision set forth in italics herein, in view of the adverse holding of the Supreme Court in National Life Accident Insurance Co. v. Preston,194 Ga. 583 (22 S.E.2d 157). See also Weems v. American National LifeIns. Co., 197 Ga. 493 (29 S.E.2d 500). They insist however, that the plaintiff is entitled to recover under the authority ofRiley v. Industrial Life c. Insurance Co., 190 Ga. 891 (11 S.E.2d, 20) which case was certified by this court to the Supreme Court. The policy in the Riley case contained an incontestable clause as follows: "This policy shall be incontestable after two years from its date except for nonpayment of premiums." This court certified the following question: "If the insured died within two years of the date of the policy and proof of death was filed immediately, and the company refused to pay the claim on the ground that the insured was afflicted with a fatal disease on the date of the policy from which she died, the refusal to pay having been in ample time to allow a suit on the policy to be filed before the expiration of two years from the date of the policy, in a suit on the policy after two years from the date of the policy, will the insurance company be permitted to contest the policy on the ground that the insured was afflicted with a fatal disease on the date of the policy, from which she died?" The Supreme Court answered this question in the negative.

We can see no substantial difference in the meaning of the incontestable clause herein referred to as contained in the insurance policy in the instant case and the incontestable clause herein quoted from the Riley case, supra. These incontestable clauses differ from the incontestable clause contained inNational Life c. Ins. Co. v. Preston, supra, in that in the latter case in order to become incontestable the policy of insurance must have been of force during the insured's lifetime for a period of two years from the date of the policy, whereas in the instant case and in the Riley case, no reference is made to the insured's lifetime in the incontestable clauses.

In the instant case the insured died in less than two years from the date of the policy. Proof of death was immediately submitted, and before the expiration of two years from the date of the policy, the company tendered the premiums that had been paid by the insured, claiming that the refund of the premiums was the extent of its liability under a provision of the policy, reference to which has hereinbefore been made. This tender and the denial of further liability did not suffice to serve as a contest of liability. In the Riley case, supra, under division 4, p. 894, the Supreme Court held as follows: "By the great weight of authority, where an insured dies within the two-year period of contestability provided by an incontestable clause in the policy, a mere refusal within the two-year period to pay a claim, on the ground that the insurer is not liable, because of another provision in the policy, will not suffice to serve as a contest of liability. This is true for the reason that such a mere refusal to pay, while manifesting the insurer's conception of its rights and its purpose to maintain them, does not constitute an attack upon the validity of the continued protection afforded by the contract of insurance; and in order to do this, either some affirmative or defensive action in court is required." See Rosev. Mutual Life Insurance Co., 19 Fed. 2d, 280, 282, and cit.; 8 Cooley's Briefs on Insurance, Supp. 4491, 4492, and cit.; 37 C. J. 540, and cit. See also Penn Mutual Life Ins. Co. v.Childs, 189 Ga. 835 (7 S.E.2d 907), and cit., andWhetstone v. N. Y. Life Ins. Co., 177 Ga. 24, 29 (169 S.E. 352), as to the procedure of a contest, American Life Ins. Co.v. Stewart, 300 U.S. 203 (57 Sup. Ct. 377, 81 L. ed. 605, 111 A.L.R. 1268).

Nothing to the contrary is held in National Life c. Ins. Co. v. Preston, supra. There the Supreme Court held that under the plain terms of the incontestable clause to the effect that the policy shall be incontestable after being in force during thelifetime of the insured for two years, the condition upon which the incontestable clause is to become applicable is not met when the insured does not live for the required length of time after the date of the issuance of the policy, and that therefore, the insurance company did not need to go into a court of equity to cancel the policy because it had the adequate remedy at law of defending the policy under its terms. In that case in headnotes 1, 2, and 3, the Supreme Court held as follows: "1. As a general rule, equity does not have jurisdiction of a suit by an insurer against a beneficiary of a deceased insured, to cancel a policy of life insurance on the ground that the insurance was procured upon false and material representations by the insured as to his physical condition and treatment by physicians, because the insurer has an adequate and complete remedy in defending such suit at law as may be brought upon the policy. 2. An exception to the rule stated above is recognized where the policy contains a clause providing that it shall be incontestable within a specified time from the date of the issuance of the policy, making it necessary for the insurer to proceed in equity to cancel the policy in order that the right to assert non-liability might not be endangered by lapse of time. 3. Where a policy of life insurance contains a clause that it `shall be incontestable after being in force during the insured's lifetime for a period of two years from its date of issue,' such clause is inapplicable where the insured dies within such period, and is not a ground for intervention of equity by a suit to cancel the policy for fraud in its procurement."

The incontestable clause contained in the insurance policy in the instant case does not fall within the rule stated inNational Life c. Ins. Co. v. Preston, supra, but is controlled by Riley v. Industrial Life Health InsuranceCo., supra.

The petition did not set forth a cause of action as to policy No. 367211-M, but does set forth a cause of action as to policy No. 370104, and therefore the trial court erred in overruling the motion for a new trial.

Judgment reversed. MacIntyre, P. J., and Gardner, J.,concur.