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(161 Ark. 602, 257 8. W. 66.) sured during his lifetime, and upon the 27th of May, 1919. On June his death immediately inures to the 26th, 1919, the defendant filed anbenefit of the beneficiary. In that swers to the complaints. Hence it case it was contended by the peti- is contended by the defendant that, tioner (the insurance company) inasmuch as the suits were filed that, if the insured died during the within a year after the date of the period of time mentioned in the in- issuance of the policies, and the decontestable clause, that clause is not fendant answered within the time applicable. On this point the allowed to do so under the statute, learned judge said: “In order to the allegations of its answers relatgive the clause the meaning which ed back to the date of the filing of the petitioner ascribes to it, it would the complaints, and constituted a be necessary to supply words which contest by it within the period of it does not at present contain. The time named in the incontestable provision plainly is that the policy clause.
shall be incontest- The forms of insurance policies -effect of death able upon the simple are prepared by the company from
condition that two its previous knowledge and experiyears shall have elapsed from its ence, and where the language used date of issue, not that it shall be is ambiguous
or incontestable after two years if the doubtful it must be
against insurer. insured shall live, but incontestable given the strongest without qualification and in any interpretation against the insurer event."
which it will reasonably bear. EmiCounsel for the insurance com- nent Household, C. W. v. McCray, pany in that case cited Jefferson 156 Ark. 300, 247 S. W. 379. Standard L. Ins. Co. v. Smith, 157 We have already seen that the inArk. 499, 248 S. W. 897, to sustain contestable clause is held valid, not his view. The Supreme Court of the for the purpose of upholding fraud, United States said that the incon- but for the purpose of shutting off testable clause under review in that expensive and harassing defenses case was unlike the one passed on by based upon fraud after the lapse of it. There the clause was: “After a reasonable time. This view does this policy shall have been in force not exclude consideration of fraud, for one full year from the date here- but allows the parties to fix by stipuof, it shall be incontestable," etc. lation the length of time within
The Supreme Court of the United which the fraud of the insured can States said that the decision seems operate to deceive the insurer. Into have turned on the use of the contestable means not contestable. words "in force," which contemplat- A contest in law implies an advered the continuance in life of the in- sary proceeding in which matters in sured during that year.
Without controversy may be settled by the approving or disapproving the dis- courts upon issue joined. The great tinction, we are content to place our body of policyholders are persons decision in the case at bar upon the who are not learned in the law, and uniform current of authority upon who have no knowledge of the judithe question, including the decision cial construction of pleadings. of the Supreme Court of the United In the application of the rule just States. It is to the advantage and announced, we think the natural convenience of both the insured and and most reasonable view is to hold the insurer that there should be uni- that the insurer has not contested formity in policies of insurance, the policy until it has acted in the both in form and in the interpreta- premises. The contract provides tion of the language used in the pol- that the policy shall be incontestable icies.
after one year, and
-effect of bringThe insurance policies sued on no action on the ing action to were issued on the 29th of May, part of the insured 1918, and the suits were brought on or of the beneficiary can relieve the company of its duty to act. In or- of the United States. Monahan v. der to contest the policy it was re- Metropolitan L. Ins. Co. 283 Ill. 136, quired to file an answer to the suit L.R.A.1918D, 1196, 119 N. E. 68; brought by the beneficiary within Ebner v. Ohio State L. Ins. Co. 69 one year, or to have instituted an Ind. App. 32, 121 N. E. 315; Lavelle action of its own in equity to cancel v. Metropolitan L. Ins. Co. 209 Mo. the policy on the ground of fraud. App. 330, 238 S. W. 504; Reliance In short, we are of the opinion that, L. Ins. Co. v. Thayer, 84 Okla. 238, construing the clause in the light 203 Pac. 190; Hardy v. Phoenix Mut. most favorable to the insured, no L. Ins. Co. 180 N. C. 180, 104 S. E. contest was made in the case at bar 166; Mutual L. Ins. Co. v. Hurni until the insurance company filed an Packing Co. 263 U. S. 167, 68 L. ed. answer, in which it averred that the Adv. Ops. p. 45, post, 102, 44 contract should be set aside on the Sup. Ct. Rep. 90. ground of the fraud of the insured The Indiana and Missouri deciin procuring it. Having waited un- sions were not rendered by courts of til a year had elapsed before it elect- last resort, but by intermediate ed to contest on this ground, the courts. The supreme court of Mincompany is barred of relief under nesota has repeatedly held to the its own contract.
contrary and in accord with our own The judgment will therefore be decision in Jefferson Standard L. affirmed.
Ins. Co. v. Smith, supra; Bankers McCulloch, Ch. J., dissenting:
Reserve L. Ins. Co. v. Omberson, The incontestable clause in an in
123 Minn. 285, 48 L.R.A.(N.S.) 265, surance policy is valid, according to
143 N. W. 735; Mutual L. Ins. Co. v. the great weight of authority, as
Stevens, — Minn. — 195 N. W. 913. shown by the numerous cases cited
The last of the Minnesota cases in the opinion of the majority. The
cited above is identical with the
facts in Jefferson Standard L. Ins. present case does not, however, involve that question, but the par
Co. v. Smith, supra, and cites the ticular question involved is whether
Smith Case with approval. In that or not the death of the insured with
case the Minnesota court said: in the contestable period affects the
"This brings us squarely to the real operation of the provision so as to
question in the case. Is it necessary
for the insurer to bring an action permit the insurance company, aft
before the expiration of the two er the expiration of the time specified in the policy, to plead in an ac
years, in order to avail itself of the tion instituted by the beneficiary
defense set out in the complaint ? defenses which would otherwise be
Does the death of the insured intercut off by the incontestable clause, rupt the running of the two-year or whether liability under the policy period so as to preclude the insurer must be actually contested by pro
from asserting the defense of fraud ceeding in court within the time
in an action by the beneficiary after specified, regardless of the time of the expiration of the fixed period ? the death of the insured. We have
The better weight of authority as already decided that precise ques
well as of good reason seems to be tion in the recent case of Jefferson that the death of the insured fixes Standard L. Ins. Co. v. Smith, 157 the right of the parties under the Ark. 499, 248 S. W. 897, which is incontestable clause.
We in effect, overruled by the majority are of the opinion and hold that the in the present case. This question incontestability clause ceased to be has arisen in but few cases, and has operative at the death of the insured been decided in accord with the within the two-year period, and present view of the majority of this fixes the rights of the parties, and court in the states of Illinois, Indi- that the insurer may avail itself of ana, Missouri, Oklahoma, and North the defense of fraud in an action to Carolina, and by the Supreme Court recover on the policy when it is (161 Ark. 602, 257 8. W. 66.) brought, even after the expiration son v. Swanke, 128 Wis. 68, 5 L.R.A. of the two-year period."
(N.S.) 1048, 107 N. W. 481, 8 Ann. If we had not already decided the Cas. 544; Druon v. Sullivan, 66 Vt. question, I would be willing to fol- 609, 30 Atl. 98; Mutual L. Îns. Co. low the weight of authority, not- v. Stevens, supra. withstanding my views to the con- A policy of insurance is an exectrary on the construction of this utory contract until the death of the clause of the policy; but since we insured, and a court of equity will have deliberately taken a position afford relief as long as it is merely on the question, I think we should
executory; but it becomes an executadhere to it. I am firmly convinced ed contract on the death of the inthat our decision in Jefferson Stand- sured—fully performed by the inard L. Ins. Co. v. Smith is sound, sured,—and the remedy for its enand that it adopts the true logic of forcement or in defense against liathe situation, which is aptly ex- bility thereuunder is complete at pressed in the opinion in that case, law. The death of the insured, as well as in the Minnesota case of therefore, fixes the rights of the Mutual L. Ins. Co. v. Stevens, supra. parties, and, as said by the MinneIt is undoubtedly a rule of almost sota court: “The insurer may avail universal application, and one often itself of the defense of fraud in an announced by this court, that the action to recover on the policy when language of an insurance policy is it is brought.” the selection of the insurance com- It is a mistake to say that the pany, and, in case of ambiguity, death of the insured before expirashould be given the strongest sus- tion of the contestable period, and ceptible interpretation against the the possibility of delay beyond that company; but that doctrine should
period from the commencement of not be pushed to the extent of giv- an action by the beneficiary to reing a forced or unreasonable inter
cover on the policy, introduce a new pretation. The word "incontest
element into the controversy which able” in a policy should be interpret- lessens the adequacy of the legal ed in its popular sense as referring to a judicial contest of liability in remedy of the insurer so as to call accordance with settled rules of le
for the interposition of a court of gal procedure, so as to give the in- equity. The legal remedy need not surer the right, during the whole of
be immediate to be adequate, but, on the specified period, to contest the
the contrary, it is adequate if it can policy in such mode of procedure. be invoked against defense for liaIn fact, it is an elemental principle bility when asserted. of remedial procedure that a court The effect of the decision of the of equity will not assume jurisdic- majority is, I think, to alter the tion when there is a complete and
terms of the contract by shortening adequate remedy at law, and it is the contestable period, and to deny equally well settled that a court of the insurer the right reserved in the equity will not afford relief in the policy to contest liability within a cancelation of an executory contract
year from its date. In the present for the reason that the remedy at
case the insured died more than law in the enforcement of liability four months before the expiration under a contract, or in defense of the contestable period, and this against liability thereunder, is ad- action was instituted by the benefiequate. 1 Pom. Eq. Jur. $ 221; ciary two days before the expiration Phenix Mut. L. Ins. Co. v. Bailey, of that period.
of that period. Appellant filed its 13 Wall. 616, 20 L. ed. 501 ; Cable answer within the time allowed by v. United States L. Ins. Co. 191 U. statute, denying liability on the S. 288, 48 L. ed. 188, 24 Sup. Ct. ground of fraudulent misrepresenRep. 74; Riggs v. Union L. Ins. Co. tation of the insured, which answer 63 C. C. A. 365, 129 Fed. 207; John- related back to the filing of the complaint. I think that the defense
NOTE. was presented in apt time, and that
Time when an incontestable clause the incontestable clause did not ap
in an insurance policy becomes efply.
fective is considered in connection ! Smith, J., concurs in these views.
with the effect of the death of insured
before the end of the contestable Petition for rehearing denied Jan
period, in the annotation following uary 14, 1924.
MUTUAL L. INS. Co. v. HURNI PACKING
INDIANAPOLIS LIFE INSURANCE COMPANY, Respt.,
THEODORE AARON et al., Exrs., Etc., of Harry Aaron, Deceased, Appts.
(- Minn. - 197 N. W. 757.) Insurance — death during contestable period — effect.
Where the holder of a life insurance policy, issued by a company duly licensed to do such business, dies before the policy by its terms becomes incontestable, as provided by subdivision 3, § 3477, Gen. Stat. 1913, there is a plain, speedy, and adequate remedy at law to the company, and an action in equity to cancel the policy on the ground of fraud will not be entertained.
[See note on this question beginning on page 108.]
Headnote by HOLT, J.
APPEAL by defendants from an order of the District Court for Hennepin County (Bardwell, J.) overruling a demurrer to the complaint and certifying the question decided to be important and doubtful, in an action brought to compel cancelation of a life insurance policy. Reversed.
The facts are stated in the opinion of the court.
The policy, after being enforced L.R.A. (N.S.) 192, 101 N. E. 289; 9 for over one year, was incontestable, C. J. p. 1173; Commercial Mut. L. Ins. and the allegations alleging fraud, Co. v. McLoon, 14 Allen, 351; Phenix misrepresentations as to age, as to Mut. L. Ins. Co. v. Bailey, 13 Wall. 616, physical condition, as to whether or 20 L. ed. 501; Des Moines L. Ins. Co. not the insured had previously applied v. Seifert, 112 Ill. App. 277, affirmed in for insurance, as to whether he had 210 Ill. 157, 71 N. E. 349; Globe Mut. been rejected, as to whether he had L. Ins. Co. v. Reals, 79 N. Y. 202. obtained medical services, and matters
Holt, J., delivered the opinion of of this character, which can be raised
the court: in an equity action, cannot be raised
In overruling a demurrer to the in an action at law, where the year had
complaint the court certified the expired and the policies are incon
question decided to be important testable. Monahan v. Metropolitan L. Ins. Co.
and doubtful. Defendant appeals. 283 Ill. 136, L.R.A.1918D, 1196, 119
The complaint set out, in subN. E. 68; Ramsey v. Old Colony L.
stance, that plaintiff is a life insurIns. Co. 297 Ill. 592, 131 N. E. 108; ance company duly licensed to do Ebner v. Ohio State L. Ins. Co. 69 Ind. business in this state; that on Sep
(- Minn, -, 197 N. W. 757.) tember 15, 1922, upon the written 3477, Gen. Stat. 1913, presents a application of Harry Aaron, plain- situation which compels the insurer, tiff issued a policy insuring his life if relief from the assured's fraud is for the benefit of his estate in the to be had, to have recourse to an sum of $5,000, and that the applica- equitable action before the time tion contained representations as to limit fixed in the policy for contestage, health, physical condition, oth- ing it expires. The complaint does er insurance, and the result of prior not allege the policy to contain such applications for insurance in other a clause, but in the briefs the parties insurance companies, setting them assert that the policy was before the out in detail. Then follow allega- trial court and was considered. tions to the effect that the represen- From the allegation that plaintiff tations were false and untrue, and was duly licensed to issue life insurwere made to defraud plaintiff, and ance in this state, and did insure the that defendants were parties to the life of Harry Aaron, we may assume fraud; that plaintiff relied on the the policy issued contains the clause representations in issuing the pol required by the statute mentioned. icy, and had no knowledge or notice In Mutual L. Ins. Co. v. Stevens, of their falsity until after the death Minn. -, 195 N. W. 913, it was deof the assured and the appointment termined that where, as here, the of the executors of his estate; that insured dies before the period ends immediately the premium paid was within which the validity of the poltendered the executors, and a de- icy may be challenged, the rights of mand made for a return of the pol- the parties become fixed, both as to icy for cancelation. The prayer is cause of action and defenses existfor a decree compelling cancelation ing at the time of loss or death, and of the policy. It is not necessary to therefore, so long as a cause of acset out the allegations in full, except tion exists against the insurer to to state that the assured died on recover for the loss,
the defenses also re- death during January 22, 1923, testate, and defendants were appointed executors main. The authori- contestable
period-effect. on February 26, 1923, so that the ties
SO expressly attempted rescission was within one holding are Jefferson Standard L. year of the issuance of the policy. Ins. Co. v. Smith, 157 Ark. 499, 248 The allegation that the fraud was S. W. 897, and Jefferson Standard practised with the consent and con- L. Ins. Co. v. McIntyre (D. C.) 285 nivance of defendants does not enter Fed. 570. It must be admitted that into the question presented for deci- a different view has been taken by sion, for they are in no better or many courts of high standing, holdworse position than the assured. ing that unless the insurer affirmThe sufficiency of the complaint, had atively seeks relief, or is in a posiit been lodged against the assured tion to assert a defense in court in his lifetime, could not have been within the period named in the polquestioned. However, the demurrer icy for contesting its validity, all deis grounded upon the doctrine that, fenses are barred, save such as may the loss having occurred under the be excepted in the incontestability policy, there is now a plain, speedy,
clause. See Ramsey v. Old Colony and adequate remedy at law under L. Ins. Co. 297 Ill. 592, 131 N. E. the decisions of Bankers' Reserve 108; Ebner v. Ohio State L. Ins. Life Co. v. Omberson, 123 Minn. Co. 69 Ind. App. 32, 121 N. E. 315; 285, 48 L.R.A.(N.S.) 265, 143 N. W. American Trust Co. v. Life Ins. Co. 735, and Kanevsky v. National 173 N. C. 558, 92 S. E. 706; Wright Council, K. L. S. 132 Minn. 422, 157 v. Mutual Ben. Life Asso. 118 N. Y. N. W. 646.
237, 6 L.R.A. 731, 16 Am. St. Rep. But plaintiff asserts the incontest- 749, 23 N. E. 186; Jefferson Standability clause contained in the pol- ard L. Ins. Co. v. Keeton (C. C. A.) icy, conformable to subdivision 3, § 292 Fed. 53; Mutual L. Ins. Co. v.