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(161 Ark. 602, 257 S. W. 66.)

sured during his lifetime, and upon his death immediately inures to the benefit of the beneficiary. In that case it was contended by the petitioner (the insurance company) that, if the insured died during the period of time mentioned in the incontestable clause, that clause is not applicable. On this point the learned judge said: "In order to give the clause the meaning which the petitioner ascribes to it, it would be necessary to supply words which it does not at present contain. The provision plainly is that the policy shall be incontest-effect of death able upon the simple condition that two years shall have elapsed from its date of issue,-not that it shall be incontestable after two years if the insured shall live, but incontestable without qualification and in any event."

of insured.

Counsel for the insurance company in that case cited Jefferson Standard L. Ins. Co. v. Smith, 157 Ark. 499, 248 S. W. 897, to sustain his view. The Supreme Court of the United States said that the incontestable clause under review in that case was unlike the one passed on by it. There the clause was: "After this policy shall have been in force for one full year from the date hereof, it shall be incontestable," etc.

The Supreme Court of the United States said that the decision seems to have turned on the use of the words "in force," which contemplated the continuance in life of the insured during that year. Without approving or disapproving the distinction, we are content to place our decision in the case at bar upon the uniform current of authority upon the question, including the decision of the Supreme Court of the United States. It is to the advantage and convenience of both the insured and the insurer that there should be uniformity in policies of insurance, both in form and in the interpretation of the language used in the policies.

The insurance policies sued on were issued on the 29th of May, 1918, and the suits were brought on 31 A.L.R.-7.

the 27th of May, 1919. On June 26th, 1919, the defendant filed answers to the complaints. Hence it is contended by the defendant that, inasmuch as the suits were filed within a year after the date of the issuance of the policies, and the defendant answered within the time allowed to do so under the statute, the allegations of its answers related back to the date of the filing of the complaints, and constituted a contest by it within the period of time named in the incontestable clause.

The forms of insurance policies are prepared by the company from its previous knowledge and experience, and where the language used is ambiguous or doubtful it must be -construction given the strongest interpretation against the insurer which it will reasonably bear. Eminent Household, C. W. v. McCray, 156 Ark. 300, 247 S. W. 379.

against insurer.

We have already seen that the incontestable clause is held valid, not for the purpose of upholding fraud, but for the purpose of shutting off expensive and harassing defenses based upon fraud after the lapse of a reasonable time. This view does not exclude consideration of fraud, but allows the parties to fix by stipulation the length of time within which the fraud of the insured can operate to deceive the insurer. Incontestable means not contestable. A contest in law implies an adversary proceeding in which matters in controversy may be settled by the courts upon issue joined. The great body of policyholders are persons who are not learned in the law, and who have no knowledge of the judicial construction of pleadings.

In the application of the rule just announced, we think the natural and most reasonable view is to hold that the insurer has not contested the policy until it has acted in the premises. The contract provides that the policy shall be incontestable after one year, and -effect of bringno action on the ing action to part of the insured or of the beneficiary can relieve the

extend time.

company of its duty to act. In order to contest the policy it was required to file an answer to the suit brought by the beneficiary within one year, or to have instituted an action of its own in equity to cancel the policy on the ground of fraud. In short, we are of the opinion that, construing the clause in the light most favorable to the insured, no contest was made in the case at bar until the insurance company filed an answer, in which it averred that the contract should be set aside on the ground of the fraud of the insured in procuring it. Having waited until a year had elapsed before it elected to contest on this ground, the company is barred of relief under its own contract.

of the United States. Monahan v. Metropolitan L. Ins. Co. 283 Ill. 136, L.R.A.1918D, 1196, 119 N. E. 68; Ebner v. Ohio State L. Ins. Co. 69 Ind. App. 32, 121 N. E. 315; Lavelle v. Metropolitan L. Ins. Co. 209 Mo. App. 330, 238 S. W. 504; Reliance L. Ins. Co. v. Thayer, 84 Okla. 238, 203 Pac. 190; Hardy v. Phoenix Mut. L. Ins. Co. 180 N. C. 180, 104 S. E. 166; Mutual L. Ins. Co. v. Hurni Packing Co. 263 U. S. 167, 68 L. ed.

Adv. Ops. p. 45, post, 102, 44 Sup. Ct. Rep. 90.

The Indiana and Missouri decisions were not rendered by courts of last resort, but by intermediate courts. The supreme court of Minnesota has repeatedly held to the contrary and in accord with our own

The judgment will therefore be decision in Jefferson Standard L. affirmed.

McCulloch, Ch. J., dissenting: The incontestable clause in an insurance policy is valid, according to the great weight of authority, as shown by the numerous cases cited in the opinion of the majority. The present case does not, however, involve that question, but the particular question involved is whether or not the death of the insured within the contestable period affects the operation of the provision so as to permit the insurance company, after the expiration of the time specified in the policy, to plead in an action instituted by the beneficiary defenses which would otherwise be cut off by the incontestable clause, or whether liability under the policy must be actually contested by proceeding in court within the time specified, regardless of the time of the death of the insured. We have already decided that precise question in the recent case of Jefferson Standard L. Ins. Co. v. Smith, 157 Ark. 499, 248 S. W. 897, which is, in effect, overruled by the majority in the present case. This question has arisen in but few cases, and has been decided in accord with the present view of the majority of this court in the states of Illinois, Indiana, Missouri, Oklahoma, and North Carolina, and by the Supreme Court

Ins. Co. v. Smith, supra; Bankers Reserve L. Ins. Co. v. Omberson, 123 Minn. 285, 48 L.R.A. (N.S.) 265, 143 N. W. 735; Mutual L. Ins. Co. v. Stevens, Minn., 195 N. W. 913.

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The last of the Minnesota cases cited above is identical with the facts in Jefferson Standard L. Ins. Co. v. Smith, supra, and cites the Smith Case with approval. In that case the Minnesota court said: "This brings us squarely to the real question in the case. Is it necessary for the insurer to bring an action before the expiration of the two years, in order to avail itself of the defense set out in the complaint? Does the death of the insured interrupt the running of the two-year period so as to preclude the insurer from asserting the defense of fraud in an action by the beneficiary after the expiration of the fixed period? The better weight of authority as well as of good reason seems to be that the death of the insured fixes the right of the parties under the incontestable clause.

We

are of the opinion and hold that the incontestability clause ceased to be operative at the death of the insured within within the two-year period, and fixes the rights of the parties, and that the insurer may avail itself of the defense of fraud in an action to recover on the policy when it is

(161 Ark. 602, 257 S. W. 66.)

brought, even after the expiration of the two-year period."

If we had not already decided the question, I would be willing to follow the weight of authority, notwithstanding my views to the contrary on the construction of this clause of the policy; but since we have deliberately taken a position on the question, I think we should adhere to it. I am firmly convinced that our decision in Jefferson Standard L. Ins. Co. v. Smith is sound, and that it adopts the true logic of the situation, which is aptly expressed in the opinion in that case, as well as in the Minnesota case of Mutual L. Ins. Co. v. Stevens, supra. It is undoubtedly a rule of almost universal application, and one often announced by this court, that the language of an insurance policy is the selection of the insurance company, and, in case of ambiguity, should be given the strongest susceptible interpretation against the company; but that doctrine should not be pushed to the extent of giving a forced or unreasonable interpretation. The word "incontestable" in a policy should be interpreted in its popular sense as referring to a judicial contest of liability in

accordance with settled rules of legal procedure, so as to give the insurer the right, during the whole of the specified period, to contest the policy in such mode of procedure. In fact, it is an elemental principle of remedial procedure that a court of equity will not assume jurisdiction when there is a complete and adequate remedy at law, and it is equally well settled that a court of equity will not afford relief in the cancelation of an executory contract for the reason that the remedy at law in the enforcement of liability under a contract, or in defense against liability thereunder, is adequate. 1 Pom. Eq. Jur. § 221; Phoenix Mut. L. Ins. Co. v. Bailey, 13 Wall. 616, 20 L. ed. 501; Cable v. United States L. Ins. Co. 191 U. S. 288, 48 L. ed. 188, 24 Sup. Ct. Rep. 74; Riggs v. Union L. Ins. Co. 63 C. C. A. 365, 129 Fed. 207; John

son v. Swanke, 128 Wis. 68, 5 L.R.A. (N.S.) 1048, 107 N. W. 481, 8 Ann. Cas. 544; Druon v. Sullivan, 66 Vt. 609, 30 Atl. 98; Mutual L. Ins. Co. v. Stevens, supra.

A policy of insurance is an executory contract until the death of the insured, and a court of equity will afford relief as long as it is merely executory; but it becomes an executed contract on the death of the insured-fully performed by the insured, and the remedy for its enforcement or in defense against liability thereuunder is complete at law. The death of the insured, therefore, fixes the rights of the parties, and, as said by the Minnesota court: "The insurer may avail itself of the defense of fraud in an action to recover on the policy when it is brought."

It is a mistake to say that the death of the insured before expiration of the contestable period, and the possibility of delay beyond that period from the commencement of an action by the beneficiary to recover on the policy, introduce a new element into the controversy which lessens the adequacy of the legal remedy of the insurer so as to call for the interposition of a court of equity. The legal remedy need not be immediate to be adequate, but, on the contrary, it is adequate if it can be invoked against defense for liability when asserted.

The effect of the decision of the majority is, I think, to alter the terms of the contract by shortening the contestable period, and to deny the insurer the right reserved in the policy to contest liability within a year from its date. In the present case the insured died more than four months before the expiration of the contestable period, and this action was instituted by the beneficiary two days before the expiration of that period. Appellant filed its answer within the time allowed by statute, denying liability on the ground of fraudulent misrepresentation of the insured, which answer related back to the filing of the com

plaint. I think that the defense was presented in apt time, and that the incontestable clause did not apply.

Smith, J., concurs in these views.

Petition for rehearing denied January 14, 1924.

NOTE.

Time when an incontestable clause in an insurance policy becomes effective is considered in connection with the effect of the death of insured before the end of the contestable period, in the annotation following MUTUAL L. INS. Co. v. HURNI PACKING Co. post, 108.

2

INDIANAPOLIS LIFE INSURANCE COMPANY, Respt.,

V.

THEODORE AARON et al., Exrs., Etc., of Harry Aaron, Deceased, Appts. Minnesota Supreme Court — March 14, 1924.

(— Minn.

197 N. W. 757.)

Insurance death during contestable period effect.

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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.

Mr. Martin Kahner for appellants. Mr. John G. Priebe, for respondent: The policy, after being enforced for over one year, was incontestable, and the allegations alleging fraud, misrepresentations as to age, as to physical condition, as to whether or not the insured had previously applied for insurance, as to whether he had been rejected, as to whether he had obtained medical services, and matters of this character, which can be raised in an equity action, cannot be raised in an action at law, where the year had expired and the policies are incontestable.

Monahan v. Metropolitan L. Ins. Co. 283 Ill. 136, L.R.A.1918D, 1196, 119 N. E. 68; Ramsey v. Old Colony L. Ins. Co. 297 Ill. 592, 131 N. E. 108; Ebner v. Ohio State L. Ins. Co. 69 Ind.

App. 32, 121 N. E. 315; Indiana Nat. L. Ins. Co. v. McGinnis, 180 Ind. 9, 45 L.R.A. (N.S.) 192, 101 N. E. 289; 9 C. J. p. 1173; Commercial Mut. L. Ins. Co. v. McLoon, 14 Allen, 351; Phoenix Mut. L. Ins. Co. v. Bailey, 13 Wall. 616, 20 L. ed. 501; Des Moines L. Ins. Co. v. Seifert, 112 Ill. App. 277, affirmed in 210 Ill. 157, 71 N. E. 349; Globe Mut. L. Ins. Co. v. Reals, 79 N. Y. 202.

Holt, J., delivered the opinion of the court:

In overruling a demurrer to the complaint the court certified the question decided to be important and doubtful. Defendant appeals.

The complaint set out, in substance, that plaintiff is a life insurance company duly licensed to do business in this state; that on Sep

(— Minn. —, 197 N. W. 757.)

tember 15, 1922, upon the written application of Harry Aaron, plaintiff issued a policy insuring his life for the benefit of his estate in the sum of $5,000, and that the application contained representations as to age, health, physical condition, other insurance, and the result of prior applications for insurance in other insurance companies, setting them out in detail. Then follow allegations to the effect that the representations were false and untrue, and were made to defraud plaintiff, and that defendants were parties to the fraud; that plaintiff relied on the representations in issuing the policy, and had no knowledge or notice of their falsity until after the death of the assured and the appointment of the executors of his estate; that immediately the premium paid was tendered the executors, and a demand made for a return of the policy for cancelation. The prayer is for a decree compelling cancelation of the policy. It is not necessary to set out the allegations in full, except to state that the assured died on January 22, 1923, testate, and defendants were appointed executors on February 26, 1923, so that the attempted rescission was within one year of the issuance of the policy. The allegation that the fraud was practised with the consent and connivance of defendants does not enter into the question presented for decision, for they are in no better or worse position than the assured. The sufficiency of the complaint, had it been lodged against the assured in his lifetime, could not have been questioned. However, the demurrer is grounded upon the doctrine that, the loss having occurred under the policy, there is now a plain, speedy, and adequate remedy at law under the decisions of Bankers' Reserve Life Co. v. Omberson, 123 Minn. 285, 48 L.R.A. (N.S.) 265, 143 N. W. 735, and Kanevsky v. National Council, K. L. S. 132 Minn. 422, 157 N. W. 646.

But plaintiff asserts the incontestability clause contained in the policy, conformable to subdivision 3, §

3477, Gen. Stat. 1913, presents a
situation which compels the insurer,
if relief from the assured's fraud is
to be had, to have recourse to an
equitable action before the time
limit fixed in the policy for contest-
ing it expires. The complaint does
not allege the policy to contain such
a clause, but in the briefs the parties
assert that the policy was before the
trial court and
trial court and was considered.
From the allegation that plaintiff
was duly licensed to issue life insur-
ance in this state, and did insure the
life of Harry Aaron, we may assume
the policy issued contains the clause
required by the statute mentioned.
In Mutual L. Ins. Co. v. Stevens, -
Minn., 195 N. W. 913, it was de-
termined that where, as here, the
insured dies before the period ends
within which the validity of the pol-
icy may be challenged, the rights of
the parties become fixed, both as to
cause of action and defenses exist-
ing at the time of loss or death, and
therefore, so long as a cause of ac-
tion exists against the insurer to
recover for the loss,

Insurance

the defenses also re- death during
main. The authori- contestable
period-effect.
ties So expressly
holding are Jefferson Standard L.
Ins. Co. v. Smith, 157 Ark. 499, 248
S. W. 897, and Jefferson Standard
L. Ins. Co. v. McIntyre (D. C.) 285
Fed. 570. It must be admitted that
a different view has been taken by
many courts of high standing, hold-
ing that unless the insurer affirm-
atively seeks relief, or is in a posi-
tion to assert a defense in court
within the period named in the pol-
icy for contesting its validity, all de-
fenses are barred, save such as may
be excepted in the incontestability
clause. See Ramsey v. Old Colony
L. Ins. Co. 297 Ill. 592, 131 N. E.
108; Ebner v. Ohio State L. Ins.
Co. 69 Ind. App. 32, 121 N. E. 315;
American Trust Co. v. Life Ins. Co.
173 N. C. 558, 92 S. E. 706; Wright
v. Mutual Ben. Life Asso. 118 N. Y.
237, 6 L.R.A. 731, 16 Am. St. Rep.
749, 23 N. E. 186; Jefferson Stand-
ard L. Ins. Co. v. Keeton (C. C. A.)
292 Fed. 53; Mutual L. Ins. Co. v.

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