Insuranceincontestability -date of issue.

Here the words, referring to the written policy, are "from its date of issue." While the question, it must be conceded, is not certainly free from reasonable doubt, yet, having in mind the rule first above stated, that in such case the doubt must be resolved in the way most favorable to the insured, we conclude that the words refer not to the time of actual execution of the policy, or the time of its delivery, but to the date of issue as specified in the policy itself. Wood v. Brotherhood of American Yeomen, 148 Iowa, 400, 403, 404, 126 N. W. 949; Anderson v. Mutual L. Ins. Co. 164 Cal. 712, 130 Pac. 726, Ann. Cas. 1914B, 903; Harrington v. Mutual L. Ins. Co. 21 N. D. 447, 34 L.R.A. (N.S.) 373, 131 N. W. 246; Yesler v. Seattle, 1 Wash. 308, 322, 323, 25 Pac. 1014. It was competent for the parties to agree that the effective date of the policy should be one prior to its actual execution or issue; and this, in our opinion, is what they did. Plainly, their agreement was effective to govern the amount of the premiums and the time of their future payment, reducing the former and shortening the latter, and, in the absence of words evincing a contrary intent, we are unable to avoid the conclusion that it was likewise effective in respect of other provisions of the policy, including the one here in question. This conclusion is fortified by a consideration of the precise words employed, which are "from its (that is, the policy's) date of issue;" or, in other words, from the date of issue as specified in the policy. It was within the power of the insurance company, if it meant

otherwise, to say so in plain terms. Not having done so, it must accept the consequences resulting from the rule that the doubt for which its own lack of clearness was responsible must be resolved against it.

Second. The argument advanced in support of the second ground relied upon for reversal, in substance, is that a policy of insurance necessarily imports a risk, and where there is no risk there can be no insurance; that when the insured dies what had been a hazard has become a certainty; and that the obligation then is no longer of insurance, but of payment; that by the incontestability clause the undertaking is that after two years, provided the risk continues to be insured against for the period, the insurer will make no defense against a claim under the policy; but that if the risk does not continue for two years (that is, if the insured dies in the meantime), the incontestability clause is not applicable. Only in the event of the death of the insured after two years, it is said, will the obligation to pay become absolute. The argument is ingenious, but fallacious, since it ignores the fundamental purpose of all simple life insurance, which is not to enrich the insured, but to secure the beneficiary, who has, therefore, a real, albeit sometimes only a contingent, interest in the policy.

It is true, as counsel for petitioner contends, that the contract is with the insured, and not with the beneficiary; but, nevertheless, it is for the use of the beneficiary, and there is no reason to say that the incontestability clause is not meant for his benefit as well as for the benefit of the insured. It is for the benefit of the insured during his lifetime, and upon his death immediately inures to the benefit of the beneficiary. ficiary. As said by the supreme court of Illinois in Monahan v. Metropolitan L. Ins. Co. 283 Ill. 136, 141, L,R.A.1918D, 1196, 119 N. E. 68: "Some of the rights and obligations of the parties to a contract of insurance necessarily become fixed upon the death of the insured. The

beneficiary has an interest in the contract, and, as between the insurer and the beneficiary, all the rights and obligations of the parties are not determined as of the date of the death of the insured. The incontestable clause in a policy of insurance inures to the benefit of the beneficiary after the death of the insured as much as it inures to the benefit of the insured himself during his lifetime. The rights of the parties under such an incontestable clause as the one contained in this contract do not become fixed at the date of the death of the insured."

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 incontestable 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. See Monahan v. Metropolitan L. Ins. Co. supra; Ramsey v. Old Colony L. Ins. Co. 297 Ill. 592, 601, 131 N. E. 108; Ebner v. Ohio State L. Ins. Co. 69 Ind. App. 32, 42-48, 121 N. E. 315; Hardy v. Phoenix Mut. L. Ins. Co. 180 N. C. 180, 104 S. E. 166, 168, 169.

Counsel for petitioner cites two cases which, it is said, sustain his view of the question: Jefferson Standard L. Ins. Co. v. McIntyre, 285 Fed. 570, and Jefferson Standard L. Ins. Co. v. Smith, 157 Ark. 499, 248 S. W. 897. But the incontestability clause under review in those cases was unlike the one here.

"After this

There the clause was: policy shall have been in force for one full year from the date hereof it shall be incontestable," etc. The decisions seem to have turned upon the use of the words "in force," the district judge in the first case saying: "Are the policies 'in force,' as contemplated in the clause, after the death of the assured, occurring prior to one year from the date of the policy? It seems to me that the proper construction of this clause is that it contemplates the continuance in life of the assured during that year; else why except the nonpayment of premiums?" This amounts to little more than a quære, since the question was then dismissed and the case decided upon another ground. We express neither agreement nor disagreement with the construction put by these decisions upon the provision therein considered; but, dealing alone with the provision here under review, we are constrained to hold that it admits of no other interpretation than that the policy be- -effect of death came incontestable of insured-time upon the sole condition that two years had elapsed.

for contest.

Certain difficulties, both legal and practical, said to arise from this interpretation, in respect of the enforcement of the rights of the insurer, are suggested by way of illustration. But these we deem it unnecessary to review. It is enough to say that they do not, in fact, arise in the instant case, and they could not arise except as a result of the contract, whose words the insurance company itself selected, and by which it is bound.

The judgment of the Court of Appeals is affirmed.

I. Introductory, 109.

II. Death of insured before expiration of period of contestability, 109.

III. Computing the time from which the incontestable clause begins to operate, 112.

IV. Effect of reinstating policies, 114.

V. Substitution of another policy, 115. VI. Assumption by one company of the risks of another, 116.

VII. Difference between policy and statute as to time, 117.

1. Introductory.

The question in Mutual Reserve' Fund Life Asso. v. Austin (1905) 6 L.R.A. (N.S.) 1064, 73 C. C. A. 498, 142 Fed. 398, and similar cases, as to the effect upon the incontestable clause of a provision in the policy that it should not take effect or be in force until delivered to the insured during his lifetime, while in good health, and the first premium paid during his good health, is beyond the scope of the annotation.

Incontestability clauses in insurance policies are favored in the law, and the courts are ever ready to construe them, if possible, in favor of the insured. As illustrative of this point, it will be observed that in many of the cases reviewed in this annotation, where there has been a doubt as to whether the incontestability clause was to run from the date appearing on the face of the policy or from the actual date of execution or delivery, or in cases where the incontestability clause conflicted with other provisions of the policy, the doubt was generally resolved against the insurer and in favor of the insured. Other classes of cases treated in the annotation are illustrative of the same principle.

II. Death of insured before expiration of period of contestability. Where a life insurance policy provides that after a certain definite time it shall be incontestable, except for certain defenses, a majority of the courts hold that the death of the insured within this time does not put an end to the incontestable clause, or prevent its subsequently becoming operative for the benefit of the beneficiary.

United States.-MUTUAL L. INS. Co. V. HURNI PACKING CO. (reported herewith) ante, 102; Jefferson Standard L. Ins. Co. v. McIntyre (1923) 294 Fed. 886, reversing (1922) 285 Fed. 570.

VIII. Death within the "period of grace" provided for paying premiums, 117.

IX. Miscellaneous, 117.

Illinois. Monahan v. Metropolitan L. Ins. Co. (1918) 283 Ill. 136, L.R.A. 1918D, 1196, 119 N. E. 68; Ramsey v. Old Colony L. Ins. Co. (1921) 297 Ill. 592, 131 N. E. 108.

Indiana.-Ebner v. Ohio State L. Ins. Co. (1918) 69 Ind. App. 32, 121 N. E. 315.

Missouri.-Lavelle v. Metropolitan L. Ins. Co. (1922) 209 Mo. App. 330, 238 S. W. 504.

North Carolina.-Hardy v. Phoenix Mut. L. Ins. Co. (1920) 180 N. C. 180, 104 S. E. 166.

Pennsylvania.-Feierman v. Eureka L. Ins. Co. (1924) Pa.

124 Atl. 171. Tennessee.

A.L.R.

HUMPSTON v. STATE MUT. LIFE ASSUR. Co. (reported herewith) ante, 78.

In MUTUAL L. INS. Co. v. HURNI PACKING Co. (reported herewith) ante, 102, affirming (1922) 280 Fed. 18, the court held that, under a provision in a life insurance policy making it incontestable after two years from its date of issue, the death of the insured within the two-year period did not make the incontestable clause inoperative. To use the words of the court, "the provision plainly is that the policy shall be incontestable 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."

The death of the insured within the period of contestability provided for in a policy does not make the incontestability clause inapplicable. Monahan v. Metropolitan L. Ins. Co. (Ill.) supra. In other words, the limitation in the policy does not have to elapse in the lifetime of the insured in order for it to become effective as a bar. This case settles the law on that point in Illinois, but attention is directed to the fact that on appeal from a former trial in this case, in the intermediate appellate court, it was held in (1913)

180 Ill. App. 390, that as the assured died within the period of contestability fixed by the policy, the incontestability clause became inoperative, the court being of the opinion that the incontestability provision should be construed as meaning that if the policy had been in force for the whole period of contestability, or if the insured should survive the period of contestability, it should be incontestable.

In Ramsey v. Old Colony L. Ins. Co. (Ill.) supra, the court held that where the insured died within a year after the issuance of a policy payable to his estate, containing a clause making it incontestable after one year from the date of issue, the period in which the insurer could contest the claim expired in one year after the date of issue, excluding the time elapsing between the death of insured and the appointment of his administrator. This case cites and follows Monahan v. Metropolitan L. Ins. Co. (Ill.) supra, in holding that the incontestable clause continued in force after the death of insured, although the death occurred before the expiration of the time limited for contest in the incontestability clause.

Construing a similar clause, the court held in Ebner v. Ohio State L. Ins. Co. (1918) 69 Ind. App. 32, 121 N. E. 315, that the insurer's right to contest was limited to one year (period provided for an incontestability clause), regardless of the time when the insured died. The court says: "Had it been the purpose of the author of the provision, or the intent of the parties to the contract in assenting to it, to stipulate that appellee's [insurer's] right to contest should be limited to a period of one year only in case the policy continued in force for that length of time, or longer, it would seem that apt language to that effect might have been employed." It seems that the incontestable clause in the policy was inserted pursuant to a legislative enactment providing that all life insurance policies should be incontestable after not more than two years from their date, except for nonpayment of premiums, etc.; therefore, applying the

rule that statutes, like contracts, are to be taken and understood in their ordinary and popular sense, the court was of the opinion that the language used in the incontestable clause in the instant case was not so ambiguous as to call for the insertion of modifying or limiting clauses in order to determine its meaning.

And in Lavelle v. Metropolitan L. Ins. Co. (1922) 209 Mo. App. 330, 238 S. W. 504, the court held that where an incontestable clause in a life insurance policy stipulated that the policy should be incontestable, except for nonpayment of premiums, after two years from date, all defenses except nonpayment of premiums were barred two years from the date of the policy, regardless of whether the insured survived that period or not. The court in the instant case was construing the law of Illinois, as the policy was an Illinois contract and governed by the law of that state, which was duly pleaded and proven; the incontestability clause in this case was a requirement of an Illinois statute, and the court, as intimated above, gave it the same construction as was given to such clauses in the Illinois courts.

And in Hardy v. Phoenix Mut. L. Ins. Co. (1920) 180 N. C. 180, 104 S. E. 166, the court held that under a policy of life insurance containing a clause providing that it should be incontestable after one year from date, except for nonpayment of premiums, the policy becomes incontestable only after that time, regardless of whether the insured survives the one-year period. The court remarks that, if it should accept the view of the insurer that the incontestability clause meant that the insured must survive the period of contestability in order to make the clause effective, "we must insert in the contract, expressed in simple, unambiguous language, stipulations which do not appear there, and which materially affect the contract of the parties, which we are not at liberty to do." To the same effect, see HUMPSTON v. STATE MUT. L. ASSUR. Co. (reported herewith) ante, 78.

Although the general question as to what acts on the part of the insurance

W. 913; INDIANAPOLIS L. INS. Co. v. AARON (reported herewith) ante, 100; Markowitz v. Metropolitan L. Ins. Co. (1924) 122 Misc. 675, N. Y. Supp.

company within the contestable period amount to a contest which will prevent the incontestable clause from becoming operative is beyond the scope of the annotation, it may be noted that in Feierman v. Eureka L. Ins. Co. (Pa.) supra, the court said that the great weight of authority supports the position that the insurer must, at least, disavow liability within the contestable period, to be relieved "not necessarily by legal action, but some definite step specifying the ground of complaint, in such form as to effect a cancelation of the contract." In Jefferson Standard L. Ins. Co. v. McIntyre (Fed.) supra, however, the circuit court of appeals held that a mere denial or repudiation by an insurer of its liability under a policy, after insured's death, accompanied by a tender of the premium paid, is not a contest within the meaning of such a provision. (In explanation of the fact that the decision on appeal in this case was in favor of the insurance company, it is to be noted that the appeal was from a decree of the district court dismissing a bill of equity filed by the insurance company after the death of insurer, and seeking cancelation because of alleged false statements as to health, etc.; the district court took the view that death put an end to the incontestable clause, and also that the clause did not confine the contest to the judicial proceedings, so that the insurance company had an adequate remedy at law; the circuit court of appeals, having taken a different view of both of these points, held that the bill was maintainable, as the insurer had no plain, adequate, and complete remedy at law.)

There is, however, some authority for the view that the death of the insured within the contestable period fixes the rights of the parties and prevents the incontestable clause from thereafter becoming operative upon the expiration of the contestable period. Jefferson Standard L. Ins. Co. v. McIntyre (1922) 285 Fed. 570 (reversed on this point in (1924) 294 Fed. 886); Jefferson Standard L. Ins. Co. v. Smith (1923) 157 Ark. 499, 248 S. W. 897; Mutual L. Ins. Co. v. Stevens (1923) Minn. 195 N.

The provision in the Stevens Case, and apparently in the AARON CASE, was that "this policy shall be incontestable after two years from its date of issue except for nonpayment of premiums." That was also the form of the clause in the Markowitz Case. In Jefferson Standard L. Ins. Co. v. Smith (1923) 157 Ark. 499, 248 S. W. 897, supra, however, the provision. was that "after this policy shall be in force for one full year from the date hereof it shall be incontestable for any cause except for nonpayment of premiums;" and the United States Supreme Court in MUTUAL L. INS. Co. v. HURNI PACKING Co. (reported herewith) ante, 102, which supports the majority view, observed that the clause in the case at bar which read, "This policy shall be incontestable, except for nonpayment of premiums, provided two years shall have elapsed from its date of issue," differed from the clause involved in the Smith Case decided by the Arkansas supreme court. In this connection it will be noted that the latter court, in MISSOURI STATE L. INS. Co. v. CRANFORD (reported herewith) ante, 93, which supports the majority view, places its decision upon what it characterizes as the uniform current of authority, disclaiming any intention to approve or disapprove the suggested distinction.

In Jefferson Standard L. Ins. Co. v. McIntyre (Fed.) supra, which in

volved a clause in the form: "After this policy shall have been in force for one full year from the date hereof it shall be incontestable for any cause except for nonpayment of premiums," the court in support of its position argued as follows: "Are the policies. 'in force,' as contemplated in the clause, after the death of the assured occurring prior to one year from the date of the policy? It seems to me that the proper construction of this clause is that it contemplates the continuance in life of the assured during that year; else why except the nonpay