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creditors sought to subject to payment benefit of it, must account for to the of their claims the proceeds of policies extent of the premiums paid during his of insurance issued on the life of the insolvency, still they would be entitled debtor in favor of his wife, who had to claim the fund as a homestead, and collected the proceeds of the policies. thus defeat the appellants' recovery See this case also under V. d, supra. in this suit. If the money paid by the VII. Miscellaneous.
insurance company to the widow and The fact that the premium on
son, to the extent of the amount of the policy of insurance taken out by an in
premiums paid by the debtor when in
solvent, was the debtor's property, solvent debtor on his own life, payable
which he had fraudulently disposed of, to his parents, was paid only by a worthless check, and that he never put
or was a sum which, ex æquo et bono, into the insurance anything upon
they ought to account for, the appel
lants' right to subject it to the paywhich the creditors could have any
ment of their debt could not be any claim, was the controlling factor in
greater than it would have been if the Roberts v. Winton (1898) 100 Tenn.
debtor had not paid the premiums, and 484, 41 L.R.A. 275, 45 S. W. 673, in
had retained the money until his holding that creditors of the assured had no right to the proceeds, but that · death, or, having paid them, a sum
equal thereto had been returned to they passed to the beneficiaries. But see Lehman v. Gunn (Ala.) under
his estate by his widow and son. The
claim of homestead, set up by the II. b, supra. And where premiums on a policy of
widow and son, would have been good
as to the money thus retained or reinsurance for the benefit of his wife and children were paid by the assured
turned, for the debtor had not waived out of his monthly wages as a laborer,
his right to a homestead exemption as
to the appellants' debt." which were exempt, it was held in Ma
Where the wife had a separate eshoney v. James (1897) 94 Va. 176, 26
tate and contributed to the premiums S. E. 384, that his creditors could not,
yearly out of her separate property, after his death, subject the insurance
and these payments were never reproceeds received by his widow and
turned to her, and she received no child to payment of their claims, to the
benefit from them except from the extent of the premiums paid, on the ground that such premiums were paid
policies of insurance after her huswhile he was insolvent, and so were
band's death, it was held in Re Goss void as to pre-existing debts. The
(1893) 71 Hun, 120, 24 N. Y. Supp. 623, court said: “It may well be doubted
that no case was made for charging
the administrator with a claim by a whether premiums paid by the insolvent debtor on the insurance policy
judgment creditor of the assured for for the benefit of his wife and child,
premiums on policies in excess of $500 out of his earnings, five sixths of
per year, since the proof failed to show which were absolutely exempt from
that this amount was paid for premidistress, levy, or garnishment, and
ums in any one year out of the funds the whole of which, if he had
of the husband. See also, as to payremained in possession of it, might
ments from the wife's property, First have been held by him as his home- Nat. Bank v. Simpson (Mo.), and First stead, free from levy, seizure, or
Nat. Bank v. White (N. J.) under II. b, sale, by claiming it in the manner pre- supra; and Jacob v. Continental L. scribed by law, could be considered, in Ins. Co. (Ohio) under V. c, supra. the absence of an actual fraudulent The question as to who should sue intent, such an alienation of his prop- for recovery of life insurance premierty as appellants could complain of. ums paid in fraud of creditors, where
. It is unnecessary, however, to the husband, while insolvent, diverted decide this question, for even if it money from his creditors for the paywere such a disposition of his property ment of premiums on policies of life as the law condemns, and which the insurance for the benefit of his wife, widow and son, who had received the under a statute providing that if the premiums on an insurance policy were But it was held in Lewis v. Ameripaid with intent to defraud creditors, can L. Ins. Co. (1879) 7 Mo. App. 112, an amount equal to the premiums so that the administrator of the husband, paid, with interest, should inure to the who had insured his own life for the benefit of the creditors, arose in Wil- benefit of his wife and children at a liams v. Harth (1914) 156 Ky. 702, 161 time when he was alleged to be insolS. W. 1102, in which it was said that vent, could not raise the objection the personal representative should in- that the insurance was in fraud of stitute the action for the recovery of creditors; and the court held, theresuch premiums, but that, in the event fore, that it was unnecessary to deof his refusal to do so, a creditor termine whether such a provision might bring the action for himself and made for the wife and children could, all other creditors, and that all the in any event, be successfully attacked creditors should be made parties, the on the ground that it was fraudulent action being in the the nature of a pro- as to the creditors of the assured. ceeding to settle the estate.
R. E. H.
REUBEN ALLEN HUMPSTON
v. STATE MUTUAL LIFE ASSURANCE COMPANY of Worcester,
Massachusetts, Piff. in Certiorari.
(- Tenn. 256 S. W. 438.) Insurance death of insured within year effect.
1. A provision that a life insurance policy shall be incontestable after one year from the date of insurance is not affected by death of the insured within the year.
[See note on this question beginning on page 108.] - rescission necessity of consent. profert is made of the policies in the
2. Consent of the beneficiaries is pleading, and they are read in evinecessary to rescission of life insur- dence, including the clauses relied on. ance contracts after the death of in
On Petition for Rehearing. sured. Injunction against action at law on Insurance character of incontestinsurance policy.
able clause. 3. Injunction lies against the main- 5. An incontestable clause in a poltenance of an action at law on a life icy of life insurance is a contractual insurance policy which was secured limitation, and is not governed by by fraud, where the time for contest principles applying to statutes of limwill expire before such defense can be itation. presented in the action.
– effect of bringing action on run[See 14 R. C. L. 408.]
ning of time. Pleading — waiver — failure to plead 6. The institution of an action on clauses in insurance policy.
a policy of life insurance does not sus4. A beneficiary does not waive the pend the running of the time limited incontestable clauses in an insurance in the incontestable clause for conpolicy by failing to plead them, where testing the validity of the policy.
CERTIORARI to the Court of Civil Appeals to review a judgment reversing a judgment of the Circuit Court for Knox County in favor of defendant in an action brought to recover an amount alleged to be due on two policies of life insurance. Affirmed.
The facts are stated in the opinion of the court.
256 S. W. 438.) Messrs. J. C. Lambdin and Turner, son, 102 Tenn. 255, 52 S. W. 862; Home Kennerly, & Cate, for plaintiff in cer- Ins. Co. v. Connley, 104 Tenn. 93, 56 tiorari:
S. W. 828; Boyd v. Vanderbilt Ins. Co. The contract of insurance became 90 Tenn. 212, 25 Am. St. Rep. 676, 16 completed upon the death of the in- S. W. 470; First Nat. Bank v. Fidelity sured, and liability or nonliability be- & G. Co. 110 Tenn. 10, 100 Am. St. came fixed by that event.
Rep. 765, 75 S. W. 1076; 1 Cooley, Thompson v. Fidelity Mut. L. Ins. Briefs of Ins. p. 1161; Missouri K. & Co. 116 Tenn. 570, 6 L.R.A.(N.S.) 1039, T. Trust Co. v. German Nat. Bank, 23 115 Am. St. Rep. 823, 92 S. W. 1098; C. C. A. 65, 40 U. S. App. 710, 77 Fed. Carlson v. Supreme Council, A. L. H. 117; Hale v. Sovereign Camp, W. 0. 115 Cal. 466, 35 L.R.A. 643, 47 Pac. W. 143 Tenn. 555, 226 S. W. 1045. 375; Miller v. Union Cent. L. Ins. Co. In the bringing of a suit on a con110 III. 102; John Hancock Mut. L. Ins. tract, the Statute of Limitations as to Co. v. Schlink, 175 Ill. 284, 51 N. E. any defense growing out of the con795; 4 R. C. L. 490; 9 C. J. 1162; Sail- sideration for the contract is suspendors v. Woelfle, 118 Tenn. 755, 12 L.R.A. ed by plaintiff's instituting his suit, (N.S.) 881, 102 S. W. 1109; Harris v. and the defendant may rely on any Security Mut. L. Ins. Co. 130 Tenn. defense not barred, when plaintiff in328, L.R.A.1915C, 153, 170 S. W. 474, stitutes his suit. Ann. Cas. 1916B, 380; Kelley v. Mutual Lewis v. Turnley, 97 Tenn. 197, 36 L. Ins. Co. 109 Fed. 56; Ebner v. Ohio S. W. 872; Williams v. Lenoir, 8 Baxt. State L. Ins. Co. 69 Ind. App. 32, 121 395; Paducah & M. R. Co. v. Parks, N. E. 315; Hardy v. Phænix Mut. L. 86 Tenn. 554, 8 S. W. 842; Lowry v. Ins. Co. 180 N. C. 180, 104 S. E. 166; Hawes, 10 Heisk. 688; 17 R. C. L. 745, Mutual L. Ins. Co. v. Buford, 61 Okla. 746; Louisville Bkg. Co. v. Buchanan, 158, 160 Pac. 928.
4 Ann. Cas. 929, note; Clark v. DunThe incontestable clause must be canson, 79 Okla. 180, 16 A.L.R. 315, pleaded.
192 Pac. 806. Stamper v. Venable, 117 Tenn. 557, Messrs. E. R. Taylor and Frantz, 97 S. W. 812; Stearnes Coal & Lumber McConnell, & Seymour, for defendant Co. v. Jamestown R. Co. 141 Tenn. 206, in certiorari: 208 S. W. 334; Perkins v. Hays, Cooke,
Defendant was precluded from set163, 5 Am. Dec. 680; Moore v. Holt,
ting up the defense of the alleged 3 Tenn. Ch. 141; 33 Cyc. 43; Hardy
misrepresentations contained in the v, Phenix Mut. L. Ins. Co. 180 N. C.
application for the insurance, for the 180, 104 S. E. 166; Gross v. Disney, 95 Tenn. 592, 32 S. W. 632; Sully v.
reason that the policies were inconChildress, 106 Tenn. 109, 82 Am. St.
testable, as defendant had not taken Rep. 875, 60 S. W. 499; German Bank
proper affirmative action within the v. Haller, 101 Tenn. 83, 52 S. W. 807;
contestable year to avoid the policies, Maupin v. Whitson, 2 Heisk. 1; Merri- and therefore the trial court should man v. Lacefield, 4 Heisk. 217.
have directed a verdict in favor of the The incontestable clauses in this plaintiff. case have not been pleaded, and are Clement v. New York L. Ins. Co. 101 therefore waived.
Tenn. 26, 42 L.R.A. 247, 70 Am, St. Waterhouse v. Sterchi Bros. Furni- Rep. 650, 46 S. W. 561; Monahan v. ture Co. 139 Tenn. 117, 201 S. W. 150; Metropolitan L. Ins. Co. 283 Ill. 136, State ex rel. Spratlin v. Thompson, 118 L.R.A.1918D, 1196, 119 N. E. 69; Tenn. 578, 20 L.R.A.(N.S.) 1, 102 S. Ramsey v. Old Colony L. Ins. Co. 297 W. 349; Standard Loan & Acci. Ins. Ill. 592, 131 N. E. 108; Ebner v. Ohio Co. v. Thornton, 97 Tenn. 1, 40 S. W. State L. Ins. Co. 69 Ind. App. 32, 121 136.
N. E. 315; Metropolitan L. Ins. Co. v. Applicants for insurance are held Peeler, Okla. —, 6 A.L.R. 441, 176 to the utmost frankness and truthful- Pac. 939; American Trust Co. v. Life ness in their applications.
Ins. Co. 173 N. C. 558, 92 S. E. 706; Harris v. Security Mut. L. Ins. Co. Murray v. State Mut. L. Ins, Co. 22 R. 130 Tenn. 328, L.R.A.1915C, 153, 170 I. 525, 53 L.R.A. 743, 48 Atl. 800; S. W. 474, Ann. Cas. 1916B, 380; Cat- Mutual L. Ins. Co. v. Buford, 61 Okla. ron v. Tennessee Ins. Co. 6 Humph. 158, 160 Pac. 928; Arnold v. New 178; Franklin F. Ins. Co. v. Crockett, York L. Ins. Co. 131 Tenn. 720, 177 S. 7 Lea, 725; Ætna Ins. Co. v. Miers, 5 W. 78; 14 R. C. L. 886, § 61; Langdeau Sneed, 139; Knights of Honor v. Dick- v. John Hancock Mut. L. Ins. Co. 194 Mass. 56, 18 L.R.A.(N.S.) 1190, 80 N. sued upon the life of Charles Ernest E. 452.
Humpston, the beneficiary named in Plaintiff was not precluded from the policies being the plaintiff, who taking advantage of said incontestable
is the father of the insured. clauses in its motion for a direct ver
The insured died on November dict.
29, 1919, and within less than a year Bomar v. Hagler, 7 Lea, 89; Waterbouse v. Sterchi Bros. Furniture Co.
after the policies were issued, as the 139 Tenn. 117, 201 S. W. 150; Grand
result of Bright's disease. Proofs Lodge, B. R. T. v. Clark, 189 Ind. 373, of death were promptly and season18 A.L.R. 1190, 127 N. E. 280.
ably made and filed by plaintiff, and There is no evidence in the record on January 30, 1920, defendant upon which a verdict for the defend
wrote plaintiff a letter denying the ant could be predicated.
justice of the claim, and refused to 3 Cooley, Briefs on Ins. § 2680; 5 Joyce, Ins. § 10, p. 6087; Snyder v. Su
pay the same, but made no tender preme Rule, F. M. C. 122 Tenn. 248,
of the premiums which had been 45 L.R.A.(N.S.) 209, 122 S. W. 981, af
paid by the insured at the time of firmed in 227 U. S. 497, 57 L. ed. 611,
the issuance of said policies. 33 Sup. Ct. Rep. 292; Hartford L. Ins.
The summons was
issued on Co. v. Sallings, 110 Tenn. 1, 72 S. W. March 5, 1920, and was executed by 960; First Nat. Bank v. Fidelity & G. service on defendant's agent on Co. 110 Tenn. 10, 100 Am. St. Rep. 765, March 16, 1920. 75 S. W. 1076; Endowment Rank, K. P. Plaintiff's declaration was filed v. Cogbill, 99 Tenn. 28, 41 S. W. 340;
April 26, 1920. It made profert of Rand v. Provident Sav. Life Assur. Soc. 97 Tenn. 291, 37 S: W. 7; Knights ing a recovery for the principal sum
the policies, and, in addition to seekof Pythias v. Rosenfeld, 92 Tenn. 508, 22 S. W. 204; Union Mut. Ins. Co. v.
of $10,000, it sought a recovery of Wilkinson, 13 Wall. 222, 20 L. ed. 617;
interest and the statutory penalty of Hale v. Sovereign Camp, W. 0. W. 143 25 per cent because of defendant's Tenn. 569, 226 S. W. 1045; 14 R. C. L. refusal to make prompt payment in 1071, 1072; Metropolitan L. Ins. Co. v. accordance with the terms of the Larson, 85 Ill. App. 143; Fidelity Mut.
policies. Life Asso. v. Jeffords, 53 L.R.A. 193,
Defendant, on June 15, 1920, 46 C. C. A. 377, 107 Fed. 402; McClain
which was more than a year after v. Provident Sav. Life Assur. Soc. 49 C. C. A. 31, 110 Fed. 89; Henn v.
the policies were issued, filed its Metropolitan L. Ins. Co. 67 N. J. L. 310, pleas to the declaration; setting up, 51 Atl. 689; Tyrus v. Kansas City, Ft. in substance, that the insured had S. & M. R. Co. 114 Tenn. 594, 86 S. W. made certain representations in his 1074; Woodward v. Iowa L. Ins. Co. applications for
applications for said insurance, , 104 Tenn. 49, 56 S. W. 1020; Cushman which were false and fraudulent, v. United States L. Ins. Co. 70 N. Y.
and were made with the intent to de77; Boos v. World Mut. L. Ins. Co. 64
ceive defendant, in that he had been N. Y. 240; Armour v. Transatlantic F. Ins. Co. 90 N. Y. 457; Campbell v. New
asked in said applications, "For England Mut L. Ins. Co. 98 Mass. 405;
what ailment or disease not includ1 Bacon, Ins. 4th ed. p. 509; Mouler v. ed in your above answers have you American L. Ins. Co. 111 U. S. 335, 28 ever consulted a physician ?" and the L. ed. 447, 4 Sup. Ct. Rep. 466.
applicant answered, “Typhoid fever Hall, J., delivered the opinion of in 1913,” and the pleas aver that the court:
this answer was falsely and fraudAn action by Reuben Allen ulently made, because, in December, Humpston, who will hereinafter be 1918, the insured had been danger· referred to as plaintiff, against ously ill with influenza and double State Mutual Life Assurance Com- pneumonia for a period of weeks; pany of Worcester, Massachusetts, and that, had this fact been diswhich will hereinafter be referred to closed to the company, the policies as defendant, to recover upon two applied for would not have been ispolicies of life insurance for $5,000 sued; and further, that, by reason each, dated March 7, 1919, and is- of said misrepresentations, said pol
(- Tenn. 256 8. W. 438.) icies were and are void at the elec- that plaintiff was attempting to set tion of defendant, which it then and up a new cause of action by way of there elected to avoid and cancel replication, which was in no wise them because of said false represen- related to the cause of action stated tations made in said applications. in the declaration.
It was further interposed in said This replication was disallowed plea, by way of defense, that the ill- by the court, but the matter incorness of the insured in December, porated therein was ordered by the 1918, left him in such an impaired court to stand as an amendment to physical condition that his death plaintiff's declaration, but was subwas due to a disease caused and su- sequently withdrawn by the plainperinduced by said illness and the tiff upon demurrer being filed to the weakened condition in which the in- declaration as amended. sured was left as a result thereof; On the issues thus made, the case that, had these facts been made went to trial before the court and a known to defendant, the applica- jury. The policies were offered in tions for said insurance would have evidence by the plaintiff, considered been rejected, and said policies as read, and became a part of the would not have been issued; and, record in the case. They each conalong with these pleas, defendant tain the following incontestable tendered into court the sum of clause: “This policy shall be incon$267.75, the amount of the premi- testable after one year from the date ums paid on the policies and accrued of its issue, except for nonpayment costs in the case; also the plea that of premiums. said representations were material At the conclusion of all the eviand increased the risk of loss; and dence, plaintiff moved the court to later, by leave of the court, defend- direct a verdict in his favor, for the ant filed an additional plea setting reasons: up the falsity of the following cer- First, that the issues presented tificate made by the insured to his were immaterial as, under the poliapplications for said insurance: "Icies, it was necessary for defendant hereby certify that I have made all to take some affirmative proceedings the statements and answers in num- to cancel or rescind the policies bers one and two of these applica- within the contestable period; and, tions, and declare that they have second, because a complete copy of been correctly recorded by the solic- the applications was not attached iting agent and medical examiner, to the policies and made a part and that no circumstance or infor- thereof. mation touching my past and pres- Defendant also moved the court ent state of health and habits of life for a directed verdict in its favor, has been withheld or omitted.” for the following reasons:
It was further averred in this plea First, that the undisputed evithat said certificate was false and dence in the case showed that the fraudulent for the reasons men
insured made certain misrepresentioned in the second and third pleas tations and concealments as to his hereinbefore referred to.
previous health, which were false On these pleas plaintiff joined is- and fraudulently made with the insue, and later sought to file an ad- tent to deceive defendant, and thereditional replication to defendant's by procure said policies; and secpleas, which averred, in substance, ond, that he was guilty of misreprethat said policies were Georgia con- sentations and concealments that tracts, and were controlled by the were material to the risk, which laws of the state of Georgia, which were sufficient to avoid the policies laws were copied in said replication. regardless of the question of good or
This additional replication was bad faith on the part of the insured. resisted by defendant as a departure Defendant's motion for a directed in pleading; its insistence being verdict was sustained by the trial