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( Tenn. , 256 8. W. 438.) Thompson v. Fidelity Mut. L. Ins. that they shall be kept up and paid Co. 116 Tenn. 557, 6 L.R.A. (N.S.) when due, during the twenty-year 1039, 115 Am. St. Rep. 823, 92 S. life of the policy. W. 1098; Jefferson Standard L. Ins. In the case of Jefferson Standard Co. v. Smith, 157 Ark. 499, 248 S. L. Ins. Co. v. Smith, 157 Ark. 499, W. 897; Jefferson Standard L. Ins. 248 S. W. 897, the incontestable Co. v. McIntyre, rendered by the clause contained in the policy sued United States district court of on was as follows: “After this polFlorida on December 21, 1922, 285 icy shall be in force for one full year Fed. 570.

from the date hereof, it shall be inThe case of Thompson v. Fidelity contestable for any cause except for Mut. L. Ins. Co. supra, has no bear- nonpayment of premiums." ing upon the question under consid- In the case of Jefferson Standard eration. In that case the insured L. Ins. Co. v. McIntyre, supra, the had defaulted in the payment of his incontestable clause in the policy premiums. The insured died on Jan- sued on was as follows: “After uary 14, 1905, and was at the time this policy shall have been in force in default in the payment of the for one full year from the date herepremium that was due on December of, it shall be incontestable for any 30, 1904. It appeared that defend- cause except for nonpayment of ant insurance company had accept- premiums." ed premiums after they were due, It will be noted that the inconand it was the contention of the testable clauses in the policies sued plaintiff Thompson that, by an ha- on in both of these cases were subitual course of dealing, the insured stantially the same, and, as a matwas justified in believing that the ter of fact, the same company was insurer would not insist upon the involved in both suits. forfeiture of the policy for the fail- The incontestable clause of the ure to pay premiums at maturity, policies involved in the suit at bar but this court held that the facts provides: “This policy shall be inwere insufficient to establish such contestable after one year from the course of dealing. In holding that date of its issue, except for nonpaywhile the insured was in default in ment of premiums.” the payment of his premiums, there It will be noted that there is a was no insurance, and, if he died marked difference in the two without having paid his premiums, clauses. This difference consists in he was not protected by the insur- the language: After this policy ance, the court quoted from Carlson shall have been in force for one full v. Supreme Council, A. L. H. 115 year from the date hereof." Cal. 466, 35 L.R.A. 643, 47 Pac. 375, In the case of Jefferson Standard the quotation set out in defendant's L. Ins. Co. v. McIntyre, supra, the brief, to the effect that the rights of court said: “Are the policies 'in the parties became fixed upon the force,' as contemplated in the clause, death of the insured upon the ques- after the death of the assured occurtion of nonpayment of premiums. ring prior to one year from the date

In Thompson v. Fidelity Mut. L. of the policy? It seems to me that Ins. Co. supra, the court said: “The the proper construction of this policy provides that, after three clause is that it contemplates the years, if the payments required continuance in life of the assured shall have been made when due, the during that year; else why except policy shall be incontestable. This the nonpayment of premiums?” only means that it shall be incontest- It is apparent that the holding of able for causes other than the non- the court in Jefferson Standard L. payment of premiums, but does not Ins. Co. v. Smith, supra, was conin any wise relieve the insured from trolled by the same consideration. the payment of his premiums, but, These cases are not, therefore, conon the contrary, expressly stipulates trolling in the suit at bar.

Defendant contends that it could viding that they could not be connot have enjoined plaintiff's suit, tested after one year, it was neceswhich was instituted within the sary for defendant to file its bill in contestable period, in view of the a court of equity to enjoin the suit holding of this court in Sailors v. at law, as the polWoelfle, 118 Tenn. 755, 12 L.R.A. icies, by their terms, against action (N.S.) 881, 102 S. W. 1109. In that would become in- at law on insurcase this court said:

ance policy.

contestable before "Hamilton v. Cummings, 1 Johns. defendant could present its defense Ch. 517, is possibly the leading case in the action at law. in America on this subject. In the By its second assignment of error, course of his opinion, Chancellor defendant insists that, plaintiff havKent reviews the leading cases in ing failed to plead the incontestable England up to that time, and shows clauses in said policies, he waived that there had been much fluctua- the same, and could not take advantion in the rulings of the various tage of and rely on said clauses in courts with regard to the exercise his motion for a directed verdict. of this particular jurisdiction. He As before stated, plaintiff made concludes his examination as fol- profert of the two policies in his lows: 'Perhaps the cases may all declaration. The policies were inbe reconciled on this general prin- troduced in evidence by the plainciple,—that the exercise of this pow- tiff, and the first page of one of the er is to be regulated by sound discre- policies was read, and it was agreed tion as the circumstances of the in- that both of the policies were identidividual case may dictate, and that cal and that both of them would be the resort to equity, to be sustained, considered as read. The incontestmust be expedient either because the able clauses were read to the court instrument is liable to abuse from and jury. its negotiable nature, or because the In Bomar v. Hagler, 7 Lea, 89, defense, not arising on its face, may this court said: be difficult or uncertain at law, or “The rule is that a statute which from some other special circum- bars the remedy only must be pleadstance peculiar to the case, and ren

ed, but a statute which cuts off the dering a resort highly proper and right need not be pleaded, but may clear of all suspicion of any design be relied upon as a protection if the to promote expense and litigation.' facts appear; as, for instance, the

"We doubt whether the principle statute which gives a title to percontrolling the interference of equi- sonal property (Kegler V. Miles, ty courts at the instance of parties Mart. & Y. 426), or a title to land complaining, with a view to the can- (Act of 1819). celation of instruments, has been

The reason is that a statute anywhere more clearly or satisfac- which merely bars the remedy may torily stated than in this case." be answered by a new promise, or

We think there was a special cir- something that will take the case cumstance existing, which was pecu- out of the statute (Allen v. Word, 6 liar to the case at bar, that would Humph. 284), and therefore must have given a court of equity juris- be pleaded in order to give the opdiction if defendant had desired to portunity to reply. But a statute take affirmative action to rescind or which cuts off the right or vests the have the policies canceled after title absolutely in the defendant, and plaintiff's suit was instituted on to which there is no answer, need March 5, 1920. All that would have not be pleaded, for it cannot be anbeen necessary to have given a swered." court of equity jurisdiction would In the case of Waterhouse v. have been to have alleged in the bill Sterchi Bros. Furniture Co. 139 that, on account of the incontestable Tenn. 117, 201 S. W. 150, this court provisions of the two policies pro- said :

(- Tenn. , 256 S. W. 438.) "The suit was based on the note. conclusive of the case, the defense That instrument was not copied in- of fraud on the part of the insured to the declaration so as to set forth in procuring said policies becomes the waiver, but profert was made immaterial. of it, that being a formula in plead- The judgment of the Court of Civing whereby the pleader professes to il Appeals is therefore affirmed, bring into court an instrument to be with costs. shown to the court and to his ad

On Petition to Rehear. versary. It is true that mere profert of a note does not make the in- This case is before the court on strument, the foundation of the ac- defendant's petition to rehear on one tion, a part of the declaration, when point, viz., that, plaintiff's suit havthat pleading is tested for sufficiency ing been brought within the contestby a demurrer. Standard Loan & able period provided in the policies Acci. Ins. Co. v. Thornton, 97 Tenn. sued on, this suspended the running 1, 15, 40 S. W. 136. The court is of the period within which defendconfined to the face of the declara- ant might contest. tion in such test.

It is said that this question was "Now the question arises: Is the overlooked by the court, and was not case to be deflected adversely by rea- passed on in its opinion filed on a son of the fact that the note is former day of the term. brought into the record by proof The question was considered by rather than by way of oyer granted the court in the determination of the What substance can there be to sup- case, but does not appear to have port a divergent ruling? It would been directly discussed in the opinseem that, if the note becomes a part

ion filed. of the record by way of sworn tes

It is defendant's insistence that timony, it should not weigh less in the incontestable clause contained plaintiff's favor than when it is im- in the policies sued on is a statute ported into a pleading of record by of limitation, and, the plaintiff havway of a quasi fiction.

ing brought his suit before the stat“If, then, the proof had shown ute run, this suspended the running the note to contain the waiver, the of the statute, and defendant could motion in arrest of judgment could present its defenses against the polnot be sustained for the reason that icies after that time in the orderly defendant Waterhouse's liability progress of the case. In support of would not be conditional, upon his this contention it cites the case of being given notice of protest, but ab- Lewis v. Turnley, 97 Tenn. 197, 36 solute in that regard."

S. W. 872. We think the holding of the above In that case suit was instituted case directly settles the question upon a note. Defendant filed an ancontrary to defendant's contention, swer and a cross bill, and in the and it was not, therefore, necessary cross bill contended that when the

for plaintiff to ex- property was sold, for which the Pleadingwaiver failure

pressly plead the in- note was given as a part of the conto plead clauses contestable clauses sideration, the vendor agreed that in insurance policy.

contained in said certain insurance upon the improve

policies. When the ments on the premises was to be policies were introduced by the transferred, and that the vendor plaintiff in evidence, and the incon- agreed that, if the property burned testable clauses read to the court before the insurance was transand jury, they became a part of the ferred, he would be liable for the record as effectively as if they had insurance. The vendor failed to been relied on in a pleading, and transfer the insurance, and the inplaintiff could rely on them in his sured's property burned. The plainmotion for a directed verdict. tiff interposed the Statute of Limi

The foregoing questions being tations to the set-off of defendant,

and the court held that, since the court said: “. That if, as a claim of the defendant was a proper result of such investigation or of set-off and was evolved from the knowledge otherwise obtained, the consideration of the original con- insurer desires to contest the policy, tract, the filing of the bill saved the appropriate steps to that end, either bar of the statute.

by defense to an action brought on The other cases cited by defend- the policy in case of the death of the ant involved a similar question. insured, or by proper affirmative ac

In Clark v. Duncanson, 79 Okla. tion, must be taken within the 180, 16 A.L.R. 315, 192 Pac. 806,

year.” plaintiff commenced an action with- In Metropolitan L. Ins. Co. v. in twelve months of the recording Peeler, - Okla. —, 6 A.L.R: 441, 176 of his tax deed, to quiet title. He Pac. 939, the court said: “The lanmade the former owner of the prop. guage admits of no reasonable conerty a party defendant. The de struction other than that the comfendant, after the expiration of pany reserves to itself the right to twelve months from the recording ascertain all the matter and facts of the tax deed, filed an answer, en

material to its risk and the validity titled the same “Answer and Cross of its contract for one year; and that Petition," in which he assailed, on if within that time it does not asseveral grounds, the validity of the certain all the facts, and does not tax sale and tax deed, and prayed cancel and rescind the contract, it judgment against the plaintiff for may not do so afterwards upon any possession and damages.

It was

ground then in existence.” held that the so-called cross petition In Ramsey v. Old Colony L. Ins. was a counterclaim, within the Co. 297 Ill. 592, 131 N. E. 108, the meaning of $ 4746, Revised Laws court said: “It admits of no reason1910, and within the Statute of able construction, as the courts have Limitations until the claim of the said in the cases already cited, other plaintiff is so barred.

than that the company may have one We think these cases have no ap- year, and no more, for investigation plication to the question under con- of the questions material to its risk, sideration. While incontestable and if it does not within that time, clauses in insurance policies have either as plaintiff or defendant, conbeen referred to by some of the de- test the policy, it cannot do so aftercisions as a short statute of limita- ward."

tions, it is not such. The court further said in that Insurance

It is a contractual case:

limitation, and is “The death of the insured within clause.

not governed by the year did not remove the contracprinciples applying to statutes of tual limitation upon the right of the limitations. A similar clause to the company to contest its liability on one in the policies sued on has been the policy, but the fact that, without construed in a number of cases. the fault of the company, there was

In Monahan v. Metropolitan L. no party in existence against whom Ins. Co. 283 Ill. 136, L.R.A.1918D, it could begin suit, and that it had 1196, 119 N. E. 68, the court said: no power to have an administrator “In case of a breach of warranty appointed for that purpose, sus

the insurer must assert its pended the operation of this proviclaim within the two-year period, sion until an administrator was apwhether the insured survives that pointed. period or not, either by affirmative “When the insured died, on April action or by defense to a suit 13, 1917, seven months of the year brought on the policy by the benefi- after the policy was issued had ciary within the two years.”

elapsed. The administrator was not In Ebner v. Ohio State L. Ins. Co. appointed until July, 1918. After 69 Ind. App. 32, 121 N. E. 315, the that there was nothing to prevent

character of incontestable

(- Tenn. , 256 S. W. 438.) the defendant from contesting its within the time limited by the polliability on the policy. Suit was be- icy.” Citing many authorities. gun against it in November, 1918, It is true that in none of these but it filed no plea denying its liabil- cases suit was brought before the ity upon the policy until May. 12, contestable period had expired, but 1919, nearly ten months after the they show the construction that was appointment of the administrator, placed on an incontestable clause and, excluding the time during similar to the one in question, and which it was prevented from bring- it was held in all of them that the ing suit by reason of the failure to insurer must assert its claim within appoint an administrator, nearly the period stipulated, either by afseventeen months after the date of firmative action or by defense to a the policy. The plea alleged that suit brought on the policy, within knowledge of the falsity of the an- the contractual period. swers did not come to the defend- The incontestable clause in the ant until July 1, 1918, but there policies sued on was written into were several months after its dis- them by the defendant itself. It covery of the fraud and after the

was contractual, and the effect of it appointment of the administrator

was to prevent the insurer from before the expiration of the year in interposing as a defense the falsity which it might have filed a bill to of the representations of the incancel the policy. It failed to do so, sured, which might be fraudulent. and by its neglect permitted the in- In other words, defendant said to contestable period fixed by the pol- the insured: "I will take one year icy, even under the construction in which to ascertain whether your which we have given it, to elapse." representations are false, and

These cases are all cited in the whether you have been guilty of any opinion of the court, heretofore filed fraud in obtaining the contract, and in this case.

if, within that period, I do not asIn Mutual L. Ins. Co. v. Buford, certain or discover such falsity and 61 Okla. 158, 160 Pac. 928, it was fraud, I agree to make no further said: “It seems to be a well-rec- inquiry into these matters, and ognized principle of insurance law

make no defense on account of that a provision in a contract of in

them.” surance limiting the time in which

There was no stipulation for a the insurer may take advantage of certain facts that might otherwise suspension of the running of the

limitation for any reason. The constitute a good defense to its liability on such policy other right of the defendant to contest, than the defenses excepted in the except for nonpayment of premiprovision itself. It also seems to be ums, was, by the stipulation, foregenerally held that such a clause closed at the expiration of the periprecludes the defense of fraud, as

od contracted for, notwithstanding well as other defenses, and that it is plaintiff's suit was brought two days not invalid on the theory that it is before the limitation expired. The against public policy, provided the letter of defendant written on Jantime in which the defenses must be uary 30, 1920, to plaintiff, would inmade is not unreasonably short. An dicate that it had knowledge or inexamination of the following cases formation of the insured's alleged will show that the holdings of the misrepresentations on that date, courts of this country have been which was more than a month be

universally that every de- fore the period of limitation exfense to a policy of insurance em

pired; still it took no action to rebraced within the terms of the 'in- scind the policies on that ground. contestable clause' is completely lost The clause in question being to the insurer, if it fails to make the merely contractual, and containing defense or take affirmative action no provision for its suspension in

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