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the event suit should be brought by ulated by the terms of the statute.
the insured within "The rights of the parties,' says -effect of bringing action on
the limitation, we Field, J., 'flow from the contract. running of time.
cannot read such a That relieves them from the genprovision into it. Defendant was eral.limitations of the statute, and, therefore precluded from contesting as a consequence, from its excepthe policies at the time it filed its tions also.' In Riddlesbarger v. pleas.
Hartford F. Ins. Co. supra, the court This court, in the case of Guthrie said: "The action mentioned which v. Connecticut Indemnity Asso. 101 must be commenced within the Tenn. 643, 49 S. W. 829, held that twelve months is the one which is a contractual limitation of action prosecuted to judgment. The failcontained in an insurance policy is ure of a previous action, from any not affected by the rules of law gov- cause, cannot alter the case. The erning statutes of limitation. In contract declares that an action shall that case the court said: “While it not be sustained unless such action is true the original suit was dis- -not some previous action shall be missed for insufficient service of commenced within the period desigprocess, and not for any cause con- nated. It makes no provision for cluding plaintiff's right of action, any exception in the event of the we are of opinion that the statute failure of an action commenced, and is wholly inapplicable in the present the court cannot insert one without instance. It clearly refers to stat- changing the contract.' This view utory, and not to contractual, limi- is supported by the cases of Wilkintations; for otherwise a statute son v. First Nat. F. Ins. Co. 72 N. could be made utterly subversive of Y. 499; Arthur v. Homestead F. Ins. contracts executed by parties upon Co. 78 N. Y. 462, 34 Am. Rep. 550; the most deliberate consideration. Brown v. Roger Williams Ins. Co. 7 It was held by the United States Su- R. I. 301 ; Farmers' Mut. F. Ins. Co. preme Court, in Riddlesbarger v. v. Barr, 94 Pa. 345; National Ins. Hartford F. Ins. Co. 7 Wall. 386, 19 Co. v. Brown, 128 Pa. 386, 18 Atl. L. ed. 257, that 'the contractual limi- 389; Hocking v. Howard Ins. Co. tation is not affected by the fact that 130 Pa. 170, 18 Atl. 614; Ostrander, a previous action, which was dis- Ins. $$ 410, 411; 2 Beach, Ins. $$ missed, had been commenced within
1258–1265; Joyce, Ins. § 3205.” that period, and that the statute of The petition to rehear will therea state which allows a party who fore be denied. suffers a nonsuit in an action to bring a new action for the same cause within one year afterwards
NOTE. does not affect the rights of the parties in such a case.' This must be The effect upon the incontestable true, for, if the contractual limita- clause, of the death of the insured tion is valid, the parties are not within the contestable period, is bound by the general limitation of treated in the annotation following the statute, and, for a like reason, MUTUAL L. INS. Co. v. HURNI PACKING they are not bound by the savings Co. post, 108, in connection with the of the statute. The question is pure- question as to the time when an inconly one of contract, and is not reg- testable clause becomes effective.
(161 Ark. 602, 257 8. W. 66.)
MISSOURI STATE LIFE INSURANCE COMPANY, Appt.,
Arkansas Supreme Court - December 24, 1923.
(161 Ark. 602, 257 S. W. 66.) Insurance effect of death of insured.
1. Death of the insured does not stop the running of the period provided for by a clause in an insurance policy, making it incontestable after a specified time.
[See note on this question beginning on page 108.] - effect of incontestable clause. in an insurance policy must be given
2. A life insurance policy contain- the strongest interpretation against ing a provision that it shall be incon- the insurer which it will reasonably testable after a specified time cannot bear. be contested by the insurer after that [See 14 R. C. L. 926; 3 R. C. L. Supp. time on any ground not excepted in 316; 4 R. C. L. Supp. 931.] the provision.
- effect of bringing action to extend - validity of incontestable clause.
time. 3. Incontestable clauses in insur
5. The commencement of an action ance policies are valid where the
an insurance policy within the
time allowed for contest does not experiod allowed for investigation is
tend the time as provided thereby for reasonable.
the period allowed for filing an an- construction against insurer.. swer, but the contest must actually be 4. Ambiguous or doubtful language made within the time specified.
(McCulloch, Ch. J., and Smith, J. dissent.)
APPEAL by defendant from a judgment of the Circuit Court for Little River County (Isbell, J.) in favor of plaintiff in a suit brought to recover the amounts alleged to be due on two life insurance policies. Affirmed. Statement by Hart, J.:
peace, and shall be incontestable aftThis is a suit brought by the wife er one year if the premiums are duly against a life insurance company to paid, except for violation of the prorecover the amount of two policies visions relating to military or naval of life insurance for the sum of service in time of war." $1,500 each, issued to her husband. On May 27, 1919, separate suits
It appears from the record that on were instituted by the wife against the 29th day of May, 1918, the Mis- the insurance company on the polsouri State Life Insurance Com- icies. The complaint alleges that pany issued two policies of life in- the insured died on the 6th of Jansurance in the sum of $1,500 each to uary, 1919, and that notice and Burrel A. Cranford, and Ida D. proof of death were given to the Cranford, his wife, was named as company, as provided by the terms the beneficiary in each policy. The of the policies, and that demand for insured died on January 6th, 1919. the payment of the amount of each Each policy carried the following policy was made upon the company, clause:
and that, on the 25th day of March, “Unrestricted and after one year 1919, the company denied liability incontestable as follows:
on said policies. “This policy is free from condi- The insurance company filed an tions as to residence, occupation, answer to each suit on the 26th day travel, or place of death, in times of of June, 1919. Payment of the policies was defended on the ground on account of the fraud practised that the insured had made certain upon it by the insured in the profraudulent representations to the curement of the policies. company in his application for the The plaintiff demurred to the insurance, which were false, and amended answer, and the demurrer which induced the company to issue was sustained by the court. The the policies.
defendant elected to stand upon its The cases were consolidated for amended answer in each case and the purposes of trial. At the first refused to plead further. Judgment trial, the jury failed to agree, and was thereupon rendered in favor of was discharged from further con- the plaintiff for the amount sued sideration of the case.
for, and to reverse that judgment were continued until the next term the defendant has duly prosecuted of the court. At the next term of an appeal to this court. the court, a mistrial resulted from Messrs. Lake & Lake, A. P. Steel, the serious illness and physical in- and J. S. Steel, for appellant: ability of one of the jurors selected The incontestable provision in the to try the case.
policies did not apply where the death Subsequently, on July 4, 1922, the
of the insured occurred and suit was plaintiff filed an amendment to her beneficiary within the contestable
commenced upon the policies by the complaint. Among other things, period. she set up the incontestable clause Jefferson Standard L. Ins. Co. v. above quoted, and alleged that the Smith, 157 Ark. 499, 248 S. W. 897; defendant did not, within one year Tennessee L. Ins. Co. v. Nolen, 108 from the date of the policies, con- Ark. 511, 158 S. W. 775. test the same, and that it is, by the There was a contested policy withterms of the policies, forever barred in the meaning of that term as used
in the contract of insurance, and estopped from contesting the
Mutual L. Ins. Co. v. Hurni Packing same.
Co. 280 Fed. 18; Joseph v. New York The defendant filed an answer in
L. Ins. Co. 219 Ill. App. 467; Simpson each case in which it admits that
v. Life Ins. Co. 115 N. C. 393, 20 S. E. each policy of insurance contains an 517; Kansas Mut. L. Ins. Co. v. Whiteincontestable clause in the language head, 123 Ky. 21, 93 S. W. 609, 13 Ann. set out in the complaint, and the Cas. 301. language of the clause is again set Messrs. A. D. DuLaney, Paul Jones, out in the answer. The answer ad
and James D. Head, for appellee: mits the issuance of the policies on
The policy was incontestable. May 29, 1918; that the insured died
Tennessee L. Ins. Co. v. Nolen, 108
Ark. 511, 158 S. W. 775; 14 R. C. L. January 6, 1919; and that, in sixty
1438, § 601; Lincoln Reserve L. Ins. days thereafter, notice of the death
Co. v. Smith, 134 Ark. 245, 203 S. W. of the insured was given to the de- 698; Brotherhood of R. Trainmen v. fendant; but it denies that the de- Merideth, 146 Ark. 140, 225 S. W. 337; fendant is, by the terms of said pol- Fidelity & C. Co. v. Meyer, 106 Ark. 91, icies, barred from contesting the
44 L.R.A.(N.S.) 493, 152 S. W. 995. same. The answer further alleges policies has invariably been held to
The word "contest" in insurance that the actions were commenced on
mean.either the institution of an acthe 27th day of May, 1919, within
tion of contest by the company, or the one year from the date of the pol- filing of an answer within the preicies sued on, and for that reason scribed time, attacking the validity of that the incontestable clause is not
the policy. applicable. The defendant, further Wright v. Mutual Ben. Life Asso.
43 Hun, 61, affirmed in 118 N. Y. 237, answering, states that on the 25th day of March, 1919, which was
6 L.R.A. 731, 16 Am. St. Rep. 749, 23
N. E. 186; Moran v. Moran, 144 Iowa, within one year from the date of the
451, 30 L.R.A. (N.S.) 898, 123 N. W. policies sued on, the defendant noti- 202'; Indiana Nat. L. Ins. Co. v. Mcfied the plaintiff that it did not rec
Ginnis, 180 Ind. 9, 45 L.R.A.(N.S.) ognize any liability on said policies 192, 101 N. E. 289; American Trust
(161 Ark. 602, 257 8. W. 66.) Co. v. Life Ins. Co. 173 N. C. 558, 92 sued on was issued by the defendant S. E, 706; Indiana Nat. L. Ins. Co. v. on the 29th day of May, 1918, and McGinnis, 180 Ind, 16, 45 L.R.A.(N.S.) the insured, Burrel A. Cranford, 196, 101 N. E. 291; Murray v. State died on the 6th day of January, Mut. L. Ins. Co. 22 R. I. 525, 53 L.R.A.
1919. Proof of death of the insured 743, 48 Atl. 800; Clement v. New York L. Ins. Co. 101 Tenn. 22, 42 L.R.A. 247,
was given to the defendant by the 70 Am. St. Rep. 653, 46 S. W. 561;
wife, who was the beneficiary in Massachusetts Ben. Life Asso. v. Rob- each policy. Payment was refused inson, 104 Ga. 256, 42 L.R.A. 269, 30 by the company on the ground that S. E. 918; Powell v. North State Mut. the insurance had been procured by L. Ins. Co. 153 N. C. 128, 69 S. E. 12; false representations of a material Mutual L. Ins. Co. v. Buford, 61 Okla. character which had been made by 158, 160 Pac. 928; Ebner v. Ohio State the insured in his application, for L. Ins. Co. 69 Ind. App. 32, 121 N. E. 315; Plotner v. Northwestern Nat. L.
the purpose of procuring the policies
of insurance. Ins. Co. N. D. –, 183 N. W. 1000; Lavelle v. Metropolitan L. Ins. Co. 209
No answer was filed to the presMo. App. 330, 238 S. W. 504; Remsey
ent suit within one year after the v. Old Colony L. Ins. Co. 297 Ill. 592,
date of the insurance policies, and 131 N. E. 108.
no suit has been brought by the inThe contest must be instituted with
surance company to set aside the in one year.
contract of insurance because it had Jefferson Standard L. Ins. Co. v. Wil
been procured by fraudulent represon, 171 C. C. A. 357, 260 Fed. 593;
sentations on the part of the inEbner v. Ohio State L, Ins. Co. 69 Ind.
sured. App. 32, 121 N. E. 315; Indiana Nat. L. Ins. Co. v. McGinnis, 180 Ind. 9, 45
Thus it will be seen that the sole L.R.A.(N.S.) 192, 101 N. E. 289; Plot
issue raised by the appeal depends ner v. Northwestern L. Ins. Co. - N. upon the construction to be given D.-, 183 N. W. 1000; Lavelle v. Metro- the incontestable clause, which is set politan L. Ins. Co. 209 Mo. App. 330, out in full in our statement of facts. 238 S. W. 504; Monahan v. Metropoli- In substance, it provides that the tan L. Ins. Co. 283 Ill. 136, L.R.A.
policies shall be incontestable after 1918D, 1196, 119 N. E. 68; Ramsey v. Old Colony L. Ins. Co. 297. ll. 592 paid, except for the violation of the
one year if the premiums are duly L. Ins. Co. 180 N. Č. 180, 104 s. Eprovision relating to military or 166; Reliance L. Ins. Co. v. Thayer,
naval service in time of war. The 84 Okla. 238, 203 Pac. 190; Metropoli- modern rule is that tan L. Ins. Co. v. Peeler, Okla. a life insurance pol- effect of incon6 A.L.R. 441, 176 Pac. 939; Mutual L. icy containing a Ins. Co. v. Lovejoy, 201 Ala. 337, provision that it shall be incontestL.R.A.1918D, 860, 78 So. 299; Supreme able after a specified time cannot be Lodge, K. P. v. Overton, 203 Ala. 193,
contested by the insurer on any 16 A.L.R. 649, 82 So. 443; Porter v. Mutual L. Ins. Co. 70 Vt. 504, 41 Atl.
ground not excepted in that provi970; Murray v. State Mut. L. Ins. Co.
sion. It is said that the practical 22 R. I. 524, 53 L.R.A. 742, 48 Atl. 800; and intended effect of such a stipuAmerican Trust Co. v. Life Ins. Co. lation is to create a short statute of 173 N. C. 558, 92 S. E. 706; Reagan limitations. By the stipulation, the v. Union Mut. L. Ins. Co. 189 Mass.
insurance company agreed that it 555, 2 L.R.A.(N.S.) 821, 109 Am. St. Rep. 659, 76 N. E. 217, 4 Ann. Cas. 362;
would take a year to investigate and Duvall v. National L. Ins. Co. 28 Idaho,
determine whether it would contest 356, L.R.A.1917E, 333, 154 Pac. 632,
the policies of insurance; and that, Ann. Cas. 1917E, 1112; Clement v. if it failed within that time to disNew York L. Ins. Co. 101 Tenn. 22, 42 cover any grounds for contesting L.R.A. 247, 70 Am. St. Rep. 650, 46 the same, it would make no further S. W. 561.
investigation, and would not thereHart, J., delivered the opinion of after contest the validity of the polthe court:
icies. Each of the policies of insurance It has been uniformly held that a
provision of this kind is valid where Co. 170 Cal. 199, 149 Pac. 171, Ann.
the time allowed -validity of
Cas. 1917E, 34; Prudential Ins. Co. incontestable for the investiga- v. Lear, 31 App. D. C. 184; Massa
tion is a reasonable chusetts Ben. Life Asso. v. Robinperiod. Policies of insurance are son, 104 Ga. 256, 42 L.R.A. 261, 30 prepared by the insurance com- S. E. 918; Weil v. Federal L. Ins. panies, and the insured has no Co. 264 Ill. 425, 106 N. E. 246, Ann. voice in their preparation. Clauses Cas. 1915D, 974; Indiana Nat. L. of this kind are evidently inserted Ins. Co. v. McGinnis, 180 Ind. 9, 45 in insurance policies by the insur- L.R.A.(N.S.) 192, 101 N. E. 289; er for the mutual advantage of Kansas Mut. L. Ins. Co. v. Whiteboth the insurer and the insured. head, 123 Ky. 21, 93 S. W. 609, 13 It has been well said that such a Ann. Cas. 301; Mutual L. Ins. Co. v. provision is reasonable and proper
New, 125 La. 41, 27 L.R.A.(N.S.) because it gives the insured a guar
431, 136 Am. St. Rep. 326, 51 So. 61; anty against expensive litigation to Reagan v. Union Mut. L. Ins. Co. defeat his policy after the lapse of
189 Mass. 555, 2 L.R.A.(N.S.) 821, the time specified, and at the same
109 Am. St. Rep. 659, 76 N. E. 217, time gives the company a reasonable
4 Ann. Cas. 362; Harris v. Security time and opportunity to ascertain
L. Ins. Co. 248 Mo. 304, 154 S. W. whether the contract should remain
68, Ann. Cas. 19140, 648; Drews v. in force. Such a stipulation is not
Metropolitan L. Ins. Co. 79 N. J. L.
398, 75 Atl. 167; Wright v. Mutual against public policy as tending to put fraud on a par with honesty. L.R.A. 731, 16 Am. St. Rep. 749, 23
Ben. Life Asso. 118 N. Y. 237, 6 On the contrary, the stipulation rec
N. E. 186; American Trust Co. v. ognizes fraud and all other defenses,
Life Ins. Co. 173 N. C. 558. 92 S. E. but provides a reasonable time in
706; Murray v. State Mut. L. Ins. which they may be, but beyond
Co. 22 R. I. 524, 53 L.R.A. 742, 48 which they may not be, established.
Atl. 800; Metropolitan L. Ins. Co. v. Therefore, it is in the nature of, and
Peeler, - Okla. —, 6 A.L.R. 441, 176 serves a similar purpose as, a stat- Pac. 939; Supreme Lodge, K. P. v. ute of limitations, the wisdom of Overton, 203 Ala. 193, 16 A.L.R. which has been universally recog- 649, 92 So. 443; Philadelphia L. Ins. nized.
Co. v. Arnold, 97 S. C. 418, 81 S. E. As said by Judge Mitchell in 964, Ann. Cas. 1916C, 706; Clement Mareck v. Mutual Reserve Fund v. New York L. Ins. Co. 101 Tenn. Life Asso. 62 Minn. 39, 54 Am. St. 22, 42 L.R.A. 247, 70 Am. St. Rep. Rep. 613, 64 N. W. 68, an incontest- 650, 46 S. W. 561; and Patterson v. able clause is inserted in the con- Natural Premium Mut. L. Ins. Co. tract by the company itself, and is 100 Wis. 118, 42 L.R.A. 253, 69 Am. written there for a purpose. After St. Rep. 899, 75 N. W. 980. holding such a stipulation to be val- That, too, is the effect of a recent id, the learned judge said: “To the holding of the Supreme Court of the laymen the present contest would, as United States in Mutual L. Ins. Co. plaintiffs' counsel suggests, appear v. Hurni Packing Co. 263 U. S. 167, very much like a contest over an in- 68 L. ed. —, Adv. Ops. p. 45, post, contestable policy."
102, 44 Sup. Ct. Rep. 90, handed Numerous other cases from the down by Judge Sutherland. In that various courts of last resort in the case the court said that, while the United States are cited in a case contract of insurance is with the innote to 6 A.L.R. at page 453. sured, nevertheless it is for the use Among these we cite the following: of the beneficiary, and that there is Arnold v. Equitable Life Assur. Soc. no reason to say that the incontest(D. C.) 228 Fed. 157; Great West- able clause is not meant for his ern L. Ins. Co. v. Snavely, 46 L.R.A. benefit as well as the benefit of the (N.S.) 1057, 124 C. C. A. 154, 206 insured. The court further said Fed. 20; Dibble v. Reliance L. Ins. that it is for the benefit of the in