Contract — Insurance Policy — "Incontestable Policy" — Death by Suicide.
An original policy of insurance contained in one clause restrictions against certain travel, occupation and residence, and in another stipulated that if the insured should die by suicide the company should not be liable beyond the net value of the policy, to be ascertained by certain methods. Subsequently the company executed an agreement declaring that "all restrictions of travel, occupation and residence expressed in the original policy are hereby waived, and that said policy shall from this date be incontestable, and when the policy becomes a claim the amount of insurance shall be paid immediately upon approval of proof of death." The insured paid all premiums as they fell due and died by suicide: Held, in an action to recover the amount of the policy (1), that by the new contract the policy was rendered "incontestable" for any cause except nonpayment of premiums and fraud, and (2) that the "amount of insurance" payable when the policy became a claim by the death of the insured was the full amount expressed upon the face of the policy.
MACRAE, J., dissents.
(396) BURWELL, J.
The defendant agreed "that all restrictions of travel, occupation or residence expressed in the original policy" should be waived. By this stipulation the fourth section of the original policy was in effect stricken out and forms no part of the contract between these parties.
It further agreed that the policy should be from the date of that agreement " incontestable"; and, as if to emphasize this promise, it added that when the policy became a claim "the amount of insurance" should be paid to the beneficiary immediately upon approval of proof of death. If the policy had lapsed or been discontinued, as by nonpayment of the stated premium, it would not, upon the death of Robert Simpson, have become a claim against the defendant insurer. It was in full force at the time of that death and has become "a claim," and the plaintiff demands the "amount of insurance." What is meant by "the amount of insurance"? Certainly the sum for which the life was insured — the sum which, under the contract, was to be paid to the plaintiff in case of her husband's death as indemnity for her loss. Those words cannot, we think, be construed to mean "the net value of the policy," a sum which, by the terms of the original contract, was to be paid under certain circumstances in lieu of the amount of insurance, to wit, $2,000. This construction is consonant with the preceding provision that the policy should be "incontestable." The quality of incontestability could with no propriety be predicated on this contract of insurance if it was still allowed to the insurer to dispute its liability to the insured for the "amount of the insurance," upon the ground that the death was caused "by the use of intoxicating liquor or opium, or from the violation of law, or any condition or agreement contained in this policy, or the application upon which this policy is issued." And yet, if it may now, under its contract, contest with this beneficiary as to its liability for the amount of insurance, upon the allegation that the deceased committed suicide, it may contest with beneficiaries under other similar contracts upon (397) the grounds enumerated above. If this can be done, the policy is certainly not incontestable, for the whole field of dispute would then be open to the defendant.
In Bliss Life Insurance (2d Ed., p. 428) the word "indisputable" is used to designate the quality here expressed by the word "incontestable." In a note on page 431 that author remarks: "Lord Campbell says ( Wheelton v. Hardisty, 8 E. B. 232, 283) that a promise that all assurances shall be unquestionable means indisputable, and amounts to an absolute guaranty that no objection shall be taken to defeat the policy on the death of the person whose life is insured, subject to the implied exception of personal fraud, which will vitiate the contract." This policy became, by virtue of the defendant's agreement, what Mr. Bliss, on page 432, denominates "a really indisputable policy," which should be "subject to no condition whatever."
Affirmed.