Brady v. Prudential Insurance

32 A. 102, 168 Pa. 645, 1895 Pa. LEXIS 850

• Court: Supreme Court of Pennsylvania
• Decided: May 30, 1895
• Docket: Appeal, No. 149
• Status: Published

Opinion

Opinion by

Mr. Justice Williams,

The sixth assignment of error directs attention to the controlling question in this ease. In the policy of insurance sued on the ninth clause contains the following provisions, “No suit or action at law or in equity shall be maintainable unless such suit or action shall be commenced within six months next after the decease of the person insured; and it is expressly agreed that should any such suit or action be commenced after the expiration of six months the lapse of time shall be deemed conclusive evidence against the validity of such claim.” The action was not brought within the time so limited. This fact was relied upon by the defendant as an answer to the action. The learned judge of the court below held that the provision was a valid one, and was binding upon the plaintiff unless be was relieved from its operation, under the circumstances of this case, by a waiver or by some other stipulation contained in the agreement.

The twelfth clause in the same policy contained this stipulation : “if the insured shall die three or more years after the date hereof, and after all due premiums shall have been received by the company, the policy shall be incontestable.” This stipulation the learned judge held relieved the plaintiff from the bar of the limitation imposed by the ninth clause and opened the way to a recovery. If the insured had died before the end of three years after the date of his policy then the limitation of the right to sue after six months would have been, in the view of the learned judge, a good defense; but having survived three years and the policy having become incontestable the right to defend upon the agreed limitation was gone. The correctness, of this exposition of the twelfth clause in the policy is the question presented on this appeal. In considering this question, it is important to remember that the application for insurance and the acceptance of it by the company, which is evidenced by the policy, constitute, when taken together, the contract. If the representations as to age, state of health, or general physical condition, on which the policy was issued, turn out to be untrue, the right of his representative to recover may be contested for that reason and the company may deny its liability under a policy so obtained. The twelfth clause puts a limit upon the time when such objections may be made. If the insured lives for three years and pays all moneys due from him in the meantime, then the statements made in the application are taken to be true. They are no longer contestable. The policy is to be held to be a good and valid contract binding upon the company according to its terms. In case of death happening after three years, the policy, if suit be brought upon it, is not to be defeated by inquiry into representations on which it was based, but the company must be held to performance. What then is the undertaking of the company? It is to pay if suit be brought within the time stipulated and proper proofs of death are produced. But suppose the proofs of death are not sufficient. The right of the company to contest its liability on that ground is not affected by the twelfth clause. S'o if the action is not brought within the time fixed, the company may contest, not the policy but the plaintiff’s right to recover upon it, for that reason. In this case therefore the plaintiff started with an incontestable policy. The defendant said, by way of reply to the action, “yes, you have a valid policy, but you have not brought your action within the time you agreed to.” This was prima facie a defense, and the burden was thereby cast upon the plaintiff to show some reason why he was not bound by his own covenant. Unless he did this to the satisfaction of the court aird jury he could not recover. The provision in the ninth clause which was relied upon to show that the policy was incontestable did not amount to a confession of judgment. It did not deny to the company the right to defend against an action brought upon the policy, except in so far as the defense might rest on a denial of the validity of the policy itself. All other lines of defense remained open to it.

The learned judge gave altogether too broad a scope to the stipulation in the twelfth clause. Under his exposition it not only closed the doors against inquiry into the statements and representations in the application, but it closed the doors against all other defenses.

It made not the policy only, but the right to recover, incontestable. This was error, and for this reason the judgment is now reversed and a venire facias de novo awarded.