Jefferson Standard Life Insurance v. Smith

248 S.W. 897, 157 Ark. 499, 1923 Ark. LEXIS 187

• Court: Supreme Court of Arkansas
• Decided: March 12, 1923
• Status: Published

Opinion

Smith, J.

On April 15,1920, the appellant insurance company issued and delivered to appellee :Smith, as beneficiary, a policy of insurance for one thousand dollars on the life of Smith’s wife. The application for the policy of insurance contained certain answers to questions which, by the recitals of the application, were declared to be material by the company in determining whether or not a policy would issue, and, among others, that the applicant had never suffered from any ailment or disease of the skin. The policy, when issued, contained an incontestable one-year clause reading as follows: “After this policy shall be in force for one full year from the date hereof, it shall be incontestable for any-cause except for nonpayment of premiums.”

The insured died on March 5, 1921, and on April 13, 1921, the company brought suit in the chancery court to cancel the policy on the ground that its issuance had been procured by the fraud of the insured, in that she had suffered from a disease of the skin, to-wit., pellagra, but had falsely and fraudulently denied that fact in her application.

It will be observed that the suit to cancel was brought two days before the expiration of the year after the issuance of the policy, but slightly more than a month after the death of the insured, as the suit on the policy was commenced June 30, 1921.

The chancery court transferred the suit to cancel to the circuit court, over the company’s objection, and it was there consolidated with the suit on the policy, to which action the company also objected and excepted.

At the trial of the cause conflicting testimony was offered as to whether Mrs. Smith had pellagra, and as to her answers made to the examining physician in regard thereto, but at the conclusion of all the testimony the court directed the jury to return a verdict for the beneficiary, on the ground that a year had expired before the suit thereon was brought. Judgment was rendered accordingly, and the company has appealed.

Instead of transferring the suit to cancel the policy to the circuit court, that suit should have been dismissed, for the reason that the death of the insured fixed the rights and liabilities of both the insurer and the insured'. Joyce on Insurance, § 1650b; American Employers’ Liability Ins. Co. v. Fordyce, 62 Ark. 562; Porter v. Mutual Life Ins. Co. of N. Y., 41 Atl. 970.

But, inasmuch as the insured died before the year had expired, the incontestable clause did not apply, and the fact that the suit was not brought until after the first anniversary of the policy is unimportant, for, as we have said, the rights and liabilities of the 'parties under the insurance contract had been fixed by the death of the insured.

The court should not therefore have directed a verdict, but should have submitted the question of the alleged breach of the warranty, the law of which question has been announced in many cases.

For the error indicated the judgment is reversed, and the cause remanded for a new trial.