Case Name: WEBSTER v. COLUMBIAN NAT. LIFE INS. CO.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1909-04-23
Citations: 116 N.Y.S. 404
Docket Number: 
Parties: WEBSTER v. COLUMBIAN NAT. LIFE INS. CO.
Judges: 
Reporter: West's New York Supplement
Volume: 116
Pages: 404–411

Head Matter:
WEBSTER v. COLUMBIAN NAT. LIFE INS. CO.
(Supreme Court, Appellate Division, First Department.
April 23, 1909.)
1. Insurance (§ 17 )—Foreign Insurance Corporations—Right to Do Business—“Citizen.”
A foreign insurance company engaged in business in New York by permission of the insurance department of the state is, so far as any litigation is concerned, a citizen of New York.
[Ed. Note.—For other cases, see Insurance, Dec. Dig. § 17.*
For other definitions, see Words and Phrases, vol. 2, pp. 1164-1174; vol. 8, pp. 7602-7603.]
2. Courts (§ 516*) — Conflicting Jurisdiction—Action in Another State-Injunction.
A court of equity in New York may enjoin the prosecution in another state of an action between a citizen of New York and a foreign insurance company doing business in New York by permission of the insurance department, involving the subject-matter of a previous action pending in New York.
[Ed. Note.—For other cases, see Courts, Cent. Dig. § 1441; Dec. Dig. § 516.*]
3. Courts (§ 516*) — Conflicting Jurisdiction—Actions in Another State-Injunction.
The remedy of a plaintiff in an action in New York seeking to restrain defendant from prosecuting its subsequently instituted suit in a sister state concerning the same subject-matter is by an independent action, and not by motion in the action already brought.
[Ed. Note.—For other cases, see Courts, Cent. Dig. § 1441; Dec. Dig. § 516.*]
4. Courts (§ 12*)—Jurisdiction—Residence.
Á resident of Massachusetts became á resident of New York and died. His wife began a suit for divorce in Massachusetts, but no decree was granted. Subsequently she leased and moved into an apartment in New York, and declared her intention to permanently reside in New York. It appeared that she had given her address at her mother’s house in Massachusetts, but explained that she did so because she was changing hotels in New York to avoid publicity. Held, that she was a resident of New York, and as such might sue in the courts of New York.
[Ed. Note.—For other cases, see Courts, Dec. Dig. § 12.*]
5. Courts (§ 516*)—Conflicting Jurisdiction—Action in Another State— ; Injunction.
A Massachusetts insurance company issuing a policy in Massachusetts to a resident thereof engaged in business in New York, by permission of the insurance department. The insured became a resident of New York and died. The beneficiary also became a resident of New York and sued on the policy. Pending the action the corporation instituted a suit in Massachusetts to restrain the prosecution of the action on the policy. Held, that a court of equity would enjoin the prosecution of the suit in Massachusetts, though the corporation showed that a witness competent in Massachusetts was incompetent under the laws of New York.
[Ed. Note.—For other cases, see Courts, Cent. Dig. § 1441; Dec. Dig. § 516. ]
6. Courts (§ 7*)—Action on Policy — Transitory Nature—Jurisdiction or Courts.
A life policy is transitory in its nature, and on the death of insured the beneficiary may sue thereon in any state where insurer is doing business and where process may be served and of which the beneficiary is a resident.
[Ed. Note.—For other cases, see Courts, Dec. Dig. § 7.*]
7. Insurance (§ 137*)—Life Insurance—Contracts—Construction.
A stipulation in a life policy that it shall be complete only by the payment of the first premium during the good health of insured, when considered in connection with a provision that the policy shall be incontestable except for suicide committed within one year from the date of its issuance, refers only to the health of insured during the period intervening between the acceptance of the risk and agreement to issue the policy and the time when the first premium is paid and the policy is delivered. •
[Ed. Note.—For other cases, see Insurance, Cent. Dig. § 234; Dec. Dig. § 137.*]
Ingraham and Clarke, JJ., dissenting. j
Appeal from Special Term, New York County.
Action by Anna C. M. Webster against the Columbian National Life Insurance Company. From an order of the Supreme Court, Special Term (115 N. Y. Supp. 892), continuing an injunction obtained by plaintiff against defendant, the latter appeals.
Affirmed.
Argued before INGRAHAM, LAUGHLIN, CLARKE, HOUGHTON, and SCOTT, JJ.
Joseph H. Choate, Jr., for appellant.
John J. Crawford, for respondent.
For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes
For other cases see same topic & 5 number in Dee. & Am. Digs. 1907 to date, & Rep’r Indexes

Opinion:
HOUGHTON, J.
The defendant is a foreign life insurance company, organized under the laws of the state of Massachusetts, doing business in the state of New York. In the year 1904 it issued a policy of insurance upon the life of Everett B. Webster, then a resident of Massachusetts, in the sum of $20,000, payable on his death to this plaintiff, his wife. Differences arose between the plaintiff and her husband in the year 1906, and she went to live with her mother in the city of Lynn, Mass., and her husband came to reside in the state of New York. He died in November, 1907, and his last will and testament was admitted to probate in this state as the will of a resident citizen. Claim was made by the plaintiff as beneficiary under the policy of insurance issued by the defendant, and upon refusal to 'pay she brought action thereon against the defendant in the Supreme Court o f the state of New York on the 4th day of February, 1908. The defend-" ant interposed an answer, and pleaded as affirmative defense that the policy of insurance contained the following provision and warranty, to wit:
"This contract is complete between the company and the insured only by the payment of the first premium mentioned in the policy in exchange for a receipt duly signed by the president or secretary and countersigned by the agent, provided the applicant is in good health at the time of such payment"
—and upon information and belief alleged that at the time of such payment the insured was not in good health, but, on the contrary, was suffering from a chronic and incurable disease, the nature of which was fraudulently concealed from the defendant, and the contract of insurance was never completed and the policy never became in force. On issue being so joined, the cause was placed upon the calendar of the Supreme Court of the County of New York, and when about to be reached for trial, and in January, 1909, the defendant filed a bill in equity in the Supreme Judicial Court of the Commonwealth of Massachusetts setting, forth the issuing of the policy in the state of Massachusetts, the clause therein respecting it not becoming complete unless the first premium should be paid while the applicant was in good health as above quoted, and that he was not' in good health when such first premium was paid, but, on the contrary, was suffering from a chronic and incurable disease of long standing, which was fraudulently concealed from the defendant and of which it had no knowledge, and of which the insured ultimately died, and that in order to establish such fact it would be necessary to call certain physicians who treated him therefor; that by the law of the state of New York physicians were not permitted to testify as to the ailments of a patient except upon consent, and that the defendant was prohibited from transferring the cause to the United States courts by the insurance laws of the state of New York on penalty of forfeiture of the right to do business in such state; that by the laws of Massachusetts such physicians were permitted to testify without consent; and praying that the policy be decreed void and be surrendered to the defendant. Thereupon the plaintiff brought the present action in equity to restrain the defendant from prosecuting its 'action in the commonwealth of Massachusetts, and obtained a temporary injunction to that effect, from which the defendant appeals.
The defendant does not challenge the power of this court to restrain the defendant from prosecuting its action in Massachusetts, and properly so for it is not open to challenge.
The defendant, although a foreign corporation, is engaged in business in this state by permission of the insurance department, and, so far as any litigation is concerned, is therefore to be deemed a citizen of this state. If the plaintiff was also a citizen of this state at the time she brought her action, there can be no question that a court of equity of this state has the power to enjoin the parties from prosecuting actions in other jurisdictions concerning the same subject-matter. Edgell v. Clarke, 19 App. Div. 199, 45 N. Y. Supp. 979; Locomobile Co. v. American Bridge Co., 80 App. Div. 44, 80 N. Y. Supp. 288.
The plaintiff followed the proper practice in bringing independent action for the purpose of restraining the defendant instead of moving in the action already brought. Belasco Co. v. Klaw, 98 App. Div. 74, 90 N. Y. Supp. 593. The defendant insists, however, although it did not plead it as an affirmative defense by its answer, that the plaintiff was not at the time of the bringing of her action a resident of the state of New York, but was a resident of the state of Massachusetts. It must be conceded that her husband became a resident of the state of New York prior to his death in 1907. Although she began an action for divorce in Massachusetts in '1906, no decree appears to have been granted, and, if her husband's residence in this state did not operate to make her a resident, the proofs in the record are quite convincing that in the latter part of 1907 the plaintiff did actually become a resident of the state of New York, and was such at the time she brought her action in 1908. The establishing of a residence is largely a matter of intention, and only slight acts indicating it are necessary. The plaintiff was in New York City, and leased and moved into an apartment before she brought her action and declared her intention of permanently residing here. She fully explains why she gave her address at her mother's house in L,ynn, Mass., in making proofs of death for the defendant, which were made and forwarded from New York, to the effect that she did so because she was changing hotels in the city of New York to avoid the publicity .attendant upon the peculiar provisions of her husband's will, which was being probated and commented upon in the press, reporters for which sought interviews with her, and that she, therefore, thought any important communication from the defendant respecting the policy of insurance could better reach her through her mother than otherwise.
The plaintiff being a resident of the state, and it being proper to consider the defendant as also a resident, in view of its doing business here under permission of the insurance department, the facts would seem to present a case eminently proper for the intervention of a court of equity to restrain the defendant from prosecuting its action in Massachusetts to annul the policy. The defendant set up as an answer in the action on the policy in this state the precise defense which it pleads as a cause of action in the Massachusetts court, and avers that under the insurance law of the state of New York it cannot transfer the action on the policy to the federal courts, because if it should do so it would lose its right to do business in this state, and that it is necessary to swear the attending physicians of the insured respecting the incurable chronic disease from which it claims he suffered prior to and when the policy was issued, and that such physicians cannot testify in the state of New York, but can testify in the state of Massachusetts. Whatever may be the wisdom of the state of New York in prohibiting physicians from disclosing what they learn while treating a patient, it is and has long been the law that they shall not make such disclosures without consent of the patient or his representatives. Whether the law be wise or unwise, its citizens are entitled to the benefit of it, and life insurance companies doing business in this state must bear whatever burdens it imposes. It is true that the policy in question was negotiated and delivered in the state of Massachusetts, but the contract was transitory in its nature, and upon the death of the insured the beneficiary could bring action thereon in any state where the defendant was doing business and where process could be served upon it, and of which she chanced to be a resident. She was not obliged to go to the state of Massachusetts, where it was issued, to enforce it, and she should not be compelled to go to the state of Massachusetts to uphold it. The defendant has asked and has been accorded the privilege of doing business in this state. If it does not desire to be bound by the laws of this state, it can voluntarily retire or forfeit its privilege by removing the cause to the federal court. The fact that a witness is disqualified in New York but is competent to testify in Massachusetts furnishes no reason, either legal or equitable, why the defendant should be permitted to shift a scene of contest from the less liberal to the more liberal state. But there is another reason why the defendant should be restrained from prosecuting its action in Massachusetts. The policy is set forth in the record, and in addition to the clause above quoted it contains the following:
"In contestability. This company insures only preferred risks, and the examination of the insured hereunder being satisfactory, this policy is incontestable except for suicide, whether sane or insane, committed within one year from the date thereof."
. A copy of this policy is attached and made a part of the bill in equity filed in the Massachusetts court. -The insured did not commit suicide within one year, and in view of this provision of the policy it-is quite apparent the bill does not state facts sufficient to constitute a cause of action, and hence the action in Massachusetts must be deemed to have been brought in bad faith. The clause first quoted with respect to the insured being in good health upon delivery of the policy and payment of the first premium has no application to such chronic diseases as the insured may have had at the time of his application and medical examination. The defendant had made an examination concerning the insured which it declared in writing to be satisfactory to itself, and because it was satisfactory it agreed that it would not contest payment of the amount specified except for suicide, whether sane or insane, within one year. Agreements by life insurance companies not to contest payment of a policy must have some force, and when a company solemnly asserts that it has made all the examination it desired, and one that is satisfactory to itself, respecting the health of the insured, and therefore agrees not to contest payment in case of death, its assertion and agreement should be given effect. All that the clause respecting good health at the time of payment of the first premium can mean, in view of the other clause which immediately follows, is that, intervening the time between acceptance of the risk and agreement to issue the policy and the time when the first premium is paid and the policy delivered, the applicant shall not have been stricken with some new disease which impairs his health. Any other interpretation would render the incontestability clause absolutely meaningless and a mere snare to delude the insurer into the taking of a policy which appeared incontestable but which in fact was not. The defendant made all the inquiry respecting the health.of the insured that it desired, and thereupon issued a policy .incontestable for any cause except suicide within one year. It is no answer to say that very likely the Massachusetts court will uphold the policy and declare it incon testable and refuse to- declare it void. The plaintiff, being a resident of this state and having first brought action in its court, ought not to be compelled to go to another forum to maintain her rights concerning the precise'matter in litigation here.
The defendant, so far as appears, has not even the excuse of holding a waiver by the insured permitting any physician who may have attended him to testify as to what he learned concerning his ailments, such as is found in many applications for or policies of life insurance. The policy having been issued in Massachusetts to a resident of that state, such a waiver might give some color to the claim that questions concerning it should be tried in a forum where physicians were not prohibited from so testifying. But there was no occasion for obtaining a waiver, for no inquiry respecting any disease which the insured had at the time of his examination by the defendant or had had prior thereto was material, because defendant had made such inquiry to its satisfaction, and stipulated that no further contest concerning such diseases should be made, and that upon death, except by suicide within one year, it would pay the amount agreed.
The order continuing the injunction was proper, and should be affirmed, with $10 costs and disbursements.
LAUGHLIN and SCOTT, JJ., concur.