Case Name: BURR v. MUTUAL LIFE INS. CO.
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1920-02-24
Citations: 96 Or. 14
Docket Number: 
Parties: BURR v. MUTUAL LIFE INS. CO.
Judges: McBride, C. J., and Bennett, J., concur.
Reporter: Oregon Reports
Volume: 96
Pages: 14–28

Head Matter:
Argued December 31, 1919,
reversed and dismissed February 24,
former opinion modified and rehearing denied April 13, 1920.
BURR v. MUTUAL LIFE INS. CO.
(187 Pac. 850; 188 Pac. 962.)
Insurance — Payment of Cash Surrender Value of Policy upon False Affidavit as to Death of Beneficiaries to Whom Paid-up Policy had been Issued Held Ineffective to Invalidate Paid-up Policy.
1. Where insurer issued paid-up policy, stipulating that the 'consideration had been paid by beneficiarles, and agreeing to pay to beneficiaries specified amount upon death of insured, and where insured subsequently delivered poliey to insurer upon receipt of the cash surrender value of the policy, upon insured’s false affidavit that the beneficiaries were dead, the transaction was ineffective to surrender or cancel the poliey.
Insurance — Equity will not Revive Policy Wrongfully Surrendered to Insurer, Remedy at Law Being Adequate.
2. Where insurer issued paid-up policy, stipulating that the consideration had been paid by beneficiaries, and agreeing to pay specified amount upon death of insured, and where insured subsequently delivered poliey to insurer upon receipt of the cash value of the policy, upon insured’s false affidavit that the beneficiaries were dead, equity had no jurisdiction of suit to restore and revive the policy, sinee the transaction did not operate to surrender or cancel the policy, and since, the poliey being in force, the beneficiaries had a complete and adequate remedy at law.
ON PETITION FOR REHEARING.
Appeal and Error — Court Reversing Judgment in Equitable Action Triable at Law will Remand Case for Trial.
3. In beneficiary’s action in equity' to revive and restore canceled policy and to recover thereon, Supreme Court, in reversing judgment for beneficiary on ground that benefieiary’s remedy was an action at. law, will remand cause under Laws of 1917, page 126, so that beneficiary may have case tried at law, with permission to beneficiary to amend her pleadings.
From Multnomah: Robert Tucker, Judge.
Department 2.
The defendant is a life insurance corporation organized under the laws of the State of New York and is now doing business in the State of Oregon. The plaintiff is a resident of this state, the daughter of Peter A. Josephs, now deceased, and the sister of James and John E. Josephs, who are residents of California.
On June 16, 1868, the defendant issued its policy on the life of Peter A. Josephs for $5,000, payable to his said children. This policy was conditioned upon the payment of the stipulated premiums, and in 1871, for failure to pay them, it was surrendered. The defendant then issued its paid-up policy No. 123,654, for the sum of $400, payable to James and John E. Josephs and this plaintiff. The face of the policy reads in part as follows:
“The Mutual'Life Insurance Company of New York in consideration of the representations made to them in the application for this policy, and of the sum of one hundred and forty dollars and fifty cents, to them duly paid by James, Harriett and John E. Josephs, children of Peter A. Josephs, do insure the life of the said Peter A. Josephs of St. Joseph in the county of Buchanan, State of Missouri, in the amount of four hundred dollars, for the term of his natural life. And the said Company do hereby promise and agree to pay the amount of the said insurance at their office in the city of New York, to the assured, their executors, administrators or assigns, in sixty days after due notice and proof of the death of the said person whose life is hereby insured.”
On August 6, 1888, this policy was delivered by the insured, Peter A. Josephs, to the defendant, without the knowledge or consent of either of the beneficiaries. - It was accompanied by his affidavit to the effect that the beneficiaries were then all dead and had died in their infancy. Without investigation and accepting this as true, the defendant at that time paid the insured the sum of $183, then the cash value of the policy, in consideration of which the document was surrendered to the defendant.
On December 24, 1895, Peter A. Josephs died in the State of New York, where he was in business after moving from California, and an administrator of his estate was appointed there. James and John E. Josephs were then residents of California, and the plaintiff, of the State of Oregon. After the death of their father they at once instituted a vigorous search for the original $5,000 policy which the deceased had shown to the plaintiff when she was a child. The testimony is conclusive that she did not know the name of the insurance company which issued the policy or any of the terms or conditions thereof except that with her brothers she was. named as a beneficiary. Although diligent search was made and numerous letters were written, no one was found who knew of the actual existence of such a policy, or the name of the company which had issued the $5,000 policy which was shown to the plaintiff by -her father. The plaintiff employed a Portland attorney to assist her in locating the policy, but without success. Finally she went to Mr. Samuels, a prominent insurance man of Portland, to whom she related the facts and from whom she obtained a list of •all the insurance companies doing business in the United States in 1868, some 32 in number. She then addressed a circular letter of inquiry to each one of them and in answer to the letter which she wrote the defendant she learned for the first time that the $5,000 policy had been surrendered and in lieu thereof a paid-up cash policy of $400 was issued and that based upon the false affidavit of her father to the effect that the beneficiaries therein, his children, had all died in infancy, the company paid to him $183, in consideration of which he delivered to the defendant the $400 paid-up policy, and for such reason the defendant denied all liability thereon.
The plaintiff then for the first time furnished “due notice and proof of the death of the said person whose life” was thereby insured, and for failure of the defendant to pay the amount of the policy, the plaintiff brought this suit, alleging all of the facts above set forth. She prays for a decree restoring and reviving the policy and for the sum of $400, with interest from December 24,1895, at the rate of 6 per cent per annum, as well as such other and further relief as to the court may seem equitable.
To this complaint the defendant filed a demurrer on the following grounds:
“ (1) Said complaint shows on its face that plaintiff is pursuing a stale demand.
“(2) More than six years have elapsed since the accrual of the cause of action stated in said complaint, as appears from the face of said complaint.
“ (3) Said complaint fails to state facts sufficient to constitute a cause of suit. >
‘ ‘ (4) Said complaint shows on its face that the cause of suit herein alleged is barred by laches.”
After argument the demurrer was overruled. The. defendant then answered, admitting the issuance of the $5,000 policy in 1868, the surrender thereof, and the issuance of the $400 paid-up policy in 1871, and alleging that the latter policy was surrendered on August' 6, 1888, by the insured, upon his said affidavit and the payment to him of $183, by reason of which the defendant denies all liability. As a further and separate answer it is pleaded that the plaintiff is pursuing a stale claim; that it is barred by the statute of limitations of the State of California, and that of the State of Oreg’on. The defendant prayed to be discharged.
After the plaintiff filed a reply, testimony was taken and a decree was rendered in favor of the plaintiff for $400, the face value of the policy. The defendant appeals, contending that the court erred: First, in decreeing that the policy is a valid, existing contract; second, in holding that the surrender and cancellation thereof were’void; third, in rendering a decree in favor of the plaintiff; and fourth, in not giving a decree in favor of the defendant.
Beversed and Dismissed.
For appellant there was a brief over the name of Messrs. Snow, Bronaugh & Thompson, with an oral argument by Mr. Earl C. Bronaugh.
For respondent there was a brief over the names of Mr. Omar C. Spencer and Messrs. Carey & Kerr, with an oral argument by Mr. Spencer.

Opinion:
JOHNS, J.
The policy in question specifically recites that, in consideration of $140.50 "duly paid by James, Harriett and John E. Josephs, children of said 'Peter A. Josephs," the company insured the life of the said Peter A. Josephs in the sum of $400. Thus it is stipulated and agreed that the consideration of the policy was paid by the plaintiff and her brothers. By its terms the policy was fully paid up and the amount named was to be turned over to James, Harriett and John E. Josephs on the death of their father, Peter A. Josephs. There is no provision by which the $400 or any part of it should be paid at any time to anyone else.
The affidavit which the father executed as to the death of his children was false; yet, based upon that declaration and relying thereon, the defendant paid to the father $183, on receipt of which he delivered the policy to the company. That proceeding was null and void. The named children were then and are now living. Under such a state of facts the payment to the father would not and could not operate to surrender or cancel the policy. The beneficiaries never knew the actual facts until the plaintiff received the defendant's answer to her circular letter of September 23, 1915. On receipt of that communication from the plaintiff, the defendant promptly advised her of all of the facts. There is no testimony tending to show that the defendant ever refused her any information, sought to mislead her or to conceal any fact which would necessitate a bill of discovery or founded upon which a suit could be sustained.
By the express terms of the policy the company promised and agreed "to pay the amount of the said1 insurance at their office in the City of New York, to the assured, their executors, administrators or assigns, in sixty days after due notice and proof of the death of the said person whose life is hereby insured." This was a direct obligation on the part of the defendant, for a valuable consideration, to pay the $400 to the children of Peter A. Josephs upon his death. To obtain the payment of this amount the beneficiaries had a complete and adequate remedy at law; and in any action therefor the payment to the father would not constitute a defense. That whole transaction was void. The policy was not surrendered and could not be canceled thereby, and the company could not thus acquire title to it.
In the instant case the defendant filed a demurrer upon the ground that the complaint did not state facts sufficient to. constitute a cause of suit, and it has relied upon that demurrer in the Circuit Court and in the brief and argument in this court. As the plaintiff had a complete and adequate remedy at law, a court of equity does not have jurisdiction of this cause, and the demurrer should have been sustained. The decree is reversed and the complaint is dismissed without prejudice. Reversed and Dismissed.
McBride, C. J., and Bennett, J., concur.