Court Opinion

ID: 6818152
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:03:56.181738+00
Date Added: 2024-06-11T16:03:59.244992
License: Public Domain

On Rehearing.
Richmond, January 12, 1933.
Holt, J.,
delivered the opinion of the court.
Our original opinion is reported in 164 S. E. 529. The facts are there stated, and so a restatement is unnecessary.
It is perfectly plain that an insurance company is not liable for a loss not covered by its policy. To use an extreme illustration, if one were to die after the expiration of a term policy there would be no liability, and a company which undertook to defeat an attempt to saddle upon it a loss would not be contesting it. To use another illustration, if it were to declare that death due to an accident in an airplane was not covered, there could be no liability for such a loss, and a denial of liability would not constitute a contest. But it is also plain that if liability were denied because of some condition subsequent broken, that would be a contest within the purview of Code, section 4228, as amended by Acts 1926, c. 205. Whitfield v. Aetna Life Ins. Co., 205 U. S. 489, 501, 27 S. Ct. 578, 51 L. Ed. 895, 898.
We shall not undertake to discuss the two applications for insurance appearing in the record, but will adopt that of October 24, 1927, here relied upon by the company. It provides that if the insured shall' personally engage “in service on any railway train * * * any agreement under this application shall become null and void and that the statements and answers to the printed questions above, together with this declaration as well as those made to the company’s medical examiner, are full, complete and true, and that they shall constitute the application and shall be made the basis *851of this contract and shall be regarded as a part of the contract.”
This rider was proposed to New York life insurance policies: “Death as a result of service, travel or flight in
any species of air craft, except as a farepaying passenger, is a risk not assumed under this policy; but, if the insured shall die as a result, directly or indirectly, of such service, travel or flight, the company will pay to the beneficiary the reserve on this policy.”
It will be observed that it deals with “a risk not assumed.” Cardozo, C. J., in Metropolitan Life Ins. Co. v. Conway, Superintendent of Insurance, 252 N. Y. 449, 169 N. E. 642, held this to be a valid rider provision, and said: “The provision (statutory) that a policy shall be incontestable after it has been in force during the lifetime of the insured for a period of two years is not a mandate as to coverage, a definition of the hazards to be borne by the insurer. It means only this, that within the limits of the coverage the policy shall stand, unaffected by any defense that it was invalid in its inception, or thereafter became invalid by reason of a condition broken.”
The New York rider would not have been sustained had it gone beyond coverage. Ours nowhere undertakes to define risks not assumed, and has nothing at all to do with coverage. It does apply to conditions broken.
Judge Cardozo, in commenting upon Northwestern Mutual Life Ins. Co. v. Johnson, 254 U. S. 96, 41 S. Ct. 47, 65 L. Ed. 155, made this observation: “The clause there in question was not a limitation as to coverage. It was a provision for a forfeiture. In case of the suicide of the insured, whether sane or insane, the policy was to be ‘void.’ ”
It was upon its face incontestable after one year, coupled with the further condition that it was to be void should the insured “die by his own hand.” The insured committed suicide, and it was held that there could be a recovery because of the incontestable clause, and not because there was no coverage. Continuing, Cardozo, C. J., said: “* * * *852with such a clause the death of the insured, coupled with the payment of the premiums, will sustain a recovery in the face of a forfeiting condition. It is quite another thing to say that the same facts will prevail against a refusal to assume the risk.”
This sound distinction appears in many cases.
Had the policy declared that “death from suicide is a risk not assumed,” a different conclusion would doubtless have been reached. Our application puts death from suicide and death from service on any railway train upon a common footing.
In Head v. New York Life Ins. Co. (C. C. A.) 43 Fed. (2d) 517, 519, the court said: “The ‘incontestable’ provision in section 6731, swpra, is not a mandate as to coverage nor a definition of the hazards to be borne by the insurer. It provides rather that, after the expiration of the two year period, the policy, within the limits of the coverage, shall stand unaffected by any defense that it was invalid in its inception or thereafter became invalid by reason of a condition broken. The exceptions to the ‘incontestable’ provision of the statute do not militate against this construction. Here, again, the distinction must be made between limitation on the coverage and limitation on a defense of invalidity. A policy may provide that default in the payment or the entry of the insured into the military or naval service shall forfeit the insurance. Such a condition is more than a limitation of the risk.”
In Bowman v. Surety Fund Life Ins. Co., 149 Minn. 118, 182 N. W. 991, 992, the policy contains this provision: “This policy shall be void if the insured shall engage in army or navy service in time of war without the written consent of the company, or shall become intemperate in the use of intoxicating liquors, chloral, cocaine or opium to the extent to impair the health of the insured.” The insured, without such written permission-, went into military service and was killed in battle. That court held that it was dealing with a condition broken, and distinguished it from Rud*853dock v. Detroit Life Ins. Co., 209 Mich. 638, 177 N. W. 242, 243, which dealt with this provision: “* * * Military or naval service in time of war is not a risk assumed under any policy hereunder applied for * * In the one case there never was coverage; in the other there was complete coverage in the beginning. The defense was a condition subsequent broken. Forfeitures defeat an existing right, but a right which never existed can never be forfeited, and this is the distinction between those policies which declare that certain risks are not assumed and those which declare that they may be defeated by some subsequent happening.
We have seen in Northwestern Life Ins. Co. v. Johnson, supra, that a condition subsequent broken cannot be availed of where a policy is incontestable upon its face, and for a like reason it is unavailable when made so by statute. This conclusion finds support in the language of the statute itself.
Service on railway trains and service in the army are put upon a common footing, with this exception: Insurance companies are given the power to exact additional premiums in the event of military service, thus carrying with it the inevitable suggestion that in such service this is the only limitation which may be imposed. Of course, no insurance company can be required to insure soldiers, and a stipulation to the effect that it does not would deal with coverage, and to it the statute would have no application.
Here the policy is a flat contract of insurance. In its inception no exceptions appear upon its face, and if defeated it must be, not because of original reservations, but because of some covenant broken. The latter possibility is one which the statute was designed to meet.
The company cannot prevail for another reason. In its amended bill is this statement: “Your complainant further shows to the court that the said Charles A. Proctor was actually engaged in service of The Chesapeake and Ohio Railway Company in the operation of its trains at Newport News, Virginia, at the time he made application *854for said insurance policy, at the time he took said medical examination and at the time he executed the said agreement ; and further that the said Charles A. Proctor departed this life on or about the 29th day of March, 1929, while he was in the pursuit of his duties as a conductor or brakeman on the railroad yards of the Chesapeake and Ohio Railway Company in Newport News, Virginia, when the railroad train on which he was riding was accidentally run over him.”
 The insured in his application said that he was a lawyer. This amended bill charges that he was at that time in the forbidden railway service as a railroad conductor or brakeman. We are dealing with a demurrer and must accept this charge as true. He warrants his answer as to occupation and makes it part of the policy. It was material to the risk, untrue, and makes the contract voidable from its inception. Code, section 4220. The company had one year in which to ascertain the facts and to act thereon. Having failed to act it must forever after hold its peace. The statute does not deal with rights of litigants, but is one of limitation, wisely conceived and to be liberally construed. Harrison v. Prov. Relief Ass’n, 141 Va. 659, 126 S. E. 696, 40 A. L. R. 616. If it did not apply to false warranties and to conditions broken, it- would be of little value. We are unwilling to fritter it away.
Upon furth'er consideration we are of opinion to reverse our conclusions first reached. The decree of the trial court, sustaining the demurrer to the original and amended bill, was without error and is affirmed. .

Affirmed.