Court Opinion

ID: 6697001
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:55:00.756821+00
Date Added: 2024-06-11T16:01:17.032471
License: Public Domain

Connor, J.
Defendant’s principal contentions, in support of its appeal to this Court, as stated in its brief, are “(1) that since blindness antedated the making of the disability contract, there could have been no valid contract as against that hazard, under the rule that continued existence of the subject-matter is necessary to sustain a contract; (2) that the failure of plaintiff to disclose bis condition pending the negotiations constituted a concealment of material facts which avoided the contracts in their entirety; (3) that said contracts were, also, avoided by plaintiff’s misrepresentations as to the pending of applications for insurance in other companies; and (4) that the insured did not show total disability within the terms of the contract sued on.” These contentions are presented by defendant’s assignments of error, and are fully discussed in the brief filed by its counsel in this Court.
Plaintiff, in support of the judgment of the Superior Court; insofar as same is attacked by the first three of defendant’s contentions, relies upon the clause in each policy, which provides that “if the premiums are duly paid as required, this policy shall be incontestable after it has been renewed beyond the first year.” Plaintiff contends, that by reason of this clause, all the premiums required having been duly paid, and each policy having been renewed beyond the first year, these contentions are not available to defendant for the purpose of contesting the validity of the policies.
By paragraph 3 of article II of the supplemental contract, which is attached to and forms a part of each policy, it is provided that “the entire and irrecoverable loss of sight of both eyes, or the severance of both bands at or above the wrists, or of both feet at or above the ankles, or of one entire band and - one entire foot, resulting from one-accident, will of themselves be considered as total and permanent disability within the meaning-of this provision.” By the provision referred to, defendant agrees that if the insured becomes physically or mentally incapacitated to such an extent that be is and will be presumably permanently unable to engage in any occupation or perform any work for compensation of financial value, defendant will waive payment of any premium payable upon the principal contract and the supplemental contract, and will pay to the insured an annual income of five hundred dollars. All the evidence tends to show that plaintiff has suffered an *39entire and irrecoverable loss of sight of both eyes. This is a permanent disability, which by the terms of the contract, entitles plaintiff to the benefits provided therein. It is immatérial whether or not plaintiff has since the loss of his sight been able to engage in any occupation or to perform any work for compensation of financial value. It is only when the disability is not one of those included within paragraph 3 that the benefits of the provision are dependent upon the inability of the insured by reason of such disability, mental or physical, to engage in such occupation or to perform such work. Plaintiff having suffered the loss of sight of both eyes, which is entire and irrecoverable, it is immaterial whether or not he has since been able to engage in an occupation, or to perform work for compensation of financial value. Defendant’s fourth contention cannot be sustained. There was no error in refusing to allow defendant’s motion for judgment as of nonsuit, or in the instructions of the court to the jury, insofar as defendant’s assignments of error involve this contention.
It must be conceded that if plaintiff’s action is founded upon the policies, issued to him by defendant, without the distinction as contended by defendant, between the principal contract and the supplemental contracts, neither of the first three contentions of defendant can be. sustained as supporting defendant’s assignments of error upon this appeal. It is expressly provided in each of said policies that the policy shall be incontestable after it has been renewed beyond the first year, if the premiums are duly paid as required. The payment of all premiums on both policies, from 1915, when they were issued, to the date of the commencement of this action in 1923, is admitted. The policies are therefore incontestable upon either ground relied upon by defendant in said contentions; defendant will not be permitted, because of its express agreement to the contrary, to contest in this action the validity of the policies.
In Trust Co. v. Ins. Co., 173 N. C., 558, Justice Allen, writing the opinion for the Court, says: “The modern rule is that a life insurance policy containing a provision that it shall be incontestable after a specified time cannot be contested by the insurer on any ground not excepted in that provision.” Many authorities are cited in support of his statement of the law. In that case, this Court held that defendant could not avail itself of the plea that the insured was not in good health at the time of the delivery of the policy, and that for that reason under the terms of the policy, the contract never became operative. The incontestable clause was held to cover the defense of the bad health of the insured at the time of the delivery of the policy. It was also held that a defense based upon the allegation that the issuance and delivery of the policy was procured by false and fraudulent representations in the *40application, would not be beard, if the policy contained an incontestable clause, which upon the facts admitted or established by evidence, was applicable. Justicei Allen further says: “The authorities are practically uniform in holding that an incontestable clause, which gives a reasonable time for the insurance company to make investigation, is valid, and that it means what it says, that is, that after the time named in. the clause has expired no defense can be set up against the collection of the policy, unless it comes within the excepted classes, named in the clause itself.” The incontestable clause in a policy of life insurance was held valid in Hardy v. Ins. Co., 180 N. C., 180, where Justice Allen says that the clause is contractual and is sufficiently pleaded when the policy containing the clause is made a part of the complaint. See 35 A. L. R., 1492n; 31 A. L. R., 109n; 13 A. L. R., 675; 6 A. L. R., 452.
In Indiana National Life Ins. Co. v. McGinnia (Ind.), 101 N. E., 289, 45 L. R. A. (N. S.), 192, Spencer, J., says: “It seems to be a well-recognized principle of insurance law that a provision in a contract of insurance limiting the time in which the insurer may take advantage of certain facts that might otherwise constitute a good defense to its liability on such contract is valid, and precludes every defense to the policy other than the defenses excepted in the provision itself. It also seems to be generally held that such a clause precludes the defense- of fraud, as well as other defenses, and that it is not invalid on the. theory that it is against public policy, provided the time in which the defenses must be made is not unreasonably short.” Many authorities are cited in the opinion to support this statement of the law. See Mass. Ben. Life Ins. Co. v. Robinson (Ga.), 42 L. R. A., 261.
Defendant, however, contends that in this action plaintiff seeks to enforce liability, not under the policies, which were issued in 1915, and are the principal contracts between the parties, each of which contains the incontestable clause relied upon by plaintiff, but under the supplemental contracts, which were entered into and attached to the policies on 14 July, 1921; no incontestable clause is contained in these supplemental contracts. The question, therefore, presented is whether the incontestable clause, contained in the policies, applies to the supplemental contracts attached thereto on 14 July, 1921.
These supplemental contracts were substituted for provisions in the principal contracts, which were parts of the policies as originally issued; each bears the same date as the principal contract to which it is attached ; a sum was charged by defendant and paid by plaintiff sufficient to cover the reserve which the defendant would have accumulated against the additional liability if the contracts had been made on the dates, upon which the policies were respectively issued and the additional premium paid by plaintiff from the date on which the policies were is*41sued; it is specifically recited in each supplemental contract that it is a component part of the policy to which it is attached, and that none of the conditions named in the supplemental contract shall be deemed to waive, modify or affect in any manner any of the conditions contained in the principal contract to which the supplemental contract is attached.
“In the conduct of insurance business it often becomes necessary to add a new term to a policy, or to modify or waive an existing term. For this purpose insurers are accustomed to use little printed slips containing the desired writing, which are attached to the policy with mucilage and are termed ‘riders.’ By reason of being annexed to the policy these riders are equally binding on the parties as if written in the face of the policy.” Vance on Insurance, p. 185. “The contract of insurance, as usually made, contains the following elements: (a) all terms legally set forth on the face of the policy, or on the back thereof, if properly referred to; (b) all separate papers expressly designated and made part of the contract by the terms of the policy; (c) all riders attached to the policy with the consent of both parties.” Vance on Insurance, p. 181. Lancaster v. Ins. Co., 153 N. C., 286.
“It is well settled that a rider attached to the policy is a part of the contract, to the same extent and with like effect as if embodied therein.” 1 Joyce on Insurance (2 ed.), p. 516.
The supplemental contract attached to each policy on 14 July, 1921, by reason of the recitals therein became a part of the policy, and was subject to all the conditions applicable thereto contained in the policy to which it was attached; the incontestable clause, contained in the policy, is applicable to said supplemental contract, in an action to enforce liability thereunder, and no defense is available to defendant in such action after said policy, including as one of the elements of the contract the provisions of said supplemental contract, has become incontestable, except for the nonpayment of premiums.
The date upon which said supplemental contract became effective was not the date upon which it was attached to the policy, but the date of the policy; this was fixed by the defendant and accepted by plaintiff. As a result of this agreement as to the date from which it became effective, defendant collected the sums required for the reserve; having received a benefit from the agreement as to the date, it must accept the burden. In Mutual Life Ins. Co. v. Hurni, 263 U. S., 167, 64 L. Ed., 235, it was held that where a clause in a life insurance policy provides that it shall be incontestable after a specified time “from its date of issue,” the word “date” refers to the date of issue appearing on the face of the policy which was antedated by mutual consent of the parties and premiums paid from that date, and not to the time of actual execution of the policy or the time of its delivery. See 31 A. L. R., 112.
*42We must bold that the supplemental contract, attached on 14 July, 1921, to each policy issued by defendant to plaintiff, in 1915, was a part of the policy to which it was attached, and was subject to the incontestable clause contained in such policy; that by express agreement of the parties such supplemental contract became effective from the date appearing therein, and not from the date on which it was actually attached to the policy; that upon all the evidence submitted to the jury in this action no defense was available to defendant upon the supplemental contract which was not available in an action on the policy. The validity of the policy, including both the principal contract and the supplemental contract, cannot be contested by defendant in this action.
The assignments of error presenting the first three contentions of defendant cannot be sustained. The judgment is affirmed. There is
No error.