Court Opinion

ID: 7812541
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:14:28.079917+00
Date Added: 2024-06-11T16:28:30.208276
License: Public Domain

McCulloch, C. J., (dissenting). The incontestable clause in an insurance policy is valid, according to the great weight of authority, as shown by the numerous cases cited in the opinion of the majority. The present case does not, however, involve that question, but the particular question involved is whether or not the death of the insured within the contestable period affects the operation of the provision so as to permit the insurance company, after the expiration of tlie time specified in the policy, to plead, in an action instituted by the beneficiary, defenses which would otherwise be cut off by the incontestable clause, or whether liability under the policy must be actually contested by proceeding in court within the time specified, regardless of the time of the death of the insured. We have already decided that precise question in the recent case of Jefferson Standard Life Insurance Co. v. Smith, 157 Ark. 499, which is, in effect, overruled by the majority in the present case. This question has arisen in but few cases, and has been decided in accord with the present view of the majority of this court in the States of Illinois, Indiana, Missouri, Oklahoma, and North Carolina, and by the Supreme Court of the United States. Monahan v. Metropolitan Life Ins. Co., 283 Ill. 136; Ebner v. Ohio State Life Ins. Co., 69 Ind. App. 32; Lavelle v. Metropolitan Life Ins. Co., 238 S. W. (Mo. App.) 504; Reliance Life Ins. Co. v. Thayer, 203 Pac. (Ok.) 190; Hardy v. Phoenix Mutual Life Ins. Co., 104 S. E. (N. C.) 166; Mutual Life Ins. Co. v. Hurni Packing Co., 260 U. S. 712. The Indiana and Missouri decisions were not rendered by courts of last resort, but by intermediate courts. The Supreme Court of Minnesota has repeatedly held to the contrary, and in accord with our own decision in Jefferson Standard Life Ins. Co., v. Smith, supra; Bankers’ Reserve Life Ins. Co. v. Omberson, 123 Minn. 285; Mutual Life Ins. Co. v. Stevens, 195 N. W. (Minn.) 913. The last of the Minnesota cases cited above is identical with the facts in the Jefferson Standard Life Ins. Co. v. Smith, supra, and cites the Smith case with approval. In that case the Minnesota court said: “This brings us squarely to the real question in the case. Is it necessary for the insurer to bring an action before the expiration of the two years, in order to avail himself of the defense set out in the complaint? Does the death of the insured interrupt the running of the two-year period so as to preclude the insurer from asserting the defense of fraud in an action by the beneficiary after the expiration of the fixed period? The better weight of authority as well as of good reason seems to be that the death of the insured fixes the right of the parties under the incontestable clause. * * * We are of the opinion and hold that the incontestability clause ceased to be operative at the deatli of the insured within the two-year period, and fixes the rights of the parties, and that the insurer may avail itself of the defense of fe^ud in an action to recover on the policy when it is brought, even after the expiration of the two-year period.” If we had not already decided the question, I would be willing to follow the weight of authority, notwithstanding my views to the contrary on the construction of this clause of the policy; but, since we have deliberately taken a position on the question, I think we should adhere to it. I am firmly convinced that our decision in Jefferson Standard Life Ins. Co. v. Smith is sound, and that it adopts the true logic of the situation, which is aptly expressed in the opinion in that case, as well as in the Minnesota case of Mutual Life Ins. Co. v. Stevens, supra. It is undoubtedly a rule of almost universal application, and one often announced by this court, that the language of an insurance policy is the selection of the insurance company, and, in case of ambiguity, should be given the strongest susceptible interpretation against the company, but that doctrine should not be pushed to the extent of giving- a forced or unreasonable interpretation. The Word “incontestable” in a policy should be interpreted in its popular sense as referring to a judicial contest of liability in accordance with settled rules of legal procedure, so as to give the insurer the right, during the whole of the specified period, to contest the policy in such mode of procedure. In fact, it is an elemental -principle of remedial procedure that a court of equity will not assume jurisdiction when there is a complete and adequate remedy at law, and it is equally well settled that’, a court of equity will not afford- relief in the cancellation of an executory contract for the reason that the remedy at law in the enforcement of liability under a contract or in defense against liability thereunder is adequate. 1 Pom. Eq. Jur., § 221; Ins. Co. v. Bailey, 13 Wall. 606; Cable v. U. S. Life Ins. Co., 191 U. S. 288; Riggs v. Union Life Ins. Co., 129 Fed. 207; Johnson v. Swanke. 128 Wis. 68; Druon v. Sullivan, 66 Vt. 609; Mutual Life Ins. Co. v. Stevens, supra. A policy of insurance is an executory contract until the death of the insured, and a court of equity will afford relief as long as it is merely executory, but it becomes an executed contract on the death of the insured — fully performed by the insured — and the remedy for its enforcement or in defense against liability thereunder is complete at law. The death of the insured therefore fixes the rights of the parties, and, as said by the Minnesota court, “the insurer may avail itself of the defense of fraud in an action to recover,on the policy when it is brought.” It is a mistake to say that the death of the insured before expiration of the contestable period, and the possibility of delay beyond that period from the commencement of an action by the beneficiary to recover on the policy, introduces a new element into the controversy which lessens the adequacy of the legal remedy of the insurer so as to call for the interposition of a court of equity. The legal remedy need not be immediate to be adequate, but, on the contrary, it is adequate if it can be invoked against defense for liability when asserted. The effect of the decision of the majority is, I think, to alter the terms of the contract by shortening the contestable period, and to deny the insurer the right reserved in the policy to contest liability within a year from its date. In the present case the insured died more than four months before the expiration of the contestable period, and this action was instituted by the beneficiary two days béfore the expiration of that period. Appellant filed its answer within the time allowed by statute, denying liability on the ground of fraudulent misrepresentation of the insured, which answer related back to the filing of the complaint. I think that the defense was presented in apt time, and that the incontestable clause did not apply. Mr. Justice Smith concurs in these views.