« ForrigeFortsett »
whom she could deliver it; that appellant , Colorado from consumption with which he had not requested its return or furnished had been afflicted since November, 1918. As her with postage for its return; but that the soon as appellant received information indisame had been kept by her as evidence of cating the falsity of the statements and anwhat had actually taken place, and also al. swers in the application, and that the inleged the facts concerning the provisions of sured was not in good health when the polithe policy relating to its incontestability and cy was delivered and the first premium paid, the expiration of the two-year period as al- it started an investigation, and by January leged in the second paragraph of answer. 12, 1921, learned of the falsity of the stateThe fourth paragraph denied the allegation ments and answers and that it did not elect of the second paragraph of answer relative to rescind the policy until February 3, 1921, to giving her notice of the claim on the part when it notified appellee of the information of appellant that the statements and answers it had received, and the falsity of the repof the insured in his application were false, resentations and of its desire to rescind. and alleged that appellant did not within a This notice was in the form of a letter in reasonable time after learning of the facts which was inclosed a check for the preminotify her of its intention to rescind. The ums paid with interest thereon. Appellant, fifth paragraph set out the incontestable in order to keep such tender good, paid the clause of the policy, alleged facts sufficient amount of such check into court, for the use to show that the policy was executed in Illi- of appellee, when it filed its answer. Apnois, and that according to the laws of that pellee received said check, but never cashed state proceedings must be instituted in court or intended to cash it. She never returned for contesting the validity of a policy con- it and had no communication with appeltaining an incontestable clause like the one lant concerning it, until March 17, 1921, in the instant case, within the stipulated when certain attorneys employed by her noperiod and after the election to rescind. tified appellant that she was not willing to Then follows a quotation from the opinion of accept a return of the premiums and had the Supreme Court of Illinois in Ramsey v: employed them to enforce collection of the old Colony Life Ins. Co., 297 III, 592, 131 N. E. 108, which is alleged to be the law of Illi- amount due under the policy. Appellee's atnois, and which is to the effect that where torneys kept the letter from appellant and the policy provides it should be incontestable the check as evidence of what had taken after a certain number of years, fraud in place and introduced the same in evidence procuring it could not be set up as a defense on the trial. Appellant did not notify appelafter the lapse of that period; that if the lee of its election to rescind within a reainsurer did not within such period ascertain sonable time after learning the facts. The the facts and did not cancel or rescind the answer and cross-complaint were filed by contract, it could not thereafter do so upon appellant January 24, 1922, the cross-comany ground then in existence, and if the in- plaint being thereafter stricken out. No acsurer did not within that time contest the tion to contest the policy for fraud was compolicy by proceedings in court to which the menced by appellant within the period of insurer and the insured, or his representa- limitation fixed by the laws of Illinois. The tives or beneficiaries, were parties, it could court also found that when this policy of innot do so afterwards. It alleged the expi- surance was executed there was in force in ration of the two-year period during which Illinois a statute requiring each life insurthe policy was contestable and that appel. ance policy issued or delivered in that state lant took no legal action to contest the pol- to contain a provision that the same should icy until it filed its answer January 24, 1922. be incontestable after two years from its
The facts were found specially and are in date except for nonpayment of premiums and substance as follows: The insured resided in except for other things not here involved. Illinois when he made the application for Upon these facts the court stated as a the insurance policy. Everything done in conclusion of law that appellee was entitled connection with the making of the application, to recover the amount of the policy and the delivery of the policy, and the payment of rendered judgment accordingly. premiums took place in Illinois; a copy of The errors assigned are that the court the application and policy being set in full. erred in striking the cross-complaint from The insured in his application made certain file, in its conclusions of law, and in overstatements and answered certain interroga- ruling appellant's motion for a new trial. tories material to the issuance of the policy. [1, 2] The correctness of the action of the Such statements and answers were false and court in striking out the cross-complaint known by the insured when made to be false. does not depend upon the sufficiency of that The insured at that time was seriously dis- pleading to state a cause of action against eased with tuberculosis of the lungs and with the defendant named therein.
That ques. nephritis, from which diseases he died Oc- tion can only be raised and presented by a tober 10, 1920. On November 3, 1920, appel- demurrer for want of facts. However, if the lee filed proofs of death showing the in- | facts alleged in the pleadings cannot, by sured had died at the Printers' Home in amendment, be made germane to the com
(145 N.E.) plaint, it is not error to strike it out. Chi-, trolling, but will be given such consideration cago, etc., R. Co. v. Dunnahoo, 63 Ind. App. as in our judgment they are entitled. 237, 112 N. E. 552.
In Ebner v. Ohio State Life Ins. Co., 69  Appellant had an adequate remedy at Ind. App. 32, 121 N. E. 315, the insurance law to the action on the policy. As was said company elected to rescind and tendered the in Phenix Mutual Life Ins. Co. v. Bailey, premiums within the contestable period, and 13 Wall. 616, 20 L. Ed. 501:
before the expiration of that period filed its “Where a party, if his theory of the contro- complaint alleging it was the intention of the versy is correct, has a good defense at law to defendant, the administrator of the insured's 'a purely legal demand," he should be left to estate, to delay action on the policy until that means of defense, as he has no occasion after the expiration of the contestable period to resort to a court of equity for relief, un- for the purpose of depriving the insurance less he is prepared to allege and prove some company of its defense by appealing to the special circumstances to show that he may suf- incontestable clause, and asking for the canfer irreparable injury if he is denied a pre- cellation of the policy. After the expiration ventive remedy."
of the contestable period, the defendant filed In Cable v. United States Life Ins. Co., a demurrer to the complaint, and also filed 191 U. S. 288, 24 S. Ct. 74, 48 L. Ed. 188, a cross-complaint asking judgment on the after action had been commenced in a state policy. The demurrer to the complaint havcourt on a policy of insurance, the insurance ing been sustained, the plaintiff filed an ancompany brought suit in the United States swer to the cross-complaint, predicated on Circuit Court for cancellation of the policy the facts that were the basis of its election on the ground of fraud. A demurrer for to rescind, as had been alleged in the comwant of equity was sustained, and on appeal plaint. from the Circuit Court of Appeals overrul The case was disposed of on a special finding the circuit court, the decree of the Cir-ing of facts, which showed the existence of cuit Court of Appeals was reversed and the such facts as rendered the policy voidable at cause remanded to the Circuit Court with di- the election of the insurer and that proper rection to dismiss the bill. It was there steps had been taken to avoid it. The adminheld that an indequate remedy at law in the istrator contended that the insurer could not state court could not be successfully urged to after the death of the insured contest the sustain the equitable jurisdiction of the fed-policy except by a defense to an action on eral court of a suit to cancel an insurance the policy, and where the insured died withpolicy for fraud, when the insurance company in the contestable period, the insurer could might have removed the action brought on not thereafter begin a contest of the policy the policy in the state court to a federal at all, unless the representative or beneficicourt where the fraud could have been set ary within the contestable period brought an up as a defense. Appellant in the instant action to enforce the policy, in wbich case the case had an adequate remedy at law. Its insurer could within that period, but not cross-complaint could not by amendment have thereafter, commence a contest by defending been made germane to the complaint. There against such action. In support of this conwas no error in striking it from file.
tention, it was insisted that the rescission of Appellant next contends that it rescinded the policy and the bringing of the action to the contract of insurance within the contest- cancel it was not sufficient for the reason able period and had the right to set up the that after the death of the insured, the insurrescission as a defense, even though such de- er could not proceed in equity, because it, in fense was not set up within the contestable such case, had an adequate remedy by deperiod. Appellee, on the other hand, con- fending an action at law on the policy, and tends that the rescission cannot avail ap- that no sufficient steps to cancel the policy pellant as a defense, because appellant failed had been taken until the filing of the anto take affirmative action in court, within the swer to the cross-complaint, which was after contestable period, either as plaintiff or de- the expiration of the contestable period, and fendant, to avoid the policy.
therefore prohibited by the policy.  While the court found facts sufficient In disposing of this contention the court, to show that the policy in question was an at page 50 (121 N. E. 320), said: Illinois contract and that the statute of
"It is universally held, however, that reIllinois required the policy to contain a pro- course to equity may be had where the remedy vision that it should be incontestable after at law is inadequate and does not afford the the expiration of two years from its date of complaining party the relief to which he is enissue, it failed to make any finding as to titled. Thus, in case of an insurance policy the law of Illinois, as decided by the Su- where the loss has occurred, none of the aupreme Court of that state construing that thorities deny, and many of them recognize that statute or deciding the question now before of the existence of which the remedy at law
there may be special circumstances by reason us. This being true, the decisions of the by defending a suit brought on the policy is inSupreme and Appellate Courts of Illinois adequate, and that as a consequence equity will cited by appellant and appellee are not con- assume jurisdiction.
We conclude that
under proper circumstances an insurance com- , which the policy could be contested was an pany, after the loss has occurred, may proceed inducement held out by the company to augby affirmative action to avoid the policy, pro- ment the sale of its contract, said: vided it takes proper steps to that end within the period named in the incontestability clause.
“The incontestable clause is construed by us Trust Co. v. Ins. Co., supra (173 N. C. 558], to be binding upon the appellant and to mean reviews the decided cases to the effect that by just what it says, that ‘after one year from the 'affirmative action, as used in such connection, date of issue, this policy shall be incontestable is meant the bringing of a proper action within if the premiums have been duly paid.'" such period."
In Pacific Mut. Life Ins. Co. v. Alsop, 191 And after applying the facts as they were Ind. 638, 134 N. E. 290, the notice of rescisfound in that case to the record, the court sion was not given until after the expiration said :
of the contestable period. The question as “We conclude that it sufficiently appears that to what would have been the effect of a rewithin the year appellee proceeded by affirma- scission made before the expiration of the tive action to contest the policy, and that such contestable period, if set up as a defense to contest was continued thereafter without inter
an action commenced after the expiration ruption until its final conclusion in the trial
It follows that under the circumstances of the contestable period, is not discussed. here the incontestability clause did not bar
The Supreme Court of Illinois, in the reappellee from making its defense."
cent case of Powell v. Mutual Life Ins.
Co., 313 Ill. 161, 144 N. E. 825, passed upon In Indiana National Life Ins. Co. v. McGin- the question now under consideration, and nis, 180 Ind. 9, 101 N. E. 289, the policy, after citing and reviewing a great many casdated December 9, 1907, was for $5,000 ; | es, including Ebner v. Ohio State Life Ins. $3,000 being payable to the appellee, who was Co., supra, Indiana · National Life Ins. Co. the mother of the insured, and $2,000 payable v. McGinnis, supra, and Ramsey v. Old Colto his wife. It contained a provision that if ony Life Ins. Co., 297 Ill. 592, 131 N. E. the premiums were duly paid it should be 108, said: incontestable after one year from the date of
"These cases hold, in effect, that an unacceptissue, The insured died January 16, 1909. ed offer for rescission or an attempt to rescind Suit was commenced on the policy in June, within the period named in the incontestable 1909. The defendant answered fraud in pro- clause is insufficient, and that it is necessary curing the policy of insurance; that the con that the insurer during such period rescind tract of insurance had been canceled by writ- by affirmative action before a proper tribunal ten agreement made November 30, 1908, in It will be seen from an examination of the
or by defense to a suit brought on the policy. consideration of which the insurer repaid authorities cited, that by the great weight of the insured the amount of premiums paid authority in this country, to contest a policy for with interest; and that there was a failure fraud it is essential that the insurer proceed, to pay premium due December 8, 1908. De- by way of defense, to a suit brought upon the murrers were sustained to all answers ex- policy or by independent action to cancel the cept the one pleading failure to pay the same, and that notice of rescission, with tenpremium. The question there decided, in so dering back premiums and interest, is not a confar as it relates to the effect of an incon- test within the meaning of the clause. Nor is
this an unreasonable or unjust rule. An intestable clause, was stated by the court as
surance contract differs from contracts of othfollows: Does the incontestable clause pre er kinds, in that the time of performance by clude the company from asserting, as a de- the insurer is uncertain, while it is necessary fense to its liability, the charge of false and for the insured to continue in the performance fraudulent answers of the insured, the war- of his obligations throughout the uncertain peranties in the contract, the mutual cancella- riod of his life. It is therefore highly desiration of the policy by the insured and the in- the insured, if the question of fraud be raised
ble, from the standpoint of both the insurer and surer without the knowledge of the bene- by the insurer, that it be settled within a reaficiary, for a cash consideration paid by the sonable time. An attempt at rescission raises company to the insured, where the answer an issue of fact, and all consideration tends to asserting such defense is filed more than one the conclusion that it should within a reasonayear after the execution, delivery, and ac- ble time be settled. The notice of rescission ceptance of the contract. And the court,
served by the insured demonstrates that it after calling attention to the fact that the insured. It can therefore be but desirable to
wishes to terminate all transactions with the action on the policy had been commenced aft- it that questions arising out of the notice of er the expiration of the contestable period, rescission should not await an indefinite numsaid the holding of the courts generally is ber of years for adjustment. It is certainly that every defense to a policy of insurance to the best interest of the insured that an embraced within the term of the incontesta- early settlement of the issue of fact be had ble clause was completely lost to the insurer for at least two reasons: First, after notice if it failed to make the defense or take af- of rescission the insured to all practical pur
poses stands in a position similar to one whose firmative action within the time limited by application for insurance has been rejected, the policy. And after referring to the fact and it is well known that as practical matter that the limitation in the contract within he encounters difficulty in securing another
(145 N.E.) policy; second, he must, because of this unset-, followed by the Appellate Court of Illinois tled issue, contiaue throughout his life to tender in Liebsker v. New York Life Ins. Co. (depremiums, and in all things offer to do and per- cided in June, 1924), where an attempt was form his part of the contract, but with the feels made to distinguish the Ramsey Case. In ing that after his death his loved ones have but acquired a lawsuit. Mere notice of rescission view of the decision of the Supreme Court for fraud settles nothing. Actual rescission is of that state in Powell v. Mutual Life Ins. permitted for fraud without the consent of the Co., supra, the Liebsker Case cannot be conother party to a 'contract where such fraud is sidered as authoritative. shown, but the right to rescind does not exist  Feierman v. Eureka Life Ins. Co., 279 unless such fraud is proven. Charging fraud Pa. 507, 124 A. 171, cited by appellant, is and serving notice of rescission cannot, of it. self, be a rescission for fraud. It still remains not in point. No attempt had been made in to be proven whether or not fraud in fact ex- that case to resind or cancel the policy durists. By notice of rescission for fraud the in- ing the contestable period. The statement surer raises an issue of fact and whether the of the court on that subject is obiter. All policy is still good or is canceled depends upon the court decided there was that the dethe decision of that issue. The law recognizes fense of fraud could not be set as a defense but two ways of settling issues of fact. They after the expiration of the contestable periare by stipulation, admission, or agreement, and by proof adduced before a legal body competent od. We hold that appellant could not, under to find the fact. The nature of the contract the facts in this case, defend on the ground requires that an issue of this character be that it had rescinded the contract of insursummarily settled and that it be not permitted ance within the contestable period, and that to pend throughout the life of the insured. if appellant had been desirous of contesting
It seems clear that if the insurer the validity of such policy it should have would contest the validity of the policy where done so by taking proper action in court rescission is not agreed to by the insured it
within the contestable period. This being should do so in the only way that is recognized in law; i. e., by a proceeding in which proof true, the court did not err in its conclusion may be adduced and a finding had in the man- of law in favor of appellee. Der recognized in law as competent to make a . The court found that appellee's “debinding determination of the issue. Nor is there termination to contest" the policy on the in this any hardship. The contract is usually ground of fraud was not commenced within solicited by the insurer. It is always written the period of limitation fixed by the law of by it. It has at its command more or less extensive means of determining whether the the state of Illinois. Appellant says (1) this representations made by the insured are true or
was not and cannot be regarded as a findfalse, and it is by the contract given two years ing of a fact, and (2) if it be held to be the in which to find out the fraud, if any exists, and, finding of a fact, it is not sustained by the where it raises, within that time an issue of evidence. The court found that at the time fraud, it is but just that it be required to in the policy was issued, the statute of Illinois stitute the necessary proceedings to settle that required that each policy issued or delivered issue."
in that state should contain a provision statIn Thistle v. Equitable Life Assur. (Tenn.) |ing that the policy should be incontestable 261 S. W. 667, the contestable period was one after two years from its date, except for year and expired September 7, 1922. Two reasons not involved in the instant case. days later suit was commenced on the policy. Appellant says this statute is a statute of On October 16, 1922, the defendant filed a limitation which affects the remedy only, and cross-complaint asking a cancellation of the that the evidence shows it was amended aftpolicy. The defendant in that case, as in er the policy was issued, that is, on July 2, this, took affirmative action within the con- 1921 (Laws Ill. 1921, p. 482) so as to provide testable period to rescind by giving notice in that a policy issued and delivered in that writing of its intention to rescind and by ten- state should be "incontestable after it shall dering back the premium paid. No action have been in force during the lifetime of was taken in court within the contestable pe- insured, for two years from its date.” The riod to have the policy canceled. It was there provision of the law as found by the court held that the act of the insurance company in had been written in and made a part of the giving the notice of rescission and tendering contract. It was a material part of the conthe premiums constituted a breach for re. tract and could not be affected or changed nunciation, but did not constitute a rescis- by subsequent legislation. The amendment sion. After citing American Trust Co. v. of 1921 was only applicable to policies issued Insurance Co., 173 N. C. 558, 92 S. D. 706, after its passage. It did not affect policies in support of that holding the court said: theretofore issued. “The remedy of the defendant was to insti- that appellant did not rescind the contract of
Appellant also contends that the finding tute an action for cancellation within a year, and if it did not do so the policy was in force insurance within a reasonable time after at the expiration of the year."
learning the facts is not sustained by the
evidence. Conceding this, and conceding apThe contrary was held in Mutual Life Ins. pellant did give notice of its rescission and Co. v. Rose (D. C.) 294 F. 122. This case was tendered back the premium within a rea
sonable time, that would make no difference, right to transact business in the state of Inin the result. Appellant, in addition there- diana, it avers that appellee's property, both to, should have taken affirmative action in real and personal, was duly assessed for tax. court within the two-year period to have ation in Center township, Marion county, for the policy rescinded and canceled because the year 1919, and the valuation thereof of the alleged fraud.
fixed. Thereafter the taxing officers of said Other reasons why the court erred in over-township, county, and state, in pursuance of ruling the motion for a new trial are dis- the pretended order of the, state board of cussed, but they are not of controlling in- tax commissioners, entered on August 23, fluence and would not lead to a reversal 1919, increased said valuation of appellee's if all of them were decided in accordance lands and lots 20 per cent., the improvements with appellant's contention.
thereon 30 per cent., and its personal propThe judgment is therefore affirmed.
erty 50 per cent. Appellee was thereupon charged upon the tax duplicate of the county and state with the sum of $2,486.32, as the
first installment of taxes for the year 1919, BOARD OF COM'RS OF MARION COUNTY of which sum $643.97 was for taxes based WESTERN ELECTRIC 0.
upon said increased valuation. At the time (No. 11822.)
there was pending in the Marion superior
court the case of Hendrickson v. Fesler et al., (Appellate Court of Indiana. Nov. 13, 1924.) wherein an injunction was sought on behalf 1. Taxation 319(2)–County board of re
of the taxpayers of Center township against view presumed to have performed statutory the collection of taxes based upon increases duty.
in assessments made under said order of County board of review is presumed to August 23, 1919. Prior to May 4, 1920, ap have performed its statutory duty, and fact pellee paid to the treasurer of Marion counthat it applied same percentages as were em-ty $2,486.32, paying $643.97 under protest; ployed by state board of tax commissioners the saine being, as aforesaid, based upon the in making horizontal increases in tax assess alleged invalid increase in assessment, and ments does not justify conclusion that it merely it was agreed that said amount so reprereaffirmed and readopted state board order.
senting the increased assessments should be 2. Taxation 543(6)-Refund of taxes ad. credited upon the second installment of ap
mitted to be proportionate to those paid by pellee's taxes for 1919, payable in Novemothers held unwarranted in absence of show. ber, 1920, if that increase should finally be ing of substantial injury.
held invalid. Taxpayer admitting by demurrer that its property was taxable, that assessments were
The superior court thereafter in the Hennot more than its true cash value, and were drickson Case held that the order of the proportionate to other property, but seeking state board of tax commissioners, and the refund on ground of alleged invalidity, for want assessments made in pursuance thereof, was of notice of horizontal increase in assessments invalid and void, and enjoined the collecunder Tuthill-Kiper Act, held not entitled to refund in absence of showing of substantial in- tion of taxes based thereon. There was no jury.
appeal in that case, and the judgment of the
superior court is still in full force and effect. Appeal from Circuit Court, Marion County; Thereby the said $643.97 became a credit H. 0. Chamberline, Judge.
upon appellee's second installment of taxes Action by the Western Electric Company as aforesaid. Thereafter the Legislature, in against the Board of Commissioners of Mar. special session, adopted an act known as the 1on Couty. Judgment for plaintiff, and de- Tuthill-Kiper Act (Acts Spec. Sess. 1920, p. fendant appeals. Reversed, with instruc
153), after which the state board of tax comtions.
missioners, the county board of review of Superseding former opinion, 143 N. E. 370. Marion county, and the taxing officer of said
county, purporting to act under the prori. Emsley W. Johnson, of Indianapolis, and sions of said Tuthill-Kiper Act, took such Wm. A. Hough, of Greenfield, for appellant. action as in effect readopted and reaffirmed
Miller, Dailey & Thompson and Albert Le said pretended order of equalization of Au. Rabb, all of Indianapolis, for appellee.
gust 23, 1919. Such action is illegal and
void for the reason that the Tuthill-Kiper NICHOLS, P. J. This appeal is from a Act is void, that no notice was given appeldisallowance by the board of commissioners lee or any taxpayer of said increases in asof a claim for refund of taxes alleged to sessments made under said act, and that said have been illegally assessed in 1919.
increases and assessments are unlawful and The claim was presented to the board of excessive. After such void action under said commissioners. In addition to the formal act, appellee was charged upon the tax duplistatement of the claim and averments as to cates of said county with $2,486.32, as its the corporate existence of appellee and its second installment of taxes for the year 1919.
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