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NEW YORK LIFE INS. CO. v. RUHLIN

October 18, 1938

NEW YORK LIFE INS. CO.
v.
RUHLIN et al.



The opinion of the court was delivered by: SCHOONMAKER

In an opinion filed April 13, 1935, this court denied similar motions as to the original bill of complaint. This action was reviewed by the Circuit Court of Appeals and affirmed. 3 Cir., 93 F.2d 416. The case then went to the Supreme Court, which held, in an opinion filed May 2, 1938, 304 U.S. 202, 58 S. Ct. 860, 82 L. Ed. 1290, that the case presented was one for the application of the appropriate state law rather than that of "General" or "Federal", as it was regarded by the District Court and the Circuit Court of Appeals. Whereupon, the judgment was vacated and the case remanded to the District Court for the enforcement of the applicable principles of state law, with directions to permit such amendments of the pleadings as may be necessary for that purpose.

Then the plaintiff presented, with leave of court, en amendment to the bill of complaint; and the defendants renewed their motions to dismiss the amended bill of complaint and dissolve the temporary injunction.

 On July 5, 1938, the date of argument on the motions to dismiss and dissolve the temporary injunction, the defendants filed a petition for a hearing on the motion to dissolve, and offered in evidence at that hearing the original policies of insurance represented by Exhibits "A" and "B" attached to the bill of complaint for the purpose of showing that true copies of the original application for insurance were not attached to those two policies, because of the omission therefrom of the following:

 "Declaration to be signed by Applicant upon making any payment with this application

 "Dated at Johnstown November 28, 1928

 "I hereby declare that I have paid to Two Hundred Eight and 50/100 Dollars ($208.50) in cash, and that I hold his receipt for the same, made up, without alteration, on the receipt form detached from and corresponding in date and number with this application.I assent to the terms of said receipt.

 "(Signature of Applicant) John G. Ruhlin"

 The plaintiff is seeking in this action to cancel and eliminate from five policies of insurance issued by it to defendant John G. Ruhlin, the provisions for the payment of double indemnity in case the death of the insured should result from accident, and the provisions for the payment to insured of disability benefits in case he should become totally and presumably permanently disabled before he arrived at the age of sixty years. In each policy the amount of premium charged for double indemnity benefits and for disability benefits is fixed by the terms of the policy.

 Each policy contains what is known as an incontestable clause in the following language: "Incontestability. -- This policy shall be incontestable after two years from its date of issue except for non-payment of premium and except as to provisions and conditions relating to disability and double indemnity benefits."

 Each policy involved in this suit was issued more than two years before suit was brought.

 Each policy also contains the following clause: "The Contract. -- The Policy and the application therefor, copy of which is attached hereto, constitute the entire contract. All statements made by the Insured shall, in absence of fraud, be deemed representations and not warranties, and no statement shall avoid the Policy or be used in defense to a claim under it, unless it is contained in the written application and a copy of the application is indorsed upon or attached to this Policy when issued. No agent is authorized to make or modify this contract, or to extend the time for the payment of premium, or to waive any lapse or forfeiture or any of the Company's rights or requirements. All benefits under this Policy are payable at the Home Office of the Company in the City and State of New York."

 The defendants' motion to dismiss is based on the following grounds: (1) The incontestable clauses of the policies do not permit the plaintiff to maintain the bill, because of the lapse of two years from the dates of issue of said policies; (2) as to the two policies delivered in Pennsylvania, they are governed by the Pennsylvania law of May 17, 1921, P.L. 682, Section 410, 40 P.S. § 510, which provides for an incontestable clause in all life and endowment insurance policies, or, if the policies as to double indemnity and casualty insurance be construed as casualty insurance, then they are governed by the Pennsylvania Act of May 17, 1921, P.L. 682, 40 P.S. § 752, and do not comply with the requirement of that statute for the use of type no smaller than ten point on the papers attached to the policy; and are therefore not available for the use of plaintiff in this suit; (3) the photostats of the applications attached to the five policies do not comply with the laws of the respective states where they were delivered, and therefore are not ...


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