New York Life Insurance v. Veit

Cohn, J.

In applying for the life insurance policy issued by plaintiff, the insured, Minnie A. ]Bradbrook, stated her age to be forty-six years when it is claimed she had passed- her sixty-second birthday. Unaware of the insured’s true age at the time of her death, plaintiff paid to the beneficiary of the policy the face value thereof.

' The plaintiff insurance company, asserting that the insured fraudulently misrepresented her age, seeks to recover the difference between the amount of insurance the premiums would have paid for, at the correct age and the sum which it actually paid to the beneficiary. Pursuant to statutory mandate [Insurance Law, § 155, subd. 1, par. (d), formerly § 101, subd. 4] the policy contained a clause providing for such an adjustment where the age of the insured had been misstated.

As the contract of insurance had been fully executed, plaintiff, the insurer, in the circumstances of this case, could not thereafter recover any portion of the sum so paid. The law is now settled that in the absence of fraud an insurance company which executes its contract by payment of the amount specified in a policy cannot later recover such payment or any portion thereof on the ground that it subsequently has discovered facts which would have justified it in withholding the payment. (Matter of McLaughlin, 289 N. Y. 738; Schwartz v. Equitable Life Assurance Society, 266 App. Div. 231, affd. 291 N. Y. 770; New York Life Ins. Co. v. Guttenplan, 30 N. Y. S. 2d 430, affd. 259 App. Div. 1004, affd. 284 N. Y. 805.)

An insurance company is under a duty to investigate the facts upon which its liability to pay depends before making *697payment under the policy. Once payment of the principal sum of the policy is made, in the absence of fraud in procuring the policy or fraud practiced in obtaining the money, such payment may not thereafter be recovered. “ Otherwise there would be no end to controversy and litigation, and the party receiving the money would hold it subject to a lawsuit until the Statute of Limitations intervened. * * (National Life Ins. Co. v. Minch, 53 N. Y. 144, 151; see, also, Smith v. Glens Falls Insurance Co., 62 N. Y. 85, 87.)

Viewing the evidence adduced upon the trial in a light most favorable to plaintiff, all that it established was a misstatement of age by the insured. No fraud on her part in the procuring of the contract was established.

The other ground for recovery which might have been asserted by the insurer would be fraud upon which the money was paid and the contract executed. (Mutual Life Ins. Co. of New York v. Wager, 27 Barb. 354, 367; National Life Ins. Co. v. Minch, supra, p. 151.) Such fraud is not claimed by plaintiff. There is not even a suggestion that the beneficiary when receiving the alleged overpayment had fraudulently concealed the fact that the insured had misstated her age or that at any time he had the slightest knowledge that the age stated by the insured was not her correct age.

As plaintiff failed to show fraud relating to the contract with respect to the alleged overpayment, “ the insurer, by the payment of death benefits due under its contract of insurance, must be deemed to have waived all questions of law or fact ” (Matter of McLaughlin, supra, p. 739). Plaintiff failed to make out a case and its complaint should have been dismissed upon the merits.

The judgment should be reversed, with costs, and the complaint dismissed, with costs.