Burr v. Mutual Life Ins.

BEAN, J., Dissenting.

It is contended by counsel for defendant that a suit in equity cannot be maintained by plaintiff, but that the remedy was by an action at law after the death of the insured and within the time prescribed by the statute of limitations.

The policy of insurance in question was wrongfully surrendered by the insured, and canceled by the insurer without right or authority, and without the knowledge or consent of the beneficiaries, and a suit in equity can be maintained to set aside the surrender and cancellation of the policy and revive or reinstate the instrument and recover thereon: 14 R. C. L., p. 1014, § 193; 25 Cyc. 792; 14 Standard Ency. of Procedure, 15; Mausbach v. Metropolitan Life Ins. Co., 53 How. Pr. *21(N. Y.) 496; Cohen v. New York Mutual Life Ins. Co., 50 N. Y. 610 (10 Am. Rep. 522); Whitehead v. New York Life Ins. Co., 63 How. Pr. (N. Y.) 394; Id., 33 Hun (N. Y.), 425; Id., 102 N. Y. 143 (6 N. E. 267, 55 Am. Rep. 787); Stilwell v. Mutual Life Ins. Co. of N. Y., 72 N. Y. 385; Tabor v. Michigan Mutual Life Ins. Co., 44 Mich. 324 (6 N. W. 830).

In case of a wrongful repudiation of a policy of insurance by the insurer an option is given to the insured, or beneficiary having a vested interest therein, to pursue different remedies, but the right to say what course shall be pursued is not awarded to the company issuing the policy, which has wrongfully canceled such policy and denied its liability thereon, and obtained a receipt from the insured indorsed on the policy.

The rule is stated in 25 Cyc. 792 thus:

“Remedies for Wrongful Surrender, Cancellation, or Termination of Contract — a. Action to Set Aside Cancellation or Surrender. A suit in equity may be maintained by the insured or the beneficiary, according to the circumstances, to set aside a surrender and cancellation of a policy and revive or reinstate the same, and to recover what may be due thereon, where the surrender and cancellation was procured by fraud on the part of the company or its agent, * * or where the surrender was wrongfully made by the insured without the assent of the beneficiary * *

See Day v. Connecticut Gen. L. Ins. Co., 45 Conn. 480 (29 Am. Rep. 693); Meyer v. Knickerbocker L. Ins. Co., 73 N. Y. 516 (29 Am. Rep. 200); Hayner v. American Popular L. Ins. Co., 69 N. Y. 435; Union Cent. L. Ins. Co. v. Poettker, 5 Ohio Dec. (Reprint) 263 (4 Am. Law Rec. 109). In 14 Standard Encyclopedia of Procedure, page 15, the author states:

*22“Where an unauthorized surrender of a policy of life insurance operates as a fraud upon the beneficiary, equity will decree a revival and enforcement of the original policy.”

It is insisted on behalf' of the defendant company, that the remedy of the plaintiff, if any, is' at law. It does not fill the complement to say there is a remedy at law. Such legal remedy, both in respect to the relief to be finally obtained, and the manner of obtaining it, must be as practical and efficient as the relief which a suit in equity would afford under like circumstances, or the jurisdiction in equity may be exercised: South Portland Lbr. Co. v. Munger, 36 Or. 457, at page 473 (60 Pac. 5, at page 8), Mr. Justice Wolverton says:

“The remedy at law to which the statute alludes must be plain, adequate, and complete, or, in other words, as practical and efficient to the ends of justice and its prompt administration as the remedy in equity. It is not enough that there is a remedy at law: Boyce’s Exrs. v. Grundy, 28 U. S. (3 Pet.) 210 (7 L. Ed. 655). Mr. Chief Justice Fullee, in Gormley v. Clark, 134 U. S. 338, 349 (33 L. Ed. 909, 914, 10 Sup. Ct. Rep. 554, 557), states the doctrine thus: ‘The .jurisdiction in equity attaches unless the legal remedy, both in respect to the final relief and the mode of- obtaining it, is as efficient as the remedy which equity would afford under the same circumstances.’ See, also, Kilbourn v. Sunderland, 130 U. S. 505, 514 (32 L. Ed. 1005, 9 Sup. Ct. Rep. 594); Watson v. Sutherland, 72 U. S. (5 Wall.) 74, 18 L. Ed. 580); Witter v. Arnett, 8 Ark. 57. In Henderson v. Johns, 13 Colo. 280 (22 Pac. 461), it is said: ‘The remedy at law which defeats a suit in equity must be full, adequate, and complete. Anything less than this will not be sufficient to deprive equity of jurisdiction.’ And again, in 11 Am. & Eng. Enc-y. Law (2 ed.), 200, the learned author says: ‘The construction given to this phrase “adequate remedy” by the courts requires that the remedy at law must be as *23practical and efficient as the remedy afforded by chancery, in order to exclude the latter from jurisdiction.’ ”

See Mall v. Dunn, 52 Or. 475 (97 Pac. 811, 25 L. R. A. (N. S.) 193).

Defendant in its answer admits—

“That on August 6, 1888, the said Peter A. Josephs made and executed an affidavit before a notary public in the city, county and State of New York stating that James, Harriett and John E. Josephs, children of. said Peter A. Josephs, were all dead, having died in infancy, and that said affidavit was thereafter by the said Peter A. Josephs filed with defendant, and thereupon, on August 9, 1888, said paid-up policy numbered 123,654, for $400.00 was returned by the said Peter A. Josephs to defendant, and defendant thereupon paid to the said Peter A. Josephs the sum of $183, being the full surrender value of said policy.”

In effect, the defendant asserts that the policy was paid and is dead, and asks .that the question of restoring it to life be submitted to a court of law and tried by a jury. In the view of the writer such a trial before a jury would- be a very inefficient and ineffectual remedy.

After the present suit has been determined and the cancellation of the policy declared “null and void” according to the majority opinion, the plaintiff might be in a better position. Until then, the defendant having possession of the receipted policy, the plaintiff would be in a crippled condition for a legal battle.

While it may be true that the defendant company never intentionally concealed any fact from the beneficiaries, the natural result of the wrongful cancellation of the policy served to obliterate it or hide the same from them for a period of about twenty years. On account of this the defendant asserts that the plaintiff is guilty of laches and cannot recover. The plain*24tiff is not barred by laches: 1 Pomeroy Eq. Juris. (4 ed.), §§419, 424; 5 Pomeroy Eq. Juris. (4 ed.), §§ 26, 35.

According to the terms of the contract, the cause of action accrued sixty days after proof of death. The limitation fixed by the statute for enforcing payment had not expired when this suit was instituted.

It may as well be said that the insurance company should have consulted the beneficiaries before attempting to cancel the policy, and that it could easily have found out that they were alive, as to say that the beneficiaries should have consulted the records of insurance of the whole world and found the hidden policy in the possession of the defendant company. The company had the names of the beneficiaries and could easily have written to or about them. The beneficiaries did not know the name of the' insurer. It was not through their fault that the policy slumbered in its grave for years, but owing to the active wrong of the company, although not intentional, in canceling the policy at the request of one who had no authority or right to make the same, and that without making any investigation as to the existence of the persons interested whose names it had written in the policy. Such conduct on the part of the company operated as a fraud upon those entitled to the benefit of the policy. An insured person who is not always familiar with the intricate requirements of a policy of insurance is usually deemed to know the terms of a policy, and although the affidavit showed the reverse, it would not seem to be too strict a rule to require an insurer to observe the main contents of a policy which it has issued. If the company had read the policy, it would have observed that the beneficiaries could not have *25died in early infancy, and 1 per cent of the effort pnt forth by plaintiff would have disclosed to the company that the beneficiaries were very much alive. The effect of the attempted cancellation evidently was to mislead the beneficiaries and prevent them from asserting their rights for about twenty years. As soon as they had knowledge of the situation, they acted promptly and commenced suit. It does not appear that the beneficiaries were guilty of laches or inexcusable delay. They were not at fault in this respect. In 5 Pomeroy’s Eq. Juris. (3 ed.), Section 26, it is stated:

“A person cannot be deprived of his remedy in equity on the ground of laches unless it appears that he had knowledge of his rights, as one cannot acquiesce in the performance of an act of which he is ignorant, so that one cannot be said to neglect the prosecution of a remedy when he has no knowledge that his rights have been invaded, excepting always that his want of knowledge is not the result of his own culpable negligence.”

In Section 35, the same author says:

“It has been held that, where the party interposing the defense of laches has contributed to or caused the delay, he cannot take advantage of it.”

As said in Cohen v. New York Mutual Life Ins. Co., 50 N. Y. 610 (10 Am. Rep. 522):

“Courts of equity depart from the ordinary rules by which their jurisdiction is hedged in, in order to do equity between suitors, and whether a proper case is made for the exercise of the equitable powers of the court, necessarily depends upon the circumstances.”

The circumstances of the present case are peculiar and present strong reasons why a court of equity should lend its aid. By reference to the letter of October 5, 1915, in response to the letter of September 23d *26from Mrs. Burr, we find a statement of the insurance company that, “The second policy was surrendered to the company for cash in 1888, ’ ’ and the letter further states that if these policies were actually on the life of the father, “you will see that they are of no value.” So that, not having possession of the policy, it was necessary, in the face of the statement that there was no value to the beneficiaries in this policy, to get possession of the writing and the record and the lost instrument, to the end and for the purpose of reviving and establishing the policy in full force, and this could only be determined at the filing of complaint in equity, which was done; and, the court having assumed jurisdiction because the writing was not at hand, it is proper to retain jurisdiction for the purpose of working out the remedies which in good conscience ought to be administered. (

By its letter the insurance' company claimed the benefit of the payment and cancellation of the policy which it had negligently made, and denied responsibility upon its written contract for which it had been paid to protect, in a measure, fatherless children from want. The position it thereby assumed was at least analogous to that of a sacred trust. I doubt if the company really wishes to be recreant to its duty, if it sees such duty.

It is stated in the majority opinion that there is no showing that defendant “sought to mislead” plaintiff. The company, however, represented to plaintiff that the policy was valueless, and thereby endeavored to silence the beneficiaries for another long period, and adopted the fraud of the insured, and claimed the benefit of the long interment of the policy caused by its negligence: See Tabor v. Michigan Mutual Life *27Ins. Co., 44 Mich. 324 (6 N. W. 830). The decree of the lower court should be affirmed..

For these reasons I am impelled to withhold my assent to the conclusion reached in the opinion of Mr. Justice Johns.