Webster v. Columbian National Life Insurance

Houghton, J.: The defendant is a foreign life insurance company, organized under the laws of the State of Massachusetts, doing business in the — 839 — State of New York. In the year 1904 it issued a policy of insurance upon the life of Everett B. Webster, then a resident of Massachusetts, in the sum of $20,000, payable on his death to this plaintiff, his wife. Differences arose between the plaintiff and her husband in the year 1906 and she went to live with her mother in the city of Lynn, Mass., and her husband came to reside in the State of New York. He died in November, 1907, and his last will and testament was admitted to probate in this State as the will of a resident citizen. Claim was made by the plaintiff as beneficiary under the policy of insurance issued by the defendant, and upon refusal to pay she brought action thereon against the defendant in the Supreme Court of the State of New York on the 4th day of February, 1908. The defendant interposed an answer and plead as affirmative defense that the policy of insurance contained the following provision and warranty, to wit: “ This contract is complete between the company and the insured only by the payment of the first premium mentioned in the policy in exchange for a receipt duly signed by the president or secretary and countersigned by the agent, provided the applicant is in good health at the time of such payment; ” and, upon information and belief, alleged that at the time of such payment the insured was not in good health, but, on the contrary, was suffering from a chronic and incurable disease, the nature of which was fraudulently concealed from the defendant, and the contract of insurance was never completed and the policy never became in force. On issue being so joined, the cause was placed upon the calendar of the Supreme Court of the county of New York, and when about to be reached for trial, and in January, 1909, the defendant filed a bill in equity in the Supreme Judicial Court of the Commonwealth of Massachusetts, setting forth the issuing of the policy in the State of Massachusetts, the clause therein respecting it not becoming complete unless the first premium should be paid while the applicant was in good health, above quoted, and that he was not in good health when such first premium was paid, but, on the contrary, was suffering from a chronic and incurable disease of long standing, which was fraudulently concealed from the defendant, and of which it had no knowledge, and of which the insured ultimately died, and that, in order to establish such fact, it would be necessary to call certain physicians who treated him therefor; that by the law of the State — 840 — of ¡New York* physicians were not permitted to testify as to the ailments of a patient except upon consent, and that the defendant was prohibited from transferring the cause to the United States courts by the Insurance Law of the State of Hew York* on penalty of forfeiture of the right to do business in such State; that by the laws of Massachusetts such physicians were permitted to testify without consent, and praying that the policy be decreed void and be surrendered to the defendant. Thereupon the plaintiff brought the presént action in equity to restrain the defendant from prosecuting its action in the Commonwealth of Massachusetts, and obtained a temporary injunction to that effect, from which the defendant appeals. The defendant does not challenge the power of this court to restrain the defendant from prosecuting its action in Massachusetts, and properly so, for it is not open to challenge. The defendant, although a foreign corporation, is engaged in business in this State by permission of the Insurance Department, and, so far as any litigation is concerned, is, therefore, to be deemed a citizen of this State. If the plaintiff was also a citizen of this State at the time she brought her action, there can be no question that a court of equity of this State has the power to enjoin the parties from prosecuting actions in other jurisdictions concerning the same subject-matter. (Edgell v. Clarke, 19 App. Div. 199; Locomobile Co. v. American Bridge Co., 80 id. 44.) The plaintiff followed the proper practice in bringing an independent action for the purpose of restraining the defendant instead of moving in the action already brought. (Belasco Co. v. Klaw, 98 App. Div. 74.) The defendant insists, however, although it did not plead it as an affirmative defense by its answer, that the plaintiff was not at the time of the bringing of her action a resident of the State of Hew York but was a resident of the State of Massachusetts. It must be conceded that her husband became a resident of the State of Hew York prior to liis death in 1907. Although she began an action for divorce in Massachusetts in 1906 no decree appears to have been granted and if her husband’s residence in this State did not operate to make her a resident, the proofs in the rec — 841 — ord are quite convincing that in the latter part of 1907 the plaintiff did actually become a resident of the State of New York and was such at the time she brought her action in 1908. The establishing of a residence is largely a matter of intention and only slight acts indicating it are necessary. The plaintiff was in New York city and leased and moved into an apartment before she brought her action and declared her intention of permanently residing here. She fully explains why she gave her address at her mother’s house in Lynn, Mass., in making proofs'of death for the defendant which were made and forwarded from New York, to the effect that she did so because she was changing hotels in the city of New York to avoid the publicity attendant upon the peculiar provisions of her husband’s will which was being probated and commented upon in the press, reporters for which sought interviews with her, and that she, therefore, thought any important communication from the defendant respecting the policy of insurance could better reach her through her mother than otherwise. The plaintiff being a resident of the State and it being proper to consider the defendant as also a resident, in view of its doing business here under permission of the Insurance Department, the facts would seem to present a case eminently proper for the intervention ota court of equity to restrain the defendant from prosecuting its action in Massachusetts to annul the policy. The defendant set up as an answer 'in the action on the policy in this State the precise defense which it pleads as a cause of action in the Massachusetts court, and in addition avers that under the Insurance Law of the State of New York it cannot transfer the action on the policy to the .Federal courts because if it should do so it would lose its right to do business in this State, and that it is necessary to swear the attending physicians of the insured respecting the incurable chronic disease from which it claims he suffered prior to and when the policy was issued, and that such physicians cannot testify in the State of New York but can testify in the State of Massachusetts. Whatever may be the wisdom of the State of New York in prohibiting physicians from disclosing what they learn while treating a patient it is and has long been the law that they shall not make such disclosures without consent of the patient or his representatives. Whether the law be wise or unwise its citizens are entitled to the benefit of — 842 — it and life insurance companies doing business in this State must bear whatever burdens it imposes. It is true that the policy in question was negotiated and delivered in the State of Massachusetts, but the contract was transitory in its nature and upon the death of the insured the beneficiary could bring action thereon in any State where the defendant was doing business and where process could be served upon it, and of which she chanced to be a resident. She was not obliged to go to the State of Massachusetts where it was issued to enforce it, and she should not be compelled to go to the State of Massachusetts to uphold it. The defendant has asked and has been accorded the privilege of doing business in this State. If it does not desire to be bound by the laws of this State it can voluntarily retire or forfeit its privilege by removing the cause to the Federal court. The fact that a witness is disqualified in New York but is competent to testify in Massachusetts furnishes no reason either legal or equitable why the defendant should be permitted to shift a scene of contest from the less liberal to the more liberal State. But there is another reason why .the defendant should be restrained from prosecuting its action in Massachusetts. The policy is set forth in the record, and in addition to the clause above quoted it contains the following: “ Incontestability. This company insures only preferred risks, and the examination of the insured hereunder being satisfactory, this policy is incontestable exdept for suicide, whether sane or insane, committed within one year from the date thereof.” A copy of this policy is attached and made a part of the bill in equity filed in the Massachusetts court. The insured did not commit suicide within one year, and in view of this provision of the poli,cv it is quite apparent the bill does not state facts sufficient to constitute a cause of action, and hence the action in Massachusetts must be deemed to have been brought in bad faith. The clause first quoted with respect to the insured being in good health upon delivery of the policy and payment of the first premium has no application to such chronic diseases as the insured may have had at the time of his application and medical examination. The defendant had made an examination concerning the insured which it declared in writing to be satisfactory to itself, and because it was satisfactory it agreed that it would not contest payment of the — 843 — amount specified except for suicide, whether sane or insane, within one year. Agreements by life insurance companies not to contest payment of a policy must have some force, and when a company solemnly asserts that it has made all the examination it desires and one that is satisfactory to itself respecting the health of the insured, and, therefore, agrees not to contest payment in case of death, its assertion and agreement should be given effect. All that the clause respecting good health at the time of payment of the first premium can mean, in view of the other clause which -immediately follows, is that intervening the time between acceptance of the risk and agreement to issue the policy and the time when the first premium is paid and the policy delivered the applicant shall not have been stricken with some new disease which impairs his health. Any other interpretation would render the incontestability clause absolutely meaningless and a mere snare to delude the insurer into the taking of a policy which appeared incontestable but which in fact was not. The defendant made all the inquiry respecting the health of the insured that it desired and thereupon issued a policy incontestable for any cause except suicide within one year. It is no answer to say that very likely the Massachusetts court will uphold the policy and declare it incontestable and refuse to declare it void. The plaintiff being a resident of this State and having first brought action in its court ought not to be compelled to go to another forum to maintain her rights concerning the precise matter in litigation here. The defendant so far as appears has not even the excuse of holding a waiver by the insured permitting any physician who may have attended him to testify as to what he learned concerning his ailments such as is found in many applications for policies of life insurance. The policy having been issued in Massachusetts to a resident of that State, such a waiver might give some color to the claim that questions concerning it should be tried in a forum where physicians were not prohibited from so testifying. But there was no occasion for defendant obtaining a waiver for no inquiry respecting any disease which the insured had at the time of his examination or had had prior thereto was material, because defendant had made such inquiry to its satisfaction and stipulated that no further contest concerning such diseases should be made, and that upon death, except by suicide within one year, it would pay the amount agreed. — 844 — The order continuing the injunction was proper and should be affirmed, with ten dollars costs and disbursements. Laug-hlin and Scott, JJ., concurred; Ingraham and Clarke, JJ., dissented. Footnotes [*] See Code Civ. Proc. §§ 834, 836; Ins. Law (Laws of 1893, chap. 690), § 30.— [Rep.