Rauber v. Mutual Life Insurance

Lambert, J.: This is an action upon three life insurance policies. These policies were issued in 1908 after physical examination of the insured, Charles Rauber, and after premiums paid. The applications contained the following agreement: “ I hereby warrant and agree that during the period of one year following the date of issue of the contract of -insurance, for which application is hereby made, I will not engage in any of the following extra hazardous occupations or employments; retailing intoxicating liquors * * * unless written permission is expressly granted by the Company.” Prior to April 25,1910, the plaintiff, as a member of a copartnership, had been engaged in the wholesale and retail liquor business in Rochester. He was guardian of the insured, his brother, and through such relationship became indebted to him. On that day, in satisfaction of such indebtedness, he transferred to the insured a one-ninth interest in such liquor business, both wholesale and retail. This business was conducted in two departments, but both in the same building. May 24,1910, for violation by insured of the warranty above quoted, the defendant canceled the policies of insurance and gave notice thereof to both the insured and to the plaintiff, the beneficiary. June 24, 1910, the insured entered into a contract in writing • with the appellant for the reinstatement of such policies of insurance. Such contract recited the issuance of the policies in the first instance, the breach of the agreement by insured, his cessation from such retail business and contained a new agree [448] ment upon his part that he should not, at any time during the continuance of such policies or any of them, “engage in the extra hazardous occupation or employment of retailing intoxicating liquors,” and provided that such policies should immediately become null and void in case such agreement was violated. The respondent, at the same time, in writing, acquiesced in. such agreement, and such policies of insurance were then reinstated. April 11, 1911, the appellant again canceled these policies and a week later the insured died. Timely proofs of death were made, and upon the refusal of the appellant to pay, this action was brought. Respondent contends that no notice was given him of the second attempted cancellation of such policies and no criticism is made, of the jury verdict in that particular. The defense urged is that the insured, in violation- of the agreement of June 24, 1910, continued to engage in the retail liquor business, thereby rendering the policies void. Much evidence was given pro and con as to the physical participation in such business by the insured and the evidence is sufficient to sustain-the verdict in that particular. It is urged, however, that .the proof demonstrates that the insured continued to own an interest in such retail liquor business and that such ownership thereof by him violated the above-quoted clause of the agreement of June twenty-fourth. ■ This presents the interesting legal question as to whether such ownership is sufficient to vitiate the policies in the absence of physical participation in'the business. A very similar situation was presented in the case of Graves v. Knights of Maccabees (199 N. Y. 397). While the forfeiture clause there involved is somewhat differently worded, yet in that case the court construed the words “ engage ” and “ occupation, ” both of which are used in the forfeiture clause under consideration, in a broad sense, so as ’ to include one who, although not physically participating, owns an interest in the business. I regard that case as decisive that if Charles Rauber, the insured, continued to own an interest in this retail liquor ' business, then there can be no recovery in this action. The trial court refused to charge at respondent’s request that [449] the forfeiture clause in the agreement of June twenty-fourth contemplated only physical participation, and submitted to the jury the question of fact as to whether there had been participation, physical or otherwise. As before noted, the proof is conclusive that on April 24, 1910, the insured did own a one-ninth interest in this business. The sole evidence of any change in such ownership comes from the respondent himself. He testified that the insured was engaged physically in and about the wholesale branch of the business; that the insured was drawing wages and at the same time, with his wages, drew, what he pleased from the cash of the concern and that such excess above the wages was charged against his interest as a matter of bookkeeping; that at the time of insured’s death such interest had been fully paid for except the sum of four hundred sixty-nine d'ollars and some cents, and paid in that manner: The witness characterizes the transaction as being “ on the installment plan ” and says that payment was being thus made in order to make the burden light for the other members of the former firm. It is upon the legal effect of this situation that the plaintiff’s right to recover depends. If, in fact, at the time of the reinstatement of the policies, the interest that the insured had in the retail business was conveyed to the other members and the drawing of money by the insured evidences merely a system of deferred payment therefor, then the judgment should be affirmed. If, on the other hand, the conclusion follows that title to insured’s interest passed to the other members only as fast as paid for, so that at the time of his death the insured still owned an interest in this business, there can be no recovery. The proof as ■ to the transfer of insured’s interest is unsatisfactory and, in my judgment, is insufficient to show that insured had parted with all his title in this business. While perhaps a formal transfer of his interest, by written instrument, would not be required, yet, it appearing that in April, 1910, he "did own an interest, it must be made to appear by more conclusive proof than is presented by this record that he ceased to own such interest before there can be recovery. It is true that the agreement of June 24, 1910, recites the fact [450] that Charles Rauber, the insured, had ceased to be engaged in retailing liquor. That recital, perhaps, lends color to respondent’s contention that at that time the insured parted with his interest in the business. It has, however, little probative force. Upon this phase of the case the jury verdict is contrary to ■the weight of evidence, and the judgment and order appealed from must be reversed and a new trial granted, with costs to the appellant to abide the event. All concurred. Judgment and order reversed and new trial granted, with costs to appellant' to abide event. Held, that the finding of the jury that the insured had transferred his interest in the retail liquor business is contrary to and against the weight of the evidence.