National Council of the Knights & Ladies of Security v. Walton

Dausman, J. This action was instituted by the appellee Elizabeth Walton to recover on a beneficiary certificate issued by the appellant to her son, Curtis Walton, in which certificate she was named as the sole beneficiary. The trial resulted in a finding and judgment [575] for the plaintiff. The only alleged errors presented are the sustaining of a demurrer to the amended fourth paragraph of answer and to the sixth paragraph of answer respectively. By each of these paragraphs the defendant sought to interpose the defense of fraud, based on certain statements made by the insured in his application. . The averment' in the amended fourth paragraph, relating to the effort to rescind the contract of insurance, is that the defendant did not know that the statements were false until after the death of the insured, and for that reason the defendant was unable to return the com sideration to him; that no administration has been granted on his estate and there is no personal representative to whom the consideration could be tendered; and that the defendant now brings into court the dues and assessments for the benefit of whomsoever may be entitled thereto. In this jurisdiction the rule is well established that where an insurer desires to rescind the contract on the ground of fraud, it must return, or offer to return, the consideration within a reasonable time after acquiring knowledge of the fraud; but if there be no rescission during the life of the insured, then, after his death, the insurer must tender the consideration to the beneficiary within a reasonable time after acquiring knowledge of the fraud, and if the beneficiary refuses to accept the consideration, the money must be brought into court for the use of the beneficiary. Failure to comply with this rule amounts to a waiver of the fraud. Grand Lodge, etc., Trainmen v. Clark (1920), 189 Ind. 373, 127 N. E. 280; Supreme Tribe, etc. v. Lennert (1912), 178 Ind. 122, 98 N. E. 115; Commercial Life Ins. Co. v. Schroyer (1911), 176 Ind. 654, 95 N. E. 1004, Ann. Cas. 1914A 968; American, etc., Life Ins. Co. v. Rosenstein (1910), 46 Ind. App. [576] 537, 92 N. E. 380; Anchor Life Ins. Co. v. Meyer (1916), 61 Ind. App. 35, 111 N. E. 436; State Life Ins. Co. v. Fletcher (1922), 78 Ind. App. 128, 134 N. E. 876. The averment in the amended fourth paragraph of answer does not show a compliance with the rule above stated. The time when knowledge of the fraud was acquired is not disclosed; therefore it is impossible to determine from that paragraph of answer whether or not the insurer acted with reasonable promptitude. Furthermore, there is no averment in that paragraph that the consideration was tendered to the beneficiary. What we have said concerning the amended fourth paragraph of answer is equally applicable to the sixth. Each of these paragraphs is fatally defective. Considerable is said in appellant’s brief on the proposition that the beneficiary certificate is a Kansas contract and governed by the law of that state; but nothing is presented which requires a decision on that feature. Judgment affirmed.