Combs v. Burbank Mutual Life & Benefit Ass'n

CRAIG, J. In an action for insurance by the widow of a member of the defendant life and benefit association, both an answer and an affirmative defense were interposed, and judgment being given in favor of the plaintiff on the pleadings, said defendant appealed.

The existence and character of the insurer, application for membership and issuance of a policy, payment of assessments and charges, and sufficiency of funds with which to pay the full amount, which was refused, were admitted. It was alleged and admitted that pursuant to the constitution [141]and by-laws of the association said policy was issued upon an application in writing, and that no member over fifty-five years of age was entitled to such insurance unless and except by amendment, but that by an amendment of the by-laws persons beyond such age were made admissible when deemed to the best interests of the association; that decedent represented his age as fifty-nine years. By affirmative allegation the defendant alleged that the decedent so stated his age to the best of his knowledge, and likewise that he was in good health and sound physical condition; but that prior to, at the time of and since the issuance of said application and policy he was in fact sixty years of age, and was suffering from organic disease; that the applicant knew all of the facts so alleged and that his said statements, representations and warranties so made were untrue, and were known to him to be untrue; that upon notice of his demise the insurer was for the first time caused to inquire, but had it known that said statements were untrue, or that the applicant was not of sound health or of the age stated, it would not have issued its policy nor accepted him as a member.

The policy, issued some two years before liability was claimed, provided that the same “except for fraud shall be incontestable after one year from its date of issue”. It is insisted by the respondent that where an applicant certifies to his good health according to the best of his knowledge and belief, recovery will not be denied if it appear that he had reason to believe and did believe that he was in good health (Couch on Insurance, p. 2725), and said answer failed to raise the issue. By comparison of the language, the question is set at rest. It was charged in the answer in effect that each and every of the conditions requisite to the issuance of a policy were found to have been misrepresented with knowledge of the applicant that the statements were false. Dibble v. Reliance Life Ins. Co., 170 Cal. 199 [149 Pac. 171, Ann. Cas. 1917B, 34], cited by respondent, held that section 1668 of the Civil Code, providing that: “All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud . . . are against the policy of the law”, does not apply to a case in which the effect of such clause is merely to limit the time within which fraud may be urged as a defense to a reasonable time in the interest of repose and security. By