Insurance Law Commons^™

Judgments-Res Judicata Between Adverse Codefendants, Nolan W. Carson

Michigan Law Review

ln an attempt to enforce a personal judgment, the judgment creditor brought a statutory equity suit jointly against the judgment debtor (plaintiff in the present suit) and the defendant insurance company to reach and apply the proceeds of a motor vehicle liability policy. The bill was dismissed as to the insurance company. In a subsequent action by plaintiff on the policy, the answer set up the equity decree as res judicata. Plaintiff demurred on the ground that the answer failed to allege that the parties were adversaries inter sese under the pleadings of the former suit. Held, order overruling …

Insurance-Consummation Of The Contract-Delivery Of The Policy, John J. Gaskell S. Ed.

Michigan Law Review

An application for life insurance was accepted, and a policy issued, mailed to, and received by the agent of the insurer. The application provided that the policy would not take effect until "manual" delivery thereof. The agent made several unsuccessful attempts to deliver the policy, but before any physical transmission of the policy, the insured died. The beneficiaries sued to recover the amount of the policy. The trial court gave judgment for the defendant insurance company. On appeal, held, affirmed. Manual delivery was a valid condition precedent. There having been no manual transmission to the insured, and the plaintiffs …

Evidence-Probative Value Of Inferences From Failure To Call A Witness, Cleaveland J. Rice S.Ed.

Michigan Law Review

lnsured sued to recover sickness benefits under an insurance policy. The defense was that the insured was not in good health when the policy was issued. The only evidence introduced by the defendant insurance company was plaintiff's refusal to consent to taking the deposition of an examining hospital physician. Defendant's request for a directed verdict on the issue of good health was refused. After being instructed that from the refusal to permit taking of the deposition they might "presume that such evidence . . . would operate against plaintiff and be against his interest in this suit," the jury returned …

Federal Courts-Use Of A Cross-Claim Under Rule 13(G) Of The Federal Rules Of Civil Procedure, Rex Eames S.Ed.

Michigan Law Review

Under an ordinary automobile insurance policy, P insurance company promised to defend and indemnify Harvey for any suit arising from an accident involving his use of the insured truck. Collier sued Harvey in a state court alleging injuries due to the negligent use of the insured truck by two Harvey employees. Before judgment thereon, P, incorporated under the laws of Wisconsin, sued Harvey and Collier, citizens of Oklahoma, in the federal court. P sought a declaratory judgment on the grounds that (a) at the time of the accident the employees were under the control and supervision of the City …

Contracts-Measure Of Damages-Life Insurance Contract, Howard Van Antwerp

Michigan Law Review

When the plaintiff was expelled from defendant Brotherhood an insurance policy issued to the plaintiff by the defendant was canceled and the cash surrender value paid to him in accordance with the terms of his policy. The directors of the Brotherhood later decided that this expulsion had been wrongful, whereupon the plaintiff returned the cash surrender value of the policy and demanded the return of all premiums paid. When this demand was refused, the plaintiff sued to recover damages for wrongful cancellation of his policy. The trial court instructed the jury to return a verdict for the premiums paid with …

Insurance-Reinstatement-''Insurability", Joseph G. Egan S.Ed.

Michigan Law Review

lnsured took out a policy of life insurance with defendant company which contained a clause providing for reinstatement within five years after default on presentation "of evidence of insurability satisfactory to the company" and payment of overdue premiums with interest. After default in payment of premiums, insured requested reinstatement. The insured had taken up aviation in the interval between issuance of the policy and the request for reinstatement. The company agreed to reinstate on condition that the insured would agree to a modification of the policy, so that it would not cover death resulting from operation of any kind of …

Insurance-Subrogation-Right Of Insured To Recover On An Automobile "Collision" Policy After Full Settlement With The Negligent Wrongdoer, Robert W. Shadd S.Ed.

Michigan Law Review

Respondent, whose automobile was covered by a policy of "collision" insurance in appellant insurance company, suffered serious personal injuries and complete loss of his car as a result of a collision with an oil company truck. Despite numerous telephone calls, appellant failed to settle for the cash value of the automobile, as required by the insurance contract. In the meantime, respondent brought an action against the oil company, joining the claims for personal injury and property damage, and executed a full release to that company in return for a settlement of $20,000. He then brought this action for actual damages …

Changing The Beneficiary Of A Life Insurance Contract, Grover C. Grismore

Michigan Law Review

A cursory examination of the court reports will reveal that there is a constant stream of cases coming before our courts in which the principal questions at issue involve the disposition of the proceeds of matured life insurance policies. The question arises most often when the insured, having reserved the right to change the beneficiary, had manifested an intention that someone other than the beneficiary named in the policy should receive the proceeds, but had not complied with the formalities prescribed in his contract for effecting a change. Unfortunately, the answer to the question in the particular case has often …

Insurance-Insurable Interest-Joint Adventurers, Alan P. Goldstein S. Ed.

Michigan Law Review

Plaintiff and the deceased were operating an airplane commercially. Plaintiff had purchased the plane, and was paying the deceased $25 per week plus half of the profits of the venture. The deceased acted as pilot, and was instrumental in obtaining business. Plaintiff took out insurance on the plane, and also on the life of the deceased, although their only relationship was through the joint venture. The plane was wrecked and the deceased was killed while on company business. The claim for the plane was paid, but the defendant refused to pay on the life insurance policy, claiming that the plaintiff …

Appeal And Error-Union Of Law And Equity-Appealability Of Order Denying Demand For Jury Trial, Earl R. Boonstra S. Ed.

Michigan Law Review

Defendant held an insurance policy written by plaintiff which by its terms covered a hangar against loss by fire. After the hangar had been destroyed by fire, plaintiff instituted this suit for reformation on the ground that the contract had been written as a fire policy through mutual mistake. Defendant denied the mistake, filed a counterclaim to recover on the policy as written, and demanded a jury trial. Plaintiff moved to strike the demand, and the motion was granted. The court of appeals dismissed the defendant's appeal. On certiorari, held, affirmed. Not being a final decision, the order denying …

Insurance-Liability Of Insurer For Judgment In Excess Of Policy Limits, Clinton R. Ashford S.Ed.

Michigan Law Review

A liability insurer has issued a policy, reserving the sole right to effect a settlement, and refuses to settle, within the limits of the policy, a claim against the insured. A judgment in excess of the policy limit is then recovered against the insured. These circumstances present the question whether the insurer may be liable to the insured for the amount of the judgment in excess of the policy limit.

This comment will be limited to consideration of cases involving only the above facts, and no attempt will be made to consider the liability of the insurer for failing to …

Insurance-Effect Of Incontestable Clause In Suit For Reformation Of Policy, N. S. Peterman S. Ed.

Michigan Law Review

For over twenty years, defendant insurer accepted premiums on a life insurance policy issued to plaintiff. Defendant then discovered that a clerical error had been made in the original policy, as a result of which plaintiff's premium payments were approximately one-half the premiums defendant normally received for the type of policy actually issued. Defendant asked for reformation of the policy on the ground of mistake, and the trial court granted the relief sought. On appeal, held, reversed. The action was barred by the incontestable clause. Richardson v. Travelers Insurance Co., (App. 9th, 1948) 171 F. (2d) 699.

Insurance-Gift-Right Of Named Beneficiary Of Life Policy To Proceeds As Against A Donee By Delivery, Bruce L. Moore S.Ed.

Michigan Law Review

Insured, in accordance with the terms of a life insurance policy, named the woman with whom he was then living as beneficiary. Subsequently, he returned to his wife and handed the policy to her with appropriate words indicating an intention to make a present and absolute delivery of it to her as a gift. No notice of a change of beneficiary was given to the insurance company. The policy reserved the right to insured to change the beneficiary by filing a written request with the company, such change to take effect only when indorsed on the policy by the company. …

Insurance-Death Of Insured Resulting From Criminal Abortion- Right Of Beneficiary, R. V. Wellman

Michigan Law Review

Insured died as the result of a criminal abortion to which she had voluntarily submitted. The policies issued on her life contained a provision to the effect that no benefits should be payable or recoverable should the insured die as a result of a violation of law. The insurer resisted the action brought by the named beneficiary on the policy on two grounds: (a) The insured's death was caused by her violation of law; (b) Although the stated terms of the policy be held not to exclude the risk of death thus caused, it would be contrary to public policy …

Contracts--Consideration-Performance Of One Alternatlve When There Is Dispute As To Which Is Owed, L. B. Lea

Michigan Law Review

Defendant issued a membership certificate to one Flowers providing for payment of $5000 in case of accidental death or $500 in case of death due to heart disease. Later Flowers was injured in an automobile accident and died an hour afterward. The beneficiary submitted proofs of loss, including a statement of a physician that death was caused by "coronary thrombosis. Shock from auto accident about one hour before death." Defendant sent to the beneficiary a draft for $500 clearly stating on its face that the endorsement of the check would be a settlement in full. After cashing the check, the …

Insurance-Automobile Liability-Meaning Of "Permission" In Omnibus Clause, A. E. Anderson S.Ed.

Michigan Law Review

Plaintiff's car was damaged in a collision with a truck driven by W, owned by M, and insured in the name of M by defendant. The policy contained an omnibus clause extending coverage to "any person legally using or operating the ['motor vehicle] with the permission, express or implied, of such owner." S had general charge of the truck, as an employee of M, and had previously used it for his own purposes to the knowledge of M, who made no objection. At the time of the accident, S was returning from a tavern with W …

Conflict Of Laws-Constitutional Law-Full Faith And Credit-Fraternal Benefit Society's Constitution Controlling Over Statute Of Limitations Of Forum State, Bruce L. Moore S.Ed.

Michigan Law Review

In an action against an Ohio fraternal benefit society to recover insurance benefits resulting from the death of an insured member, the defense was that the constitution of the society prohibited the bringing of an action on such a claim more than six months after disallowance of the claim. This provision was valid under the statutes and court decisions of Ohio. The statute of limitations of the state of the forum, South Dakota, was six years on contract actions. Another statute of South Dakota declared void every stipulation in a contract limiting the time within which a party may enforce …

Insurance-Right To Proceeds Of Policy On Life Of Divorced Spouse, A. E. Anderson S.Ed.

Michigan Law Review

Plaintiff was beneficiary of certain life insurance policies issued by defendant on the life of her former husband. All of the policies involved were issued after the marriage and before the divorce, and plaintiff had paid all the premiums on the policies. The administratrix, decedent's second wife, claimed the proceeds on the basis of section 425 of Kentucky Civil Code of Practice which provides for restoration of property obtained from the other spouse by reason of the marriage upon judgment for divorce. Held, where the wife has procured and paid for insurance on the life of her husband a …

Insurance-Right Of Insured To Make His Own Defense At Expense Of Insurer Where P And D Are Insured By Same Insurer, Kenneth Liles

Michigan Law Review

The drivers of two automobiles involved in a collision were insured against liability for damages by the same insurance company. Their policies contained clauses reserving to the insurer the right and duty to defend all actions. One driver, Borad, sued the other, O'Morrow, who, through counsel of his own selection, filed a cross complaint for damages and gave notice to the insurance company that these attorneys would also present his defense. When the company informed O'Morrow that it considered his independent defense a breach of the co-operation clause, he brought this action for declaratory relief. On appeal from a judgment …

Taxation-Federal Gift Tax-Life Insurance Policies, John W. Riehm S.Ed.

Michigan Law Review

On December 19, 1930 the petitioner created two trusts, placing in the first five $100,000 life insurance policies on the life of her husband, and in the second, securities, the income from which was to pay premiums on the policies, excess if any to be paid to the petitioner; after the death of her husband the whole of the income from the securities was to be paid to her for life. On death of the husband the proceeds of the life insurance policies were to be used to provide life estates for four named beneficiaries followed by remainders over; and …

Constitutional Law-Interstate Commerce-Congressional Consent To Discriminatory State Taxation, George Brody S.Ed.

Michigan Law Review

South Carolina statutes imposed upon foreign insurance companies a tax of 3 per cent of the aggregate premiums received from business done within the state, without reference to its interstate or local character, as a condition to receiving a certificate of authority to do business within the state. No similar tax was imposed upon domestic insurance companies. The Prudential Life Insurance Company, a New Jersey corporation doing business in South Carolina, refused to pay, contending that since it was a discriminatory tax it was unconstitutional. Furthermore, Prudential challenged the power of Congress to consent to the levying of such discriminatory …

Evidence -Witnesses - Privileged Communications Between Physician And Patient--Statutory Effect Of Asserting Privilege In Actions On Insurance Contracts, William H. Buchanan S.Ed.

Michigan Law Review

Plaintiff, beneficiary of an insurance policy (but not the personal representative of the deceased insured), sued to recover the amount of the policy from the insurance company. As a defense the defendant claimed that the policy never became effective because the insured had made material misrepresentations in the application as to his state of health. To show that there had been such misrepresentations, the defendant proved that the insured had been treated by physicians during the five years preceding the issuance of the policy. Upon objectionμ by plaintiff the court excluded the testimony of the doctors as to the nature …

Insurance-Beneficiaries-Right To Change Beneficiary Where Beneficiary Has Paid All The Premiums, Howard A. Jacobs

Michigan Law Review

Insured's mother, who was the original beneficiary of a life policy, paid all the premiums before and subsequent to the time when insured's wife was substituted as beneficiary. The mother was interpleaded in the wife's suit on the policy. Held, in the absence of a collateral agreement creating a4ditional rights in the mother, the payments were gratuitous and created no vested interest in the mother in the proceeds of the policy, where the right to change the beneficiary was reserved; and that the wife was entitled to the proceeds on the insured's death. McCloud v. Aetna Life Ins. Co. …

Insurance-Construction Of Policy-"Military Or Naval Service" Clause-"Aviation" Clause, Paul J. Keller, Jr., S.Ed.

Michigan Law Review

Plaintiffs, six minor children of deceased, were beneficiaries of a $20,000 life insurance policy issued to deceased while a member of the United States Army. Traveling under Army orders, the deceased procured a permit from the operations officer at an Army airfield in Puerto Rico for space on a regular Army transport route to another Army field in Puerto Rico. The plane crashed, killing all of its occupants. The policy issued to the deceased contained an "aviation" clause and a "military service" clause, under both of which the defendant insurance company rests its defense. Held: Deceased was a "fare-paying …

Principal And Agent-Right Of Agent To Waive Statute Of Limitations-Estoppel, Howard A. Jacobs

Michigan Law Review

Plaintiff was injured in an automobile accident. Defendant's insurance adjuster informed the father of the plaintiff that no settlement could be made of her claim for personal injuries until she had fully recovered, and represented to him that defendant company would pay all her damages if the plaintiff did not consult an attorney. Held, where adjuster, having apparent authority to promise a settlement, lulled plaintiff into a false sense of security and caused her to permit Massachusetts one year statute of limitations to run, defendant was estopped by the conduct of the adjuster from pleading the statute as a …

Restitution-Recovery Of Insurance Payments Made Under A Mistake Of Fact As To The Death Of The Insured, Edwin F. Uhl

Michigan Law Review

Respondent insurance company, upon receipt of claims filed by the appellant beneficiary and a copy of the original Certificate of Presumptive Death issued by the Maritime War Emergency Board, certifying that the insured was presumed to have died on or about November 28, 1942, paid to the beneficiary the face amount of a life insurance policy plus a refund of a premium payment received after the date of presumptive death. Subsequently it was discovered that the insured was a prisoner of war in Japan and, having received from the Maritime War Emergency Board a correction of the original certificate, the …

Simulation Of Nervous And Mental Disease, Moses Keschner

Michigan Law Review

Simulation may be defined as a wilful, deliberate and fraudulent imitation or exaggeration of illness intended to deceive the observer for the purpose of gaining a consciously desired end. Simulation of a physical or mental illness is usually resorted to: (1) by persons who have sustained an injury, the disability resulting therefrom being compensable by benefits payable under the workmen's compensation law or by damages in personal injury actions based on alleged negligence; (2) by persons who wish to obtain insurance benefits for disability in accordance with the provisions of health, accident and life insurance policies, and included in this …

Insurance-Misrepresentation-False Answers Inserted In Application By Soliciting Agent, Milton D. Solomon S.Ed.

Michigan Law Review

The plaintiff brought this action against the defendant insurance company as beneficiary of a life insurance policy. The insured signed the application in blank and the soliciting agent inserted false answers to questions in the application concerning medical attendance and prior application for insurance. The application was inserted in and became a part of the policy. The policy was mailed by the defendant to the insured with a return post-card wherein it was stated that the statements on the application were correct and that the insured was in good health. The card was signed by the insured, witnessed by the …

Insurance-Incontestability Clause-Fraud In Connection With Reinstatement, T. M. Kubiniec

Michigan Law Review

Plaintiff sued for disability benefits under a life insurance policy providing that it should be incontestable from its date and that insured's statements, in the absence of fraud, should be deemed representations and would not avoid the policy unless contained in a written application, a copy of which was attached to the policy when issued. Defendant sought to rescind the contract on the ground that a reinstatement granted some eighteen months before had been induced by fraudulent statements. Held, the reinstatement may be contested only within the time after reinstatement fixed for contesting the policy, and that fraud is …

Insurance--Insurable Interest--Assignment Of Life Insurance Policy As Collateral Security, Richard C. Scatterday

Michigan Law Review

The insured and a revocably designated beneficiary jointly assigned a life insurance policy as collateral security for a prior indebtedness of the insured. Another policy and first deed of trust notes were also assigned as collateral by the insured. Upon the death of the insured, who obtained the policy and paid all premiums, the bank applied a proportionate amount of the proceeds from this policy to the debt and paid the remaining sum to the beneficiary. Executors of the estate of the insured seek to recover the sum paid by the bank to the beneficiary, while executors of the beneficiary …