N.J. Constitutional Convention: Vol. 4, Page 360
Insurance Company that the incontestability clause applies only tothe original policy, but does not apply to reinstatement. In other words, if for some reason the policy lapsed and then your policy was reinstated, the insurance company could come in six years, seven years, ten years later, to cancel the policy for fraud.
Now, in another case, Metropolitan Life Insurance Company v Lodzinski, the Court of Errors and Appeals handed down an opinion which contains language which is susceptible to the interpretation that where the incontestability provision in the policy reserves the right to cancel for fraud, a bill to cancel for fraud may be brought even after the incontestability period. The word "fraud" in New Jersey at the present time includes equitable as well as legal fraud, and probably from the testimony given heretofore, and as you practicing attorneys know, in equitable fraud no moral intent to defraud is required.
So that in the situation today life insurance is extremely dangerous from point of view of the policyholder. Once he dies it's a question between the insurance company and the beneficiary.
MR. SMITH: Why did the insurance company contest the payment of the insurance policy?
MR. GAULKIN: In the Urback case?
MR. SMITH: Yes.
MR. GAULKIN: Well, the pleadings, as I recall it, set forth the following defense: Some 4 ½ years before the policy was issued Mr. Urback had had fainting spells. He went to his doctor, who sent him to a neurological clinic in New York, where he was checked for four days, five days, and they could find absolutely nothing wrong with him. On the basis of the findings of the New York Hospital, the doctor concluded that what he needed to have done was to have his tonsils taken out, which was done. The insurance company raised the defense that he had been in the hospital and had not told the insurance company; that he had had his tonsils removed and had not told the insurance company; that he had had an infected finger and had not told the insurance company, and the last one was that he had been pushing his truck out of a snow bank and bruised his ribs - he was a truck driver - and one day single-handed he lifted his truck out of a snow drift and hurt his ribs, as a result of which he went to the city hospital to see if he had cracked his ribs and they found nothing. He died at the age of 39, apparently in good health, and that was the case.
Now, I should like also to point out to the Committee a series of fours cases decided by the Court of Errors and Appeals: Grant v Olsen, 104 N. J. Eq. 242; Bailey v B. Holding Co., 104 N. J. Eq. 241; Clark v Badgely, 105 N. J. Eq. 534; and Slomkowski v Levitas, 106 N. J. Eq. 266. Those were four cases in which four separate
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