Prudential Ins. Co. v. Prescott , 115 Fla. 365 ( 1933 )

This case is before us after rehearing granted pursuant to opinion filed on December 7, 1933. The judgment was affirmed largely on authority of opinion and judgment of this Court in the case of Ocean Accident Guaranty Corporation, Lmtd., v. Tucker, filed October 19, 1933, and reported in150 Sou. Rep. 606.

On rehearing we have been impressed by a feature existing in the case which did not exist in the Tucker case,supra.

In the Tucker case, supra, suit had been filed on the policy while in this case no suit had been filed.

It appears that by the weight of authority, as well as what we conceive to be the better reason, a clause contained in an insurance policy declaring the same to be incontestable after a stated period of time has reference to contest in court by some sort of litigation and not a mere protest against payment, or an offer to rescind or a notice to protest at interest that the insurer will insist upon some defense to the policy, 37 C. J. 540, 36 A. L. R. 1245. The incontestability clause in an insurance policy does not affect the statute of limitations within which a suit may be brought on the policy, but it is a contract by the parties which makes the insurance policy incontestable for any cause unless specified in the policy after a certain period. The stipulation has no reference to the statute of limitations but constitutes a waiver by the insurer of the right to invoke defenses against the payment of the policy after a certain period of time from the date of issuance has elapsed. Citizens Life Insurance Co. v. McClure,139 Ky. 138, 127 S.W. Rep. 794, 27 L.R.A. (N.S.) 1026; Huxton v. State Mutual Insurance Co., 148 Tenn. 439, 31 L.R.A. 78; Ericson v. Commercial Travelers, 103 Kan. 831,176 Pac. Rep. 989.

The incontestability clause simply means that the insurer contracts that if it should have any defense which might be interposed to the validity of the contract that it will interpose such objections to its validity either by affirmative or defensive action taken in court within the period named in the contract. Northwestern Mutual Life Insurance Co. v. Pickering, 293, Fed. 496; Jefferson Standard Life Insurance Co. v. McIntyre, 294 Fed. 886; Chun Ngit Ngan v. Prudential Insurance Co., 9 Fed. (2nd Ed.) 340; Powell v. Mutual Life Insurance Co., 313 Ind. 161, 144 N.E. Rep. 825, 36 L.R.A. 1239; New Life Insurance Co. v. McCarthy, 22 F.2d 241; Brown v. Pacific Mutual Life Insurance Co., 62 F.2d 711; Jefferson Standard Life Insurance Co. v. Keeton (C.C.A. 4th Ed.) 292 Fed. 53.

It appears in this case, however, that the insurer was guilty of inexcusable laches in that it waited until the last day of the contestable period to deny liability, and then undertook to resort to a court of equity for relief based on its election to rescind the contract. Whether this was done purposely as a means of depriving the insured of her constitutional right to a jury trial on certain issues of fact arising because of its denial of liability on the policy, or whether it was due merely to the insurer's neglect, the result is the same — namely, the insured will be deprived of her constitutional right to a jury trial because of the act of the insurer in withholding its notice of election to deny liability until the last day of the contestable period, whereas it plainly appears that it was in a position to have given notice of election to rescind at a much earlier date.

The holding of Ocean Accident Guaranty Co., Ltd., v. Tucker, 112 Fla. 401, 150 Sou. Rep. 606, confirms the constitutional right of an insured after loss to have issues of fact arising under insurance policies tried by jury. And only when an insurance company has seasonably denied liability on its policy within the contestable period and the insured has with notice thereof delayed so long thereafter in bringing a suit at law on the policy that the insurance company is about to lose its right to contest the policy during the contestable period unless it affirmatively proceeds in equity, is an equity suit to avoid the policy after loss maintainable.

The opinion filed heretofore in this cause on December 7, 1933, is hereby modified and amended in the particulars covered by this opinion, and as so amended and modified, the opinion heretofore rendered is adhered to and the decree of the Chancellor again affirmed.

Affirmed on rehearing.

DAVIS, C. J., and WHITFIELD, ELLIS and TERRELL, J. J., concur.

BROWN and BUFORD, J. J., dissent.