
    Dory Osterhoudt, Respondent, v. The Prudential Insurance Company of America, Appellant.
    Third Department,
    December 30, 1909.
    Insurance—payment of premiums after rescission of policy—when tender back excused — insurance procured by fraud — evidence. .
    Where the receipt given by an insurer on receiving a premium on a lapsed policy provided that the company should not be liable on the policy unless it was revived on its books and the money credited in its receipt book, and that the money would be returned if the policy was not revived, the insurer on repudiating the policy was not required to tender the premium where the person paying the same had already refused to receive it.
    Evidence in an action upon a life insurance policy examined, and held, to show that the plaintiff was guilty of fraud in procuring the policy on his sister’s life, knowing that she was ill with consumption and in attempting to revive the policy when she was dying with that disease.
    In an action on an insurance policy which was rescinded by the insurer for fraud, conversations by the plaintiff relating to an attempt to reinstate the policy are admissible, and it may also be shown whether the insured consented to a revival of the policy.
    Cochrane, J., dissented.
    Appeal by the defendant, The Prudential Insurance Company of America, from a judgment of the County Court of Ulster county in favor of the plaintiff, entered in the office of the cleric of said •county on the 24th day of July, 1909, upon the decision of the court, the case having been taken from the jury.
    By the judgment the plaintiff recovered upon a life insurance policy upon the life of Julia Yandermark, payable to her estate.
    
      William D. Brimmer, for the appellant.
    N. Frank OFeilly \John J). Eckert of counsel], for the respondent.
   Kellogg, J. :

The policy was obtained upon a forged application containing answers clearly false, and without a medical examination, upon the life of a woman in a consumptive family, who was sick at the time. The policy was upon the life of the plaintiff’s sister. They resided in the little village, of Bosendale, and had apparently resided there for years, The plaintiff clearly knew the family history and her ' state of health. ' He gives no account of the circumstances under which the policy was delivered to him. It was taken out without the knowledge or consent of the sister. He says he obtained the policy from the agent Sammons, and the evidence shows that Sammons was guilty of making the fraudulent application and obtaining the fraudulent policy. Plaintiff’s only claim of ownership is liis general statement that after the policy was issued he had a conversation with her and held tlie policy with her consent. He later gives the conversation as taking place in 1907, after the company had declared the policy fraudulent. He says he then had a conversation with her, and adds: “ They wanted me to have the policy, said I must keep it up and I could have it.” The defendant’s agent Boyd, who discovered the fraud, communicated all the facts showing the fraudulent nature of the transaction to the plaintiff, about April 25, 1907, which did not apparently surprise thé plaintiff ; he stated, however, that he owned the policy. He added nothing to Boyd’s statement of the interview. Boyd also stated that the'sister said that if plaintiff owned the policy she had no objection to his having it. Plaintiff swears his sister owed him, but he states no circumstance showing that such is the fact. The manner in which he obtained the policy from the person perpetrating the fraud, and the fact that he gives no explanation of his connection with it, indicates clearly that he was a party to the fraud, as he alone was to receive the principal benefits of the fraud.

An application for reinsurance was made by the assured March 19, 1908, perhaps at the instigation of the company to show the fraud which had been practiced upon it, but that is.not clear. Dr. Bice then examined her, and he says that she had consumption and was pretty well along with it. She died April 14, 1908, of consumption. The policy, was in the plaintiff’s possession, and provides : “ Sixth. Bevival of policy.— If this policy is lapsed for non-payment of premiums it will be revived within one year from the date to which premiums have been duly paid, upon payment of all arrears, provided evidence of the.insurability of the insured, satisfactory to the company, be furnished. Seventh. Alterations and Waivers.— Ho person except the President, one of the Vice-Presidents, the Secretary, the Assistant Secretary or the Actuary of the company can alter this contract or waive any condition, privilege or provision thereof.” It does not appear but that the plaintiff had full knowledge of these provisions; he is presumed to have had such knowledge.

It is a broad stretch of imagination to say that the plaintiff obtained this policy in good faith-and was not a party to the fraud. The company discovered the fraud April 25, 1907, and the plaintiff was then given full information as to the fraud and made no further payments upon the policy. He and the company alike treated the policy as of no further force. On February 19, 1908, when his sister was clearly in the last stages of consumption, which fact must have been known, plaintiff paid to the agent of the company fourteen dollars and forty cents and received therefor a renewal receipt, conditioned by its terms as follows : Under no circumstances will the company be liable under said policy in case of death until the policy has been revived on the books of the company and the money credited in the premium receipt book belonging with said policy.” And on the margin of the receipt appeared the words : “ If the company accept the revival application the amount paid will be credited in the premium receipt book belonging with the policy ; otherwise the money will be returned.”

On February twenty-ninth plaintiff paid to another agent of the company four dollars and forty cents, being the premium for the next ten weeks, and took a receipt therefor. He says he did not read the receipt, upon which it says: “ Unless you receive your policy, or your money is returned within three weeks from the date of this receipt, please notify company, giving name of agent, amount paid, and the date when paid.” The company did not revive the policy on the books; neither were the moneys credited upon the receipt book belonging with the policy and held by the plaintiff.

It is not clear from the plaintiff’s evidence whether the company •tendered back the four dollars and forty cents before or after the death of the plaintiff’s sister. A tender of the four dollars and forty cents and the fourteen dollars and forty cents was not neces: sary, as the plaintiff told the company that he refused to receive it. He swears he could not say whether it was within a month before ora month-after the company sent him the letter of April 18,1908. It is not quite clear from the plaintiff’s evidence when such refusal. took place. Af the time the plaintiff paid the fourteen dollars and forty cents he knew that his policy was fraudulent and that the defendant had repudiated it and he had acquiesced, and he knew that his sister was dying with consumption and not an insurable risk. It is offering too much premium upon fraud to permit a recovery in this case, and we are not permitted to warp the actions of the parties beyond their natural force and effect.

On direct examination the plaintiff swore that after the policy had issued he had it in his possession with his sister’s, consent, and upon his redirect examination he swears that he had a conversation with her after the representative of the company, in the spring of 1907, told hirn of the fraudulent nature of the policy, in which he says: They wanted me to have the policy, said I must keep it up and I could have it.” On cross-examination the defendant, asked the plaintiff these questions : “ Did you talk with anybody in reference to filing an application for reinstatement of this policy after you knew it had lapsed ? ” “Did you talk with your sister about this policy being reinstated or revived after you had learned it had lapsed for non-payment of premiums ? ” ■ Plaintiff’s objection to each question was sustained and the defendant excepted. When the defendant’s representatives told the plaintiff the policy was fraudulent he raised no objection. It was proper to show whether he had any talk with any one about reinstating the policy. It was clearly competent to show, after the policy had ceased to exist, ■ whether it had been revived by the consent or permission of the insured.

For the reasons stated the judgment should be reversed upon the law and the facts and a new trial granted, with costs to the appellant to abide the event.

All concurred, Sewell, J., in result, except Cochrane, J., dissenting.

Judgment reversed on law and facts and nqw trial .granted, with costs to appellant to abide event.  