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Insurance Company v. Bailey, 80 U.S. 13 Wall. 616 616 (1871)

Insurance Company v. Bailey

80 U.S. 616


Although equity have power to order the delivery up and cancellation of a policy of insurance obtained on fraudulent representations and suppressions of facts, yet it will not generally do so when these representations and suppressions can be perfectly well used as a defense at law in a suit upon the policy. Hence a bill for such a delivery up and cancellation was held properly "dismissed, without prejudice," though the evidences of the fraud were considerable, there being no allegation that the bolder of the policy meant to assign it, and suit on the policy having after the bill was filed been begun at law.

The Phoenix Mutual Life Insurance Company filed a bill

Page 80 U. S. 617

against Mrs. Elizabeth Bailey, widow of Albert Bailey, to compel the cancellation of two policies of insurance issued by that company upon the life of the said Albert, on the 12th of June and 15th of July, 1867, respectively.

The grounds of the bill were that the policies had been procured by the defendant by fraudulent suppression of certain material facts and the misrepresentation of other ones of the same class. The answer denied the allegations made.

Evidence was given tending to show that the defendant, then bearing the name of Mrs. Von Kammecher, after a husband from whom she had been divorced, went, on the 10th June, 1867, to the office of the insurance company to have Mr. Bailey's life insured, the insurance being in Bailey's own favor, he representing himself as unmarried. Bailey being required, in the usual form, to name an intimate friend who could answer as to his health, referred to Mrs. Von Kammecher, in whose house he was then boarding and who accordingly signed a certificate that he was in good health and of temperate habits. A policy was accordingly made out to Bailey for $4,000. Nine days afterwards -- that is to say, on the 19th June, 1867 -- the same lady called at the office and requested that the policy should issue to her as the wife of Bailey and should be increased to $6,000. The policy was thus made, and was dated as of the 12th June, 1867, the date intended for the other. An additional policy was made for $4,000 on the 15th July, 1867. Bailey and Mrs. Von Kammecher were married June 22, 1867, and Bailey died October 11th following, of phthisis pulmonalis. Evidence was also given tending to show that Bailey had been under treatment from February till May, 1867, was told that his lungs were diseased, and that he "must strenuously take care of himself," and moreover that Mrs. Von Kammecher knew this, and had been told that Mr. Bailey "might live two years or not more than six months," and that she had been herself principally if not solely instrumental in procuring the policies. Evidence was also given tending to show that Bailey's habits were not temperate.

Page 80 U. S. 618

On the other hand, evidence was given tending to a contrary conclusion, but it did not perhaps establish it.

It was not alleged in the bill, nor was there evidence given to show that Mrs. Bailey had attempted to assign or that she was about to dispose of the policies. The averment of the bill was that Mrs. Bailey, insisting upon the obligation of the company under the policies, "demanded the $10,000, and threatened to bring an action at law to recover the same, and by such suit to harass and injure the company." But on the other hand, it appeared that after the bill had been filed, suit was brought at law on the policies; so that the company could now set up the fraud alleged.

The court below dismissed the bill without prejudice.

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