Schiel

This is an appeal by the beneficiaries of a life insurance policy from a judgment reforming the policy and from a summary judgment in favor of the insurance company terminating the litigation.

The first question to be noticed is whether, as the insurer claims, this court lacks jurisdiction of the appeal insofar as it relates to the decree of reformation. The contention is that the decree was final under Rule 54(b), Federal Rules of Civil Procedure, 28 U.S.C.A., hence was reviewable only by appeal taken within the statutory time after its entry. The facts bearing on the point are these: The insured, a young army pilot named Frank Schiel, Jr., met *730 his death in December 1942 while on a military mission in a remote part of China, allegedly in a crash of his plane. In 1943 the insurer filed suit in the form of a single cause of action in which it set up the facts on which reformation was sought, alleged that the insured died in an operation intended to be excluded from coverage, and asked a declaration of its obligations. The beneficiaries by answer placed in issue the allegations pertaining to reformation and to the circumstances of the death, and prayed judgment for the full…

178 F.2d 729 SCHIEL et al. v. NEW YORK LIFE INS. CO. No. 12250. United States Court of Appeals Ninth Circuit. December 21, 1949. Rehearing Denied January 23, 1950. Crawford & Baker, A. M. Crawford, A. G. Baker, Prescott, Ariz., for appellants. Evans, Hull, Kitchel & Jenckes, Joseph S. Jenckes, Jr., Phoenix, Ariz., for appellee. Before HEALY, BONE, and ORR, Circuit Judges. HEALY, Circuit Judge. 1 This is an appeal by the beneficiaries of a life insurance policy from a judgment reforming the policy and from a summary judgment in favor of the insurance company terminating the litigation. 2 The first question to be noticed is whether, as the insurer claims, this court lacks jurisdiction of the appeal insofar as it relates to the decree of reformation. The contention is that the decree was final under Rule 54(b), Federal Rules of Civil Procedure, 28 U.S.C.A., hence was reviewable only by appeal taken within the statutory time after its entry. The facts bearing on the point are these: The insured, a young army pilot named Frank Schiel, Jr., met his death in December 1942 while on a military mission in a remote part of China, allegedly in a crash of his plane. In 1943 the insurer…

I concur in the result reached 'by the court but I cannot agree that there was insufficient consideration to support the conditional reinstatement of the policy. Whether or not the court is correct in holding that the Company had no right to refuse reinstatement at the time the insured reapplied, I think that, in consideration of the uncertain state of the law in this regard as disclosed by the discussion in the cases in the majority opinion, the Company’s contention that it had that right is not so lacking in foundation as to make this assertion unreasonable and wholly incompatible with honesty and good faith. It is my view that the Company’s forbearance to assert a claimed right not to reinstate the policy should be held to constitute sufficient consideration to support the new condition which it exacted. See 1 Williston on Contracts (Rev.Ed.) § 130, footnote 6, and § 135; c.f., Restatment of Contracts § 76(b), illustration 4.

However, we held in Richardson v. Travelers Insurance Co., 9 Cir., 171 F.2d 699 that an incontestable clause such as appears in the instant policy, precludes reformation. I dissented from that proposition but the decision represented the considered…