Questions of the construction of an insurance policy are to be
decided by the federal courts in accordance with the applicable
principles of state law. Erie Railroad Co. v. Tompkins,
p. 304 U. S. 64
Certiorari granted; 94 F.2d 288 vacated.
Petition for certiorari to review a Judgment enforcing an
insurance policy, on a cross-bill, in a suit to set it aside.
This suit was brought by petitioner, New York Life Insurance
Company, to cancel the reinstatement of an insurance policy upon
the ground that it was obtained by fraud. The defendants, the
insured and the beneficiary, denied the responsibility of the
insured for any misrepresentations
Page 304 U. S. 262
by reason of his mental incapacity at the time. They also filed
a cross-bill seeking the payment of the monthly disability benefits
for which the policy provided. Decree was rendered in favor of
defendants on their cross-bill. The decree declared void the
reinstatement of the policy, but held it to be in full force from
the date of its issue. The Circuit Court of Appeals affirmed. 94
The stipulation of facts stated that the insured, at the time of
the issue of the policy in 1927, was a resident of Missouri, and
that the policy was delivered to the insured in that State.
Findings of the District Court followed the stipulation.
The Circuit Court of Appeals considered the question whether,
under the provisions of the policy, the insurer was liable for
disability benefits to the insured who became totally and
permanently disabled during the period of grace following the date
on which a semiannual premium payment fell due where the premium
was not paid until after the expiration of the period of grace. The
court considered the question as one of general law. Its decision
should have been made according to the applicable principles of the
state law which governed the interpretation of the policy. Erie
Railroad Company v. Tompkins, ante,
p. 304 U. S. 64
Ruhlin v. New York Life Ins. Co., ante,
p. 304 U. S. 202
Certiorari is granted, the judgment of the Circuit Court of
Appeals is vacated, and the cause is remanded to that court for
further proceedings in conformity with this opinion.
MR. JUSTICE CARDOZO took no part in the consideration and
decision of this case.