Armstrong v. Modern Brotherhood of America

Citation112 S.W. 24,132 Mo.App. 171
PartiesARMSTRONG, Respondent, v. MODERN BROTHERHOOD OF AMERICA, Appellant
Decision Date23 June 1908
CourtCourt of Appeal of Missouri (US)

Appeal from Ralls Circuit Court.--Hon. David H. Eby, Judge.

Reversed and certified to supreme court.

Roy & Hays and Ball & Sparrow for appellants.

E. L Alford and J. O. Allison for respondent.

NORTONI J. Bland, P. J., and Goode, J., concur.

OPINION

NORTONI, J.

This is a suit on a certificate of life insurance issued by a fraternal beneficiary association. Plaintiff recovered and defendant appeals. The question involved for decision is whether the association is one of that character exempted from the general insurance laws of this State, under the provisions of section 1408, Revised Statutes 1899. The beneficiary certificate sued upon contained a provision exempting the society from liability in event the insured took his own life, whether sane or insane. The insured committed suicide. The defendant invoked the stipulation in the insured's application and the provisions of its certificate exempting it from liability in case of suicide. The court nevertheless gave judgment against it for the amount of the plaintiff's claim on the theory that the association could not relieve itself from responsibility in that behalf for the reason it was not such a fraternal association as is exempted from the operation of our suicide statute which provides, substantially, that suicide shall be no defense to an action on a life insurance policy unless it be made to appear that the insured contemplated taking his own life at the time the policy was issued. There is no claim whatever in this case that the insured contemplated suicide at the time of entering into the contract in suit. The matter is therefore to be determined by reference to and the construction of our statutes exempting fraternal societies from the operation of the general insurance statutes of the State, among which is the statute on suicide above referred to.

The defendant is a beneficiary society, incorporated under the laws of the State of Iowa, and was duly admitted by the commissioner of insurance of this State to prosecute its calling here. The insured became a member of one of its subordinate lodges located at Perry, Missouri, in November 1892; and on the 26th day of that month, received his certificate payable to the plaintiff, his wife, whom he designated therein as his beneficiary. The insured paid all of his assessments and was in good standing at the time of his death, March 1, 1905, on which date he committed suicide. Proofs of death having been properly made and submitted, the defendant declined to pay the amount of the certificate for the reason stated, and the plaintiff, the insured's widow, instituted this suit. Under the law of the State of Iowa, constituting the charter of the defendant association, it is authorized to issue certificates of insurance payable to the same classes of beneficiaries mentioned in the Missouri statute, sec. 1408, R. S. 1899, and one other class of beneficiaries as well; that is to say, the Iowa statute authorizes the defendant to issue certificates of insurance payable to the personal representatives of the insured. Because of this deviation from the Missouri statute, the circuit court gave judgment to the effect that the defendant association was not exempted from the operation of our statute on suicide. The Missouri statute dealing with the question of the defense of suicide on life insurance policies, is as follows:

"In all suits upon policies of insurance on life hereafter issued by any company doing business in this State, to a citizen of this State, it shall be no defense that the insured committed suicide, unless it shall be shown to the satisfaction of the court or jury trying the cause, that the insured contemplated suicide at the time he made his application for the policy, and any stipulation in the policy to the contrary shall be void." [Sec. 7896, R. S. 1899.]

This statute, of course, becomes parcel of every life insurance contract entered into within this jurisdiction, unless the institution issuing the contract of insurance or the contract itself is exempted therefrom by other competent provisions of our statute law. It is a well-known fact that fraternal beneficiary associations engaged in the life insurance business are organized and conducted for the purpose, among others, of affording to the members thereof, indemnity against death, payable to designated beneficiaries, at a much lower rate of compensation to the insurer than is customary for life insurance in the regular companies. In aid of this idea, the legislative authority of the State has provided that associations complying with our laws and falling within the prescribed designation, shall be exempted from the harsher and more rigorous provisions of the statutes respecting life insurance generally, and therefore it is competent for such beneficiary societies to contract with their members, exempting the society from liability in case the insured shall come to his end by self-destruction, as in this case. And therefore the question as to whether the contract of insurance issued by this society, is to be determined by reference to the principles of the common law in that behalf and enforced as a common law contract, unincumbered with the suicide statute, is to be ascertained and determined with reference to our statute affording a definition of a fraternal insurance association. That statute, sec. 1408, R. S. 1899, is as follows:

"A fraternal beneficiary association is hereby declared to be a corporation, society or voluntary association, formed or organized and carried on for the sole benefit of its members and their beneficiaries, and not for profit. Each association shall have a lodge system, with ritualistic form of work and representative form of government, and shall make provision for the payment of benefits in case of death, and may make provision for the payment of benefits in case of sickness, temporary or permanent physical disability, either as the result of disease, accident or old age, provided the period of life at which payment of physical disability benefits on account of old age commences, shall not be under seventy (70) years, subject to their compliance with its constitution and laws. The fund from which the payment of such benefits shall be made, and the fund from which the expenses of such association shall be defrayed shall be derived from assessments or dues collected from its members. Payments of death benefits shall be to the families, heirs, blood relatives, affianced husband or affianced wife of, or to persons dependent upon the member. Such associations shall be governed by this act and shall be exempt from the provisions of the insurance laws of this State, and shall not pay a corporation or other tax, and no law hereafter passed shall apply to them unless they be expressly designated therein. And such fraternal beneficial association may create, maintain, disburse and apply a reserve or emergency fund in accordance with its constitution or by-laws."

It will be observed that among other things, the statute provides, "such association shall be governed by this act and shall be exempt from the provisions of the insurance laws of this State." Sec. 1410 authorizing non-resident associations to enter the State of Missouri and qualify to conduct their business here provides among other things: "Any such association coming within the description as set forth in section 1408 of this article, organized under the laws of any other State," etc., etc., may qualify and conduct its business here by complying with the conditions therein prescribed. Upon so qualifying, such foreign institutions become privileged as domestic concerns. There is no controversy as to the facts with respect to the case now under advisement. It stands conceded that the defendant is a fraternal beneficiary association, organized and chartered under the laws of the State of Iowa; that it conducts its business solely for the benefit of its members and not for profit; that it obtains its funds by means of dues and assessments, authorized both by the statutes of Missouri and Iowa; that it has a lodge system of government and a ritualistic form of work; that the element of fraternity pervades its entire scope and it...

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