Ellerbe v. Barney

• Citation: 25 S.W. 384,119 Mo. 632
• Parties: ELLERBE v. BARNEY.
• Decision Date: 13 February 1894
• Court: United States State Supreme Court of Missouri

25 S.W. 384

119 Mo. 632

ELLERBE v. BARNEY.

Supreme Court of Missouri.

February 13, 1894.

MUTUAL LIFE INSURANCE — FORFEITURE — LIABILITIES OF MEMBERS FOR ASSESSMENTS.

1. Defendant had accepted a certificate of membership in a mutual benefit society, by the terms of which certain beneficiaries were, upon his death, to be paid a named amount in consideration of an admission fee paid and further sums to be paid by defendant, so long as he should be a member, when duly assessed by its officers, upon the deaths of other members of the society. The certificate also provided for a forfeiture of defendant's membership on nonpayment of any assessment within 20 days after notice. Held, that defendant was liable for assessments regularly made by the officers of the society, upon the deaths of other members, while his membership continued. Black, Brace, and Burgess, JJ., dissenting.

2. The effect of such a stipulation for forfeiture in a certificate of membership in a benefit society is to cut off the possibility of future obligation, but not to disturb the validity of past indebtedness of the member. Black, Brace, and Burgess, JJ., dissenting.

3. Defendant's promise to pay the assessments, when duly called, to meet the obligations of the society accruing upon the deaths of other members, is the consideration for the benefit he derives from his insurance as a member of the society.

4. The nature and objects of assessment societies, as well as the differences between them and other insurance companies, discussed.

(Syllabus by Barclay, J.)

In banc. Appeal from St. Louis circuit court; D. D. Fisher, Judge.

Action by Chris. Ellerbe, superintendent of the state insurance department, against Charles E. Barney, to recover certain assessments for insurance. There was judgment for plaintiff, and defendant appeals. Affirmed.

F. H. Bacon and Lubke & Munch, for appellant. Jas. E. Hereford and M. W. Huff, for respondent.

MARTIN, Special Judge.

This is an action brought by the superintendent of the insurance department of the state, as receiver of the Masonic Mutual Benefit Society of Missouri, (a mutual insurance organization,) to recover the amount of certain assessments levied upon the members of the association to pay death losses. The defendant was a member of the organization. Shortly before the receiver took charge, the directors of the company regularly levied against defendant assessments amounting to $140.80, which assessments he refused to pay. The regularity of the assessments is admitted. The suit was originally before a justice of the peace, where judgment was rendered against defendant, who then appealed to the circuit court. There an amended statement was filed, to which appellant demurred for the reason that it did not set forth a cause of action. The demurrer was overruled, and defendant declined to plead further, but appeared at the trial and demurred to plaintiff's evidence. The court gave judgment for plaintiff. After unsuccessfully moving for a new trial, defendant appealed to the supreme court. The case is, in effect, an agreed one, as all the facts are conceded.

Defendant became a member of the society in 1885, accepting two certificates, (one in division B, the other in division C,) in the nature of policies, the material parts of which follow, viz.: "This certificate of membership witnesseth that the Masonic Mutual Benefit Society of Missouri, in consideration of the representations made to it in his application for membership, and the sum of six dollars to be paid by Charles E. Barney, of St. Louis, state of Missouri, and the further sum to be paid by him to this society within twenty days after the notice, duly mailed or delivered to him, of a death occurring in the membership of division C of this society, of one dollar and sixty cents for each such death, as assessments therefor may be made, so long as he may be a member thereof, promises and agrees to and with the said Charles E. Barney well and truly to pay or cause to be paid to his children, within sixty days after due notice and satisfactory proof of the death of said Charles E. Barney have been filed in the office of the secretary of the society, for every member in good standing in said division of this society, as follows: For each member in said division of the first class, seventy cents; of the second class, seventy-five cents; of the third class, eighty-five cents; of the fourth class, ninety-five cents; of the fifth class, one dollar and five cents; of the sixth class, one dollar and twenty cents; of the seventh class, one dollar and forty cents; and of the eighth class, one dollar and fifty cents: provided, however, that the aggregate amount of the sums so paid shall in no case exceed the sum of three thousand dollars. Upon this condition, however, that, if the said Charles E. Barney shall fail to pay any assessment when the same becomes due and payable by him according to the by-laws of this society and the terms of this certificate, then this contract and agreement shall be null and void and of no effect, and the said Charles E. Barney and the beneficiary therein shall forfeit all rights accruing under this certificate. This certificate is issued by the society, and accepted by the holder and beneficiary therein, upon the following express conditions and agreements: 1st. That the same is issued and accepted subject to the provisions of the articles of association and by-laws of this society," etc. The certificates were duly executed by the president and secretary of the society. No question as to their form is raised. Afterwards, the name of the company was changed to "United Masonic Benefit Association of Missouri;" and its internal laws were amended so as to fix the sum to be paid on each certificate at $2,000, and the amount of assessment for each death of a member at $6.40. The by-laws of the society bearing on the present controversy provide that "upon the death of a member, or as soon thereafter as ordered by the executive committee, each member of the association, at the time such death occurred, may be assessed, and shall pay to the secretary of the association," the regular amount of the assessment above indicated. The by-laws then immediately proceed to declare it the duty of the secretary to notify, by mail, each member of each assessment upon his certificate, and then recite that "any member failing to pay such assessment within twenty days after the date of such notice which have been served upon, sent or given to, him, shall forfeit his membership in the association, and all benefits and interests therefrom and therein: provided, that the payment of assessments after such forfeiture, or any notice to pay or subsequent assessment by the association, shall not have the effect to restore the person notified or paying to membership, or to any rights under his certificates, until his application for reinstatement shall be presented and approved by the executive committee." The defendant paid assessments until those now in dispute were called. The latter were regularly made by the proper officers of the society to pay the amounts due upon deaths of members in good standing holding valid certificates. Defendant was duly notified of these assessments. Afterwards the insurance commissioner, now plaintiff, took possession of the assets of the concern, under the laws of Missouri, because of the insolvency of the company, and now seeks to compel payment of these assessments as assets for the benefit of those properly entitled to share therein.

1. It is apparent from the foregoing statement, which was prepared by Judge BARCLAY, that the issue in this case is one of law, to be determined by a construction of the contract disclosed in the record. On the part of the appellant, it is contended that he never became indebted for the assessments levied against him, but that he had the option of forfeiting his rights under the certificate by declining to pay them, which forfeiture left the company without any right to collect them. If this is a proper construction of the contract, the judgment will have to be reversed. If, however, these assessments constituted a liability of the appellant from the date of their levy, payable after notice given according to the by-laws, then the action of the lower court will have to be affirmed. In his contention the appellant argues that the certificate held by him constituted a contract of life insurance, which, in a general sense, may be conceded, inasmuch as it provides for payment of an ascertainable sum upon the death of the holder. It is next argued that, being a contract of life insurance, it must necessarily possess the distinguishing features imputed to such a contract by the courts, in being a unilateral or one-sided undertaking of the assured, as to all future payments required of him. If he chooses to pay them, the company is bound to continue the insurance. If he declines to make further payments, the insurance ends, without imposing on him any liability on account of them. I am sensible of the danger, in construing contracts, of attaching undue importance to particular words and phrases as controlling the intention of the parties, and overruling the presence and effect of other parts. All contracts should be construed with reference to the general object and purpose for which they were entered into by the contracting parties, and a rational and harmonious effect given to all the parts, if possible. The construction that this is a unilateral contract, in like manner and effect as a policy of life insurance, I propose to consider briefly on principle, and not on the analogy of names, or accidental use of concurring phrases. The unilateral feature contended for in this contract has been very generally imposed upon the contract of the regular, old-line, premium-collecting life insurance companies. These companies were unable to commence business except upon capital paid in by the...