Hall v. Royal Fraternal Union

• Decision Date: 15 July 1908
• Citation: 61 S.E. 977,130 Ga. 820
• Parties: HALL et al. v. ROYAL FRATERNAL UNION.
• Court: Georgia Supreme Court

61 S.E. 977

130 Ga. 820

HALL et al. v. ROYAL FRATERNAL UNION.

Supreme Court of Georgia

July 15, 1908

Syllabus by the Court.

Where the meaning of a contract of insurance, by reason of inconsistent provisions therein, is ambiguous, that construction will be adopted which is most favorable to the insured.

[Ed Note.-For cases in point, see Cent. Dig. vol. 28, Insurance § 1870.]

Under the facts of this case, it was error to hold that the liability of the defendant to the beneficiaries under the benefit certificate was limited to the amount of one assessment actually realized for the benefit fund for the month in which the insured died from the membership in the division to which she belonged.

[Ed Note.-For cases in point, see Cent. Dig. vol. 28, Insurance § 1962.]

Error from Superior Court, Chatham County; Geo. T. Cann, Judge.

Action by Mary F. Hall and J. R. Saussy, administrator of Emily S. Hall, against the Royal Fraternal Union. Judgment for defendant, and plaintiffs bring error. Reversed.

Saussy & Saussy, for plaintiffs in error.

Osborne & Lawrence, for defendant in error.

HOLDEN J.

The plaintiffs contended that the beneficiaries of the benefit certificate were entitled, upon the death of the insured, to $2,000. The defendant contended that the beneficiaries were only entitled to the amount of one assessment actually realized for the benefit fund from the membership in the division in which the assured belonged for the month in which she died, which, according to the facts of the case, amounted to $575.82. A circular was introduced in evidence which had been issued by the defendant and submitted to the insured to obtain her application for insurance. This circular was not by the terms of the contract made a part thereof; but, having been issued by the defendant and submitted to the insured to obtain her application, it should be considered to explain any ambiguities or inconsistencies in the language embraced in the contract. This circular stated the rate per $1,000 at age 52 to be $1.95, which was the age of the insured and the rate per $1,000 paid by her. The circular had in it these words: "Life protection, from $500 to $2,000"; and "certificates will be issued *** in amount from $500 to $2,000." This would seem to indicate that the insurance issued by the defendant was not to be less than $500 nor more than $2,000. Yet, if the amount to be obtained by the plaintiffs was only the one assessment for the one month above referred to, it might be less than $500, as this assessment for the benefit fund from one membership in the division to which the assured belonged for just one month might realize a very small sum. This circular further stated that upon the death of the member the "full amount of the benefit will be paid in one sum, or be payable in annuities *** of $125 per quarter, unless the certificate is less than $1,000; then only $62.50 will be paid per quarter." This language would not necessarily mean, but would seem to indicate, that the quarterly payments should amount to not less than $125 when the certificate was for $1,000 or more, and not less than $62.50 per quarter when the certificate was for less than $1,000. But, if the amount due the beneficiaries was only the one assessment above referred to during the month of the death of the insured, the whole amount payable under the certificate might amount to less than either of the quarterly installments provided for. The circular further states that, "at the member's death, such balance of the amount named in the certificate as remains unpaid to the member will be paid to the member's beneficiary." There was only one amount named in the certificate, and that was $2,000, and the amount referred to in the circular must be this amount, the balance of which, according to the circular, as remained unpaid to the member would be paid to the member's beneficiary. One of the by-laws of the defendant, which by the terms of the benefit certificate was made a part thereof, provided: "The payment of death benefits to beneficiaries under all life certificates, in one sum, shall be, at the option of the Supreme Trustee, payable in annuities of $125 per quarter until the sum under said certificate has been paid." This by-law provided that $125 per quarter was to be paid "until the sum under the certificate had been paid," which is an unequivocal statement, if quarterly payments were made, that payments under the certificate should be in sums of $125 per quarter until the whole sum was paid, and would indicate that the amount to be paid under the certificate, upon the death of the insured, should not be less than $125. But if, as contended by counsel for defendant, the amount to be paid upon the death of the insured was only the amount of the one assessment above referred to during the month of her death, it might be less than 125.

The provisions of the benefit certificate made the conditions and statements contained on the back of the certificate a part thereof. One of these statements is as follows: "It is also understood and agreed that the liability of the order to the said member or his beneficiary in case of his disability or death shall not exceed the amount of one assessment actually realized for the benefit fund from the membership in this division for the month in which the disability or death occurs, from which shall be deducted all accident and old age benefits previously paid hereunder; and not to exceed the principal sum named in this certificate, from which shall be deducted all accident and old age benefits previously paid hereunder." The word "disability" in the above statement would cover any disability from accident and any disability from old age; in fact, under the old age benefit provision, the statement appears that the member is to be paid for "physical disability on account of old age." Hence it will be seen that, if this statement in fine type on the back of the certificate is to be enforced it will have to be enforced in determining any amount that might be due under the accident or old age benefit, as well as under death benefits; yet it is provided under the head of "First. Accident Benefit," that, if certain accidents should happen to the insured, an amount not exceeding one-half of said sum will be paid to the aforesaid member, payable in annuities of $125 per quarter, and under the head of "Second. Accident Benefit," the same provision is made, with the exception that the amount to be paid is an amount not exceeding one-fourth, instead of one-half. But how can these provisions in the benefit certificate, providing that a certain per cent. of the $2,000 shall be payable in annuities of $125 per quarter, have any meaning if the limitation on the back of the certificate is to be enforced, providing that the member could not receive an amount exceeding one assessment during the month in which the disability occurred, when this assessment might amount to less than $125, although the defendant in the benefit certificate agreed to pay $125 every quarter? The benefit certificate provided that the insured was entitled to participate in the benefit fund "not exceeding the amount of $2,000, which sum as provided herein and in the constitution and by-laws of this order shall be paid as follows." The certificate then proceeds, as set forth in the statement of facts, to show how it shall be paid; but nothing in this part of the certificate refers to the statement on the back thereof, but says that the beneficiary is entitled to participate in the benefit fund not exceeding the amount of $2,000, "which sum, as provided herein and in the constitution and by-laws of this order, shall be paid as follows." What amount is meant by the words "which sum"? Only one sum is mentioned, and that is $2,000. No reference whatever is here made to the statement on the back of the certificate, but the provision is: "What sum, as provided herein and in the constitution and by-laws of this order, shall be paid as follows." It is true that later on the statement on the back of the certificate is made a part of the benefit certificate, but this is in fine type, under the head of "Privileges and Requirements," where many matters are set forth, and this important provision is not found under a separate paragraph, but is put in between other matters entirely foreign to it. Such a restriction or limitation would not be expected to be found under the head of "Privileges" or "Requirements." If the meaning of the other provisions of the contract was that, upon the death of the assured, her beneficiaries would receive the amount of $2,000, less the unpaid assessments hereinafter referred to, this important provision limiting the liability of the order to one assessment, being in conflict with such provisions, should not prevent the beneficiaries from having such amount. The constitution and by-laws provided that the defendant should have authority to levy and collect such assessments, in addition to the regular monthly assessments, as might be necessary for the payment of accrued benefits. Why was such power given, if it was the contract that a beneficiary under the certificate should not receive more than one month's assessments, which were fixed and needed no levy upon the part of the defendant, as no benefits could accrue if discharged by the assessments as collected during a particular month? Especially is the inquiry pertinent as to why this power was given, if it was the contract that the beneficiary under the certificate should receive more than one month's assessment, in view of the provision in the constitution and by-laws: "If the benefit fund is not sufficient to pay all claims so approved, they shall be paid pro rata, and this shall be accepted in full...