Mutual Reserve Fund Life Ass'n v. Cleveland Woolen Mills

• Citation: 82 F. 508
• Decision Date: 11 October 1897
• Docket Number: 488,489.
• Parties: MUTUAL RESERVE FUND LIFE ASS'N v. CLEVELAND WOOLEN MILLS. PARKER v. SAME.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

82 F. 508

MUTUAL RESERVE FUND LIFE ASS'N v. CLEVELAND WOOLEN MILLS.

PARKER v. SAME.

Nos. 488, 489.

United States Court of Appeals, Sixth Circuit.

October 11, 1897

In 1885, John H. Parker, of Cleveland, Bradley county, Tenn was received as a member of a co-operative and assessment insurance association, incorporated under chapter 175 of the Laws of 1883 of the state of New York, under the corporate name of the Mutual Reserve Fund Life Association, and having its principal office in the city of New York. The policy or certificate of insurance was for the sum of $10,000, and was payable to Mary K. Parker, wife of the insured. In January 1890, this policy, as we shall hereafter designate it, was assigned by a writing indorsed thereon to the Cleveland Woolen Mills, a corporation of the state of Tennessee, for a recited consideration of $10,000, though the real intent of the assignment was to secure to the Woolen Mills Company a large sum of money then due and owing to it by the assured. This assignment was by both Parker and his wife, and the genuine signatures of both appear thereon. On the 6th day of March, 1891, the association indorsed its consent to this assignment. Parker continued thereafter to pay the assessments made upon him until March 3, 1893, when a default occurred by a failure to pay mortuary call No. 66, which was due and payable on that day. This default appears to have been accidental, inasmuch as a fund was kept on deposit in a bank at Cleveland for the purpose of meeting such calls. By oversight, payment of this assessment was omitted until March 18, 1893, when a draft for the necessary amount was remitted by the Cleveland National Bank, in a letter stating that money had been deposited with the bank 'to pay premium before due, but was overlooked at proper date. ' To this letter from the bank, the association replied, by letter addressed to John H. Parker, as follows: 'Dear Sir: We have to acknowledge receipt at this office of your remittance of $25.70, to be applied upon your policy 27,542, under call 66, and that of Mrs. Mary K. Parker, 88,772, amounting to $10.65. This amount has been placed in the suspense account by reason of the fact that the remittance was not in transit until March 18th, and the thirty days allowed for the payment of call expired March 3d. We will require satisfactory application for reinstatement and certificate of health blank for which purpose we inclose you herewith. In the meantime we are holding your remittance in suspense account awaiting this information, or the money will be returned to you as you direct. ' Mr. Parker's health and failed when this default occurred, and he declined to submit to a medical examination; but, as future assessments were made, he caused remittances to be made by his banker for the purpose of meeting them. Call No. 67 was made March 13, 1893; No. 68, May 1, 1893; No. 69, July 19, 1893; and No. 70, September 16, 1893. In response to letters remitting funds for their payment, replies were received stating that the money had been placed 'in suspense account,' with that of call 66, and was held subject to Parker's order 'or satisfactory medical examination.' On November 10, 1893, a draft covering these four remittances was remitted by express to the Cleveland National Bank, which that bank declined to receive; and, on the same day, Mr. Parker was notified of this return of his money, and that the time had expired within which he might be reinstated on medical examination. The Cleveland Woolen Mills, becoming aware of the claim of the association that the policy had lapsed by nonpayment of call No. 66, filed an original pill in the state chancery court for the county of Bradley, October 1, 1894, to which it made defendants the said John H. Parker and wife, Mary K. Parker, and the Mutual Reserve Fund Life Association, for the purpose of having said policy reinstated, and its rights as assignee protected. This bill averred that when it applied, March 6, 1891, to obtain the consent of said association to the assignment of said policy, it also asked that notices of assessments, as made from time to time, be sent to it, that it might arrange for the payment thereof in case the assured was unable to make such payments; that the association declined to do this, but agreed that, if Parker should make default, notice should at once be given the assignee, that it might pay the call and avoid forfeiture. The bill further averred that no notice of the failure of Parker to pay call No. 66 had been given according to this agreement, and that the company had fraudulently concealed from the complainant all knowledge of Parker's default, and was now claiming that the policy had lapsed. The bill tendered payment of any assessments not covered by the remittances theretofore made by the assured. At this stage of the cause, the Mutual Reserve Fund Life Association appeared and removed the suit to the circuit court of the United States. Before answers were filed, John H. Parker died; whereupon the Woolen Mills Company filed an amended and supplemental bill, averring this fact, and claiming payment of the policy. Mrs. Parker answered, and filed a cross bill against the Woolen Mills Company and the Insurance Association, setting out the facts heretofore stated, and averring that her signature and consent to the assignment of the policy had been obtained from her by the undue influence and coercion of her husband, and praying that the said Woolen Mills Company might be decreed to hold the proceeds of the policy, when collected, in trust for her use and benefit. Upon a final hearing, the circuit court decreed in favor of the Woolen Mills Company, and ordered that any surplus after the payment of the debt due by the assured to it should be held for and paid over to Mrs. Parker, From this decree both the Mutual Reserve Fund Life Association and Mrs. Mary K. Parker have appealed, and separately assigned error.

Theo. Richmond, for Mutual Reserve Fund Life Ass'n.

Frank Spurlock and Creed Bates, for Mary K. Parker.

J. B. Sizer and Tomlinson Fort, for Cleveland Woolen Mills.

Before TAFT and LURTON, Circuit Judges, and BARR, District Judge.

LURTON Circuit Judge, after making the foregoing statement of facts, .

The first error assigned by the Mutual Reserve Fund Life Association is as to the action of the court in overruling a plea in abatement to the jurisdiction of the state court. The policy issued to John H. Parker contained a stipulation that no suit in law or equity should be brought upon it except in the circuit court of the United States. This provision intended to oust the jurisdiction of all state courts is clearly invalid. Any stipulation between contracting parties distinguishing between the different courts of the country is contrary to public policy, and should not be enforced. Nute v. Insurance Co., 6 Gray, 174; Amesbury v. Insurance Co., Id. 596; Reichard v. Insurance Co., 31 Mo. 518; Beach, Ins. Sec. 1272; Bac. Ben. Soc. Sec. 443; Insurance Co. v. Routledge, 7 Ind. 25; Steam-Shipping Co. v. Lehman, 39 F. 704; Slocum v. Assurance Co., 42 F. 235; Scott v. Avery, 5 H.L.Cas. 811, 839-844. The process by which the appellant association was brought into court was served upon the local agent representing the association at Cleveland, Tenn. The association also pleaded in abatement that it was a corporation of another state, doing business in Tennessee in accordance with chapter 66 of the Tennessee Acts of 1875, and that by section 12 of that act all such companies were required to file with the insurance commissioner of the state a power of attorney, authorizing the secretary of state to acknowledge service of process for and in behalf of said companies in suits brought against them in the courts of the state. The contention of the appellant is, that as it had complied with this law, no process could be lawfully served upon its agents or officers, and this suit could only be brought by process served on the secretary of state. This section has not been construed by the supreme court of Tennessee. By sections 3516 and 3539, Rev. Code Tenn. (Mill. & V.) general provision is made for the service of process upon the resident agents of corporations in all actions growing out of the business of the corporation. Though foreign corporations are not specifically mentioned in these sections, yet they have been construed as conferring the right to commence a suit against a foreign corporation found within the county where the suit was brought. This act was construed as intending to enlarge, and not limit, the jurisdiction over such companies. Telephone Co. v. Turner, 88 Tenn. 265, 12 S.W. 544. We think a like construction should be given to section 12 of chapter 66 of the Acts of 1875. It was not the purpose of that provision to prevent such corporations from being served with process in the ordinary way where they have a resident agent, but to provide an additional mode of obtaining jurisdiction which might be available if such company had no resident agent. The plea in abatement was properly overruled.

The second, third, fourth, and fifth assignments of error may be grouped and considered together. They present the question as to whether the policy on the life of John H. Parker had lapsed or terminated by failure to pay mortuary call No. 66 within 30 days from February 1, 1893. Waiving any question as to the sufficiency of the notice of that call under the legislation of the state of New York, it is sufficiently established that a notice was received of that assessment and that, under the stipulations of the policy, call No. 66 was due and payable March 3, 1893. This call was not paid or offered to be paid until March 18, 1893. The policy provided that the failure to pay any...