Armstrong v. Modern Brotherhood of America.

• Decision Date: 05 July 1912
• Citation: 149 S.W. 459
• Parties: ARMSTRONG et al. v. MODERN BROTHERHOOD OF AMERICA.
• Court: Missouri Supreme Court

149 S.W. 459

ARMSTRONG et al. v. MODERN BROTHERHOOD OF AMERICA.

Supreme Court of Missouri, Division No. 2.

July 5, 1912.

INSURANCE (§§ 687, 788)—MUTUAL BENEFIT INSURANCE—NATURE AND STATUS OF ASSOCIATION.

A provision in the by-laws of a fraternal benefit association organized for the sole benefit of its members and their beneficiaries, and not for profit, that benefits may be paid to the legal representatives or legatees of the members, thus creating a class of beneficiaries in addition to the classes specified in Rev. St. 1909, 7109, relative to the payment of benefits by such associations, does not deprive the association of its character as a fraternal benefit association, and subject it to the laws governing old line insurance companies, and hence it may rely on suicide as a defense notwithstanding section 6945, providing that suicide shall not be a defense to an action on a life insurance policy, unless insured contemplated suicide at the time he applied for the policy, especially where the insurance commissioner by licensing the association to carry on business in this state so construed the statutes, and to otherwise construe them would cause great hardship to members who have acted in good faith on his construction.

Appeal from Circuit Court, Rails County ; D. H. Eby, Judge.

Action by Harriet R. Armstrong and another against the Modern Brotherhood of America. From a judgment for plaintiffs, defendant appealed to the St. Louis Court of Appeals, which certified the cause to the Supreme Court. Reversed.

Action on life insurance policy. From a judgment for plaintiff in the circuit court of Rails county, Mo., defendant appealed to the St. Louis Court of Appeals, where the judgment of the circuit court was reversed and the cause certified to this court; the opinion of the St. Louis Court of Appeals being in conflict with the decision of the Kansas City Court of Appeals in the case of Dennis v. Modern Brotherhood of America, 119 Mo. App. 210, 95 S. W. 967. The defendant Brotherhood was organized under the laws of Iowa, and is licensed to transact business in Missouri. On November 26, 1902, after the defendant Brotherhood had been licensed to carry on its business in Missouri, one John A. Armstrong, a citizen of Missouri, became a member of said Brotherhood, and procured therefrom a beneficiary certificate in the sum of $1,000, payable at his death to his wife, Harriet R. Armstrong, and his son, Charles M. Armstrong, who are the plaintiffs in this action. This certificate contained a proviso that, if the said John A. Armstrong commit ted suicide, the certificate should become null and void, and all rights thereunder absolutely forfeited. The petition is based upon the beneficiary certificate above mentioned. The answer admits that said John A. Armstrong paid all his dues to the defendant Brotherhood up to the 1st day of March, 1905, on which day he committed suicide. Plaintiff's reply does not deny the suicide, but as a defense to that part of the answer in which suicide is pleaded alleges that defendant is not a fraternal beneficiary association under the laws of Missouri, that the certificate was not issued in compliance with the laws of our state, and therefore the provision in the policy that the same should be forfeited in case of the suicide of the insured is illegal and without effect, being in violation of section 7896, R. 8. Mo. 1899 (section 6945, R. S. 1909). It is conceded that the defendant was licensed to transact business in Missouri as a fraternal beneficiary association under the provisions of section 1410, R. S. 1899 (section 7112, R. S. 1909), and that under its by-laws and the statutes of Iowa it could issue certificates for the benefit of legatees and legal representatives of its members. The trial court held that because defendant was authorized to issue benefit certificates to classes of persons not designated in the laws of Missouri, to wit, legatees and legal representatives, it should be treated as an old line insurance company. The laws of Missouri (section 1408, R. S. 1899 [section 7109, R. S. 1909]) provide that fraternal beneficiary associations may issue their certificates of insurance in favor of "the families, heirs, blood relatives, affianced husbands or affianced wives of or to persons dependent upon the member." It will thus be seen that the laws of Iowa as well as the by-laws of the defendant authorize fraternal insurance in behalf of at least one class of persons not authorized by the laws of Missouri.

Ball & Sparrow, for appellant. E. L. Alford and J. O. Allison, for respondents.

BROWN, P. J.

(after stating the facts as above). The issue presented is whether or not the by-laws of the defendant and statutes of Iowa under which it is acting are so different from the laws of Missouri that it cannot properly be classed as a fraternal beneficiary association, and should, therefore, be denied the immunities granted to fraternal beneficiary associations incorporated under the laws of Missouri, and subjected to the same restrictions placed upon old line Insurance companies, particularly by section 7896, R. S. 1899 (section 6945, R. S. 1909), which ordains that suicide shall be no defense to an action on a life insurance policy, unless it can be shown to the satisfaction of the jury or court trying the case that the party to whom...