Asel v. Order of United Commercial Travelers of America

• Citation: 197 S.W.2d 639,355 Mo. 658
• Decision Date: 11 November 1946
• Docket Number: 39923
• Parties: Henry C. Asel v. The Order of United Commercial Travelers of America, Appellant
• Court: Missouri Supreme Court

197 S.W.2d 639

355 Mo. 658

Henry C. Asel v. The Order of United Commercial Travelers of America, Appellant

No. 39923

Supreme Court of Missouri

November 11, 1946

Appeal from Cole Circuit Court; Hon. Edward T. Eversole Judge.

Affirmed.

Sam Bushman, Jr., H. P. Lauf and Carson E. Cowherd for appellant; Keyes & Bushman, and Gage Hillix, Shrader, Cowherd & Phelps of counsel.

(1) An insurance contract must be construed and enforced in accordance with the laws of the state in which made, as determined by the place of last and final act which made the contract binding and gave it validity. As here, contract became binding and effective with the final act of signing by the defendant Association in Columbus, Ohio. The contract is an Ohio contract to be construed and enforced in accordance with the laws of the State of Ohio. Yeats v. Dodson, 127 S.W.2d 652; Eyring v. Kansas City Life Ins. Co., 234 Mo.App. 328; 129 S.W.2d 1086; Pickett v. Equitable Life Ins. Co., 27 S.W.2d 452; Fields v. Equitable Life Ins. Co., 118 S.W.2d 521; Kellogg v. Natl Protective Ins. Co., 155 S.W.2d 512; Edwards v. B.M.A., 205 Mo.App. 102; N.Y. Life Ins. Co. v. Head, 234 U.S. 149, 34 S.Ct. 879; Order of United Commercial Travelers v. Meinsen, 131 F.2d 176. (2) Such a provision limiting to six months the time within which action must be brought is reasonable, valid and enforceable under Ohio laws where said contract was made, and prior to the enactment of Section 3351, R.S. 1939, was valid in Missouri. Appel v. Cooper Ins. Co., 76 Ohio St. 52, 80 N.E. 955; Bartley v. Natl. Business Men's Assn., 109 Ohio St. 585, 143 N.E. 386; Keim v. Home Mutual F. & M. Ins. Co., 42 Mo. 38; Glass v. Walker, 66 Mo. 32. (3) Under the controlling decisions of the Missouri courts this provision, being a qualification annexed to the right created under the contract, pertains to the substantive rights rather than to the remedy, hence its validity is to be determined by the lex loci contractus rather than by the lex fori, and since Section 3351, R.S. 1939, does not apply to said contract, the court should have enforced said provision on the basis of comity. Dolan v. Royal Neighbors, 123 Mo.App. 147, 100 S.W. 498; Roberts v. Modern Woodmen of America, 133 Mo.App. 207, 113 S.W. 726; Tuthill v. Fid. & Dep. Co. of Md., 119 S.W.2d 468. (4) This case is not within the purview of Section 3351. Generally, a statute of limitation affects the remedy only, and hence the period of limitations prescribed by the statutes of the state where the suit is brought govern, instead of the lex loci contractus. Where, however, the lex loci contractus operates not only to suspend or bar the remedy, but also to extinguish the right itself, the case is not within the law of limitation of the remedy and the lex loci contractus and not the lex fori governs. This has been the rule in Missouri since as well as before Section 3351 was enacted. McMerty v. Morrison, 62 Mo. 140; Berkley v. Tootle, 163 Mo. 584, 63 S.W. 681; State of Kansas ex rel. U.S. Fidelity & Guar. Co., 40 S.W.2d 1050.

Ragland, Otto, Potter & Embry and Leon P. Embry for respondent.

(1) The defendant, a foreign fraternal, applied for authority to do business in Missouri pursuant to the laws thereof, and was licensed in Missouri. This action was commenced within five years. The Missouri law fixes five years as the time within which actions on policies or certificates issued by fraternals shall be brought. Sec. 6147, R.S. 1939. (2) Any provision in a fraternal's contract purporting to fix a shorter time than five years, for the filing of suit thereon, is void. Sec. 3351, R.S. 1939. (3) The provisions of said Sec. 3351, R.S. 1939, constitute and establish the public policy -- and a declaration of the public policy -- of, and in, the State of Missouri with reference to the subject matter thereof. The Supreme Court of Missouri has so construed said Sec. 3351, R.S. 1939. Karnes v. Insurance Co., 144 Mo. 413. (4) Even if the contract sued on be an Ohio contract, as contended by appellant, and even if the Ohio courts recognize, as valid, a contract provision fixing a six months limitation on the time for filing a suit, that provision constitutes no defense to this action, and will not be recognized or enforced in Missouri, because it is contrary to, and violative of, the public policy of, and in, the State of Missouri, as aforesaid. Meinsen v. Order of U.C.T., 43 F.Supp. 756; Order of U.C.T. v. Meinsen, 131 F.2d 176; Griffin v. McCoach, 313 U.S. 498, 61 S.Ct. 1023, 85 L.Ed. 1481; Cobble v. Royal Neighbors, 291 Mo. 125, 236 S.W. 306; Maxey v. Banking Co., 57 S.W.2d 1091; Jamison Cole & Coke Co. v. Goltra, 143 F.2d 889; Brucker v. Casualty Co., 32 S.W.2d 1088. (5) In the cases relied on by appellant, the objection was not raised, nor ruled upon, that enforcement of the provisions there involved was contrary to, and violative of, the public policy of the forum. (6) Furthermore, Missouri was necessarily the place of performance of the contract. The law of the place of performance is the law of the contract. Smoot v. Judd, 161 Mo. 673; Bank v. Bank, 225 Mo.App. 948, 34 S.W.2d 143; Kavanaugh v. Royal League, 158 Mo.App. 234. (7) And the plaintiff was initiated, and lived, at Jefferson City, Missouri, and paid his assessments in Missouri. Gill v. W.O.W., 209 Mo.App. 63, 236 S.W. 1073. (8) The defendant is estopped to assert any purported six months limitation on the time to sue as a defense. 21 C.J., p. 1061, sec. 10. (9) Appellant did not keep that defense a live issue in the case by offering an instruction on it and, therefore, waived the defense. Unterlochner v. Wells, 317 Mo. 181, 296 S.W. 755; Miller v. Chinn, 223 S.W. 767; Shanholtzer v. Brubaker, 159 Mo.App. 366. (10) There is no showing that the limitation sought to be enforced is recognized as valid, even in Ohio. Appel v. Cooper Ins. Co., 76 Ohio St. 52, 80 N.E. 955; Bartley v. Natl. Business Men's Assn., 109 Ohio St. 585, 143 N.E. 386; Order of U.C.T. v. Meinsen, 131 F.2d 176.

OPINION

Ellison, J.

This case was certified to this Court by the Kansas City Court of Appeals under Sec. 10, Art. V, Const. Mo. 1945, and our Rule 2.06, on the grounds that its opinion, reported in 193 S.W.2d 74, conflicts with three decisions ^[1] of the St. Louis Court of Appeals, and that those decisions are out of harmony with several decisions of this Court, mainly the first three cited below. ^[2] The point of conflict on which the cause was certified, was whether the suit was contractually barred by limitation under a clause in the insurance contract in litigation. But under the above Rule our review is not limited to that question. We must determine the whole case as if the appeal had been originally brought here.

The respondent, a resident of Missouri, sued the appellant fraternal beneficiary association, an Ohio corporation (hereinafter called the Order), on his benefit certificate therein issued in November, 1936, insuring him against accidental injury. He prevailed in the trial court and the Court of Appeals. The certificate provided [as did our statute then and since] ^[3] that it, together with the constitution, by-laws and articles of incorporation of the Order and any changes, additions or amendments thereto, should constitute the insurance contract; and a provision of its Constitution required any suit on the certificate to be brought within six months after the insured's claim had been disallowed by the Order. He did not bring it until thirteen months thereafter.

Appellant's answer pleaded that fact in bar, contending: that the benefit certificate was an Ohio contract and governed by the laws of that State; that such six months contractual limitations of action had been held reasonable and valid in Ohio; ^[4] that the action was therefore barred in this state notwithstanding our statute of limitations, Sec. 6147, ^[5] which permits such actions to be commenced within five years after the cause of action accrued. Appellant maintained the six months contractual limitation was enforceable in this action in Missouri on two theories: first, because Sec. 1021 of our statutes provides that "Whenever a cause of action has been fully barred by the laws of the state . . . in which it originated, said bar shall be a complete defense to any action thereon, brought in any of the courts of this state;" and second, because the contract limitation in the benefit certificate was not a mere procedural limitation as to which the lex fori is controlling; but was an integral and substantive part of the insurance contract and governed by the lex loci contractus ^[6] (Ohio) independent of our Sec. 1021.

Respondent contended and still contends: that the benefit certificate was a Missouri contract; that regardless of whether the six months contractual limitation therein had been upheld by the Ohio courts, it did not come within the purview and protection of our Sec. 1021; that it was in conflict with our limitation statute, Sec. 6147; and that it was outlawed by Sec. 3351 of our statutes enacted in 1887 long before the insurance contract was made, which provides that "All parts of any contract or agreement hereafter made or entered into which either directly or indirectly limit or tend to limit the time in which any suit or action may be instituted, shall be null and void."

To that appellant answered that Sec. 3351 applies only to limitation of action contracts made in Missouri, and not to those made in other states. On that point appellant invoked the three decisions of the St. Louis Court of Appeals cited at the beginning of this opinion in marginal note 1. Respondent replied that the statute declares the public policy of the state and is controlling regardless of whether the limitation contract be procedural or...