Berry v. Knights Templars' & Masons' Life Indem. Co.

• Decision Date: 09 May 1891
• Citation: 46 F. 439
• Court: U.S. District Court — Western District of Missouri
• Parties: BERRY et al. v. KNIGHTS TEMPLARS' & MASONS' LIFE INDEMNITY CO.

46 F. 439

BERRY et al. v. KNIGHTS TEMPLARS' & MASONS' LIFE INDEMNITY CO.

United States Circuit Court, W.D. Missouri.

May 9, 1891

George Hall, E. M. Harber, and F. H. Bacon, for plaintiffs.

Luther Collier and Huston & Parrish, for defendant.

CALDWELL J.

On the 6th day of July, 1885, the defendant, a corporation created under the laws of Illinois and doing business in this state issued to John B. Berry, then a resident and citizen of this state, a policy of insurance on his life for the sum of $5,000, subject to conditions which will be hereafter noticed. On the 7th day of November, 1889, Berry committed suicide by hanging. The holders of the policy, the present plaintiffs, made due proof of Berry's death, and demanded payment of the policy. The company refused to pay, upon the ground that the policy was void by reason of the following condition contained therein, viz.: 'In case of the self-destruction of the holder of this policy, whether voluntary or involuntary, sane or insane, * * * this policy shall become null and void. ' The plaintiffs thereupon brought this suit to recover the amount of the policy. The company pleads the suicide of the assured, and the above-recited condition of the policy, in bar of the action. The plaintiffs reply that a statute of this state, in force at the date of the policy, renders that provision of it void. The statute reads as follows:

'In all suits upon policies of insurance on life hereafter issued by any company doing business in this state, it shall be no defense that the assured committed suicide, unless it shall be shown to the satisfaction of the court or jury trying the cause that the assured contemplated suicide at the time he made his application for the policy, and any stipulation in the policy to the contrary shall be void. ' Section 5982 Rev. St. Mo.

If this statute is applicable to the policy in suit, it puts an end to the company's defense. The defendant contends that it is not applicable for several reasons.

1. It is said the policy is an Illinois contract, and to be construed by the laws of that state. But clearly this is not so. The company established an agency, and carried on its business, in this state. It was through that agency the assured, who was a citizen and resident of the state, made his application and received his policy. The fact that the policy was signed by the officers of the company in Chicago has no significance. It was transmitted to the company's agent in Missouri, who received the premium, called, in this case, an 'entrance fee,' and delivered the policy to the assured, at his home in this state, and it took effect at that place and from that date. Corporations are artificial creations, and have no natural rights, and their constitutional and legal rights, in some respects, fall short of those of natural persons. A state cannot deny to the citizens of other states the right to do business within its limits, but it may deny such right absolutely to corporations of other states, or may admit them to do business on such terms and conditions as it is pleased to prescribe. And when an insurance company of one state does business in another the laws of the latter state prescribing the terms and conditions upon which it is allowed to do business in the state are obligatory upon it. These conditions may extend to the form and legal effect of the company's policies, and if, in the course of its business in the state, it issues policies on the lives or on the property of the citizens of the state which contain conditions prohibited by or in contravention of the laws of the state, such conditions are void. Doing business in the state brings the policy within the operation of its laws, notwithstanding the policy may be signed, and the loss made payable, in another state. In such cases the company cannot, by any contrivance or device whatever, evade the effect and operation of the laws of the state where it is doing business. Wall v. Society, 32 F. 273.

2. It is contended that the provision in the policy, declaring that it shall be void if the assured commits suicide, is a waiver or nullification of the statute which declares such a stipulation in a policy 'shall be void.' The statute is mandatory and obligatory alike on the insurance company and the assured. Its very object was to prohibit and annul such stipulations in policies, and it cannot be waived or abrogated by any form of contract or by any device whatever. The legislative will, when expressed in the peremptory terms of this statute, is paramount and absolute, and cannot be varied or waived by the private conventions of the parties.

3. The next contention of the defendant is that, although it was doing business in the state at the time the policy was issued, it had not then done those things which by the laws of the state were conditions precedent to its right to do business in the state, and 'that, therefore,' in the language of its counsel, 'the defendant did not in any way submit to the jurisdiction of the state,' and is in no manner bound by its laws. The state laws referred to were enacted for the benefit of the state, and the protection of the policy-holders. By failing to comply with them, the defendant and its agents incurred the prescribed penalties; but such failure does not affect the validity of its policies, or in any manner operated to the prejudice of its policy-holders. By the fact of doing business in the state it asserted a compliance with the laws of the state, and, after enjoying all the benefits of that business, and receiving the money of the assured, it will not be heard to say that it never submitted 'to the jurisdiction of the state. ' It can reap no advantage from its own wrong. To sustain this defense would be giving judicial sanction to business methods much below the standard of common honesty. Ehrman v. Insurance Co., 1 Fed.Rep. 471, 1 McCrary, 123; Fletcher v. Insurance Co., 13 F. 528, 4 McCrary, 440; Insurance Co. v. Elliott, 5 Fed.Rep. 225, 7 Sawy. 17; Wall v. Society, 32 F. 273; Insurance Co. v. McMillen, 24 Ohio St. 67; Clay, etc., Ins. Co. v. Huron Salt, etc., Co., 31 Mich. 346; Insurance Co. v. Walsh, 18 Mo. 229; Lamb v. Bowser, 7 Biss. 315, 372; Insurance Co. v. Matthews, 102 Mass. 221.

4. It is next contended that the defendant is not a life insurance company, and therefore not subject to the laws of the state applicable to life insurance companies, and particularly that section 5982 of the Revised Statutes of the state has no application to its policies. The company is variously styled in the answer and brief of its counsel 'a corporation for benevolent purposes,' 'a fraternal brotherhood, having a community interest,' and 'a co-operative benevolent insurance society.' The defendant was incorporated under the general incorporation laws of the state of Illinois on the 5th day of May, 1884. Its character as a corporation is disclosed by its charter, the policies it issues, and its mode of conducting business. Its charter provides:

'ARTICLE I.

'Section 1. This company shall be known as the 'Knights Templars' and Masons' Life Indemnity Company.'

'Sec. 2. The object of this company shall be to furnish life indemnity or pecuniary benefits to the widows, orphans, heirs, relatives, devisees, or legatees of deceased members, according to the regulations and provisions hereinafter specified.

'Sec. 3. The principal office of the company shall be at Chicago, Illinois, but the board may establish branch offices elsewhere.

'ARTICLE II.

'Section 1. The officers of this company shall be a president, vice-president, second vice-president, and medical director, to be chosen annually by the board of directors.

'Sec. 2. The affairs of the corporation shall be managed by not less than five nor more than nine directors, who shall be elected form and by the members. * * *

'ARTICLE III.

'Sec. 2. The board of directors shall have power to employ any agent, agents, or other service, for such time, and on such terms, and with such powers, as in their judgment will best promote and conserve the interests of the company. * * *

ARTICLE IV.

'Sec.3. Policies of membership may be issued upon a basis of benefits ranging in amounts to five thousand dollars. * * *

'Sec. 4. Upon the death of any member, an assessment, increasing with age, shall be made upon the surviving members, provided an assessment is needed, according to the following table of rates. Said table is drawn for $1,000, which shall be the unit in determining all other amounts:

"Table of Rates--Assessments per $1,000.

Years of age, inclusive, 21 to 30, ....... $0 50

" " " 31 to 35, .......... 60

" " " 36 to 40, .......... 65

" " " 41 to 45, .......... 80

" " " 46 to 50, .......... 95

" " " 51 to 55, ........ 1 20

...