Burchard v. Western Commercial Travelers' Ass'n

• Decision Date: 06 December 1909
• Citation: 123 S.W. 973
• Parties: BURCHARD et al. v. WESTERN COMMERCIAL TRAVELERS' ASS'N.
• Court: Missouri Court of Appeals

123 S.W. 973

BURCHARD et al. v. WESTERN COMMERCIAL TRAVELERS' ASS'N.

Springfield Court of Appeals. Missouri.

December 6, 1909.

Rehearing Denied January 6, 1910.

1. INSURANCE (§ 750) — FORFEITURES — NONPAYMENT OF DUES.

A beneficial association not organized for gain has not only an inherent right to take all benefits from members for nonpayment of dues and assessments, but may provide in its bylaws that such nonpayment within a specified time shall work a forfeiture of all rights of membership.

2. INSURANCE (§ 756) — CHARTER AND BYLAWS — KNOWLEDGE OF MEMBER — NOTICE.

A member in a beneficial association is bound by the charter and by-laws of the company, and is conclusively presumed to have knowledge thereof, and the company need not give him special notice as to the same to prevent a forfeiture of his rights.

3. INSURANCE (§ 744) — FORFEITURES.

The rule that the law abhors a forfeiture and will relieve against it when possible applies to membership certificates issued by beneficial associations.

4. INSURANCE (§ 817) — FORFEITURE — BURDEN OF PROOF.

In an action on a benefit association certificate, the burden of establishing a forfeiture is on defendant.

5. INSURANCE (§ 819) — FORFEITURE.

When a forfeiture of an insurance policy is claimed, the existence of the precise condition, which under the contract worked its termination, must be clearly shown, and, if such condition be failure to pay a membership assessment, it must appear that such assessment was made by the persons and under the conditions and for the amount provided in the contract.

6. INSURANCE (§ 817) — FORFEITURES.

Where, under the contract and by-laws of a beneficial association, failure to pay an assessment within the time fixed does not ipso facto work a forfeiture of the right to benefits, the association must show, to establish a forfeiture, that every step necessary therefor has been taken with technical accuracy.

7. INSURANCE (§ 756) — NONPAYMENT OF ASSESSMENTS — FORFEITURE.

Where the by-laws of a beneficial association provide that failure of a member to pay his assessment in time shall ipso facto work a suspension and forfeiture, the member is not entitled to notice or a hearing before suspension.

8. INSURANCE (§ 756) — NONPAYMENT OF ASSESSMENTS — FORFEITURE — CONSTRUCTION.

It is only where the language of the bylaws of a beneficial association permit of no other construction that the mere failure to pay an assessment in time will be held to ipso facto work a suspension or forfeiture.

9. INSURANCE (§ 750) — FORFEITURE.

In order to authorize a suspension by a beneficial association for nonpayment of an assessment, it is absolutely necessary that the assessment be made in strict accordance with the by-laws of the association.

10. INSURANCE (§ 750) — NONPAYMENT OF ASSESSMENTS.

Where the directors of a beneficial association were under the by-laws required at each regular meeting to make an assessment on the members, according to their ages, in specific sums, but under such by-laws assessments were fixed in a definite sum, payable at regular periods, that the assessment was not made by the board did not render it illegal so as to prevent the suspension of a member for nonpayment thereof.

11. INSURANCE (§ 756) — NONPAYMENT OF ASSESSMENT — SUSPENSION.

Where the by-laws of a beneficial association provide for the suspension by the directors of a member in arrears, some affirmative action is required by the board.

12. INSURANCE (§ 756) — SUSPENSION OF MEMBERS.

Where the duty of suspending members of a beneficial association was placed in the directors, they could not delegate such duty to the secretary.

13. PAYMENT (§ 38) — APPLICATION.

The general rule is that, when a creditor holds more than one claim against his debtor, the latter, on making a payment, may direct on which debt it shall be credited, and it is the duty of the creditor to so apply it.

14. INSURANCE (§ 751) — ASSESSMENTS — FORFEITURE.

When a member in a beneficial association, on receiving notice of an assessment, remitted for it, the secretary of the association could not apply the remittance to payment of a prior assessment, so as to justify a forfeiture for nonpayment of the assessment of which notice was given; no notice being given the member that the prior assessment was unpaid.

Appeal from Circuit Court, Pulaski County; L.B. Woodside, Judge.

Action by Clarence A. Burchard and another by John R. Burchard, their guardian and curator, against the Western Commercial Travelers' Association, a corporation. Judgment for plaintiffs, and defendant appeals. Affirmed.

Jones, Jones, Hocker & Davis, for appellant. Bland, Crites & Murphy, for respondents.

GRAY, J.

On the 15th day of July, 1878, the appellant was incorporated under the laws of the state of Missouri, as a mutual benefit association, for the following purposes: "To obtain as its active and honorary members a large number of white male persons, (a) of good moral character, (b) of good health, (c) who are not under twenty-one nor over forty-five years of age, (d) who are traveling salesmen, (e) salesmen (or clerks in wholesale or manufacturing houses) or (f) buyers or salesmen for proprietors, co-partners or corporations engaged in a legitimate mercantile manufacturing or commercial business, and who are proprietors, co-partners, officers, directors or stockholders of corporations engaged in such business; (2) adopt, maintain and execute such plans as shall tend to the mutual benefit and protection of its members; (3) levy and collect assessments from its active members for such sums as may be necessary to provide a death loss fund for the sole purpose of the relief and aid of families, widows and orphans and other dependents of its deceased members, and (4) levy and collect from its members such sums as may be provided in its constitution and by-laws for the payment of its necessary expenses and the promotion of its objects."

There is no pretense that the defendant has a lodge system with a ritualistic form of work and a representative form of government, as provided by sections 1408 and 1409, Rev. St. 1899, and amendments thereto (Ann. St. 1906, pp. 1111, 1113), and therefore its powers and duties are not to be measured by those statutes. But the failure of the appellant company to adopt the provisions of said sections does not make it an old line insurance company. As said by Judge Bland, in Western Commercial Travelers' Ass'n v. Tennent, 128 Mo. App. 541, 106 S.W. 1073: "It is a mutual benefit association, doing business on the assessment plan, and is confined in the issuance of certificates of insurance to the class of beneficiaries named in its charter." These observations are necessary in order to determine what statutes of this state apply to the contracts of this association in disposing of the points in issue. If the association is an old line insurance company, then certain statutes of the state in regard to forfeiture of rights to benefits after payments have been made would have to be taken into consideration; but, the association being of the character heretofore stated, these statutes have no place in determining the issues involved.

On the 6th day of November, 1897, George A. Burchard, then of St. Louis, Mo. (whom we will hereinafter designate as the "assured"), became a member of the association and received from it a benefit certificate upon his life in the sum of $4,000, payable at his death to his wife, Sarah A. Burchard. On the 30th day of July, 1904, the assured, for the purpose of changing the beneficiary from his wife to his children, Clarence A. Burchard and Blanche Burchard, surrendered his certificate and received from the defendant, as a substitute therefor, the benefit certificate in suit.

The association had, at all times, a constitution and by-laws, which were offered in evidence by the defendant. In 1899 or 1900, at an annual meeting of the association, the by-laws were amended, and, among others, the following adopted:

"Sec. 5. The board of directors, at each regular monthly meeting, shall levy an assessment upon each active member as follows:

                Those  aged  between                     Whole Certificate.  Half Certificate
                                 21 and under 26 years,  $2 75               $1 40
                 "      "    "   26  "    "   31   "      3 50                1 75
                 "      "    "   31  "    "   36   "      4 00                2 00
                 "      "    "   36  "    "   41   "      4 75                2 40
                 "      "    "   41  "    "   46   "      6 00                3 00
                 "      "    "   46 years and over,       7 00                3 50
                

"All active members shall be classified as follows:

                Those aged between 21 and 26 years  1st Class
                  "    "     "     26  "  31  "     2nd  "
                  "    "     "     31  "  36  "     3rd  "
                  "    "     "     36  "  41  "     4th  "
                  "    "     "     41  "  46  "     5th  "
                  "    "   46 years and over,       6th  "
                

"It is further provided, that when any member in class 1 shall reach twenty-six years, he shall be transferred to class 2, and be subject to the assessment as ordered for class 2; and when any member of class 2 reaches the age of thirty-one years, he shall be transferred to class 3, and be subject to the assessments as ordered for class 3; and when any member of class 3 shall reach the age of thirty-six years, he shall be transferred to class 4, and be subject to the assessment as ordered for class 4; and when any member of class 4 shall reach the age of forty-one years, he shall be transferred to class 5, and be subject to the assessment as ordered for class 5; and when any member of class 5 shall reach the age of forty-six years, he shall be transferred to class 6, and be subject to the assessment as ordered for class 6. Age at transfer shall be computed from age at beginning of each fiscal year and transfer made at that time."

The evidence shows from the adoption of this by-law, until after the death of the assured, which...