Claudy v. Royal League

• Decision Date: 23 June 1914
• Docket Number: No. 16695.,No. 16694.,16694.,16695.
• Citation: 259 Mo. 92,168 S.W. 593
• Parties: CLAUDY v. ROYAL LEAGUE.
• Court: Missouri Supreme Court

168 S.W. 593

259 Mo. 92

CLAUDY v. ROYAL LEAGUE.

No. 16694.

No. 16695.

Supreme Court of Missouri, Division No. 2.

June 23, 1914.

1. CONSTITUTIONAL LAW (§ 205)—INSURANCE (§ 688)—SPECIAL PRIVILEGES—CLASSIFICATION —FRATERNAL INSURANCE.

Rev. St. 1909, §§ 7109-7127, providing for fraternal beneficiary associations for the benefit of its members and their beneficiaries, and declaring in section 7109 that such associations shall be exempt from the general insurance laws, creates a class regulated by a law complete in itself and operating uniformly on those coming within the class, and does not violate Const. art. 4, § 53, par. 26, prohibiting the granting of special privileges or immunities.

2. CONSTITUTIONAL LAW (§ 92) — VESTED RIGHTS—FRATERNAL INSURANCE.

Vested rights are not conferred by a certificate issued by a fraternal beneficiary association.

3. INSURANCE (§ 718) — FRATERNAL INSURANCE —CONTRACTS.

The constitution and by-laws of a fraternal beneficiary association are a part of a contract of insurance created by the issuance and acceptance of a certificate.

4. INSURANCE (§ 725) — FRATERNAL INSURANCE —CONTRACTS.

A fraternal beneficiary association issuing a certificate creating no vested interest may contract with a member in advance that the terms of the certificate may be changed, provided the change is reasonable and in harmony with the purpose for which the association is formed.

5. INSURANCE (§ 719) — FRATERNAL INSURANCE —CONTRACTS.

Where a fraternal beneficiary association, created to provide by co-operation a fund to be paid the beneficiaries on the death of the members, issued to a member a certificate which bound it to pay a sum not in excess of $2,000 in accordance with the law governing the fund, and which provided that the member would comply with the laws in force or that might be subsequently enacted and which was accepted by the beneficiary on the conditions specified, the association, having in force at the time of issuance of the certificate a by-law reducing the benefit one-half on a member committing suicide, could subsequently adopt a by-law providing that the beneficiary of a member committing suicide should be paid such proportion of the sum named in the certificate as the total amount the member had paid into the fund bore to the amount he would have paid had he lived out his life expectancy, and the beneficiary, on the member committing suicide, could only recover the amount due on such a calculation, though it was less than one-half of $2,000.

Appeal from St. Louis Circuit Court; Chas. Claflin Allen, Judge.

Action by Christine Claudy against the Royal League. From a judgment granting relief to plaintiff, both parties appeal. Reversed and remanded, with directions.

Warren D. Isenberg, of Los Angeles, Cal., and F. H. Bacon, of St. Louis, for Christine Claudy. George W. Miller, and R. P. & C. B. Williams, of St. Louis, for the Royal League.

WALKER, P. J.

There are cross-appeals in this case.

Plaintiff brought suit in the circuit court of the city of St. Louis against defendant, a fraternal beneficiary association, on a benefit certificate of life insurance of $2,000, issued by defendant on the life of the husband of plaintiff, who, several years subsequent to the issuance of the certificate died by his own hand. The defendant was incorporated under the laws of the state of Illinois as a fraternal beneficiary association, and at the time of the issuance of the certificate herein, and at all times intervening between that date and the death of the husband of the plaintiff, it was authorized to do business in this state, under article 9 of chapter 61, R. S. 1909, entitled "Fraternal Beneficiary Associations."

At the time of the issuance of the benefit certificate the following by-law of the association was in force, to wit:

"If any member, whether admitted heretofore or hereafter, shall die by his own hand, sane or insane, his beneficiary or beneficiaries shall receive only one-half of the face value of his benefit certificate."

Subsequently this by-law was changed several times, and at the time of the death of the member in this case the following was in force:

"No member, whether, admitted heretofore or hereafter, shall die by his own act or hand, sane or insane, and if any member, whether admitted heretofore or hereafter, shall die by his own act or hand, sane or insane, such death shall forfeit all the rights and claims to the amount agreed to be paid on his death and specified in the benefit certificate of such member, and his beneficiary or beneficiaries shall receive and be paid in lieu thereof, such a proportion of the sum named in his benefit certificate as the total amount which he has paid into the widows' and orphans' benefit fund bears to the amount he would have paid had he lived out his entire life expectancy at his age of entering."

Following this is a table of life expectancy, from which the amount is to be calculated due a member subject to the foregoing conditions.

The benefit certificate contains the following condition:

"Upon condition that the said member complies in future with the laws, rules, and regulations now governing the said council and fund, or that may hereafter be enacted by the Supreme Council and to govern said council and fund, all of which are also made a part of said contract. These conditions being expressly assented to and complied with, the Supreme Council of the Royal League hereby promises and binds itself to pay out of its widows' and orphans' fund to Christine Claudy, wife, a sum not exceeding two thousand dollars ($2,000.00), in accordance with and under the provisions of the laws governing such fund."

The certificate of which this condition was a part was issued and delivered to the member, and thereon was indorsed the following:

"I accept this certificate on the condition therein named. Christian Claudy."

The petition after admitting the corporate character of defendant as a fraternal beneficiary association, and its authority to do business in this state at all of the times mentioned, contains the formal allegations requisite to state a cause of action in a proceeding based upon a certificate of this character, and asks judgment for the full amount of same, to wit, $2,000.

The answer, among other things, pleads the condition under which the certificate was issued, the acceptance of same by the member, that he thereafter died by his own hand, the by-law of the society in force in regard to the forfeiture of rights of a member who thus died, and that under such by-law his beneficiary is entitled to the sum of $764.39, which has been tendered her and refused, and that the defendant now tenders, and is ready and willing to pay, same.

Plaintiff filed a motion for a judgment on the pleadings, the material parts of which motion are as follows:

"First. The amendment of the original by-law in force at the time Christian Claudy became a member of defendant corporation operated as a repeal of such original by-law, and said amended by-law was inoperative so far as the contract of said Christian Claudy with defendant was concerned, being an after-enacted by-law.

Second. The fact that Christian Claudy committed suicide is irrelevant to any issue in this case, and the fact of suicide constitutes no defense to plaintiff's cause of action, because said defendant is subject to the statute of this state providing that in suits on life insurance policies, suicide shall be no defense, unless it is shown that the deceased contemplated suicide at the time he took out the policy, and in said answer it not being alleged that the deceased contemplated suicide when the policy or certificate sued on was issued, and because the act of 1897 exempting fraternal beneficiary societies from the insurance laws of this state, and particularly the suicide statute, is in violation of the constitutional provision of this state which forbids the Legislature from passing any law granting to any corporation, association, or individual any special or exclusive right, privilege, or immunity."

The trial court sustained the foregoing motion in part, and rendered judgment in favor of plaintiff in the sum of $1,000, basing same on the by-law of the society in force at the time of the issuance of the certificate.

Plaintiff appealed therefrom on the ground that judgment should have been rendered in her favor for $2,000, the full amount of the benefit certificate.

Defendant appealed on the ground that judgment should have been rendered in plaintiff's favor for only $764.39, the amount found to be due on the certificate under the bylaw of the society in force at the time of the death of the member, calculated upon the table of expectancy forming a part of said by-law.

The regularity of the...