Crossman v. Massachusetts Ben. Ass'n

• Decision Date: 11 January 1887
• Citation: 9 N.E. 753,143 Mass. 435
• Parties: CROSSMAN, Adm'x v. MASSACHUSETTS BENEFIT ASS'N.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

143 Mass. 435

9 N.E. 753

CROSSMAN, Adm'x v. MASSACHUSETTS BENEFIT ASS'N.

Supreme Judicial Court of Massachusetts, Bristol.

January 11, 1887

COUNSEL

W.C. Parker and R.F. Raymond, for plaintiff.

The non-payment of the assessment was no forfeiture. In re People's Mut.Eq. Fire Ins. Co., 9 Allen, 319. Our claim is that, until this sum was exhausted, the association had no authority to call another assessment, either under the statute relating to assessment insurance, or under a reasonable construction of the contract contained in the policies. Defendant corporation was organized under Acts 1874, c. 375, as amended by Acts 1877, c. 204. See Acts 1872 c. 325, § 7. The supreme court has decided that societies agreeing to pay to beneficiaries of deceased members the sum of certain assessments made upon surviving members were insurance companies. Com. v. Wetherbee, 105 Mass 149. See Acts 1875, c. 107; Acts 1877, c. 204. There was no reserve fund authorized or contemplated or needed. See Acts 1874, § 7; Acts 1880, c. 196. In none of these acts is a reserve named or provided in any way. Life insurance companies are obliged to have a guaranty capital. See Gen.St c. 58, § 60; Pub.St. c. 119, § 145; Acts 1866, c. 33; Acts 1863, c. 148; Acts 1871, c. 297,§ 1; Gen.St. c. 58, § 4; Pub.St. c. 119, § 17. Assessment companies are exempted from all these provisions. Acts 1877, c. 204, § 2; Acts 1880, c. 196,§ 4. See Acts 1872, c. 325, § 7. The only fund that is spoken of is a death fund, to be kept until the death of a member, and then distributed.

As to the contract. It is one of life insurance in all essential elements, and should be construed with reference to the statutes authorizing it to be made. Com. v. Wetherbee, supra; Acts 1872, c. 325, § 7. The only fair construction is that the assured was not to be called on beyond his anniversary payment, unless money was needed because of the happening of a death.

The court wrongly ruled that there was no evidence to go to the jury on the question of the waiver by the association. See Insurance Co. v. Norton, 96 U.S. 234; Hanley v. Life Ass'n of America, 69 Mo. 380; Bliss, Ins. § 266. It is competent to show a subsequent parol agreement to waive, modify, or annul the provisions of a written instrument. Cummings v. Arnold, 3 Metc. 486; Stearns v. Hall, 9 Cush. 31; Leathe v. Bullard, 8 Gray, 545. So a waiver of a clause in an insurance policy may be by acts, as well as by express words. Titus v. Glens Falls Ins. Co., 81 N.Y. 410; Insurance Co. v. Norton, 96 U.S. 234; Insurance Co. v. Eggleston, Id. 572; Phoenix Ins. Co. v. Doster, 106 U.S. 30; S.C. 1 S.Ct. 18; Insurance Co. v. Wolff, 95 U.S. 326; Buckbee v. United States Ins., A. & T. Co., 18 Barb. 541; Viele v. Germania Ins. Co., 26 Iowa, 9; Home Life Ins. Co. v. Pierce, 75 Ill. 426; Wing v. Harvey, 5 De Gex, M. & G. 265; Phoenix Ins. Co. v. Lansing, 20 N.W. 22; Morrison v. Life Ins. Co., 59 Wis. 162; S.C. 18 N.W. 13; May, Ins. § 361; Bliss, Ins. § 266. There may be a waiver, also, by conduct amounting to estoppel. May, Ins. § 361; Bigelow, Estop. 633. See Helme v. Philadelphia Life Ins. Co., 61 Pa.St. 107; Insurance Co. v. Norton, supra; Insurance Co. v. Eggleston, supra; Mayer v. Mutual Life Ins. Co. of Chicago, 38 Iowa, 304; Tripp v. Vermont Life Ins. Co., 55 Vt. 100; S.C. 12 Ins.Law J. 854; Thompson v. St. Louis Mut. Life Ins. Co., 52 Mo. 469; Howell v. Knickerbocker Life Ins. Co., 44 N.Y. 276; Hanley v. Life Ass'n, supra. This is a question for the jury. Bigelow, Estop. 636; Com. v. Porter, 10 Metc. 263, 276; Insurance Co. v. Norton, supra. See Holmes, Common Law, 123 et seq.; Sheldon v. Connecticut Mut. Ins. Co., 25 Conn. 207; Enterprise Ins. Co. v. Parisot, 35 Ohio St. 35. The acts and course of dealing, evidence of which we ask may go to the jury to determine the question of waiver, were clearly the acts of the association, and not of its agent.

E. Avery and A.E. Avery, for defendant.

The assessment numbered 24, levied on each policy on December 1, 1884, was legal and authorized. All assessments made pursuant to the act of incorporation and by-laws are prima facie reasonable and valid. Acts & Resolves Mass. 1874, c. 375, § 6; Pub.St.Mass. c. 115, § 5. An assessment made in good faith, upon correct principles, and substantially correct, is binding. Marblehead Ins. Co. v. Underwood, 3 Gray, 210. The records of the defendant association are sufficient prima facie evidence of the legality of the assessment levied. People's Ins. Co. v. Allen, 10 Gray, 297. The two grounds on which the plaintiff relies as showing the assessment to be illegal are: (1) That there was no law authorizing the accumulation of the reserve fund; (2) that in such reserve fund there was more money than was required to meet its current obligations. The answer to the first is found in the provisions of the act of 1880, (chapter 196, § 3.) If the defendant corporation, under this statute, had the right to accumulate and hold a death fund, the second objection fails with the first. It does not, however, follow that, if the accumulation of the reserve death fund was not authorized by the law, the assessment of December 1, 1884, was illegal. We submit that, under the act of 1880, the defendant corporation had the right to accumulate and hold a reserve death fund in trust for the beneficiaries. The right to apply this fund to the payment of death claims was vested in the officers as trustees, and no single member had the right to insist upon its being used, at any given time, to relieve him of his assessments. The ruling of the court, that the plaintiff was not entitled to go to the jury on the question of waiver, was correct. We submit that the evidence shows that there was no waiver, or intent to waive the prompt payment of the assessments.

OPINION

MORTON C.J.

Each of the certificates under which the plaintiff claims, provides that "a failure to comply with the rules of said association as to payment, or falling into gross and confirmed habits of intoxication, shall also render this certificate void." It is admitted that the deceased, R.H. Crossman, with whom the contract was made, and of whom the plaintiff is the widow and administratrix, failed to pay an assessment levied on December 1, 1884, and payable December 30, 1884, and that such assessment has never been paid. Prima facie this failure to comply with the rules rendered his certificate void. But the plaintiff contends that the assessment was illegal and invalid, because, at the time it was laid, the association had money enough in its hands to meet all its obligations, and therefore that it was not authorized to lay an assessment.

We agree with the counsel for the plaintiff that it was not the intention of the legislature that associations of this character should become great financial institutions, with the capacity of accumulating and holding funds to an unlimited amount. The legislature has established the limits to which they may go in this direction. St.1880, c. 196, § 3, provides that "any beneficiary corporation, association, or society organized under the laws of this commonwealth shall have the right to hold, at any one time, as a death fund belonging to the beneficiaries of anticipated deceased members, an amount not exceeding one assessment from a general or unlimited membership, or an amount not exceeding in the aggregate one assessment from each limited class or division of such society or association."

In the case before us, it is not shown that the defendant has exceeded the authority conferred on it by this statute. The report states that in 1881 the defendant began to accumulate a fund called, in their books, a "reserve fund," and that "on December 1, 1884, said reserve fund, so accumulated, amounted to $67,281.17; and each policy-holder had contributed to that fund a sum equal to one death assessment upon his policy." At that time "the association had been notified of death losses amounting to $55,000, which remained unpaid," some of which were contested. It is immaterial whether the fund authorized by the statute is called on the books a reserve fund or a death fund. The object of the legislature probably was to enable the associations to strengthen their position...