Ellerbe v. Barney

• Decision Date: 05 February 1894
• Citation: 25 S.W. 384,119 Mo. 632
• Parties: Ellerbe, Superintendent of Insurance, v. Barney, Appellant
• Court: Missouri Supreme Court

25 S.W. 384

119 Mo. 632

Ellerbe, Superintendent of Insurance, v. Barney, Appellant

Supreme Court of Missouri

February 5, 1894

Appeal from St. Louis City Circuit Court. -- Hon. D. D. Fisher Judge.

Affirmed.

T. H Bacon and Lubke & Muench for appellant.

(1) The association in question was doing a life insurance business on the assessment plan and its contracts are those of life insurance, just as much as the policies issued by the regular life insurance companies, hence the same rules applicable to life insurance contracts should be applied to this contract so far as possible. Commonwealth v. Weatherbee, 105 Mass. 149; Farmer v. State, 69 Texas, 561; Berry v. Knights Templars, 46 F. 439; Masonic Aid Association v. Taylor, 50 N.W. (S. Da.) 93; Bolton v. Bolton, 73 Maine, 299; State v. Miller, 66 Iowa 26; Rensenhouse v. Seeley, 72 Mich. 603. (2) A contract of life insurance is a peculiar contract in that its obligations are unilateral. It contains no undertaking of the assured to pay premiums but simply gives him an option to pay or not, and thus continue the obligation of the association. Ins. Co. v. Statham, 93 U.S. 36; Worthington v Ins. Co., 41 Conn. 399; Dungan v. Ins. Co., 46 Md. 492. (3) The nature of the association and of kindred organizations is voluntary, and the members join with that understanding. The levying of an assessment places them under simply a necessity of choosing whether they will pay it, or allow their certificate to lapse. The penalty for nonpayment being a cessation of the obligation of the contract. In re Protection L. Ins. Co., 9 Biss. 188; Rood v. R'y etc., Ass'n, 31 F. 62; Burdon v. Mass., etc., Ass'n, 147 Mass. 360. (4) The consideration for the payment of an assessment is the continuance of the protection afforded by the association until the next assessment matures. The company becoming insolvent before the time for the payment of assessments arrives made it impossible for it to give any consideration for the assessment levied. In re Protection L. Ins. Co., 9 Biss. 188; Burdon v. Mass., etc., Ass'n, 147 Mass. 360; Attorney General v. Ins. Co., 82 N.Y. 336; Attorney General v. Ins. Co., 33 Hun, 138. (5) These life insurance organizations must not be confounded with the mutual fire insurance corporations where the obligation is to pay a pro rata on such losses as shall be sustained by the association. If this distinction is observed it explains the only case opposed to the views herein set forth, which is McDonald v. RossLewin, 29 Hun, 87. The doctrine concerning liability of members of mutual fire insurance organizations is very different from that which applies in this case. May on Insurance, sec. 653.

James E. Hereford with whom is M. W. Huff for respondent.

(1) The United Masonic Benefit Association was a mutual insurance company. R. S. 1889, sec. 5860; State ex rel. v. Ben. Soc., 72 Mo. 147; Bacon on Benefit Societies, page 175. (2) Premiums due such companies are recoverable. Clark v. Middleton, 19 Mo. 53; Ins. Co. v. Geraldin, 31 Mo. 30. (3) Neither insolvency nor cancellation of policy prevents recovery for losses suffered during life of policy; Receiver v. Hite, 94 Pa. St. 394; Vanata v. Insurance Co., 31 N.J.Eq. 15; Commonwealth v. Insurance Co., 112 Mass. 116; Life Ass'n v. Rossiter, 132 Pa. St. 314. (4) A member can not, by withdrawal, avoid any obligation incurred; Borgraefe v. Knights of Honor, 26 Mo.App. 218. (5) Issuance and acceptance of the certificates furnish a sufficient consideration for agreement to pay any assessments made during the life of the policy, and upon failure to pay an action will lie. Receiver v. Lewin, 29 Hun, 87. (6) A member is liable for all losses accrued up to termination of membership, and in case of insolvency the receiver may assess and bring action for assessments. Receiver v. Lewin, 29 Hun, 87.

Martin Special Judge. Barclay, Gantt and Sherwood, JJ., concurring; Black, C. J., Brace and Burgess, JJ., dissenting; Macfarlane, J., not sitting.

OPINION

In Banc

Martin (Special Judge).

This is an action brought by the superintendent of the insurance department of the state, as receiver of the Masonic Mutual Benefit Society of Missouri (a mutual insurance organization), to recover the amount of certain assessments levied upon the members of the association to pay death losses. The defendant was a member of the organization. Shortly before the receiver took charge, the directors of the company regularly levied against defendant assessments amounting to $ 140.80, which assessments he refused to pay. The regularity of the assessments is admitted. The suit was originally before a justice of the peace, where judgment was rendered against defendant, who then appealed to the circuit court. There an amended statement was filed to which appellant demurred for the reason that it did not set forth a cause of action. The demurrer was overruled, and defendant declined to plead further, but appeared at the trial and demurred to plaintiff's evidence. The court gave judgment for plaintiff. After unsuccessfully moving for a new trial, defendant appealed to the supreme court. The case is, in effect, an agreed one, as all the facts are conceded.

Defendant became a member of the society in 1885, accepting two certificates (one in division B, the other in division C) in the nature of policies, the material parts of which follow, viz.:

"This certificate of membership witnesseth that the Masonic Mutual Benefit Society of Missouri, in consideration of the representations made to it in his application for membership, and the sum of $ 6 to be paid by Charles E. Barney, of St. Louis, state of Missouri, and the further sum to be paid by him to this society, within twenty days after the notice, duly mailed or delivered to him, of a death occurring in the membership of Division C, of this society, of $ 1.60 for each such death, as assessments therefor may be made, so long as he may be a member thereof, promises and agrees to and with the said Charles E. Barney well and truly to pay or cause to be paid to his children within sixty days after due notice and satisfactory proof of the death of said Charles E. Barney have been filed in the office of the secretary of the society, for every member in good standing in said division of this society as follows, for each member in said division of the first class seventy cents, of the second class seventy-five cents, of the third class eighty-five cents, of the fourth class ninety-five cents, of the fifth class $ 1.05, of the sixth class $ 1.20, of the seventh class $ 1.40, and of the eighth class $ 1.50. Provided, however, that the aggregate amount of the sum so paid shall in no case exceed the sum of $ 3,000.

"Upon this condition, however, that if the said Charles E. Barney shall fail to pay any assessment when the same becomes due and payable by him according to the by-laws of this society and the terms of this certificate, then this contract and agreement shall be null and void, and of no effect, and the said Charles E. Barney and the beneficiary therein shall forfeit all rights accruing under this certificate.

"This certificate is issued by the society and accepted by the holder and beneficiary therein upon the following express conditions and agreements:

'First. That the same is issued and accepted subject to the provisions of the articles of association and by-laws of this society,'" etc.

The certificates were duly executed by the president and secretary of the society. No question as to their form is raised. Afterwards the name of the company was changed to "United Masonic Benefit Association of Missouri," and its internal laws were amended so as to fix the sum to be paid on each certificate at $ 2,000, and the amount of assessment, for each death of a member, at $ 6.40.

The by-laws of the society bearing on the present controversy provide that, "upon the death of a member, or as soon thereafter as ordered by the executive committee, each member of the association, at the time such death occurred, may be assessed, and shall pay to the secretary of the association" the regular amount of the assessment above indicated. The by-laws then immediately proceed to declare it the duty of the secretary to notify by mail, each member of each assessment upon his certificate, and then recite that "any member failing to pay such assessment within twenty days after the date of such notice shall have been served upon, sent or given to him, shall forfeit his membership in the association and all benefits and interests therefrom and therein; provided, that any payment of assessments after such forfeiture, or any notice to pay or subsequent assessment by the association, shall not have the effect to restore the person notified or paying, to membership or to any rights under his certificates until his application for reinstatement shall be presented and approved by the executive committee."

The defendant paid assessments until those now in dispute were called. The latter were regularly made by the proper officers of the society to pay the amounts due upon deaths of members in good standing, holding valid certificates. Defendant was duly notified of these assessments. Afterwards the insurance commissioner, now plaintiff, took possession of the assets of the concern, under the laws of Missouri, because of the insolvency of the company, and now seeks to compel payment of these assessments as assets, for the benefit of those properly entitled to share therein.

I. It is apparent from the foregoing statement, which was prepared by Judge Barclay, that the issue in this case is one of law, to be determined by a construction of the contract disclosed in the record.

On the part of the appellant it is contended that he never became...