Folkens v. Northwestern National Life Insurance Company

• Decision Date: 02 March 1903
• Citation: 72 S.W. 720,98 Mo.App. 480
• Parties: ZULICA FOLKENS, Respondent, v. NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY, Appellant
• Court: Kansas Court of Appeals

72 S.W. 720

98 Mo.App. 480

ZULICA FOLKENS, Respondent, v. NORTHWESTERN NATIONAL LIFE INSURANCE COMPANY, Appellant

Court of Appeals of Missouri, Kansas City

March 2, 1903

Appeal from Chariton Circuit Court.--Hon. John P. Butler, Judge.

AFFIRMED.

Judgment affirmed.

Lavelock & Kirkpatrick for appellant.

(1) The defendant company was organized under a statute providing for the incorporation of life insurance associations on the "assessment plan;" its license specially authorized the transaction of a life insurance business on the "assessment plan," and the policy or certificate sued on in this case is an "assessment contract" as defined by the Missouri statutes. Gen. Stat. Minn., sec 3296; R. S. 1899, secs. 7906, 7901; Whitmore v. Supreme Lolge, 100 Mo. 36; Hanford v. Ben. Ass'n, 122 Mo. 50; Haynie v. Indemnity Co., 139 Mo. 416; Elliott v. Ins. Co., 163 Mo. 132; Haydel v. Life Ass'n, 104 F. 718. (2) In this State, an assessment contract of life insurance is not subject to the non-forfeiture statute. Policies denominated "assessment contracts" under section 7901 of the Revised Statutes are, by section 7910, expressly exempt from all the provisions of article 2, chapter 119 of said statute, except the sections therein specifically mentioned. R. S. 1899, sec 7910; Hanford v. Ben. Ass'n, 122 Mo. 50; Haynie v. Indemnity Co., 139 Mo. 416; Aloe v. Life Ass'n, 147 Mo. 561; Elliott v. Life Ins. Co., 163 Mo. 132; Sparks v. Indemnity Co., 61 Mo.App. 109; Haydel v. Life Ass'n, 104 F. 718. (3) A contract of life insurance, providing for forfeiture in case of non-payment of premiums or assessments, in the absence of a controlling statute, is valid. The premiums and assessments are not debts of the insured, as such contract in this respect, is unilateral, and the insured may pay or forfeit at his option. If default be made the policy or certificate will lapse. If it were otherwise the insuring company would be without remedy in such case. May on Insurance (2 Ed.), secs. 341, 341a; Richards on Insurance (2 Ed.), secs. 37, 182; Ashbrook v. Ins. Co., 94 Mo. 72; Ellerbe v. Barney, 119 Mo. 632; Gaterman v. Ins. Co., 1 Mo.App. 300; Curtin v. Grand Lodge, 65 Mo.App. 294; Scheele v. Lodge, 63 Mo.App. 277; Worthington v. Ins. Co., 41 Conn. 372; Ins. Co. v. Statham, 93 U.S. 24; Klein v. Ins. Co., 104 U.S. 88; Thompson v. Ins. Co., 104 U.S. 252; Jeffries v. Ins. Co., 22 Wall. 47. (4) The policy or certificates sued on in this case is not a single yearly contract with the privilege of renewal from year to year by paying the annual premium, but it is a whole life contract subject to forfeiture for non-payment of premiums or assessments when due. In contracts of life insurance, time is material and of the essence of the contract, and in this case, it was expressly stipulated that the policy should lapse for default of payment of premiums or assessments; this the contracting parties distinctly covenanted should be the consequence of such default. 1 Beach on Contracts, secs. 80, 616; 2 Bacon on Ben. Societies (New Ed.), sec. 354, p. 701-2; Ellerbe v. Barney, 119 Mo. 633, 649; Sick v. Ins. Co. 79 Mo.App. 609; Wheeler v. Ins. Co., 82 N.Y. 583; Carpenter v. Life Ass'n, 68 Iowa 453; Worthington v. Ins. Co., 41 Conn. 372; Pitt v. Ins. Co., 66 Conn. 376; Ins. Co. v. Statham, 93 U.S. 24; Klein v. Ins. Co., 104 U.S. 88; Thompson v. Ins. Co., 104 U.S. 252, 257; Sheerer v. Ins. Co., 16 F. 723; Hawkshaw v. Supreme Lodge, 29 F. 773.

Fred Lamb for respondent.

(1) The respondent, to sustain the judgment found by the trial court in this cause, relies upon the application of sections 5856 and 5858, Revised Statutes 1889, known as the non-forfeiture law, to the policy in suit. (2) The policy filed was issued by a company which was authorized to do business in this State. There had been three full annual payments thereon. The policy had, when the fourth annual premium became due and remained unpaid, a net value, which applied according to the provisions of section 5856, supra, would have maintained said policy in force for a period of four months and seven days, from the 8th day of September, 1900, the date of lapse. The assured died on the 8th day of November, 1900. These facts are not disputed and upon this record respondent is entitled to have the judgment of the trial court affirmed. Cravens v. Ins. Co., 148 Mo. 610; Raymond v. Ins. Co., 86 Mo.App. 392; Horton v. Ins. Co., 151 Mo. 621.

OPINION

ELLISON, J.

--This is an action on a policy of life insurance in which the plaintiff prevailed in the trial court.

The insured paid his premium annually on the 8th day of September, 1897, 1898 and 1899. He failed on the fourth which fell due on September 8, 1900, and he died in the following November. Defendant claims to be what is known as an assessment company and that in consequence the non-payment of the last premium due forfeited the policy; and it is conceded by plaintiff that if the policy is based on the assessment plan as contemplated by the statute, it became void by reason of non-payment of the premium last due. But the contention of counsel for plaintiff is that defendant is an old line company, or at least that the policy is a contract of old line insurance and that it had a net value at the death of the insured sufficient to keep it in force beyond the date of his death. This extended, or paid up insurance, so invoked by counsel, is based on the provisions of sections 5856-5859, Revised Statutes 1889, providing for such insurance on the contingency of a failure of payment of a premium on old-line policies when due. The reason for the contest over the kind of company defendant is, arises from the unfortunate and unjust distinction which the Legislature has made between the two kinds of companies, wherein it is provided that certain provisions of the law as to old line companies (among which are the sections aforesaid as to extended insurance) shall not be applicable to assessment companies. Art. 3, chap. 89, R. S. 1889.

So, therefore, it is only necessary to consider to which class of companies the defendant belongs. This will be determined, so far as this case is concerned, by the contract in the policy. If it is an assessment contract, as known to the law, then the sections of the statute aforesaid providing for extended or paid up insurance, known as the non-forfeiture statute, are not applicable. Sec. 5869, R. S. 1889.

An assessment contract, the statute says, is one wherein the payment of the benefit "is in any manner or degree dependent upon the collection of an assessment upon persons holding similar contracts." Sec. 5860, R. S. 1889. If provision is made by the policy in any manner or degree, for an assessment, then it is an assessment contract. Elliott v. Ins. Co., 163 Mo. 132, 63 S.W. 400; Aloe v. Ins. Co., 164 Mo. 675. In the former Judge GANTT, and in the latter, Judge MARSHALL, review all the principal cases in this State on the subject. There must not only be provision made for such an assessment, but a liability of members created for its payment, as well as a right given to a beneficiary to have the assessment made. Jacobs v. Ins. Co., 146 Mo. 523, 538, 48 S.W. 462. For a provision for an assessment in certain contingencies would be valueless if there was no liability on the members to pay it, or no right in the beneficiary to have it enforced.

The application made by the insured was for a policy "on the accumulative reserve plan;" and the policy was issued in consideration of a stated annual premium of $ 13.65. There is no other premium, or other consideration, called for by the policy, unless it be in the following "safety-clause" provision, which defendant insists makes the policy an assessment contract, viz.: "This association legally qualifies in the various States where it does business under the laws which do not require it to assume the liability of maintaining the legal reserve or level premium of old line companies. The rate upon which this policy is issued is based upon the American life tables, and according to American experience will be sufficient to fully carry out the terms of this contract. Should, however, an emergency (hitherto unknown to American experience) arise which would exhaust the mortuary and reserve, or emergency fund, in excess of the amount of one mortuary rate upon all policies in force, then it is agreed that the policies in force may be assessed their pro rata, according to the American experience table of mortality, of the amount necessary to meet such emergency and maintain the solvency of the association." That provision does provide for an assessment in a certain contingency (so remote as never yet to have occurred in America, and as to which we will again refer) but it does not provide for any obligation on the insured's fellow-members to pay it. It provides for a non personam assessment upon other policies. The statute aforesaid makes necessary that the assessment shall be upon the "persons" holding the policies. An assessment upon the policy may cause its forfeiture if not paid, but it does not create a personal liability on the policyholder any more than a charge on real estate creates a personal liability upon the owner of such realty. One of the essential elements of an assessment contract, and upon which each member of an assessment company has a right to rely, is that every other member is personally obligated to pay in, for his benefit, such an assessment as will make good the amount of his insurance. That there was no provision for an assessment against the member intended to be provided for by this safety clause, is made apparent by other provisions of the policy wherein it is...