Grimes v. Northwestern Legion of Honor

• Decision Date: 25 October 1895
• Parties: GRIMES v. NORTHWESTERN LEGION OF HONOR.
• Court: Iowa Supreme Court

97 Iowa 315

64 N.W. 806

GRIMES

v.NORTHWESTERN LEGION OF HONOR.

Supreme Court of Iowa.

Oct. 25, 1895.

Appeal from district court, Iowa county; M. J. Wade, Judge.

Action at law upon a certificate of membership in the defendant company issued to Martin L. Grimes, in which plaintiff is the beneficiary. The district court sustained a demurrer to the defendant's answer, and defendant appeals. Affirmed.Hedges & Rumple, for appellant.

S. H. Fairall, for appellee.

DEEMER, J.

This is an action at law upon a certain certificate of membership in the defendant company,--a corporation organized under the laws of this state,--issued to one Martin L. Grimes, in which the defendant, upon compliance with certain conditions upon the part of Grimes, promised and agreed to pay out of its benefit fund to the plaintiff, Rosaltha Grimes, a sum not exceeding $2,000. The petition alleges that the defendant is a mutual life insurance company incorporated under the laws of Iowa, and was and is operated on the mutual, co-operative plan, for the purpose of furnishing its members with life insurance; that its objects were and are as follows: “(1) To unite fraternally all white persons of good moral character, who are socially acceptable, of sound bodily health, and between eighteen and fifty-five years of age, and whose occupation is not extrahazardous. (2) To improve the conditions of its members, morally, socially, and materially, by timely counsel, by encouragement in business, by assistance to obtain employment when in need, and to provide for and comfort the sick and distressed members of the order. (3) To establish a benefit fund, from which, on the satisfactory evidence of the death of a member of the order who has complied with all its lawful requirements, a sum not exceeding three thousand dollars shall be paid to the family, orphans, or dependents, as the member may desire. (4) To establish a reserve fund, from which benefits shall be paid from time to time as the grand council, while in regular session, may direct, and as provided by the laws of the grand council.” It further alleges the issuance and delivery on August 30, 1893, of a certificate of membership by the defendant company to Martin L. Grimes, as before referred to. It also avers that on October 7, 1893, said Martin L. Grimes died; that he had fully complied with all the rules and regulations of the defendant company, and was in good standing at the time of his death; that notice and proofs of death were given defendant as required by the certificate. The defendant, in answer, denied that it is a mutual life insurance company, and that it is operated on the mutual, co-operative plan, for the purpose of furnishing its members with life insurance. It avers that it is a secret, fraternal institution, of a benevolent and charitable character, incorporated under the laws of this state in the year 1884; that it has never complied with the law (Acts 21 St. Gen. Assem. c. 65) in reference to mutual insurance companies doing business on the mutual, assessment, co-operative, or natural premium plan; and that its business and objects are as defined in its articles, which are set forth in the petition. It states that its members are honorary and beneficial, the first being restricted to wives, husbands, brothers, and sisters of beneficial members, and that good character and social standing is a prerequisite to membership, either honorary or beneficiary; that the laws of the society provide for investigation and report of a committee on the character of the applicant, and the question is submitted to a vote of all members present of the council which applicant desires to join; that its laws provide for a relief committee, whose duty it is to visit the sick or disabled, and report at each stated session; that the laws also provide for benefits in case of sickness, after any member shall have been six months in good standing. It further alleges that about August 27, 1893, said Martin L. Grimes made application for membership in defendant company, and at the time made answers to certain interrogatories therein contained, which were false and untrue; that these statements were, by the terms and conditions of the application, made part of the contract between the member and the association, and were warranties on the part of Grimes; and that Grimes well knew that the statements and representations made in said application for insurance were false. A copy of the application is attached to the answer. Thereafter plaintiff filed an amendment to her petition, setting forth the constitution and by-laws of the defendant, in addition to the articles of incorporation, and then filed a demurrer to the answer, based upon the ground that, as no copy of the application was attached to or indorsed upon the policy or certificate declared on, the alleged false statements or representations or breach of warranty was no defense to the action. The court sustained this demurrer, and rendered judgment for plaintiff, and defendant appeals.

McClain's Code, § 1733 (Acts 18th Gen. Assem. c. 211, § 2), so far as material, is as follows: “All insurance companies or associations shall upon the issue or renewal of any policy attach to such policy or endorse thereon, a true copy of any application or representations of the assured which by the terms of such policy are made a part thereof, or of the contract of insurance or referred to therein, or which may in any manner affect the validity of such policy. The omission so to do shall not render the policy invalid, but if any company or association neglects to comply with the requirements of this section, it shall forever be precluded from pleading, alleging or proving such application or representations or any part thereof or falsity thereof or any parts thereof in any action upon such policy. * * *” Defendant's counsel urge two propositions as decisive of the case at bar: (1) They insist that defendant is not a life insurance company, but they say it is a secret, fraternal society or institution, of a benevolent and charitable character, and that the provision of McClain's Code before quoted is not applicable to it. (2) They contend that, if it should be held that it is a life insurance company, it is not such a one as is contemplated in the aforesaid statute, and that this act of the general assembly, requiring a copy of the application to be attached to or indorsed upon the policy, has no application to the case.

1. Our first inquiry will be with reference to the character of defendant. It was incorporated under the general incorporation laws of this state in the year 1884, for the objects stated in the petition; and the articles also provided that it should have certain fraternal forms and ceremonies, and should be a fraternity or secret society. The trustees, directors, or managers were to be known and designated as “grand commander,” “grand vice commander,” “past grand commander,” “grand secretary,” “grand treasurer,” “grand chaplin,” “grand guide,” “grand warden,” “grand sentinel,” “three grand trustees,” and a medical examiner in chief. The constitution of the grand council declared the object of the order to be about as stated in the articles of incorporation. It provided for a grand council, and who should compose it; named the officers, their terms, duties, etc.; provided for passwords for subordinate councils; recognized the secret work of the order; and provided for visitation by grand officers for instruction in the secret work. It provided for the instruction of councils under the authority of the grand officers; named and defined the duties of subordinate officers; required the instituting officers of new councils to instruct and exemplify secret work; provided for expulsion from the order for revealing any of the secrets, grips, etc. Applicants for membership were required to be white people, of good moral character, and socially acceptable. No medical examination was required, as we understand it, unless one desired to take a benefit certificate. One of the declared objects of the association was to improve the condition of its members, morally, socially, and materially, by encouragement in business, assistance to obtain employment when in need, and to provide for and comfort sick and distressed members. Provision was also made for trial and expulsion of members for certain offenses. In addition to all this, and many other matters which might be mentioned, a third object of the association was to establish a benefit fund, from which, on satisfactory proof of death, a sum not exceeding $3,000 should be paid to some one of the member's family, as he might direct. This was to be accumulated by mutual contributions or assessments,...