Jarman v. Knights Templars' & Masons' Life Indem. Co. of Illinois, 2,341.

• Decision Date: 26 June 1899
• Docket Number: 2,341.
• Citation: 95 F. 70
• Parties: JARMAN v. KNIGHTS TEMPLARS' & MASONS' LIFE INDEMNITY CO. OF ILLINOIS.
• Court: U.S. District Court — Western District of Missouri

95 F. 70

JARMAN v. KNIGHTS TEMPLARS' & MASONS' LIFE INDEMNITY CO. OF ILLINOIS.

No. 2,341.

United States Circuit Court, W.D. Missouri, Western Division.

June 26, 1899

Harber & Knight, for plaintiff.

Saml. B. Huston, Alex B. Huston, and Hervey B. Hicks, for defendant.

PHILIPS District Judge.

This case was submitted to the court without the intervention of a jury, on the agreed statement of facts, with some additional evidence; and the controversy, briefly stated, grows out of substantially the following state of facts: The defendant is a life insurance company, doing business on what is known as the 'assessment plan,' by which it issues policies of insurance to Masons who become members of the company on application. In 1885 it issued a policy to John P. Jarman whereby, in case of death and proof thereof, it promised to pay to his wife, or children, or heirs, in the order named the sum of $5,000 and all assessments paid to the company by the assured. In 1898 the assured died by a gunshot wound inflicted by himself while insane. This suit is brought by his wife to recover on the policy. The principal matters of defense interposed by the defendant are: (1) That the policy exempts the defendant from liability for death resulting from an act of suicide; and (2) if it should be held by the court that said provision of the policy was void, under the statute of Missouri in force at the time of the issue of the policy declaring that the fact of suicide should be no defense to a suit on a life policy, then the defendant is not required to pay to the plaintiff the sum of all the assessments paid in by the assured during his lifetime, for reasons which fully appear in this opinion.

The first question, therefore, for decision, arising on the facts and evidence submitted, is, does the fact that the insured died by his own hand defeat the right of recovery on this policy? At the time of the issue of the policy,--which admittedly, was a Missouri contract,-- the following provision of the Missouri statute was in force:

'In all suits upon policies of insurance of life hereafter issued by any life insurance company authorized to do business in this state, it shall be no defense that the insured committed suicide, unless it shall be shown to the satisfaction of the court or jury trying the cause, that the insured contemplated suicide at the time he made his application for the policy, and any stipulation in the policy to the contrary shall be void. ' Section 5982, Rev. St. Mo. 1879; section 5855, Rev. St. Mo. 1889.

The language of the statute is comprehensive. It applies to all 'policies of insurance on life hereafter issued by any life insurance company doing business in this state. ' On a life policy issued by this same defendant tried in this court, it was distinctly held by Judge Caldwell, on the circuit (Berry v. Indemnity Co., 46 F. 439), that this company at the time in question was engaged essentially in life insurance business, and nothing else. This ruling was affirmed by the court of appeals. 1 C.C.A. 561, 50 F. 511. It was as distinctly further held in this case that said section of the Missouri statute applied to such policies, and cut off the defense of death by suicide. The policy sued on in that case was issued in 1885, and the act of suicide was committed in November, 1889. As in the case at bar, the act of suicide was subsequent to the enactment of the statute of 1887, now section 5869, Rev. St. Mo. 1889, relied on by defendant to avoid the operation of said section 5855. Said act of 1887, after directing that all insurance companies doing business in the state should make certain returns to the insurance department touching the state of its affairs, and subjecting it to visitation and examination, contained the following clause:

'And all such foreign companies are hereby declared to be subject to, and required to conform to, the provisions of section 5912 of the Revised Statutes of Missouri of 1889; provided, always, that nothing herein contained shall subject any corporation doing business under this article to any other provisions or requirements of the general insurance laws of this state, except as distinctly herein set forth.'

The only feature which, in this respect, differentiates the Berry Case from this, is the fact that in the former it did not appear from the evidence that the defendant company had ever complied with the provisions of the act of 1887, or that it was doing business in Missouri under the requirements and liabilities imposed by the act; while in the case at bar it does appear that, in 1888, the company complied with said statute, attempting to do business in the state of the assessment plan.

It is to be conceded to defendant that, as to policies issued on the assessment plan, subsequent to the statute of 1887 and prior to 1897, said section 5855, denying the defense of suicide, does not apply. Haynie v. Indemnity Co., 139 Mo. 416, 41 S.W. 461. The policy in the Haynie Case was issued in 1888, and the insured committed suicide in 1893. It is on said act of 1887 that the defendant's counsel have builded a most elaborate argument, on the assumption that this act superseded and repealed the provisions of said section 5855 in respect of assessment companies, and therefore the rights of the parties in this action are to be determined as if said section 5855 had been expunged from the statutes at the time the cause of action arose in this case. In support of this contention, reliance is placed upon rulings akin to that in Ewell v. Daggs, 108 U.S. 143, 2 Sup.Ct. 408, which was, in effect, that when the right of a party to a given contract to avoid it on the ground of a statutory enactment based upon the declared public policy of the state, where such right pertains rather to the remedy than an essential element of the contract, inducing its execution, may, by subsequent act of the legislature, be entirely taken away, the parties are remitted to the terms of the contract as expressed on its face. Judge Shiras, who wrote the opinion of the court of appeals in the Berry Case, declined to pass affirmatively upon the correctness of this contention, because it did not appear from the record before him that the company had complied with the provisions of the act of 1887, entitling it to plead exemption from the operation of said section 5855. But it is quite apparent from the trend of his observations that the inclination of his mind was against the contention of the defendant, if the requisite facts had appeared. In that connection he said:

'Before this question can arise, it must be made clear that the legislature of the state intended to repeal, by the act of 1887, the provisions of section 5982 (now section 5855), in its applications to policies previously issued by companies doing business under the assessment plan; and, in our judgment, the intention to repeal the section in this particular is not made clear. In the first place, the legislature of Missouri has not repealed section 5982 (now section 5855). It is still the law of the state that companies engaged in the business of life insurance shall not be permitted to exempt themselves from liability for death by suicide, but contemplated when the application for its insurance is made.'

His assertion was correct. The act of 1887 only exempted assessment companies from the operation of section 5855. In other words, it only suspended its operation in its application to assessment insurance companies; and, in view of the general law, and especially of the constitution of Missouri, the act of 1887 only had, and could only have, a prospective operation, and in no degree affected antecedent policies issued by such companies.

Counsel misconceive the character of section 5855. It is something more than a mere declaration of the state as to its public policy prohibiting such contracts, and affecting merely the remedy, which the legislature might at will revoke, leaving in force the provisions of a policy that an act of suicide could be pleaded to defeat recovery thereon. On the contrary, this statute became a constituent element of the contract itself between the parties, constituting a part of the consideration for entering into the contract. In contemplation of law, it was the same as if it had been written into the face of the policy, that, in case of suit to enforce the payment of a stipulated sum, the defendant should not plead thereto that the insured committed suicide, unless it should be shown that the insured contemplated suicide at the time he made his application for the policy, and any stipulation in the policy to the contrary should be void. Judge Dillon, in White v. Insurance Co., 4 Dill. 177, Fed. Cas. No. 17545, speaking of another section of this same statute respecting the effect of misrepresentations made in obtaining or securing the policy, said:

'We are of opinion that policies of insurance issued and delivered in Missouri, after that act took effect, fall within its prospective operation, and, as to such policies, the act is to be treated as if incorporated therein. * * * The general rule is that the laws in existence are necessarily referred to in all contracts made under such laws, and that no contracts can change the law.'

This same principle was announced by Chief Justice Sherwood in State v. Berning, 74 Mo. 87:

'For whatsoever the law annexes as the incident of a contract, whether granting a privilege or announcing a prohibition, is as much part and parcel thereof as though written therein or indorsed thereon.'

See, also Reed v. Painter, 129 Mo. 680, 31 S.W. 919.

Again, in the recent case of Cravens v. Insurance Co., 50 S.W. 519-524, the supreme court say:

'Being a Missouri contract, the statute then...