Knights Templars' & Masons' Life Indem. Co. v. Jarman

• Decision Date: 15 October 1900
• Docket Number: 1,347.
• Citation: 104 F. 638
• Parties: KNIGHTS TEMPLARS' & MASONS' LIFE INDEMNITY CO. v. JARMAN.
• Court: U.S. Court of Appeals — Eighth Circuit

104 F. 638

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

No. 1,347.

United States Court of Appeals, Eighth Circuit.

October 15, 1900

H. B Hicks and Samuel P. Huston, for plaintiff in error.

F. H Bacon (E. M. Harber and A. G. Knight, on the brief), for defendant in error.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

THAYER Circuit Judge.

This action is founded on a certificate of membership issued by the Knights Templars' & Masons' Life Indemnity Company, the plaintiff in error, to John P. Jarman, by the terms of which a certain sum of money, hereafter mentioned was payable to Rosa B. Jarman, the wife of John P. Jarman, on the death of the latter. The plaintiff in error will be hereafter designated as the 'defendant' or the 'defendant company.' The certificate was issued and delivered on October 25, 1885. When it was issued the constitution or by-laws of the defendant company, which were indorsed on the back of the certificate, provided 'that a policy of membership for $5,000 shall be good for all money in the death fund arising from one assessment, provided it shall not exceed $5,000, and all the money paid on the policy in assessments'; and Jarman's certificate declared on its face that the defendant company would pay 'to Rosa B Jarman, wife, the children or heirs of said member, and in the order named, * * * the sum of five thousand dollars, and all the money paid on the policy in assessments, subject to the limitation as to the amount of such payment as is provided in section one (1) of article seven (7) of the constitution, on the back of this policy.' By an amendment to the constitution or by-laws which was adopted on January 8, 1889, the company limited its liability to refund all assessments that might have been paid to such as were paid 'for the first five years' of membership; and by later amendments, which were made, respectively, on February 20, 1894, and January 14, 1896, it exempted itself from liability to refund any assessments, or to pay any greater sum than the principal sum specified on the face of its certificates. The certificate of membership, when issued contained a provision that the policy should become null and void 'in case of the self-destruction of the holder of this policy, whether voluntary or involuntary, sane or insane'; and it was stipulated that John P. Jarman, the deceased member, committed suicide on September 12, 1898, 'while insane to such an extent as to be incapable of understanding the nature or consequences of his act, * * * by a gunshot wound inflicted by himself.' When sued upon its policy, the defendant company interposed two defenses: First, it asserted that it was not liable on its policy for any amount, because Jarman took his own life; second, it contended that even if it was liable for the face of its policy, to wit, for the sum of $5,000, it was not liable for the amount of assessments which the deceased member had paid, and which it had originally agreed to refund, because of the aforesaid amendments made to its constitution on February 20, 1894, and January 11, 1896. Both of these contentions were overruled by the trial court (95 F. 70), and the case is now before this court for review.

In the case of Indemnity Co. v. Berry, 4 U.S.App. 353, 1 C.C.A. 561, 50 F. 511, it was held by this court, affirming the decision of Judge Caldwell on the circuit (Berry v. Indemnity Co., 46 F. 439), that a certificate or policy of insurance which was executed by the defendant company and delivered in the state of Missouri to a citizen of that state prior to 1887, and was in the same form, substantially, as the policy now under consideration, was a Missouri contract, and a policy of insurance, and that, being such, it was subject to the provisions of section 5855 of the Revised Statutes of Missouri of 1889, which declares, in substance, that, in suits on policies of insurance on life issued by any company doing business in the state of Missouri, it shall be no defense that the insured committed suicide, unless it is shown to the satisfaction of the court or jury trying the case that the insured contemplated committing suicide at the time he made his application for the policy, and that any stipulation in a life insurance policy to the contrary shall be void. The correctness of that view is not challenged on the present occasion, and as the policy in suit was issued to a citizen of Missouri, and delivered to him in that state, and the initial assessment there paid, it follows that when the policy was delivered it covered the risk of suicide, by virtue of the local statute. On March 30, 1887, nearly two years after the policy in suit was issued, the legislature of the state of Missouri enacted a law with reference to insurance companies doing business on the assessment plan, which now appears in the Revised Statutes of that state for the year 1889, as article 3, c. 89 (being sections 5860 to 5872, both inclusive). This act placed foreign insurance companies doing business in the state on the assessment plan under the supervision of the insurance department of the state, and one section thereof (being section 5869) subjected such foreign assessment companies to all the provisions of section 5912 of the Revised Statutes of Missouri for 1889, which was then in force, but concluded with the following proviso:

'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.'

Section 5912, to which reference was thus made, related wholly to the mode of obtaining service on foreign insurance companies doing business within the state of Missouri; and it is accordingly claimed that the operation of the proviso was to relieve insurance companies doing business on the assessment plan, as distinguished from companies doing business in other ways, from the disability imposed by section 5855, to plead suicide as a defense, inasmuch as section 5855 forms a part of the general insurance laws of the state, and was not incorporated into the act of March 30, 1887, relating to assessment companies. It is by no means certain that the proviso in question was intended by the lawmaker to except assessment companies from the operation of section 5855. The legislature did not see fit to repeal that section, but left it standing and in full force as a part of the statute law of the state,-- at least, in so far as it affected ordinary life companies; and it is difficult to assign any reason for prohibiting companies of the latter kind from pleading the defense of suicide which does not apply with equal force to assessment companies. It has been held, however, in Haynie v. Indemnity Co., 139 Mo. 416, 41 S.W. 461 that from the date of its adoption the proviso did exempt assessment companies from the operation of section 5855, and enable them to plead suicide as a defense to policies thereafter issued which by their terms excluded the risk of death by suicide. Accepting that as an interpretation of a local law by the highest court of the state, which this court is required to adopt, we pass to the inquiry whether it was competent for the legislature, by the proviso in the act of March 30, 1887, to relieve the defendant company from the operation of section 5855, as respects policies theretofore issued and then outstanding, which were clearly subject to its provisions when they were issued. In considering this question, it must be borne in mind that section 5855 not only provides that, in suits on life insurance policies issued by companies doing business in the state of Missouri, it shall be no defense that the insured committed suicide, but also declares that 'any stipulation in the policy to the contrary shall be void. ' The effect of this statute upon the policy in controversy was to expunge the provision which is found therein, in substance, that it should become null and void if Jarman took his own life, either sane or insane. The contract, by force of the statute, took effect as it would have done if no such clause as that last referred to had been inserted, and embraced the risk of death by suicide as well as from other causes. Moreover, in legal contemplation, the first and all subsequent premiums or assessments were paid by the insured in consideration of the assumption by the insurer of the risk of death by suicide, as well as from other causes, since the statute rendered the agreement to the contrary utterly meaningless and nugatory. In this way the statute was worked into the contract, and became a part of it, and determined its meaning, scope, and effect. In the light of the statute, the parties must be presumed to have agreed that the insurer would assume the risk of death by suicide, because the law would not permit them to agree otherwise. We are of opinion, therefore, that it was not within the power of the legislature to declare in 1887, with respect to the policy in suit, and others of a like character, that self-destruction might be pleaded as a defense, which was tantamount to saying that the policy should not comprehend the risk of death by suicide, because a legislative enactment to that effect would impair the obligation evidenced by the policy, contrary to the mandate of the federal and the state constitutions. Const. Mo. Sec. 15, art. 2; Rev. St. Mo. 1889, p. 59. In so holding we have not overlooked the decision in Ewell v. Daggs, 108 U.S. 143, 2 Sup.Ct. 408, 27 L.Ed. 682, upon which much reliance is placed by the defendant company, but we are of the opinion that the doctrine of that case is not applicable to the one at bar. In Ewell v. Daggs a purely statutory defense, existing under the usury...