Lawson v. Brotherhood of American Yeomen

• Decision Date: 07 October 1933
• Docket Number: 31268.
• Citation: 25 P.2d 344,138 Kan. 248
• Parties: LAWSON v. BROTHERHOOD OF AMERICAN YEOMEN. [*]
• Court: Kansas Supreme Court

25 P.2d 344

138 Kan. 248

LAWSON v. BROTHERHOOD OF AMERICAN YEOMEN. ^[*]

No. 31268.

Supreme Court of Kansas

October 7, 1933

Syllabus by the Court.

In determining rights of parties to benefit certificate certificate, articles, by-laws, application, medical examination, and all amendments must be considered where certificate so provided.

Benefit certificate, articles, and other writings governing rights of parties will be construed favorably to insured.

Facts showed that beneficial association was estopped from contending that beneficiary's rights were forfeited for nonpayment of premium.

Facts showed that beneficial association had waived formal proof of member's death.

Association was promptly notified of member's death and immediately admitted liability for $293 only, but later a representative of the association admitted liability for amount of paid-up insurance and offered to pay it, and when that was refused offered to pay $500. There was no contention that association was not liable in some amount, and it was conceded that formal proof of death on blanks furnished by association could have readily been made.

1. A beneficiary certificate contained an agreement that the certificate, the articles of incorporation, the by-laws of the association, the application for membership, and the medical examination, with all amendments to each, should constitute the agreement between the association and the member, and any changes, additions, or amendments to the articles of incorporation and by-laws, enacted subsequent to the issuance of this certificate, should be binding and govern and control the agreement in all respects. Held, in determining the contract between the parties, all of the instruments mentioned, including the amendments to the by-laws, should be construed together as constituting the contract between the parties; and, further held, where there are inconsistencies between some of the provisions of such instrument, and they are open to interpretation, the court will interpret them as favorably to the insured as can reasonably be done.

2. A certificate issued by a benefit association provided for reserve and loan value, and that on request of the member the reserve could be borrowed for the payment of premiums. Its directors were given extensive powers with respect to the forms of certificates, benefits payable thereunder, and the amount, and payment of premium. The association issued a leaflet or circular which it sent to a member, which stated that, for the protection of beneficiaries, when a member's certificate had accumulated a reserve and the payment of premium was not made, the association, without request from the member, would use the reserve to apply upon the premiums. A member received, understood, and acted upon this. The certificate had a reserve loan value in excess of an annual premium. Held, the association was estopped from contending that the rights of the beneficiary were forfeited for the nonpayment of the premium.

3. Under the facts stated, the trial court correctly held that the association had waived formal proof of death of the member.

Appeal from District Court, Cowley County; O. P. Fuller, Judge.

Action by Amelia Jane Lawson against the Brotherhood of American Yeomen. From a judgment for plaintiff, defendant appeals.

Geo. R Allen and Richard F. Allen, both of Topeka, for appellant.

W. L Cunningham, D. Arthur Walker, Fred G. Leach, and Wm. E Cunningham, all of Arkansas City, for appellee.

HARVEY Justice.

This is an action on a beneficiary certificate for $5,000 claimed to be due because of death by accident of the insured. Defendant contends it is liable for no more than for paid-up insurance in the sum of $293. The trial court made findings of fact and conclusions of law and rendered judgment for plaintiff in the sum claimed. Defendant has appealed.

Defendant is a fraternal benefit society organized under the laws of Iowa and authorized to do business in Kansas, and will be referred to herein as the association. It has local lodges, known as "Homesteads," a legislative body known as the Supreme Conclave, and a board of directors with powers to determine, within certain limits, classes and forms of certificates, the benefits provided for therein, and the contributions or premiums to be paid by members therefor, and to modify or change these from time to time; also, under some circumstances, to declare refunds of premiums paid. It issues several classes and forms of certificates, some of which are in the form ordinarily issued by fraternal benefit societies, others of which are quite like policies normally issued only by old-line life insurance companies. The certificate sued on in this action is a "twenty-payment life certificate, legal reserve Form C," with a level premium rate. It was to become fully paid up for its face amount in twenty years if the payments due thereon for that time were made. By its terms the association agrees to maintain with the insurance commissioner of the state of Iowa the accumulations necessary to provide the benefits promised by the certificate, being the usual reserves computed by the American Experience Table of Mortality and 4 percent. interest. It provided two classes of benefits: (a) Death benefits, payable to the beneficiary, $2,500 if death was from normal cause, $5,000 if from accident. (b) Disability benefits, payable to the insured, $1,250 for total, permanent disability through accident or disease if the certificate had been in force for two years, or the same sum for partial disability for the loss of sight of both eyes, or the loss of both legs above the ankles, or of both arms above the wrist, or of one arm above the wrist and one leg above the ankle; or, $625 for the loss of one arm above the wrist, or one leg above the ankle. Under the heading, "Paid-up and extended protection, withdrawal equities and loan values," it provided, in accordance with a table printed thereon, at the end of the four years, paid-up protection in the sum of $293, cash withdrawal or loan value in the sum of $80, and extended protection for a term of four years and 133 days. In this connection it further provided:

"After the payment of monthly or other payments for three or more full years, one of the following options shall become effective:

"1st. Automatic paid-up protection. In case of the non-payment of any monthly or other payment when due hereon, then, without any action on the part of the member named herein, this certificate will become a paid-up certificate for the amount shown by the adjoined table of paid-up protection and such amount will be payable in one sum under the conditions of this certificate upon the death of the member; or,

"2nd. Cash withdrawal value. Upon a full and valid surrender of this certificate while it is in full force, the Association will pay the then cash withdrawal value as shown by the adjoined table of value; provided, that the Association may defer such payments for a period not exceeding sixty days from the date of the application therefor; or,

"3rd. Extended protection. Upon written request of the member named herein, made while this certificate is in full force, the Association will extend and continue in force the full amount of this certificate as term protection for the number of years and days shown by the adjoined table of extended protection.

"4th. Automatic monthly payment loans. Upon written request of the member named herein, made while this certificate is in full force, the monthly or other payments thereafter falling due, if not paid, will be charged against this certificate as a loan bearing compound interest at the rate of six percent per annum until such time as the accumulated loans, together with any other indebtedness with interest thereon, shall equal or exceed the cash withdrawal value hereof, in which case this certificate shall thereupon become null and void and be surrendered to the Association in consideration of the cancellation of the indebtedness. While this certificate is thus continued in force, the member may resume the payment of monthly or other payments without furnishing evidence of good health, and the accumulated loans and interest may be repaid or allowed to stand as a lien against this certificate.

"5th. Cash loan. ***" (not important here).

The certificate contained this agreement: "It is agreed by the member holding this certificate that the certificate, the Charter or Articles of Incorporation, the By-Laws of the Association and the application for membership, and the medical examination, signed by the applicant, with all amendments to each thereof, shall constitute the agreement between the Association and the member; and any changes, additions or amendments to said Charter or Articles of Incorporation and By-Laws of the Association enacted subsequent to the issuance of this certificate shall be binding upon the member and his beneficiary, or beneficiaries, and shall govern and control the agreement in all respects in the same manner as if such changes, additions or amendments had been made prior to and were in force at the time of the application for membership."

The certificate was issued March 2, 1926, to John Edward Lawson of Arkansas City, Kan., a member of Homestead No. 1277, and named Amelia Jane Lawson, mother of the insured, as beneficiary. Payments for the certificate named thereon to be paid by the insured were, if made annually, $57.98 semiannually, $30.10; quarterly, $15.20; monthly, $5.35; children's home fund, monthly, 10 cents. The amount of the Homestead dues was not indorsed on the certificate, but it is agreed they were 20 cents per month. The certificate had attached a rider, quoting from a by-law: "Monthly payments are due...