McCoy v. Bankers Life Association

• Decision Date: 07 December 1908
• Citation: 114 S.W. 551,134 Mo.App. 35
• Parties: CHARLES McCOY, Respondent, v. BANKERS LIFE ASSOCIATION, Appellant
• Court: Kansas Court of Appeals

114 S.W. 551

134 Mo.App. 35

CHARLES McCOY, Respondent, v. BANKERS LIFE ASSOCIATION, Appellant

Court of Appeals of Missouri, Kansas City

December 7, 1908

Appeal from Harrison Circuit Court.--Hon. George W. Wanamaker Judge.

Judgment reversed.

I. M Earle and A. S. Cumming for appellant.

(1) The Non-Forfeiture Statutes has no application to this case because the contract is an assessment contract in fact and not an "ordinary life policy," "limited life policy," or "continued payment endowment policy," which are the only contracts affected by the Non-Forfeiture Statute. Westerman v. Supreme Lodge, 196 Mo. 670, 94 S.W. 486. (2) The failure of a member in an assessment association to pay his assessment in the time provided terminates his membership if so provided in the contract. Lavin v. Grand Lodge, 104 Mo.App. 17, 78 S.W. 329; Smith v. Sovereign Camp, 179 Mo. 119, 77 S.W. 862; Lehman v. Clark, 174 Ill. 279, 51 N.E 222, 25 Cyc. 831; Kennedy v. Grand Fraternity (Mont.), 92 P. 971. (3) There can be no reinstatement except as provided by the contract. Niblack, Mut. Benefit Societies, 303, 3d Cooley's Ins. Briefs, p. 2399. Lane v. Fidelity Ass'n (N. C.), 54 S.E. 854; Kennedy v. Grand Fraternity (Mont.), 92 P. 971; Butler v. Grand Lodge, 146 Cal. 172, 79 P. 761, 25 Cyc., 849. (4) The guarantee fund cannot be used for payment of assessments. Mee v. Assn., 69 Minn. 210, 72 N.W. 74. (5) Defendant is an assessment life insurance company under the Missouri statute, because it appears from the contract and agreed facts that its premiums are not level and fixed. Westerman v. Supreme Lodge, 196 Mo. 716, 94 S.W. 482; Williams v. St. Louis Life, 97 Mo.App. 454, and cases cited; Haddell v. Mut. Reserve Fund, 98 F. 200; Elliott v. Des Moines Life, 163 Mo. 132; 3d Missouri Annotated Statutes 1906, section 7901 and cases cited.

J. M. Sallee for respondent.

(1) To create an assessment company three things are necessary: (a) The right to have the assessment made must be given to the insured. (b) The duty to make it must be imposed upon the corporation. (c) Liability for its payment must be created upon its members. No scheme of life insurance can come within this principle and become insurance upon the assessment plan unless somewhere along the line of its operation all three of the above and foregoing provisions must be created. Jacobs v. Life Association, 146 Mo. 538; Williams v. Insurance Co., 97 Mo.App. 454; Folkens v. Insurance Co., 98 Mo.App. 488; McDonald v. Life Association, 154 Mo. 628; Elliott v. Insurance Co., 163 Mo. 153; Jacobs v. Omaha Life Association, 142 Mo. 59; Williams v. Insurance Co., 189 Mo. 82. (2) The primary and controlling principle of the statute is that the benefit is to be paid out of a fund raised by assessments upon persons holding similar contracts by which they are made liable for the payment of such assessments. R. S. 1899, sec. 7901. (3) By careful examination of defendant's articles of incorporation and by-laws, we think will fully substantiate our contentions that the defendant is not an assessment company. Herzberg v. Mod. Bro. of Am., 110 Mo.App. 333; McDonald v. Life Assn., 154 Mo. 628. In the case of Aloe v. Fidelity Mutual Life Association, 164 Mo. 686, Judge MARSHALL in speaking for the court says: "A closer investigation, however, has led me to the conclusion that this defendant cannot be considered an insurance company on the assessment plan, in the light of the Act of 1887, and of the later decisions in this State, as to what constitutes an assessment company under our laws, and the fact that it was chartered by the State of Pennsylvania as an assessment company, does not change its character or status under our law." (4) The Bankers Life Association, of Des Moines, Iowa, has been several times before the courts of this State and has been construed by our courts of last resort to an old line insurance company. McDonald v. Bankers Life Association, 154 Mo. 626; Purdy v. Bankers Life Association, 101 Mo.App. 91.

OPINION

BROADDUS, P. J.

This is an action upon a policy of insurance. On the 26th day of September, 1898, the defendant, an insurance company organized under the laws of Iowa as an assessment company and licensed as such to do business in this State, issued to the plaintiff a certain policy in words and figures as follows:

"THE BANKERS LIFE ASSOCIATION.

Certificate of Membership No. 75565.

$ 2,000.00

Des Moines, Iowa, September 26, 1898.

"This is to certify that in consideration of the articles of incorporation and by-laws of this association and of the warranties contained in his application No. 63298, all of which are hereby made a part of this contract, and the sum of seventy-two dollars, Mr. Charles McCoy, of New Hampton, State of Missouri, by occupation a farmer, aged forty-eight years, has been admitted to membership in this association, and that in the event of his death during membership his beneficiary shall receive the sum of two thousand dollars, and the guarantee fund deposited with the association by the said member amounting to forty-eight dollars. Upon the failure of the above-named member to make any payment due from him to the association at its maturity in January, April, July or October of each year, his guarantee deposit and all other payments made shall be forfeited, and his membership shall thereupon cease. This certificate to become null and void if death occurs from self-destruction within five years from this date, the member being sane or insane, or if the member shall become habitually intemperate in the use of intoxicating liquors, chloral, cocaine or opium, and no action shall be brought or sustained upon or under this certificate unless proof of death be made within sixty days and suit commenced within one year after the day of death of the member. The amount due under this contract to be provided for by assessment on the membership levied pro rata upon the guarantee fund of the association unless otherwise supplied and to be paid to legal representatives at the home office of the association upon presentation of the certificate with satisfactory proof of claim to be supplied by the beneficiary. In the event of the death of the beneficiary prior to that of the member, or in case none is named, the benefit then to be payable to the legal representatives of the deceased members.

"In witness whereof the signature of the president attested by the secretary and the seal of the association, are hereto affixed on the date above written."

Two days prior to the date of said policy, the plaintiff became a member of the defendant association. The plan of the association is that every applicant at entry pays to the association a sum equal to one dollar for each year of his age, which is placed in what is called a guarantee fund. If he dies a member, the sum is paid to his beneficiary in addition to the $ 2,000 mentioned in the certificate. If he fails to pay his expense dues or assessments within the time provided, his membership terminates and this sum is forfeited to the association and is passed to what is called the reserve fund, which can be used only as an emergency fund to provide for death losses in excess of one per cent. per annum of the membership of the association. The by-laws provide for assessments quarterly for each year, viz.: December, March, June and September, and are payable during the succeeding calendar month. Each assessment is based upon the estimated amount required for death losses for the quarter, which is levied upon the guarantee fund; that is to say, the estimated amount is divided by the aggregate of the guarantee fund, which gives the percentage of levy. The assessment against each member is determined by multiplying the sum paid by him into the guarantee fund by such percentage. Notice of such assessment is required by the by-laws to be sent to each member stating the percentage levied and the time in which it is to be paid.

In December, 1903, an assessment on the members of ten per cent levy was made upon the guarantee fund for the purpose of providing for death losses and five...