Melville v. Business Men's Acc. Assur. Co.

• Decision Date: 10 July 1923
• Docket Number: No. 18109.,18109.
• Citation: 253 S.W. 68
• Parties: MELVILLE v. BUSINESS MEN'S ACC. ASSUR. CO.
• Court: Missouri Court of Appeals

253 S.W. 68

MELVILLE v. BUSINESS MEN'S ACC. ASSUR. CO.

No. 18109.

St. Louis Court of Appeals. Missouri.

July 10, 1923.

Rehearing Denied July 18, 1923.

Appeal from St. Louis Circuit Court; Wit.. son A. Taylor, Judge.

"Not to be officially published."

Action by Anna Melville against the Business Men's Accident Assurance Company. Judgment for plaintiff, and defendant appeals. Affirmed.

Solon T. Gilmore, of Kansas City, and Jones, Rocker, Sullivan & Angert, of St. Louis, for appellant.

James J. O'Donohoe, of St. Louis, for respondent.

ALLEN, P. J.

This is an action upon a policy of accident insurance issued to plaintiff's husband, Charles Melville, on August 17, 1919. The petition alleges that the policy was issued by the "Business Men's Accident Association of America," and that the defendant, "Business Men's Accident Assurance Company," for value received, assumed all liability thereunder and agreed to pay the same in the event of liability accruing thereon, averring that the original indemnity agreed to be paid plaintiff in the event of the accidental death of the insured was $3,000, but that in consideration of the payment of an additional premium to the defendant, the amount thereof was subsequently increased to $3,600. The petition further alleges that on or about May 28, 1921, the insured died as a result of injuries inflicted through external, violent, and accidental means, to wit, by being struck by an automobile; after making other averments, as to compliance with all the terms of the policy, etc., judgment is prayed for $3,600 and interest, together with damages and a reasonable attorney's fee as for defendants vexatious refusal to pay the loss.

The answer admits the allegations of the petition except as to the amount due plaintiff under the contract of insurance and except as to defendants alleged vexatious refusal to pay the loss. It then alleges that defendant was originally incorporated under the laws of this state, under the name of "Business Men's Accident Association of America," as an insurance company on the assessment plan, and that, "during its existence as an assessment accident insurance company it issued to Charles Melville the policy of insurance described in plaintiff's petition"; that on or about March 1, 1920, defendant amended its articles of incorporation and by-laws to conform to article 2, c. 50, Revised Statutes 1919, complying with section 6105 of said article "providing for the incorporation of stock companies with the power to write accident insurance." Further allegations of the answer are to the effect that at the time defendant "ceased its corporate existence as an assessment insurance company," there was a fund of 83 cents belonging to the insured, and that, with his consent, this was applied to increase the indemnity of the policy 20 per cent., and the policy, so increased, was continued as a level premium policy.

It is then pleaded in the answer that in the written application for the policy, in response to interrogatories propounded to him, the insured made certain answers to the effect that he then had no accident or health insurance in any other company, which answers were false, in that he then had an accident and health policy Issued by another company.

The answer further alleged that the policy contained the following provision:

"If the insured shall carry with another company, corporation, association, or society, other insurance covering the same loss without giving written notice to the association, then in that case the association shall be liable only "for such portion of the indemnity promised as the said indemnity bears to the total amount of like indemnity in all policies covering such loss and for the return of such part of the premium paid as shall exceed the pro rata for' the indemnity thus determined."

And defendant alleged that at the time of making the application for the policy in suit, and at the time of the accident which caused the death of the insured, the latter had other insurance providing for indemnity in the sum of $3,750 for loss of life resulting from injuries accidentally sustained, of which he gave defendant no written notice and of which defendant had no notice; and that by reason of the premises there is due plaintiff under the policy in suit the sum of $1,800, together with $58, being one-half of the premiums paid on the policy. And defendant offered to confess judgment for $1,858, with interest and costs.

Plaintiff moved to strike out from the answer all that portion thereof relating to the alleged false answers of the insured in his application, and to the defense, pro tanto, predicated upon the provision of the policy quoted above. The main ground of this motion is that the answer did not state facts sufficient to constitute a defense in whole or In part to plaintiff's cause of action, for the reasons: (1) That the answer did not aver that the alleged false answers of the insured In his application, and the misrepresentations alleged to have been thereby made, caused or contributed to cause the death of the insured (citing section 6142, Rev. Stat. 1919, and numerous cases); (2) that the answer did not allege that defendant would not have issued the policy had it known the real state of facts concerning the alleged misrepresentations; (3) that the provision of the policy quoted above is in conflict with the statutes of this state, particularly with sections 6155 and 6157, Rev. Stet. 1919, requiring every such policy to "specify the exact sum of money which it promises to pay upon each contingency insured against," and therefore void (citing cases).

Plaintiff's motion to strike out the above-mentioned portions of defendants answer was sustained, defendant excepting. Thereupon defendant declined to plead further, and, on plaintiff's motion, the court rendered judgment for plaintiff on the pleadings for $3,600 and interest. Defendant, having, by term bill of exception, duly preserved its exceptions to the ruling striking out said Parts of its amended answer, has brought the case here by appeal.

So far as concerns alone the averments of the answer relating to the alleged false answers of the insured in his application, we regard it as entirely clear that portion of the answer presented nothing by way of defense. While it is alleged that such answers were untrue, defendants answer does not allege that they were warranties, neither does it allege they were fraudulently made, for the purpose of Inducing defendant to issue the policy and that defendant was in fact deceived' and defrauded thereby. Indeed, defendant does not attempt to allege any fraud in this connection.

But learned counsel for defendant, appellant here, contend, in effect, that the portion of the answer stricken out, as a whole, stated a defense, pro tanto, to plaintiff's cause of action for the reason that the provision of the policy quoted above is one in the nature of a continuing warranty, and is valid and binding on the insured; that It has reference to insurance of this character carried by the insured at the time of the loss; end that if the insured carried other such insurance without notice to defendant, then this provision operated to reduce the indemnity accordingly.

It may be conceded, arguendo, that a contract of insurance of this character is one which, if unaffected by any statute, the parties are at liberty to make. In Dustin v. Business Men's Accident Association, 37 S. D. 635, 159 N. W. 395, L. R. A. 1917E, 319, it was held that a similar provision in a contract of accident insurance had reference to insurance in force at the time of the accident, operating to reduce the indemnity if the insured carried other such insurance without notice to the insurer, was not contrary to law or against public policy, and was a contract which the parties were entitled to make and which would be enforced. In this connection it may be noted that the opinion in the Dustin Case saga that the element of moral hazard is involved in accident insurance, though not to the same extent as in fire insurance, and, in effect, says that there is no reason why an insurer may not, by a provision of this character, guard against the risk of self-inflicted injuries—a risk which may be enhanced by excessive accident insurance and such is the tenor of appellant's argument here. But the Dustin Case dealt with the validity of a provision of this character at common law; whereas, the Tea: question before us is the validity vet non thereof in view of our statute upon which plaintiff relies.

When this policy was written the defendant was doing business on the assessment plan, subject to the provisions of what is now article 3, c. 50, Rev. Stat. 1919. Section 6157 of that article and chapter provides that every policy...