Moran v. Franklin Life Ins. Co.

• Decision Date: 07 November 1911
• Citation: Moran v. Franklin Life Ins. Co., 140 S.W. 955, 160 Mo. App. 407 (Mo. App. 1911)
• Parties: MORAN v. FRANKLIN LIFE INS. CO.
• Court: Missouri Court of Appeals

140 S.W. 955

160 Mo. A. 407

MORAN v. FRANKLIN LIFE INS. CO.

St. Louis Court of Appeals. Missouri.

November 7, 1911.

1. INSURANCE (§ 349)—NONFORFEITURE STATUTE—APPLICABILITY.

The nonforfeiture law (Rev. St. 1889, § 5856) does not apply to insurance on the assessment plan.

2. INSURANCE (§ 57)—ASSESSMENT PLAN INSURANCE—STATUTES—"ASSESSMENT PLAN."

A policy, which provides for the payment of fixed sums at fixed intervals, and which authorizes an assessment on persons holding similar policies, if necessary, is an assessment policy within Rev. St. 1909, § 6950, defining a contract of insurance on the "assessment plan."

3. INSURANCE (§ 135) — CONTRACTS — BY-LAWS.

A policy, which provides for payments of fixed sums at stated intervals, and which authorizes assessments on persons holding similar contracts, if necessary, notifies the holder that he is amenable to assessments in addition to the regular payments as provided by the by-laws of insurer, and, though the policy does not in terms make the by-laws a part of the contract, the by-laws govern the levying of the necessary assessments.

4. INSURANCE (§ 192)—ASSESSMENT INSURANCE—CONTRACTS.

Where insurer contemplated only one plan of insurance embodied in policies issued, and the policies provided for fixed payments at stated intervals, and authorized assessments on persons holding similar contracts if necessary to make good the impairment of the emergency fund, the holder of a policy is personally liable for assessments regularly made while his membership continues, and the contract is an assessment contract.

5. INSURANCE (§ 191)—ASSESSMENT INSURANCE—ASSUMPTION OF LIABILITY BY OLD LINE INSURANCE COMPANY.

Where an old line insurance company reinsures the business of an assessment insurance company and assumes the outstanding policy contracts and all obligations of policy holders and beneficiaries thereunder, and issues to policy holders a certificate reciting that it assumes the insurance under the terms and conditions of the policies, the contract is not changed from an assessment contract to an old line policy, though the old line company has no authority to levy assessments, since the assessment insurance company could still do so, or a court of equity could order the levy of assessments.

6. INSURANCE (§ 634)—ACTIONS—WAIVER— ESTOPPEL—PLEADING.

A petition, in an action on a life policy, which admits that insured discontinued the payment of premiums, and alleges that at the lapse of the policy more than three full annual premiums had been paid, and that insured had complied with the terms of the contract except as stated, does not allege performance of the policy so far as to the payment of premiums, and insured may not rely on waiver or estoppel of performance in that respect.

7. INSURANCE (§ 645) — ACTIONS—PLEADING PERFORMANCE—EVIDENCE.

In a suit on a policy, evidence of a waiver of a condition is admissible under an allegation of performance thereof.

8. INSURANCE (§ 664) — PROOF OF LOSS — WAIVER—PLEADING—EVIDENCE.

Where the petition, in an action on a policy, alleged waiver of proofs of death, a letter by insurer, wherein it asserted that the policy lapsed on a designated date because of the failure of insured to pay an assessment due on that date, was admissible to show waiver of proofs of death.

Appeal from St. Louis Circuit Court; George H. Williams, Judge.

Action by Augusta A. Moran against the Franklin Life Insurance Company. From a judgment for defendant, plaintiff appeals. Affirmed.

This is an action brought by the beneficiary after the death of the insured to recover the amount of an insurance policy issued by the Merchants' Life Association of the United States and assumed by the defendant. The trial court directed a verdict for the defendant at the close of plaintiff's evidence, and plaintiff has appealed.

The insured was in default as to the payment of premiums at the time of his death, and according to its terms the policy was void on that account. But the plaintiff contends that under the evidence and the provisions of the Missouri nonforfeiture statute the insurance had been extended so as to be in effect when the insured died. The correctness of the trial court's action in overruling this contention is the important question for our consideration. The petition proceeds on the theory that the Merchants' Life Association was an ordinary life insurance company and issued the policy in suit as an ordinary life insurance policy subject to the Missouri nonforfeiture law, and alleges the assumption of the policy by the defendant, Franklin Life Insurance Company, an ordinary life insurance company. It then proceeds as follows: "Plaintiff states that said Michael A. Moran continued to pay the premiums on said policy until, to wit, January 15, 1902, when the said Michael A. Moran discontinued the payment of further premiums. Plaintiff states that at the time of said lapse, to wit, on the 15th day of January, 1902, more than three full annual premiums had been paid on said policy, and the net value of said policy under the statutes of the state of Missouri in such case made and provided amounted to the sum of, to wit, $300, three-fourths of which said sum applied as a net single premium as provided by said statute, extended the policy for the full amount thereof, for the term of, to wit, four years. Plaintiff states that within the said period, to wit, on the 18th day of April, 1904, said Michael A. Moran died. Plaintiff states that the said Michael A. Moran in his lifetime had duly complied with all the terms and conditions of the said contract to be done and performed by him, except as hereinbefore stated. Plaintiff states that the plaintiff is the same person named in said policy as payee thereof. Plaintiff states that, after the death of said Michael A. Moran and within 90 days after such death, she notified defendant, Franklin Life Insurance Company, of the death of said Michael A. Moran, and requested blank forms upon which to make proofs of death; but said defendant refused to furnish said blank forms, and then and there disclaimed all liability under said policy, whereby defendant waived the furnishing of proofs of the death of said Michael A. Moran. Plaintiff states that said defendant disclaimed all liability and refused to pay said policy on the sole ground that the said Missouri statute did not apply to the said contract and said policy had lapsed, and at no time placed its refusal to pay upon the ground that any condition of said policy as to the proofs of death had not been complied with." Prayer for judgment follows the foregoing.

The answer, by denials and affirmative allegations, properly raises the defense that the Merchants' Life Association was an assessment company, and that the policy sued upon was one of insurance upon the assessment plan and exempt from the Missouri nonforfeiture laws. It alleges that all rights under the policy lapsed and became null and void according to its terms because of the failure of the insured after due notice to pay a special assessment due December 20, 1901, and a regular quarterly assessment due January 15, 1902. It alleges that no annual premiums have been paid on the policy sued on; that said policy has no net value; and that the net single premium for temporary insurance for the full amount of said policy from the date of lapse to the date of death was far in excess of the net value of said policy. Plaintiff's evidence consisted of an agreed statement of facts, and certain additional evidence which we will mention. It appears from the agreed statement that the Merchants' Life Association was an assessment company organized in 1890 under what is now article 3, c. 61, of the Revised Statutes of Missouri, 1909, "to carry on a life insurance business on the assessment plan." Its charter provided that "the fund with which to pay death losses is to be accumulated by assessments on policy holders." It also provided for an emergency fund as contemplated by the statute relating to assessment companies. Its by-laws declared that "the aim of the association shall be to furnish safe life indemnity at cost on the plan hereinafter set forth." They provided that "all policy holders and none but policy holders shall be members of the association." They empowered an executive committee to levy "all premiums and assessments" as stated in said plan, which is as follows: "Insurance Plan. The premium call, payable annually (which for convenience may be paid quarterly as stated herein) for the purpose of providing a mortuary fund for the payment of death claims, an emergency reserve fund to meet death claims in excess of the mortuary fund and an expense fund for current expenses, shall be according to the following rates at entry for each $1,000 insurance." Here follows table of entry rates, both quarterly and annual, increasing annually from ages 20 to 60. The quarterly rate in this table for the insured in this case at age of entry, 44 years, was $4.14 per $1,000 of insurance, or $20.70 for $5,000 of insurance. The table is then followed by this provision: "Should the emergency reserve fund or any part thereof, be used for the payment of death claims in excess of the mortuary fund, its impairment shall be made good by assessments in addition to the regular premium call, sufficient to pay the maximum amount of insurance stated in the policy."

The by-laws provide additionally that assessments to meet impairment of the emergency reserve fund should be "against each member of the association according to the ratios of the mortuary call," and prescribe the notice to be given of such special, as well as the regular, assessments, and the manner of serving same. They also provide that, "if any policy holder should fail to pay the amount of his or her premium or assessment on or before the day fixed for the payment thereof, the policy shall lapse, become null and void and of no effect." Said agreed...