Moran v. Franklin Life Ins. Company

• Court: Missouri Court of Appeals
• Writing for the Court: CAULFIELD, J.
• Citation: Moran v. Franklin Life Ins. Company, 140 S.W. 955, 160 Mo.App. 407 (Mo. App. 1911)
• Decision Date: 07 November 1911
• Parties: AUGUSTA A. MORAN, Appellant, v. FRANKLIN LIFE INSURANCE COMPANY, Respondent

140 S.W. 955

160 Mo.App. 407

AUGUSTA A. MORAN, Appellant, v. FRANKLIN LIFE INSURANCE COMPANY, Respondent

Court of Appeals of Missouri, St. Louis

November 7, 1911

Appeal from St. Louis Circuit Court.--Hon. George H. Williams Judge.

AFFIRMED.

STATEMENT.--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 non-forfeiture 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 non-forfeiture 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: Three hundred dollars, 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 ninety 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 non-forfeiture 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, chapter 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, and 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 $ 1000 insurance." Here follows table of entry rates, both quarterly and annual, increasing annually from ages twenty to sixty. The quarterly rate in this table for the insured in this case at age of entry, forty-four years, was $ 4.14 per $ 1000 of insurance, or $ 20.70 for $ 5000 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 statement of facts further stipulated that on April 15, 1897, while the foregoing charter and by-law provisions were in force, the said Merchants' Life Association issued to Michael A. Moran its certificate of membership or policy, whereby "in consideration of the first annual premium of seventy-nine dollars and seventy-five cents, the written and printed application for this policy, and the payment of all premiums as stated in the insurance plan endorsed hereon, which application and plan are hereby made a part of this contract," the said association promised "to pay to Augusta A. Moran, wife of the insured, . . . five thousand dollars, within thirty days after receipt and approval by it of satisfactory proofs of the death of M. A. Moran, St. Louis, Mo. Provided, that if any premium, called in accordance with said insurance plan, shall not be paid on or before the day named in the notice for the payment thereof, this contract shall be void." The "insurance plan endorsed hereon" was substantially the same as that described in the by-laws and above set forth. The provision for making good impairment of the emergency fund contained in the plan endorsed on the policy was as follows: "Should the emergency reserve fund be used, in excess of statutory requirement, for the payment of death claims, its impairment shall be made good by additional premium calls sufficient to pay the maximum amount of insurance stated in the policy." The said agreed statement of facts further stipulated that Michael A. Moran, made to the Merchants' Life Association all payments demanded of him until May 20, 1899, being nine regular quarterly premiums or assessments of $ 20.70 each, aggregating $ 186.30. That on May 20, 1899, the defendant, an old line life insurance company authorized to do business in Missouri, reinsured the business of the Merchants' Life Association by contract approved by the policy holders and the superintendent of insurance in accordance with what is now section 6953, Revised Statutes 1909. By said contract, so far as it is material, in consideration of the transfer to the defendant of all of the money, securities, assets and properties of every kind of the Merchants' Life Association and of the transfer to the defendant of all of the outstanding policies of the Merchants' Life Association with all premiums due or to become due thereon "and on the complete substitution" (so far as lies in the power of the Merchants' Life Association) of the defendant in place and stead of the Merchants' Life Association, the defendant agreed that it would "assume outstanding policy contracts" . . . "and all obligations to policy holders and beneficiaries thereunder."

The defendant also issued to the insured individually the following:

"Springfield Ill., June 14, 1899.

"The Franklin Life Insurance Company of Springfield, Ill., hereby assumes under and according to the terms and conditions thereof, policy or certificate No. 3775, issued by the Merchants' Life Association of the United States, April...