Morrow v. National Life Ass'n

• Decision Date: 29 June 1914
• Docket Number: No. 1231.,1231.
• Citation: 168 S.W. 881,184 Mo. App. 308
• Parties: MORROW v. NATIONAL LIFE ASS'N OF DES MOINES, IOWA.
• Court: Missouri Court of Appeals

168 S.W. 881

184 Mo. A. 308

MORROW v. NATIONAL LIFE ASS'N OF DES MOINES, IOWA.

No. 1231.

Springfield Court of Appeals. Missouri.

June 29, 1914.

Rehearing Denied July 10, 1914.

1. INSURANCE (§ 52)—LIFE INSURANCE—ASSESSMENT PLAN.

No fixed periodical premiums being provided for by a life policy, but the plan being to collect from members such sums, apportioned among members according to age and amount of insurance, as are necessary for payment of death and disability claims and legitimate expenses, the benefit is dependent upon the collection of an assessment on persons holding similar contracts," within Rev. St. 1909, § 6950, declaring such insurance to be on the assessment plan.

2. INSURANCE (§ 602)—LIFE INSURANCE—ASSESSMENT PLAN — VEXATIOUS REFUSAL TO PAY LOSS—DAMAGES AND ATTORNEY'S FEES.

Under the concluding proviso of Rev. St. 1909, § 6959, part of the article on insurance on the assessment plan that nothing in that article shall subject any corporation doing business under it to any other provision or requirement of the general insurance laws of the state, except as distinctly "herein" set forth and provided, such article not so providing, a company operating under the assessment plan is not subject to section 7068, as amended by Laws 1911, p. 282, part of the article on general provisions as to insurance authorizing recovery of damages and attorney's fees for vexatious refusal to pay a loss under a policy of insurance.

3. INSURANCE (§ 116)—LIFE INSURANCE—INSURABLE INTEREST—CREDITOR.

A creditor of insured has an insurable interest, within Rev. St. 1909, § 6956, prohibiting any company, doing business under the article concerning assessment plan insurance, from issuing a policy on the life of any person in which the beneficiary named has no insurable interest, and also prohibiting the assignment of a policy to any such person.

4. INSURANCE (§ 116) — LIFE INSURANCE—WAGERING POLICY — POLICY PAYABLE TO CREDITOR.

A life policy, made payable to one whose interest in designated as "creditor," without any provision as to payment of the balance above his interest as creditor, is not void as a wagering policy because of the debt being much less than the face of the policy, but is to be construed as one for his benefit for the amount of his debt, and for the benefit of insured's estate for the balance, and is valid.

5. INSURANCE (§ 262)—LIFE POLICY—FRAUD IN PROCUREMENT.

There is no fraud in the procuring of a life policy made payable to one whose interest is described as "creditor," merely because of the debt owing to him being much less than the face of the policy; the application disclosing he was a creditor making no statement or inquiry as to the amount of the debt.

6. INSURANCE (§ 116)—LIFE INSURANCE—INSURABLE INTEREST—INSOLVENT DEBTOR.

A life policy payable to a creditor of insured is not void because of the debtor being insolvent, and there being no reasonable expectation of his becoming insolvent so as to pay the debt; but, notwithstanding this, he has an insurable interest in the life of insured.

7. INSURANCE (§ 666) — LIFE INSURANCE — POLICY TO CREDITOR — AMOUNT OF PERSONAL RECOVERY.

Where a life policy is made payable to one whose interest is designated as "creditor," he may recover thereon for himself, not only the amount owing him when the policy is issued, but advances which he afterwards makes on the faith of it, and with an understanding, then had, that the policy is to stand security for it; and he should also be allowed from the recovery attorney's fees and expenses of collecting the policy.

8. INSURANCE (§ 666) — LIFE INSURANCE — POLICY PAYABLE TO CREDITOR — RECOVERY AS TRUSTEE.

Where a life policy is made payable to one whose interest is designed as "creditor," though the amount above his debt is to go to the estate of insured, he may, as trustee of an express trust, recover of the insurance company the whole amount of the policy.

Robertson, P. J., dissenting in part.

Appeal from Circuit Court, Dunklin County; T. R. R. Ely, Special Judge.

Action by D. C. Morrow against the National Life Association of Des Moines, Iowa. Judgment for plaintiff, and defendant appeals. Reversed and remanded, with directions.

Donaldson & Tribble, of Kennett, and Bartley & Douglass, of St. Louis, for appellant. C. P. Hawkins and Bradley & McKay, all of Kennett, for respondent.

STURGIS, J.

The defendant on May 16, 1911, issued its policy of insurance on the life of Charles P. Vines, of Gibson, Dunklin county, Mo., wherein it agreed to pay the plaintiff, therein designated as "creditor," the sum of $2,000. In the event of the death of the plaintiff prior to that of the insured no other beneficiary is named. As a part of the policy it is stated:

"The foundation principle of the system of insurance carried out by this association is to collect from the members such sums as are necessary for the payment of death and disability claims, accumulate a reserve fund and pay legitimate expenses, the same being apportioned among the members according to their ages, and the amount of insurance held by each. The reserve fund is held for the payment of death and disability losses in excess of twelve thousand dollars per annum for each one million dollars of insurance in force (or twelve deaths to each thousand members). The reserve is invested in interest-bearing securities which are deposited with the auditor of state, of the state of Iowa, as required by the laws of said state; the principal and interest of said fund can only be used for the payment of losses as above stated."

Vines died September 14, 1912, plaintiff made proof of death, demanded payment of the $2,000, which was refused, and thereupon brought this suit, seeking to recover said amount, together with attorney's fees and damages, as provided for in the amendment, Laws of 1911, p. 282, § 7068, R. S. 1909. The defendant appeared and filed an answer containing a general denial, and alleging false representations by the insured in his application. Plaintiff was engaged in the mercantile business at Gibson at the time the policy was taken out, and had an account, as he testified, against Vines amounting to $95, which had been placed in the form of a note. The application for the policy states that plaintiff bore the relation of "creditor" to Vines. After the policy was issued plaintiff claims to have advanced further sums to Vines for premiums, burial expenses, etc., making the total indebtedness amount to $750. Plaintiff paid all of the assessments on the policy, and in addition thereto deposited $25, apparently to be used as a fund to meet future assessments. The testimony is conflicting as to who procured or caused the insurance to be taken out in plaintiff's favor, but plaintiff testified that it was done by Vines without any suggestion or instigation upon plaintiff's part, and the jury so found. He also testified that soon after the policy was taken out Vines sold his restaurant business, was insolvent, in poor health, and went away for the purpose of regaining his health, and that the expenses of the trip were paid by donations of his neighbors; that later, after he returned, a fraternal order sent him to Colorado Springs, where he died. The plaintiff testified that before the assured left for that point he furnished him with clothing and some money, and that he also went to attend to his burial at that place, a portion of the expenses of which, including the trip, constitutes a part of the amount of the indebtedness claimed here. Shortly before Vines died he executed a note to plaintiff for $1,800, although he owed plaintiff not to exceed $750. We consider it unnecessary to discuss the instructions further than to state that they authorized a recovery by plaintiff of the full amount of the policy if he was not the procuring cause of its being taken out, and if the jury believed he was a creditor of the deceased at the time it was applied for and issued. Under the instructions a recovery was allowed for damages and attorney's fees if the jury believed defendant vexatiously refused to pay the policy. There were also evidence and instructions on the question of misrepresentations in the application for the insurance, which question was found against the defendant, and no error is assigned thereon. The jury returned a verdict in favor of the plaintiff in the sum of $2,000 and $100, interest, and found that the defendant had vexatiously refused to pay the amount after demand, and therefore found for the plaintiff in the sum of $300 for attorney's fees. Whereupon judgment was entered for $2,400, from which the defendant has appealed.

That the defendant was authorized to do business in this state is alleged in plaintiff's petition, and that it was operating under the assessment plan (section 6950 et seq., R. S. 1909) appears to be a subject of so little doubt as to require only brief notice. Said section, 6950 reads as follows:

"Every contract whereby a benefit is to accrue to a person or persons named therein, upon the death or physical disability of a person also named therein, the payment of which said benefit is in any manner or degree dependent upon the collection of an assessment upon persons holding similar contracts, shall be deemed a contract of insurance upon the assessment plan, and the business involving the issuance of such contracts shall be carried on in this state only by duly organized corporations which shall be subject to the provisions and requirements of this article."

The portion of the policy quoted discloses that the benefit therein provided for is "dependent upon the collection of an assessment upon persons holding similar contracts." The policy states that it is issued in consideration of the application and medical examination, the advance payment of $16.80, "and the payment of all stipulated payments and calls required under this contract at or before the time when due and payable." No fixed periodical premium is...