Mutual Ben. Ass'n of Michigan v. Hoyt

• Citation: 46 Mich. 473,9 N.W. 497
• Court: Supreme Court of Michigan
• Decision Date: 01 July 1881
• Parties: MUTUAL BENEFIT ASSOCIATION v. HOYT.

9 N.W. 497

46 Mich. 473

MUTUAL BENEFIT ASSOCIATION v. HOYT.

Supreme Court of Michigan

July 1, 1881

A contract by a benefit society to pay money upon the death of one of its members to one who it is clearly apparent has no interest in the life insured, is contrary to public policy and will not be enforced.

Error to Wayne.

Conely & Lucking, for plaintiff in error.

Atkinson & Atkinson, for defendant in error.

MARSTON C.J.

The plaintiff in error is organized under chapter 94 of the Compiled Laws. The act authorizes any number of persons not less than five to organize as a corporation, for the purpose of securing "to the family or heirs of any member upon his death" a certain sum of money, to be paid out of the corporate funds or by an assessment upon the members in the class to which the deceased belonged. The principal facts in this case, are that Isaiah Phair, on the twenty-second day of November, 1879, made a written application, upon one of the blank forms of the association, for a $5,000 certificate, to be made payable to Enos Hoyt. In this application Phair was asked to state "relation of the beneficiary (Hoyt) to the applicant" and the answer given thereto was "no relation." The proper medical report was made, money premium paid, and a certificate issued on the twenty-fifth day of November, a copy of which is given in note herewith. ^[*]

Phair died March 4, 1880, and at the time of his death there were but 1,135 members of the association in the class in which he was insured. The association declined to pay upon several grounds, the most important, and the only one we shall consider, being that Hoyt was not a member of Phair's family or one of his heirs. As showing the relations existing between Phair and Hoyt, the testimony of the latter is given in full herewith.^[d]

This case seems to be peculiar, and if not one of fraud, then from the very inception, it would appear at least to be delusive and deceptive. While the insurance, if such it may be called, was for $5,000, and the premium paid was for this sum, yet the actual amount was fixed by the number of members in the class to which the assumed belonged, which turned out to be a little over 1,100, so that the amount to be recovered was thus cut down.

Again. The application, signed by Phair, and delivered to the company, and upon which the certificate was issued, showed clearly, and without any ambiguity or uncertainty, that the certificate to be issued was to be made payable to Hoyt who was no relation to the applicant. The certificate issued three days after the date of the application, referred to the application and made it and each of the statements therein a part of the contract, and the statement made in the certificate was "to pay to Enos Hoyt, friend of Isaiah Phair, of Jackson, ** the sum of $5,000."

It is thus clearly apparent that the association in accepting the application, receiving the premium, and issuing the certificate, well knew that Hoyt was not a relative, and was not claimed to be a member of Phair's family or an heir, within even the most liberal construction. So that the association issued this certificate under circumstances which most strongly call upon the courts to enforce performance of their agreement, if certain imperative rules of public policy do not forbid. The defence set up in this case must be considered as that of the public and not that of the defendant, as it stands in no position to interpose such a defence. Lyon v. Waldo, 36 Mich. 333.

We need not discuss the other facts at length. The testimony of Hoyt shows that this contract was in the nature of a mere wager policy, and that his interest could not be promoted by prolonging the life of Phair. Such contracts are so clearly contrary to public policy that they cannot be upheld, and must be declared absolutely void.

The judgment in this case must be reversed with costs of both courts.

(The other justices concurred.)

---------

Notes:

^[*] In consideration of the application for this certificate, which is hereby referred to and made part of this contract and of each of the statements made therein and in further consideration of the first payment, (four dollars,) receipt whereof is hereby acknowledged, and of the further payment of the semi-annual dues of one dollar, on or before the first days of July and January of each year, and upon the notice of any assessment and the prompt payment of the same (said assessment never to exceed one dollar and ten cents) during the continuance of this contract, does promise to pay to Enos Hoyt, friend of Isaiah Phair, of Jackson, in the state of Michigan, his executors, administrators or assigns, the sum of $5,000 within 10 days after due notice and proof of the death of Isaiah Phair: provided, there be 5,000 members of the association in good standing. In case the number of members of the association shall be less, then a sum of as many dollars as there shall be members at the death of Isaiah Phair. If the above-named dues or assessments are not paid as provided for in the articles of incorporation and by-laws of the association, then this certificate shall be inoperative and void. In witness whereof, the Mutual Benefit Association has caused this certificate to be signed by its president and secretary, at its office in the city of Detroit, this twenty-fifth day of November, 1879.

J.W. McGRATH, Secretary. )40 GEO. C. LANGDON, President.

^[d] I am the plaintiff in this case. Phair first came to board with me in December, 1878, and stayed till April 25, 1879. He returned on September 7, 1879. He came back as a boarder, and stayed as such boarder till December 25th.

Question. State whether there was any arrangement or agreement between yon and Mr. Phair as to his becoming a member of the family and remaining in the family during his life-time?

Objected to by defendant as incompetent and immaterial; also incompetent to contradict the statement of no relationship set out in the application; also because the certificate purports to insure a friend, and it cannot be shown that the family relationship existed; also as irrelevant to the issue. Objection overruled. Exceptions for defendant.

A. He was to live with me as long as he lived. As long as I had a home he was to have one with me. After that he was treated as a member of the family. This arrangement was made about the time the policy was got out. I was keeping hotel at that time. Q. What, if anything, did he do around the hotel after this arrangement? A. He was not obliged to do anything. He used to do chores Q. Seemed to take an interest in it and work around as the rest of you? A. Just about the same. Q. Whether during that time and after this arrangement and up to his death he worked at your house around doing chores as your wife would call on him? A. Yes, sir. Q. And between the two places lived with you as a member of your family? A. Yes sir; just the same. Q. And under an agreement with you to that effect? A. Yes, sir. Q. You say he came and went, and in all respects conducted himself towards you, and you treated him, as one of the family? A. Just about the same, sir. He went away in December to Eaton Rapids and came back the latter part of January. When he came back I needed a man, so I told him if he wanted to, I would give him $10 a month, the same as I would have to pay another man, so he stayed there as night watch until he got so sick he could not work. Q. So that from the time he came back, in addition to treating him as a member of the family, you allowed him $10 a month for some work he did? A. Yes, sir. Q. Who took care of him? A. Some of the help in she house. Q. Under whose instructions? A. Mine. Q. Who paid the bills? A. I did. Q. Who called in the doctor? A. I did. Q. Who paid them? A. I did. Q. Who paid the expenses of burying him? A. I did. Q. State whether Phair was indebted to you at the time of the issuing of the policy.

Objected to for the same reasons as like testimony of the witness Foster. Objection overruled. Exception for defendant.

A. Yes. He was owing me about $200; don't know exactly how much. Q. And if you had charged up for all you did for him after he became a member of the family, how much would he have owed you at the time of his death? A. About $600.

Cross-examination: Phair was not in any business when he first came to my place. Did not know where he came from. He was to pay me $5 per week. He never paid me anything. He did not do anything; had no employment. I kept my account with my boarders in a large book; charged them with board and gave credit for payments. Q. Why didn't you charge Phair with his board ? A. I did have him charged with his

board until after he was insured. After he was insured I gave him his account. He was square. I gave him his bill. Q. You say you gave him a square account after the insurance? A. I gave him his bill. Yes, sir. It was just stated in the book Ike commenced to board such a date, so much per week. I tore the leaf out, and gave it to him. Q. He never paid you anything? A. No, sir. Q. Any others around you had boarding like that? A. I had one--George Proudfit. I did not know where Phair went after he left April 5, 1879. Didn't keep any track of him. Never dunned him for my pay while he was gone. No arrangement was made when he came back in September '79; just came and stopped. Q. You had at the Sheridan House Mr. White (bar-tender) and this man (Phair) working around? A. No, sir. I did not have this man working around the Sheridan House. He was there, but not working for me. I moved from the American to the Sheridan May, '79, and from there to the Central City House, December, '79. When he was staying with me from December, '78, to April, '79, I did not charge up his board in the books. Q. You...