National Aid Life Ass'n v. Murphy

• Decision Date: 01 December 1934
• Docket Number: No. 11558.,11558.
• Citation: 78 S.W.2d 223
• Parties: NATIONAL AID LIFE ASS'N v. MURPHY.
• Court: Texas Court of Appeals

Page 223

78 S.W.2d 223

NATIONAL AID LIFE ASS'N v. MURPHY.

No. 11558.

Court of Civil Appeals of Texas. Dallas.

December 1, 1934.

Rehearing Denied January 12, 1935.

Error from District Court, Dallas County; W. M. Taylor, Judge.

Suit by Mrs. Mattie E. Murphy against the National Aid Life Association. From a judgment, defendant appealed, and plaintiff filed cross-assignments of error.

Affirmed.

Snyder, Owen & Lybrand, of Oklahoma City, Okl., and Taylor & Irwin and W. J. Rutledge, Jr., all of Dallas, for appellant.

Crane & Crane, of Dallas, for appellee.

LOONEY, Justice.

Mrs. Mattie E. Murphy, widow, sued the National Aid Life Association, a benefit association conducted on the assessment plan, referred to herein as the Oklahoma Association, to recover the amount due upon a benefit certificate issued by said association to Ernest C. Murphy, deceased husband of plaintiff. The case was tried to a jury, and resulted in judgment for plaintiff for the full amount of the policy and interest, from which the association appealed, and plaintiff filed cross-assignments of error, based on the action of the court in striking out on exception her plea for penalty and attorney fee.

The material facts are these: During September, 1930, Ernest C. Murphy became a member of the Citizens' Mutual Life & Accident Association, conducted on the assessment plan, designated the Texas Association; its certificate or policy issued to Mr. Murphy was in the sum of $5,000, payable on his death to his wife, plaintiff herein. The affairs of the Texas Association were placed in the hands of T. K. Irwin, receiver, who, on May 25, 1931, entered into a written contract with the Oklahoma Association, by the terms of which said association became obligated to take over the membership of the Texas Association, consisting of approximately 4,500 members in good standing (including Ernest C. Murphy), representing effective life insurance amounting to about $65,900,000. The pertinent provisions of the absorption contract are these:

"(4) First party (Oklahoma Association) hereby offers to admit to its membership all of the members of said Texas Association without further medical examination and without expense except as hereinafter provided and to issue benefit certificates to said newly transferred members, same to be accepted in lieu of benefit certificates in said Texas Association now held by them, said certificates to be issued in consideration of the warranties of the truth of the statements made in their original respective applications to said Texas Association, but only when the statements appearing therein shall, in writing, be re-affirmed to have been true when originally signed and same shall become a part of the new benefit certificate to be issued by party of the first part. * * *

"(6) First party will execute and tender by mail to each member of said Texas Association its own mutual benefit certificate for a like maximum amount of insurance as stipulated by the present benefit certificate held by each member of said Texas Association, respectively, same to become effective however only as and when the respective members of the said Texas Association, while yet living and within thirty days after the receipt of the tendered benefit certificate, shall execute and return to the first party an accompanying receipt for said benefit certificate (a copy of which is hereto attached marked `Exhibit A' and made a part hereof), agreeing to the acceptance thereof in lieu of any liability of said Texas Association under the benefit certificate now held by said member, and shall also remit a special contingent assessment of $2.00 per thousand of maximum death benefits specified in said benefit certificate of first party. * * *"

It is obvious that the absorption contract was entered into for the benefit of the creditors, and members in good standing, of the Texas Association, including Ernest C. Murphy; the appointing court approved the arrangement, and the same was also approved by the commissioners of insurance of the states of Oklahoma and Texas.

In pursuance of the agreement, the Oklahoma Association wrote Ernest C. Murphy June 4, 1931, inclosing the benefit certificate sued upon, also a receipt therefor to be executed by the insured. The letter, transmitting the certificate and receipt, called attention to the consummation of the contract with the receiver, stating that: "In compliance therewith, we now offer you the enclosed benefit certificate. * * * Enclosed also is form of a receipt for said benefit certificate and memorandum of ratification of your membership transfer, which * * * when signed by you and mailed to us, together with the remittance of $2.00 per thousand, constitute the necessary closing instrument between yourself and this association, transferring your membership and giving you adequate protection on the terms and conditions therein set forth. * * * The association is waiving the usual membership fee and medical examination, and will place you in a group formed of Texas. Our Texas office is at 810 Fidelity Union Bldg., Dallas, Texas." About ten days later, a follow-up letter was mailed to Murphy, urging him to execute the receipt and remit the special contingent assessment mentioned.

The pertinent provisions of the receipt transmitted with the letter are these: "I understand and agree that, (1) I will not become a member of said National Aid Life Association unless I personally sign and mail this receipt, while I yet live, together with remittance of a special contingent assessment of $2.00 per thousand of maximum death benefits represented by said proffered benefit certificate. * * * (2) The written statements in my application last submitted to and accepted by said Texas Association are correctly there recorded and are as given by me, and shall be considered as and become the basis and consideration for my membership, and a material part of said benefit certificate in the National Aid Life Association with as much force and effect as though addressed to said Association. (3) Every statement now appearing in said application was true at the date said application was made and any false statement therein contained shall be treated as a breach of warranty and shall release said Association from any liability other than to return to me or to my beneficiary the sum which said Association may hereafter collect from me as dues or by assessments. (4) Said benefit certificate issued by the National Aid Life Association shall not be binding upon said issuing Association should it develop that I was not in good health at the date my benefit certificate was delivered to me by said Texas Association; or that I was not in good standing in said Association at the date said Receiver was appointed. * * * Note: This receipt must be executed and mailed within 30 days from the date of your certificate, together with a special contingent assessment of $2.00 per thousand of maximum death benefits represented by said proffered benefit certificate. * * *" The record discloses that, within the 30-day period prescribed, the receipt or memorandum of ratification was executed, delivered, and the special assessment was paid, in the manner and under the circumstances hereinafter set out.

The certificate of membership or policy sued upon contains a provision that defendant insists is a warranty, the alleged violation of which constitutes its chief defense; this provision reads: "This certificate is issued upon the warranty by the applicant that all statements and answers to questions made in application for the same are true, said application being by reference made a material part of this contract, and this certificate is not effective unless delivered into the manual possession of the applicant, while he is still in good health."

The receipt or memorandum of ratification was executed and delivered and the special assessment was paid, in the manner and under the circumstances following: When the first letter, above mentioned, was received by the Murphys, they were without sufficient funds to pay the assessment, but, on receipt of the follow-up letter, Mr. Murphy directed Mrs. Murphy to arrange with Mr. E. Rothschild of Dallas for a loan of $10 to pay the assessment, which he agreed to do; Mrs. Murphy also requested Rothschild to sign Mr. Murphy's name to the receipt, and deliver same, together with the money, to defendant at its office in the Fidelity Union Building, Dallas, in charge of Mr. B. F. Allen, defendant's state agent; later the same day, Rothschild delivered the document and paid the money to Mr. Allen. After the transaction with Mr. Rothschild, as above stated, Mrs. Murphy returned home, told Mr. Murphy what she had done, to which he assented.

The evidence warrants the conclusion that Mr. Murphy had enjoyed good health for a number of years preceding an attack of influenza in February or March, 1931; the influenza, however, left him with a bad heart affliction, and about May 21, 1931, his condition was pronounced serious by a heart specialist, who expressed the opinion that insured could not live very long. Insured ceased regular work three or four months prior to his death, which occurred June 21, 1931, but continued to be up and around; on Wednesday preceding his death Sunday morning, he drove 30 miles in the country, and the night before his death ate supper with his family about 6 p. m., had company until about 10 p. m., dying suddenly early next morning. Additional pertinent facts will be mentioned in their proper connections during the discussion.

Defendant filed a general denial, and specially pleaded that, under the facts, no binding contract was ever consummated, in that (a) its offer to insured was never accepted in the manner and form stipulated in the contract with the receiver; (b) insured not being in good health at the time, the stipulation of the contract (certificate) that it was not to become effective,...