Newman v. Covenant Mut. Ben. Ass'n

• Decision Date: 26 October 1888
• Citation: 76 Iowa 56,40 N.W. 87
• Parties: NEWMAN v. COVENANT MUT. BEN. ASS'N.
• Court: Iowa Supreme Court

76 Iowa 56

40 N.W. 87

NEWMAN

v.COVENANT MUT. BEN. ASS'N.

Supreme Court of Iowa.

October 26, 1888.

Appeal from district court, Linn county; J. H. PRESTON, Judge.

The defendant, the Covenant Mutual Benefit Association, is a life insurance company, organized under what is known as the “Assessment Plan.” On the 8th day of July, 1882, it issued a policy or certificate of membership, as it is denominated, to W. H. Hewitt, a resident of the city of Marion, in this state. On the morning of the 14th of July, 1882, the dead body of Hewitt was found in a ditch in the city of Omaha. The ditch was about 24 feet wide, and there was water in it to the depth of 3 1/2 or 4 feet. He left surviving him a widow and two or three children. They assigned the claim, founded upon the policy of insurance, to the plaintiff herein. An action at law was commenced thereon by Alfred H. Newman, trustee for A. E. Hewitt, widow of deceased, and a trial had, which resulted in a judgment for the plaintiff. An appeal was taken to this court, and the judgment was reversed. 33 N. W. Rep. 662. After the cause was remanded to the district court, the plaintiff amended the prayer of his petition, by which equitable relief was demanded. Afterwards he filed an amended and substituted petition in equity, by which he demanded that the defendant proceed to make an assessment upon the membership in the association, and collect the money and pay off the policy. A hearing was had, and a decree was entered, ordering an assessment to be made, and a report thereof to be made to the court. The cause was continued. At the next term it was made to appear that the defendant had made no assessment. A supplemental petition was filed, demanding judgment against defendant for failure to make the assessment. A demurrer to the supplemental petition was overruled, and a judgment was entered for the full amount of the policy, the same being $5,000, and for interest thereon from the time the same should have been paid if an assessment had been made in the regular course of the business of the company. The defendant appealed from the decree ordering the policy to be paid by assessment, and from the final judgment rendered on the supplemental petition. Code Iowa, § 2514, provides that, in case the plaintiff adopts the wrong kind of proceedings, such error shall not cause an abatement or dismissal of the action, but merely a change into proper proceeding, and a transfer to the proper docket. Section 2689 provides that a court may, in furtherance of justice, allow pleadings to be corrected and amended, by the insertion of an allegation material to the action.W. C. Calkins and F. C. Hormel, for appellant.

Chas A. Clark, Henry Rickel, and E. H. Crocker, for appellee.

ROTHROCK, J., ( after stating the facts as above.)

1. The opinion of this court on the former appeal of the cause will be found in 72 Iowa, 242, 33 N. W. Rep. 662. It was held upon that appeal that an action at law for the amount named in the policy or certificate could not be maintained; that, by the terms of the contract, the defendant's obligation was to make an assessment upon the members of the association, collect the assessment, and pay it to the beneficiary; and that no more than nominal damages could be recovered in an action at law. When the cause was remanded to the district court, and when the amended and substituted petition in equity was filed, the defendants moved to strike out the petition, and demurred thereto. The motion and demurrer were overruled. The question arising upon these rulings of the court is elaborately argued by counsel. It is an important question in the case. If there was no right to amend the pleadings so as to present an action in equity, instead of one at law, and if the amendments set up an entirely new action, it could not be maintained, because the policy or certificate, which is the basis of the suit, expressly provides that no action can be maintained thereon which is not commenced within one year after the death of the insured. The statute of this state, authorizing the amendment of pleadings, is very comprehensive. Code, § 2689. Under this and other sections of the Code it has become the rule to allow amendments and to deny the right to the exception. When this cause was remanded to the district court there was the same right of amendment as there would have been if it had not been tried. It was one of those cases where an amendment to the petition was absolutely necessary. In the opinion of this court, the plaintiff should have demanded an assessment upon the membership of the association, instead of asking a judgment at law. It was no more than an amendment of the prayer of the petition. If the claim was an honest one, and the defendant refused to make an assessment to pay it, there was a breach of the contract for which it was liable. The plaintiff sought a recovery upon the policy. He set out in his petition and amendments thereto, before the first trial, every fact necessary to show that he was entitled to relief in some form. He made the mistake of demanding a judgment for the amount, when he should have demanded that an assessment be made. If the objection to his petition had been made before the trial it was his right to have his cause changed into the proper proceeding, and to amend the prayer of his petition accordingly. The error in claiming a judgment did not abate the action. Code, § 2514. By the amendments there was no change of the cause of action. If the plaintiff, when the cause was remanded, had sought to amend his petition by declaring upon the breach of a contract of insurance against loss by fire, that would have been a new cause of action. It would not have been an amendment. The cause of action in this case was the breach of the contract of insurance, and the amendment was merely a change of the form of the remedy. The right to make these amendments, by which causes are changed from the law to the equity jurisdiction of the court, and vice versa, have been too long practiced in our courts to be now called in question. As sustaining the views above expressed, see Holmes v. Clark, 10 Iowa, 427;Weaver v. Kintzley, 58 Iowa, 193, 12 N. W. Rep. 262;County of Emmet v. Griffin, 34 N. W. Rep. 792;Case v. Blood, 71 Iowa, 632, 33 N. W. Rep. 144;Barke v. Early, 72 Iowa, 273, 33 N. W. Rep. 677;Barnes v. Insurance Co., 39 N. W. Rep. 122; and Cook v. Railway Co., Id. 253. We have not thought it necessary to review the authorities cited by counsel for appellant upon this question. It is a question of pleading, which we must regard as settled in this state. The original petition was filed within a year after the insured died, and neither the limitation in the policy, nor the limitation of the statute, can be invoked as defenses to the action.

2. The certificate held by the deceased was made payable to “the devisees of Wm. H. Hewitt, as designated in his last will and testament.” When the plaintiff filed his amended petition in equity, he pleaded that the designation of the beneficiaries in the certificate was a mistake, and it was prayed that the same be reformed so as to be made payable to A. E. Hewitt, his wife, in conformity with the intention of the parties. The decree reformed the instrument as prayed. It appears that the deceased left no last will and testament, and there were therefore no devisees. It is claimed that there was not sufficient evidence to warrant the reformation of the contract. We need not determine this question. It appears that the widow of the deceased, and all of his heirs, assigned the policy to the plaintiff. Surely the defendant ought not to seek to avoid its obligation by the alleged failure of a beneficiary. In such case the heirs of the deceased are the beneficiaries. If he made no last will and testament, the right to the avails of the life insurance would descend to his heirs the same as any other property or chose in action. Smith v. Association, 24 Fed. Rep. 685; Association v. Sears, 114 Ill. 113.

3. We come now to a consideration of the facts in the case. The defendant is a corporation, and its place of business is at Galesburg, in the state of Illinois. The deceased was a resident of Marion, in this state, where he kept an hotel. The application for the insurance was taken in June, 1882, by one W. H. Wharry, an agent of the defendant. He had been at Marion for several weeks before the application was made, engaged in taking applications for insurance for the defendant. It does not appear that he had any other business. He boarded at the hotel kept by the deceased. Fifteen dollars was necessary to be paid by the deceased to constitute him a member of the association. When the application was made by an arrangement between Wharry and the deceased, five dollars of this amount was paid by a credit upon the account against Wharry, for his boarding, and the deceased gave Wharry his promissory note for ten dollars, dated June 15, 1882, and payable July 15, 1882. Wharry changed the scene of his operations to Sycamore, Ill., and sent a note to a bank at Marion for collection, where it was paid July 15, 1882, and the amount,...