Order of Railway Conductors of America v. Quigley

• Decision Date: 05 January 1938
• Docket Number: No. 2108-6964.,2108-6964.
• Parties: ORDER OF RAILWAY CONDUCTORS OF AMERICA v. QUIGLEY.
• Court: Texas Supreme Court

111 S.W.2d 698

ORDER OF RAILWAY CONDUCTORS OF AMERICA v. QUIGLEY.

No. 2108-6964.

Commission of Appeals of Texas, Section A.

January 5, 1938.

Error to Court of Civil Appeals of Sixth Supreme Judicial District.

Action on a life insurance policy by Mrs. Lillian Quigley against the Order of Railway Conductors of America. A judgment for plaintiff was affirmed by the Court of Civil Appeals, 83 S.W.2d 701, and defendant brings error.

Reversed and rendered.

Grimm, Elliott, Shuttleworth & Ingersoll, of Cedar Rapids, Iowa, and Arnold & Arnold and Wm. Hodges, all of Texarkana, for plaintiff in error.

N. L. Dalby and King, Mahaffey, Wheeler & Bryson, all of Texarkana, for defendant in error.

GERMAN, Commissioner.

Prior to May 17, 1932, C. M. Quigley had been a member of the Order of Railway Conductors of America for many years. He carried a policy of insurance provided by the Order for its members, which, prior to August 1, 1931, was carried upon the mutual assessment plan. On August 1, 1931, the Order, in compliance with statutes, changed its plan of insurance so that thereafter it should be carried on the legal reserve plan, based upon premiums payable monthly, quarterly, semiannually, or annually, as the member might elect. This change in plans resulted in the cancellation of the insurance of all members as of date August 1, 1931, but privilege of accepting insurance under the new plan was timely extended to all members, and with members such as was Quigley the privilege could be exercised at any time prior to December 31, 1931, without medical examination. Quigley had first declined to take any insurance under the new plan. However, about October 21, 1931, he wrote a letter to the general office of the Order at Cedar Rapids, Iowa, indicating his desire to take insurance in the sum of $2,000 under the new plan. In this letter he inclosed money order for $10.37 to pay the premium for August, 1931, and stated, "I will take care of September dues this month." Proof was made that the Order usually made reply to such communications promptly upon receipt of same by card addressed to the applicant reading in substance as follows: "Your letter has been received and your case will be taken care of as soon as possible. I trust you will be patient and remember that this office has a tremendous amount of work to do. Remember your monthly rate is $____ and must be paid during each current month." Whether in this particular instance such card was sent to Quigley is not shown. However, on November 5, 1931, the Order did send a communication to Quigley in substance as follows: "New Certificate 23240 is being issued to you, and the monthly rate on same is $10.37. It will be mailed to you in the near future. Should you communicate with this office, or make remittance, in the meantime please mention the number of your certificate, in order that we may make proper identification."

It appears to be undisputed that prior to August 1, 1931, and for several months thereafter, on account of the change in the plan of insurance, the cancellation of old policies and the issuance of new ones, and the vast amount of correspondence resulting therefrom, the office force of the Order was wholly unable to promptly transact the business of the Order. Due to this vast accumulation of work the Order employed from 20 to 30 extra helpers, and would have employed more, if competent workers could have been obtained. This condition resulted in great delay in the issuance and forwarding of new policies.

It is undisputed that after the remittance of $10.37 for the August premium Quigley never made any other remittance to the Order and never paid any sum as premiums. However, sometime in February, 1932, the Order mailed a policy to Quigley in the sum of $2,000, effective as of date August 1, 1931, showing upon its face the amount of annual, semiannual, quarterly, and monthly premiums. It is not shown when the policy was mailed to Quigley, but the receipt signed by him was received by the Order in Cedar Rapids February 15, 1932. The policy, however, must have been received by Quigley on or about February 12, 1932, for on that date Mrs. Quigley wrote the Order at Cedar Rapids as follows: "In regard to a policy of Charlie Martin Quigley was 363. And since they raised the due they gave him a new number which is 23240, that he could pay semi-ann'l $60.56, quarterly 30.85, month 10.37. You men know that Mr. Quigley was in good standing up to the time he was taken sick; has been a O. R. C. member for 27 years. He wants to keep up his due, but owing to his sickness he cannot. I made it known at the Lodge at Bonham, Tex., that they would have to look after this ins. until Mr. Quigley gets where he can. And as I have not heard from them, I am going to ask you O. R. C. to take care of Mr. Quigley's dues until he gets where he can and just as soon as he gets able to go back to work I will let you know, then he will look after them himself. After he has carried this Policy for 27 years, I don't feel that he should lose it. Now please see to this at once and let me know. Trusting to here from you at an early date so I will know what to look to. I told the Lodge at Bonham they would have to see to this for me, and since I have no reply will ask you gentlemen to please take care of Mr. Quigley due. And just as soon as he get where he can take care of them will let you know. Thanks."

On February 17, 1932, the Order replied to this communication direct to Quigley, saying:

"I am in receipt of a letter under date of February 12th signed by Mrs. Quigley in which she states that your physical and financial condition had been made known to Secretary of Division 363.

"I have called for your file, and I find that you are holding policy No. 23240, which is a $2000 Ordinary Life issued in lieu of your old Certificate B-13840 — Age 62, the monthly rate thereon being $10.37. Inasmuch as only one month's dues were paid on this policy, it lapsed for non-payment of assessments, and if you desire to carry insurance in the Order of Railway Conductors, it will be necessary that you pass a medical examination, same to be approved by the medical directors before a new certificate can be issued. It would then be issued at the rate chargeable at your attained age at the time of making new application.

"It is unfortunate that the Grand Division could not consistently revise rates in accordance with each member's ability to pay, but under the Legal Reserve Plan of Insurance, the rate charged each member is sufficient to cover the death rate in his class as well as create his own individual reserve."

On February 23, 1932, Mrs. Quigley made reply to the foregoing letter. It is not necessary to set out this reply in full, but a pertinent statement therein is as follows: "When they changed the dues I paid the first due after it was changed to $10.37, then I made it known to the O. R. C. lodge at Bonham for them to please keep up Mr. Quigley due until he got well, and then he would see to them his self."

On February 25, 1932, the Order replied to this letter of Mrs. Quigley, and among other things said: "It is unfortunate, and I am indeed sorry, that the condition exists as it does. We have no record in this office of any communication from you so I presume you wrote directly to...