Purdy v. The Bankers' Life Association of Des Moines
| Decision Date | 28 April 1903 |
| Citation | 74 S.W. 486,101 Mo.App. 91 |
| Parties | LOUISA PURDY, etc., Respondent, v. THE BANKERS' LIFE ASSOCIATION OF DES MOINES, IOWA, Appellant |
| Court | Missouri Court of Appeals |
[Copyrighted Material Omitted]
Appeal from Lawrence Circuit Court.--Hon. H. C. Pepper, Judge.
The appellant insurance company is a corporation organized under the laws of the State of Iowa, and does an assessment insurance business in this State.
On October 27, 1894, it issued a certificate of insurance for $ 2,000 on the life of George A. Purdy, of Pierce City Missouri, payable to his daughter, Louisa Purdy. Purdy died the first day of June, 1900; proofs of his death were made and furnished the company, which refused to pay the insurance money and this action was brought to compel payment.
The reason stated in the answer for refusing to pay is, that by virtue of the contract made between the deceased and the company (of which the constitution and by-laws of the company are said to be a part, as well as the application for insurance), the certificate or policy issued to Purdy had been legally cancelled two years prior to his death, on account of Purdy becoming intemperate in the use of liquors to an extent liable to impair his constitution and injure his general health.
The answer further states that the order of cancellation was made by the board of directors of the Bankers' Life Association at Des Moines, Iowa, April 17, 1898, after due consideration of testimony bearing on the question of Purdy's intemperate habits and after notice to him of when and where the matter would be heard and to submit such evidence as he saw fit.
Another defense is that Purdy was notified of the cancellation on April 28, 1898, but never took any steps to be reinstated, or signified that he was dissatisfied with the board's action.
The replication, besides denying the averments of the answer alleges the notice to Purdy of the contemplated inquiry by the board of directors into his habits, was mailed at Des Moines, March 13, 1898, in a registered letter so that no one but Purdy could receive it, nor could it be forwarded to him if he was absent from home; that the officers of the association then knew Purdy had left home on March 14, for a sojourn with his family in Florida, was still absent and would remain away until the latter part of April; that in fact he did not return to Pierce City until April 22d, when he found the notification awaiting him in the post office that Purdy was postmaster at Pierce City at that time and had left the office in charge of an assistant during his absence. The replication denies the power of the board of directors, under the by-laws of the association, to cancel Purdy's certificate and avers that the by-law attempting to confer such authority was unreasonable and not binding on members. It was further averred that the ground of forfeiture set up by the defendant was so indefinite and uncertain as to the time, place and manner of the inquiry as to constitute an insufficient basis for forfeiture; further, that no evidence of any kind was received by the board in support of the charge; that neither the plaintiff nor her deceased father was called on for an assessment, dues or payments by the association after April 20, 1898, but instead the association induced Purdy to believe no dues or assessments would be thereafter received from him.
The certificate of insurance is of the following tenor:
"Bankers' Life Association, Des Moines, Iowa.
October 27, 1894.
The catechism submitted to and signed by Purdy as part of his application for insurance contains, among other questions and answers, these:
Said application was dated October 24, 1894.
The articles of incorporation of the Bankers' Life Association provide that its business shall be managed by a board of directors; that it shall be conducted on the mutual assessment plan, payment of all assessments to be made by levies on a guaranty fund formed by the contributions of members, at the rate of one dollar for each year of their age when they enter the society, and that a member's contribution to the guaranty fund shall be forfeited on his failure to pay assessments when called for. There is also a surplus fund which is made up of guaranty deposits forfeited to the association by lapsed memberships, and all interest accruing on any of the funds of the association. This surplus fund is set apart to meet emergency losses caused by deaths in excess of one per cent per annum of the membership and for advances to pay death losses when the benefit fund is exhausted. There is also a contingent fund to meet expenses, which consists of a membership fee of fifty per cent of the guaranty deposit of each member.
Purdy was fifty-four years old when he joined the association and had to pay fifty-four dollars as a deposit to the guaranty fund, and one-half of that amount to the contingent fund; eighty-one dollars in all.
The articles provided that the board of directors might adopt all by-laws deemed necessary for the management and transaction of the business of the association in accordance with law and the articles of incorporation.
Certain by-laws material to this controversy are of the following tenor: That certificates of membership may be cancelled by the board of directors in case the applicant misrepresented his health, family history, or other material circumstances, or in case a fraud was perpetrated by him on the association; or if a member becomes intemperate to an extent to impair his constitution or injure his general health. When information comes to the officers of the association leading to the belief that an inquiry should be made as to the cancellation of a certificate, the president or secretary must cause a notice to be sent to the member whose certificate is questioned, stating briefly the nature of the information or charge and that at any time not less than ten or more than forty days from the date of the notice, the board will proceed to determine whether or not the certificate shall be cancelled. The member is to be informed that he may submit evidence or appear before the board of directors, by counsel, and show cause why his certificate should not be cancelled. Said notice, it is provided, must be sent by registered mail, directed to the post office address of the member as shown on the books of the association and the receipt of the postmaster at the mailing point for the envelope containing the notice shall be sufficient evidence of the service thereof. Another by-law provides that on the day fixed for hearing, whether the member attends or not, the board of directors shall proceed to hear and determine the matter on the evidence and information before it, and if it finds the existence of a fact authorizing cancellation, shall cancel the certificate and declare the membership terminated, notice of this action to be sent to the member in the same manner as the notice of the hearing was sent. It is further provided that cancellation forfeits all the money and notes paid to the association.
The information which led to the cancellation of Purdy's certificate was given to the association by a special agent or examiner sent to Pierce City to look into the company's risks and was contained in the following report:
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