Railway Mail Mut. Ben. Ass'n v. Henry, A-155.
| Decision Date | 11 October 1944 |
| Docket Number | No. A-155.,A-155. |
| Parties | RAILWAY MAIL MUT. BEN. ASS'N v. HENRY. |
| Court | Texas Supreme Court |
This is a suit for $2000 by respondent, Mrs. Elizabeth Henry, as beneficiary of a certificate of membership issued to her husband, Walter S. Henry, by petitioner, Railway Mail Mutual Benefit Association, a fraternal benefit society.
The trial court rendered judgment that respondent take nothing by her suit, having concluded that before the death of Walter S. Henry on August 23, 1941, his membership was suspended and the right to benefits under the certificate lapsed on account of his failure to pay on or before August 8, 1941, the regular monthly assessment that was levied on July 8, 1941.
The Court of Civil Appeals reversed the judgment of the trial court and rendered judgment in favor of respondent against petitioner for $2000, together with 12% penalty and $500 for attorney's fees, holding that the general insurance laws, and in particular the provision of Article 4732 of the Revised Civil Statutes of 1925 for a grace of a month for the payment of premiums, are applicable to the case and that respondent is entitled to recover on the certificate because the death of the member occurred within the grace period. 179 S.W.2d 333, 334.
The substance of the material facts as shown by the findings of the trial court and the supporting evidence is as follows: Petitioner is a fraternal benefit association incorporated under the laws of Illinois. Its constitution and bylaws provide that it is a corporation not for pecuniary profit but for the benefit of its members and their beneficiaries, and they make provision for the payment of benefits upon the death or disability of its members. Petitioner has a lodge system and its governing bodies are a convention, a board of directors, an executive committee and local lodges. The membership of the society is limited to railway postal clerks and all others connected with the railway branch of the United States mail service, post office inspectors, clerks assigned to the inspection division, United States sea post clerks and superintendents of mail in post offices. The members in their occupation are subject to greater risks of injury and death than are other employees of post offices.
On March 21, 1941, petitioner issued to Walter S. Henry a certificate of membership, providing that the member shall fully comply with all the laws, rules and regulations of the association then and thereafter made, and that upon full compliance with the aforesaid condition the association is bound to pay to Elizabeth Henry, respondent herein, $2000 after receipt of satisfactory proof. On the face of the certificate appears the following: "Any member who does not pay his regular monthly assessments, extra assessments, Expense Fund Assessments, or Annual Dues as provided in the Constitution and By-Laws of this Association, as now or hereafter in force, shall be suspended and his membership forfeited as therein provided."
The constitution and bylaws of the association or society provide that assessments are thereby made upon every member on the 8th of every calendar month, which must be paid before 10 o'clock p. m. of the 8th day of the succeeding calendar month, that a member who does not pay his regular monthly assessment on or before 10 p. m. of the 8th day of the succeeding month shall be suspended without any action by the association or any officer or committee thereof, and that the failure to pay a regular monthly assessment on or before the 8th day of the second succeeding calendar month shall of itself work a forfeiture of membership. Another section of the bylaws provides that no member shall be entitled to any benefits from the association during suspension, and that no benefits shall be paid to the beneficiaries, representatives or heirs of any member dying while under suspension or during forfeiture of his membership.
A regular monthly assessment against Walter S. Henry was levied July 8, 1941, and it became delinquent on August 8, 1941. Mr. Henry paid this assessment to the local secretary on August 20, 1941. Remittance of this payment was received in petitioner's home office on September 9, 1941. Mr. Henry died August 23, 1941.
Petitioner did not have a license to transact business in Texas on March 21, 1941, when the certificate to Walter S. Henry was issued, as is provided for by Article 4842 of the Revised Civil Statutes, and it did not comply with any of the other provisions of the statutes relating to foreign benefit societies. It had no license or permit from any other department of the state government of Texas to transact business in the state on March 21, 1941, and it has made no annual reports as provided by Article 4849 of the Revised Civil Statutes.
The ruling of the Court of Civil Appeals that Article 4732, part of the general insurance laws, providing for a thirty-day period of grace, saved the policy from lapsing rests upon its construction of portions of Article 4831 () and portions of Article 4857 in relation to Article 4823, all being parts of the chapter of the insurance laws which relates to fraternal benefit societies, Chapter 8, Title 78, Revised Civil Statutes of 1925. That court held that Articles 4831 and 4857, in providing that "nothing contained in this Act" and "nothing in this chapter" shall affect or apply to certain named societies (including this petitioner) have the effect of depriving the named societies of the benefit of Article 4823 which exempts fraternal benefit societies from the provisions of the general insurance laws. It reasoned that, if nothing in the Act or chapter applies to the limited class of societies named in Articles 4831 and 4857 it must follow that Article 4823 does not apply to them, and it concluded that those societies are therefore not exempt from the general insurance laws but are subject to them. This construction appears to be literally correct. In our opinion it is destructive of the legislative intent, which was to exempt a favored few societies from the control and regulation imposed generally by Chapter 8 upon fraternal benefit societies. The construction does exempt them from that control and regulation, but it deprives them of the exemptions given by Article 4823 to all fraternal benefit societies and places them under the greater and stricter control and regulation of the general insurance laws.
Chapter 3, entitled "Life, Health and Accident Insurance", of Title 78 of the Revised Civil Statutes is the chapter which relates to the organization, incorporation, licensing, regulation and control of ordinary life insurance companies. It contains elaborate legislation for strict supervision, control and regulation, primarily for the purpose of protecting policyholders from insurance companies doing business for profit. Article 4732 of Chapter 3 contains a number of requirements as to the contents of policies of life insurance, one of them being a provision for a period of grace of one month for the payment of premiums.
Fraternal benefit societies are defined and regulated by Chapter 8 of the same title, a distinct chapter and law from that relating to ordinary insurance companies. This chapter, with some additions by amendment, is Chapter 113 of the General Laws of the 33rd Legislature, entitled "Fraternal Insurance—To Define, Regulate and Control Fraternal Benefit Societies." Acts Regular Session, 33rd Legislature, p. 220, Vernon's Ann.Civ.St. art. 4820 et seq.
This chapter prescribes a certain amount of regulation and control, but less complete and strict than that prescribed by Chapter 3 relating to ordinary life companies. Without discussing the statutes in detail, it is sufficient to say that they classify and treat fraternal benefit societies and their insurance business as separate and distinct from ordinary life insurance companies and the business conducted by them. This accords with the general practice. "The difference between ordinary life insurance and that furnished by the fraternal benefit societies has been universally recognized in legislation and is a matter of common knowledge." Supreme Council of the Royal Arcanum v. Behrend, 247 U.S. 394, 38 S.Ct. 522, 524, 62 L.Ed. 1182, 1185, 1 A.L.R. 966. See also 38 Am. Jur., pp. 443-445, Sec. 4.
Article 4823, which is Section 4 of the original Act of 1913, p. 221, defining and regulating fraternal benefit societies, is as follows:
Article 4831 relates in the main to members of fraternal benefit societies and their beneficiaries. It was rewritten in 1931, the following sentence being added to it: "Nothing contained in this Act shall be construed to affect or apply to societies which admit to membership only persons engaged in one or more hazardous occupations, in...
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