Reece v. Security Ben. Ass'n, 19014.

• Decision Date: 07 March 1938
• Docket Number: No. 19014.,19014.
• Citation: 114 S.W.2d 207
• Court: Missouri Court of Appeals
• Parties: REECE v. SECURITY BEN. ASS'N.<SMALL><SUP>*</SUP></SMALL>

114 S.W.2d 207

REECE v. SECURITY BEN. ASS'N.^*

No. 19014.

Kansas City Court of Appeals. Missouri.

March 7, 1938.

Appeal from Circuit Court, Jackson County; Allen C. Southern, Judge.

"Not to be published in State Reports."

Action by Willson Reece against the Security Benefit Association for old age benefit under fraternal insurance certificate. Judgment for plaintiff, and defendant appeals.

Affirmed.

A. W. Fulton, of Chicago, Ill., and Harry L. Ladbury, of Topeka, Kan., and Edward E. Naber, of Kansas City, for appellant.

John R. James, of Kansas City (Barnett, Seddon & James, of Kansas City, of counsel), for respondent.

SPERRY, Commissioner.

This is a suit on a policy of life insurance issued to Willson Reece, plaintiff, by defendant a fraternal insurance company. The question to be determined is whether plaintiff can collect on the old age benefit provisions of the policy. There was a directed verdict for plaintiff in the lower court, and defendant appeals. Mr. Reece will be referred to herein as plaintiff, and the Security Benefit Association will be known as defendant.

The pertinent facts are not disputed. Plaintiff was a resident of Amsterdam, Mo., on May 27, 1897, and made application to defendant for a policy of insurance. Defendant duly issued the policy sued on, and caused it to be properly signed by its officers, under date of June 7, 1897. The policy was delivered to and accepted by plaintiff at his home on June 30, 1897. Every premium falling due thereon has been paid, including those falling due after plaintiff attained the age of seventy years, at which time the policy provided that premiums should cease and old age benefits begin. The application carried the following provisions:

"By paying the rate opposite your age, entitles you to $1,000 at death or $500 in case of disability or $100 a year after the age of seventy.

"A member living to the age of seventy will receive one-tenth of his certificate each year thereafter until the full amount has been paid. Any amount received by a member during life will be charged on his certificate * * * and the remainder will be paid to the beneficiary at his death."

The certificate sued on carries provisions practically identical wilth those above set forth.

Defendant's constitution, section 1 of article 5, and section 1 of article 6, provided, at date of issuance of the certificate, a facsimile or form of blank certificate, same including the exact provisions hereinabove set out; and authorized the issuance of such a certificate. The foregoing constitutional provisions were repealed in 1898, after issuance of this certificate.

Plaintiff attained the age of seventy, February 4, 1922, and demanded to be paid under the policy at the rate of $100 per year. This was refused on the grounds that the constitution and by laws of the order had been changed since 1897, and that, as they stood in 1922 (and as they stand now), authorized payment of such benefits only when a member became disabled after attaining the age of seventy. He made other futile demands thereafter, but continued paying his dues and assessments until the time this action was brought. Under the terms of the certificate he was entitled to have received his last $100 yearly installment in June, 1931; and it is admitted that he paid, in premiums, between that date and the date this action was brought, $145.15. He asked for, and obtained, judgment on the first count of his petition for the amount of each of the yearly $100 payments, with interest thereon from date of maturity; and in the second count he prayed and obtained judgment for the principal amount of his total payments since June, 1931, together with interest thereon.

Defendant urges that under the statutory law of the state of Kansas, its domicile, such a contract of insurance could not be legally issued in that state by any fraternal beneficiary company, including defendant, at the time this contract was issued; that in 1898 defendant repealed the above-mentioned provisions of its constitution, and enacted certain by-laws, and that, after such new provisions became effective, such a contract as the one here considered could not be issued; that such facts have been judicially determined by the Supreme Court of the state of Kansas in Dey v. Knights and Ladies of Security, now the Security Benefit Association, 113 Kan. 86, 213 P. 1066, which was pleaded and placed in evidence; that such decision is binding on the courts of this state, under the full faith and credit clause of the Constitution of the United States, art. 4, § 1; and that we are precluded from holding that the contract in suit is not ultra vires the authority and power of the defendant corporation.

It is contended that jurisdiction of this appeal properly vests in the Supreme Court because of the aforementioned alleged constitutional question involved. Reliance is placed in Rechow v. Bankers Life Co., 335 Mo. 668, 73 S.W.2d 794. The same contention was raised in the Supreme Court in Bolin v. Sovereign Camp, 339 Mo. 618, 98 S.W.2d 681, loc. cit. 683, it was there held that the Supreme Court had no jurisdiction; that the only question to be determined was whether to apply the law of Nebraska or the law of Missouri; and the court said: "The fact the court refused instructions offered by appellant, to the effect that it was a Nebraska contract and that the Trapp decision must be followed and applied pursuant to the constitutional provision just mentioned, implies that the view of the court was that a Missouri contract was in controversy and the issues concerning it were to be adjudged under the Missouri decisions; this, irrespective of the constitutional provision. * * * [Zach v. Fidelity & Cas. Co.] 302 Mo. [1] loc. cit. 7, 257 S.W. 124, 125: * * * `Whether the ruling of the trial court with respect to this question was erroneous can be determined upon appellate review without reference to the constitutional provisions above referred to.'" To the same effect, see Esmar v. Haeussler, Mo.Sup., 106 S.W.2d 412, loc. cit. 414. This is the identical situation here, and we unquestionably have jurisdiction.

The application in this case was signed by a Missouri citizen, in the state of Missouri. The certificate sued on was delivered to plaintiff in Missouri, and he paid defendant all premiums thereon while residing in Missouri. Therefore, the contract, which is the subject of this suit, is a Missouri contract. Ragsdale v. Brotherhood of Railroad Trainmen, 229 Mo.App. 545, 80 S.W.2d 272; Bolin v. Sovereign Camp, W. O. W., supra; Bolin v. Sovereign Camp, W. O. W., 112 S.W.2d 582, not yet published [in State report], opinion filed in this court, November 15, 1937. Since it is a Missouri contract, the laws of this state govern its interpretation and determine the rights of the parties.

The certificate was delivered to plaintiff and accepted by him on June 30, 1897, and the contract was finally consummated and became effective on that date. Defendant was not authorized at that time to transact any business in Missouri whatever, as a foreign fraternal beneficiary insurance company. The law governing such companies was approved March 16, 1897. Laws Mo.1897, pages 132-137; Bolin v. Sovereign Camp, W.O.W., supra, and therefore became effective prior to June 30, 1897. By its terms defendant could only do business in this state, after its effective date, by compliance with its provisions which defendant, by its own admission, did not do until after June 30. Therefore, defendant, at the time the contract in question was consummated, "was acting in disregard of the laws of the State, and subjecting its officers to pains and penalties of the statute. If it was not doing business at the time it issued the certificate in suit, as a fraternal beneficial association, and also doing business under the regulation of the statute in question its liability would be measured by section 7896 [Mo.St.Ann. § 5740, p. 4385]." Brassfield v. Knights of Maccabees, 92 Mo.App. 102, loc. cit. 106. Ragsdale v. Brotherhood of Railroad Trainmen, 229 Mo.App. 545, 80 S.W.2d 272, loc. cit. 279. Section 7896, supra, is a section of R.S.Mo.1899, Mo.St.Ann. § 5740, p. 4385, and corresponds to section 5855, R.S.Mo.1889; they being a part of the general Insurance Code. Toomey v. Supreme Lodge Knights of Pythias, 147 Mo. 129, 48 S.W. 936. Even if defendant had been duly licensed to do business in Missouri as a fraternal beneficiary company, yet it was required to make its contracts under the law of Missouri. Wilhelm v. Security Benefit Association, Mo. App., 104 S.W.2d 1042, loc. cit. 1044; Bolin v. Sovereign Camp, W.O.W., supra; Ordelheide v. Modern Brotherhood of America, 268 Mo. 339, 187 S.W. 1193; Toomey v. Supreme Lodge, K. of P., 147 Mo. 129, 48 S.W. 936; Aloe v. Fidelity Mutual Life Ass'n, 164 Mo. 675, loc. cit. 686, 55 S.W. 993. The character of the insurance granted does not depend on the character of the company, but depends upon the terms of the contract. Bolin v. Sovereign Camp, W.O.W., supra, and other cases above cited.

The contract in this case is one of endowment, and not such a policy as a fraternal beneficiary company, chartered by this or any other state, could legally enter into in Missouri. State ex rel. Supreme Lodge v. Orear, 144 Mo. 157, loc. cit. 169, 45 S.W. 1081; Wilhelm v. Security Benefit Association, supra; Bolin v. Sovereign Camp, W.O.W., supra. This court said, in Ragsdale v. Brotherhood of Railroad Trainmen, supra, 229 Mo.App. 545, 80 S.W.2d 272, loc. cit. 279, that a policy issued by a fraternal company, when the policy did not comply with the laws of this state then in force, must be construed as old-line insurance. As an old-line insurance policy the policy in suit is binding on defendant in every respect. Bolin v. Sovereign Camp, W.O.W., supra.

But the defense of ultra vires the corporation is urged here. The same defense could have been made, just as logically, in a great...