Royal Neighbors of America v. Fortenberry

• Decision Date: 14 January 1926
• Docket Number: 6 Div. 454
• Citation: 107 So. 846,214 Ala. 387
• Parties: ROYAL NEIGHBORS OF AMERICA v. FORTENBERRY.
• Court: Alabama Supreme Court

107 So. 846

214 Ala. 387

ROYAL NEIGHBORS OF AMERICA v. FORTENBERRY.

6 Div. 454

Supreme Court of Alabama

January 14, 1926

Rehearing Denied April 8, 1926

Appeal from Circuit Court, Jefferson County; Roger Snyder, Judge.

Suit by W.A. Fortenberry against the Royal Neighbors of America. Judgment for plaintiff, and defendant appeals. Reversed and remanded.

W.A Jacobs, of Birmingham, for appellant.

Edgar Allen and W.H. Anderson, both of Birmingham, for appellee.

THOMAS J.

The trial was had upon counts 3, 4, 5, and 7, based on an alleged contract to insure and the breach thereof in the failure to issue a policy of insurance made payable pursuant to the application. Each of the counts stated a good cause of action. L. & L. & C. Ins. Co. v. McCree, 98 So. 880 210 Ala. 559, 561.

The evidence discloses that the application for insurance was of date April 4, 1923, the applicant was initiated into the lodge as a beneficial member on April 5th, the required certificate of good health was given by its physician on the 9th of that month, the application and certificate were transmitted by mail on the 10th to the home office, and there received on the 12th and approved April 19, 1923, by the Supreme Physician of the lodge. It is further shown that Mrs Fortenberry, the applicant, had theretofore done all that was required of her as such member and applicant of said order and that this action on her part was before the date of her death on May 10, 1923. The policy came by mail to the company's representative about a week after the death of the applicant, and could not be delivered as a certificate of insurance. Cherokee Life v. Brannum, 82 So. 175, 203 Ala. 145.

It is shown by the application to the Supreme Camp that the by-laws, articles of association, and the application should "be the sole basis" of Mrs. Fortenberry's "admission to and membership" in the order, and "of any benefit certificate to be issued" by said "Royal Neighbors of America," the defendant corporation. It is also expressly agreed in that writing that the applicant constituted and made the officers of the local camp and of the Royal Neighbors of America, who had aided her in making the application, her "agents for such purpose" (sections E and G), and that the certificate of insurance applied for should not become operative, except as indicated, by delivery, etc. (by-laws,§§ 206, 229, 230). To this we will later advert. The form of the policy in evidence contracted for contained like provisions. Furthermore, an inspection of the policy in evidence, for the limited purpose of showing the form of the policy issued and when acted upon by the Supreme Lodge or officers thereof, discloses that the applicant had the right of acceptance or rejection when delivery of the certificate of insurance was sought to be made, and, upon acceptance, the final agreement of assured to all the conditions contained and to warrant her "sound health" at such time is shown by the form of the policy in evidence. The policy or certificate of insurance shows the order is a mutual benefit association, and it provided, among other things:

"Said fund out of which any liability hereon shall be paid shall be created by levying upon all reserve benefit plan members of this society sufficient assessments, from time to time, to pay all such liability in full. The member to whom this certificate is issued hereby admits and agrees that the organization issuing the same is a fraternal beneficiary society, and so incorporated, and as such is legally transacting its business, and that, in enforcing any rights or demands accruing to said member or beneficiary by virtue of this contract, this agreement shall be conclusive evidence that this corporation, at this time and then, is a fraternal beneficiary society.

"This benefit certificate is issued and accepted only upon the following express warranties, conditions, and agreements:

"First. That the Royal Neighbors of America is a fraternal beneficiary society as contemplated, and as defined by the statutes of the state where the member resides. ***"

"Eleventh. It is agreed by the member that this certificate, the charter or articles of incorporation, the by-laws of the society, all the resolutions above referred to, and the application for membership and medical examination signed by the applicant, with all amendments to each thereof, shall constitute the agreement between the society and the member; and that any changes, additions, or amendments to said charter or articles of incorporation and bylaws of the society, or in any of said resolutions enacted subsequent to the issuance of this certificate, shall be binding upon the member and his or her beneficiary or beneficiaries, and shall govern and control the agreement in all respects in the same manner as if such changes, additions, or amendments have been made prior to and were in force at the time of the application for membership."

It is provided by section 203 of the by-laws that, upon acceptance of the application and its certificate by the local chapter and execution by recorder and certificates by its local and general physician, the same shall be delivered immediately to the Supreme Recorder, who shall forthwith sign and issue a benefit certificate which shall be signed by the Supreme Oracle. It is also provided as to delivery of the certificate:

That the applicant appear for adoption, if not already adopted as member, and that the applicant shall, "if in sound health, sign the benefit certificate, also sign receipt for same, and pay one dollar certificate fee, if same has not previously been paid, current assessment at date of acceptance, together with local camp dues for current month at date of acceptance, as provided in sections 283 and 286: Provided, that if the benefit certificate is not delivered to and accepted by the applicant while in sound health and within sixty days from the date of issue by the Supreme Recorder, the same shall, ipso facto, be absolutely null and void, and be returned to the Supreme Recorder, and if the applicant still desires a benefit certificate, new application must be made." Section 206.

Pertinent provisions of sections 229 and 230 are as follows:

"Sec. 229. When Certificate Becomes Operative.--The liability of this society upon any benefit certificate issued by it shall not begin until such certificate shall have been countersigned by the oracle and recorder of the local camp and actual manual possession thereof be delivered to the applicant therefor, and upon payment to the local recorder of the current assessment and dues if not already paid at the time of such delivery of said certificate and all while said applicant is in sound health. No local camp or any officer or member thereof and no officer of the society is permitted or authorized to waive any of the provisions of this section.

"Sec. 230. No Waiver of Any By-Laws.--No officer of this society, except as provided in section 32 hereof, nor any local camp officer or member thereof, is authorized or permitted to waive any of the provisions of the by-laws of this society which relate to the contract between the member and the society, whether the same be now in force or hereafter enacted. ***"

The theory of the suit is for the breach of parol agreement to insure, or negligence in unnecessary delay in the transmission of the application and its conduct in the home office to the issue of the beneficiary certificate and its return for acceptance by the assured, resulting in financial loss to the beneficiary, for which he might sue. Counsel for appellee insist that it was within contemplation of the parties and within the contract rights of assured and her beneficiary that action by the respective officers should be taken immediately, and without undue and unnecessary delay in the due conduct of the general business of the Supreme Lodge. They say if that due dispatch was not observed, and unusual and unnecessary delay in the premises occurred that amounts to negligence which causes loss to the applicant and assured or to the beneficiary named in the policy, that the defendant is liable. The counts aver that the authorized agent of defendant...