Schmidt v. Supreme Court, United Order of Foresters

• Decision Date: 31 May 1910
• Parties: SCHMIDT et al. v. SUPREME COURT, UNITED ORDER OF FORESTERS.
• Court: Missouri Supreme Court

129 S.W. 653

228 Mo. 675

SCHMIDT et al. v. SUPREME COURT, UNITED ORDER OF FORESTERS.

Supreme Court of Missouri. Division No. 1.

May 31, 1910.

Rehearing Denied June 14, 1910.

1. INSURANCE (§ 788)—FORFEITURE—SUICIDE —STATUTORY PROVISIONS.

Rev. St. 1899, § 7896 (Ann. St. 1906, p. 3750), providing that in suits on life policies, it shall be no defense that the insured committed suicide unless he contemplated suicide when he made his application, and any stipulation in the policy to the contrary shall be void, is more than a declaration of legislative policy affecting the remedy solely, and is a substantive law entering into the contract itself, and into all contracts for life indemnity, including those of fraternal organizations.

2. INSURANCE (§ 788)—MUTUAL BENEFIT INSURANCE — FORFEITURE — SUICIDE—STATUTORY PROVISIONS.

Acts 1887, p. 204, § 10 (Rev. St. 1889. § 5869), and Rev. St. 1889, § 5872 (Rev. St. 1899, § 7913 [Ann. St. 1906, p. 3763]), requiring foreign associations doing life insurance business on the assessment plan to make certain reports and to comply with statutory provisions relating to appointment of agent to receive service of process, but providing that nothing therein shall be construed to subject such corporations to other provisions of the general insurance law, as affecting Rev. St. 1899, § 7896 (Ann. St. 1906, p. 3750), barring the defense of suicide except where contemplated at the time of application, merely provide an exemption therefrom, of which a foreign association can take advantage only by qualifying and taking out a license as required by Rev. St. 1899, §§ 1408-1423 (Ann. St. 1906, pp. 1111-1118).

3. INSURANCE (§ 788)—MUTUAL BENEFIT INSURANCE —FORFEITURE—SUICIDE.

That a foreign beneficiary association, after issuance of a benefit certificate, complied with Rev. St. 1899, §§ 1408-1423 (Ann. St. 1906, pp. 1111-1118), requiring such associations to qualify and take out a license to do business in the state, does not give the association as to such certificate the exemption provided by section 7913 (page 3763) to such associations from the operation of section 7896 (page 3750), barring the defense of suicide except where contemplated at the time of the application, and declaring void any provision in a policy to the contrary.

4. INSURANCE (§ 723)—MUTUAL BENEFIT INSURANCE —AVOIDANCE—REPRESENTATIONS.

A statement in an application for a benefit certificate that the applicant had no brothers and sisters when he had half brothers and sisters did not avoid the contract, especially in view of the statutory provision that no misrepresentation in procuring insurance shall avoid the policy unless the matter misrepresented shall have contributed to the contingency on which the policy is to become payable.

Appeal from St. Louis Circuit Court; O'Neill Ryan, Judge.

Action by George Schmidt, Jr., and others against the Supreme Court, United Order of Foresters. From the judgment of the St. Louis Court of Appeals (124 Mo. App. 165, 101 S. W. 625), affirming a judgment for defendant, plaintiffs appeal. Reversed and remanded.

W. F. Heideman and F. A. Wislizenus, for appellants. Robert & Robert, for respondent.

GRAVES, J.

This case has been certified to this court by the St. Louis court of appeals. The reason for so certifying the case is that that court was of opinion that the views which it had expressed conflicted with those of the Kansas City Court of Appeals in the case of Huff v. Woodmen, 85 Mo. App. 96.

A short statement of the facts will suffice. Plaintiffs are the half brothers and sisters of one Charles Henry Fosz. The defendant is an alleged fraternal beneficiary association, chartered by the state of Wisconsin. On December 1, 1901, the defendant issued to the said Fosz, one of its certificates of insurance in the sum of $1,000. By the terms of the certificate the defendant agreed to pay Wilhelmina Smith (Schmidt) the mother of Fosz, the said sum of $1,000, or so much thereof as might be realized from one full assessment of its membership. It was admitted that one full assessment would bring more than $1,000, so this limitation of the amount to be paid becomes immaterial. The mother died January 5, 1902, and Fosz died May 15, 1903. It stands admitted that Fosz committed suicide. Fosz died without designating another beneficiary, and in this contingency a by-law of the society or association provided for the brothers and sisters as beneficiaries. The defendant urged two defenses: (1) Suicide in violation of terms of the certificate; and (2) false statements in the application. In the application, which is made a part of the contract, deceased stated that he had no brothers and sisters, and the proof discloses that he only had half brothers and sisters. The case turned below and in the Court of Appeals upon the question of suicide. Upon this question material portions of the application made by deceased are as follows:

"(2) I declare I am in good, sound, mental and physical health, and agree that this declaration together with the answers in medical examination paper, and the law, rules and usages of said order, shall be part of my contract with said order."

"(4) That if my death ensues by reason of suicide or self-destruction, voluntary or involuntary, or while sane or insane, no benefits shall be due to my beneficiary or beneficiaries on account of my death."

"(7) That the laws of the society, in force on the date of my death, shall determine the rights of my beneficiary or beneficiaries, and that this application and all rights and privileges accruing to me or my beneficiary or beneficiaries thereunder, shall be limited by and subject to all laws, rules and regulations which are now in force, or which may hereafter be enacted or adopted by the United Order of Foresters."

"(10) That in case of a suit for a death benefit by my beneficiary or beneficiaries, against the society, that the burden shall rest upon such beneficiary or beneficiaries to prove my application, membership and the constitution and laws in force at the time of my death, as well as the furnishing of due notice of and proof of death."

Upon the same question, the following bylaws of the society were in existence at the time deceased applied for and received the certificate:

"Law 23, section 1. The supreme power and authority of the order is hereby vested in the Supreme Court, and the same shall be exercised in such manner as said court may determine.

"Section 2. The Supreme Court shall at all times have power to enact such laws as it may deem proper for the government of the order and the management of its affairs, which laws shall at all times determine the rights and obligations between the order and its members; and the order at all times reserves the right and power in said Supreme Court to make such changes in existing laws as it may deem for the best interest of the order, and all certificates providing for the payment of any benefits to any member, or to any person as his beneficiary, shall be forever issued subject to such reserved right and power."

"Law 62, section 9. The United Order of Foresters does not insure against suicide nor against self-destruction, and if any member shall commit suicide or self-destruction or shall be the means in any manner of taking his own life, he shall by such act forfeit his certificate of membership, together with all rights and benefits due him or his beneficiary or beneficiaries from the Supreme Court or High Court or a subordinate court."

In brief of counsel for the plaintiff it is admitted that defendant is a fraternal association under the laws of Wisconsin. The proof shows that defendant did not comply with the laws of Missouri as a fraternal beneficiary association until January 6, 1902, but on said date did comply with such law, and from that time until the death of Fosz was licensed to do and did business in Missouri as such fraternal beneficiary association. The judgment of the circuit court of St. Louis was for the defendant, and this judgment the St. Louis Court of Appeals affirmed. Schmidt et al. v. United Order of Foresters, 124 Mo. App. 165, 101 S. W. 625. The case reaches this court as before stated. This sufficiently states the case.

The real bone of contention in this case lies in the fact that the certificate sued upon was issued some 36 days prior to the time the defendant qualified and took out the license to do business in the state as a fraternal beneficiary association or society. Plaintiffs concede that had defendant qualified and taken out its license under the provisions of the act of 1897, prior to the issuance of the policy, there would be no liability. In other words, the plaintiffs contend that although defendant was in fact a fraternal beneficiary association, yet it is not entitled to the exemptions given such associations by the act of 1897, until such time as it brings itself within the purview of the act by qualifying and taking out a license under the act. Plaintiffs say that, inasmuch as our general insurance laws preclude suicide as a defense, the contract in question was under that law when made, and by that law the clause as to suicide as a matter of defense was effectively stricken from the contract, and no act of the defendant thereafter, by way of qualifying and taking out license under the other law, can change the thus fixed terms of the contract. Stating the question differently, they urge that whilst the contract on its face contains a clause exempting the defendant from liability in the event of suicide, yet under section 7896 of the general insurance laws (Rev. St. 1899 [Am. St. 1906, p. 3750]), such clause was stricken from the contract by force of the statute, and the contract thereby became one by the terms of which indemnity was granted and given as against death by suicide, and this contract could not be changed by the association later qualifying under the law relating to fraternal beneficiary...