Schuster v. Knights and Ladies of Security

• Decision Date: 07 September 1910
• Citation: 60 Wash. 42,110 P. 680
• Parties: SCHUSTER v. KNIGHTS AND LADIES OF SECURITY.
• Court: Washington Supreme Court

110 P. 680

60 Wash. 42

SCHUSTER v. KNIGHTS AND LADIES OF SECURITY.

Supreme Court of Washington

September 7, 1910

Department 1. Appeal from Superior Court, Spokane County; E. H Sullivan, Judge.

Action by Nicholas H. Schuster, guardian, against the Knights and Ladies of Security. From a judgment for defendant, plaintiff appeals. Reversed and rendered.

Scott &amp Campbell, for appellant.

Samuel T. Crane and Fred H. Moore, for respondent.

GOSE J.

The defendant is a foreign corporation, organized and doing business as a fraternal beneficiary society. It has a subordinate lodge in the town of Chattaroy in this state known as Royal Council No. 1380 of the Knights and Ladies of Security. On the 27th day of October, 1906 Minnie A. Schuster became a member of the lodge at Chattaroy, and the defendant issued to her a beneficiary certificate in the sum of $1,000, payable to her daughter, Ethel H. Schuster, upon the death of the assured. The assured thereafter made timely payments of her dues and assessments up to August 1, 1908. On September 30, 1908, her husband paid her assessments for the months of August, September, and October of that year to the financial secretary of the local lodge; she then being ill at the hospital in the city of Spokane. Her dues were paid up to January 1, 1909. The assured died on October 2, 1908. Thereafter due proof of death was submitted to the defendant, and payment was demanded and refused. This action was commenced for the recovery of the amount due on the policy on the 21st day of June, 1909. The defendant answered on the 24th day of September following. The assessments were transmitted to the defendant in October, 1908, by the financial secretary of the home lodge, and were retained by it until the last of September, 1909, when the amount was returned to the local secretary at Chattaroy, who tendered it to the plaintiff on October 9th following. It is conceded that the financial secretary of the local lodge was the proper officer to receive and transmit the assessments. The defendant's by-laws, which under the certificate constitute a part of the contract of insurance, provide that the certificate of each member who has not paid his assessment on or before the last day of the month shall ipso facto stand suspended without notice; that no right thereunder shall be restored until it has been duly reinstated; that it may be reinstated within 60 days from date of suspension by payment of all arrearages, provided 'that he be in good health at the time of reinstatement; provided, further, that the receipt and retention of such assessments or dues in case the suspended member is not in good health shall not have the effect of reinstating said member or of entitling him or his beneficiaries to any rights under his benefit certificate.' They further provide: 'The National Council shall not be liable for the illegal receipt of arrears of beneficiary or reserve fund, or National Council general funds or assessments, from suspended members, and the receiving of any such arrears, and receipting therefor by any officer of a subordinate council and the reinstatement of any suspended member except as provided in the laws of the order, shall not be binding on the National Council'--and that a member in default in the payment of his assessments for more than 60 days and less than 6 months can only be reinstated by the payment of all arrearages, and by presenting a health certificate approved by the company's national medical examiner. The plaintiff offered testimony tending to show that, when the husband paid the assessment on September 30, 1908, he informed the secretary of his wife's illness. This the secretary denies. Upon the facts stated, after both parties had submitted their evidence, a judgment was entered in favor of the defendant for costs. The plaintiff has appealed.

It was alleged in the answer, and it is urged here, that because of the illness of the assured the payment of the arrearages to the financial secretary within 60 days from the date of the suspension of the certificate did not reinstate it. A reference to the by-laws, to which we have adverted, will disclose that a payment of the assessments to the secretary within 60 days after the suspension of a certificate for the nonpayment of an assessment reinstates the policy if the member is in good health, and that no method is provided for determining that fact.

The appellant contends that the retention of the assessments by the respondent after having notice of all the material facts operates as a ratification of its acceptance by the local secretary, and estops the respondent from asserting the invalidity of the certificate. We think this contention must be sustained. Summarizing the facts, it appears that the tender was made more than a year after the death of the insured, about 4 months after the commencement of the action, and...