Smith v. Covenant Mut. Ben. Ass'n

• Decision Date: 01 May 1885
• Citation: 24 F. 685
• Court: U.S. District Court — Eastern District of Wisconsin
• Parties: SMITH and others v. COVENANT MUT. BEN. ASS'N OF GALESBURG, ILL.

24 F. 685

SMITH and others v. COVENANT MUT. BEN. ASS'N OF GALESBURG, ILL.

United States Circuit Court, E.D. Wisconsin.

May, 1885

Small &amp Hopkins, for plaintiff.

Jenkins Winkler & Smith, for defendant.

DYER J.

On the eighteenth day of January, 1881, the defendant association issued its certificate by which it constituted Benjamin F Smith a member of said association, with all the rights and privileges of the same, upon the following conditions and agreements:

'That at any time during the continuance, and before the termination of this contract, upon due notice and satisfactory proofs of the death of the aforesaid member having been filed with the secretary of the association, he having in all respects fully complied with the conditions of this certificate, an assessment shall be levied upon all the members holding certificates in force at the time of the death of the said member, for the full amount named in their respective certificates: provided, however, that when the aggregate of such assessments would exceed the limit of this certificate, then the assessment shall be levied ratably, according to the certificate held by each, for an aggregate amount not less than the limit of this certificate, and the sum so collected on such assessments (less all amounts which may be added for expense and collection costs) the association hereby agrees well and truly to pay, or cause to be paid, as a benefit to his devisees as provided in last will and testament, or, in the event of their prior death, to the legal heirs or devisees of the holder of this certificate, * * * within ninety days from the date of the acceptance of said evidence of death, any assessment or other indebtedness of the said member to the association being first deducted therefrom; but in no case shall the payment under this certificate exceed twenty five hundred dollars.'

This is a suit upon this certificate, brought by the plaintiffs as the legal heirs of Benjamin F. Smith, who died intestate. The plaintiff's complaint sets out fully the provisions of the certificate, and then alleges that notice and proof of death were duly given; that the insured on his part fully complied with all the conditions of the certificate to be performed by him, but that the defendant has not paid, and refuses to pay the plaintiffs the sum of $2,500 named in the certificate; and judgment is demanded for that sum, with interest.

The defendant demurs to the complaint on the ground that it does not state facts sufficient to constitute a cause of action. In support of the demurrer, it is urged (1) that the complaint is fatally defective, since it does not allege that the insured left devisees under a last will who were first to take under the certificate, and that such devisees have died, by reason whereof the legal heirs of the insured are entitled to claim the amount of the insurance; (2) that there is no allegation in the pleading that the association has levied an assessment upon its members to pay the loss, or, having levied an assessment, has collected the same, and failed to pay over the sum collected.

The questions raised by the demurrer are novel, and not free from difficulty. The certificate is partly printed and partly written; and before it was completed as a contract of insurance, there was in it a blank space after the words 'paid as a benefit to,' which was followed by the words in print, 'or, in the event of * * * prior death, to the legal heirs or devisees of the holder of this certificate,' etc. When the certificate was filled up, the words 'his devisees, as provided in last will and testament,' were written in the space after the words 'paid as a benefit to,' and the word 'their' was inserted after the words 'or in the event of.' The contention of counsel for the defendant is that no liability was created to pay to the legal heirs of the insured, except in the event of the prior death of devisees; that the word 'their' refers to the word 'devisees;' that if the insured made no will,-- as it is conceded he did not,-- there were no devisees, and as there were no devisees to die, the contingency never arose when the association became obligated to pay to the legal heirs of the holder of the certificate; hence that this action cannot be maintained by the present plaintiffs,-- and it was suggested on the argument that if an action would lie at all on the certificate, it would lie only in favor of the administrator of the estate of the insured. This argument is ingenious, but in our judgment unsound. The certificate, it is true, is very awkwardly worded; but, as the contract of the association, it should be so construed, if possible, as to give it efficacious meaning, rather than to defeat the intention of the parties and destroy its character as an obligation.

It must be presumed that the association intended by this certificate to pay to somebody as beneficiary whatever sum should be collected by assessment from other certificate holders, not exceeding the sum specified in the certificate. The vitality of the contract was not to depend upon the fact that the insured should make a last will and testament, in which devisees should be named, nor do we think that a remedy upon the contract in favor of...