State ex rel. Beach v. Citizens' Benefit Ass'n of St. Louis

Decision Date04 June 1878
Citation6 Mo.App. 163
PartiesSTATE OF MISSOURI, EX REL. L. B. BEACH, CIRCUIT ATTORNEY, Relator, v. CITIZENS' BENEFIT ASSOCIATION OF ST. LOUIS, Respondent.
CourtMissouri Court of Appeals

1. The business of making assurance upon lives cannot be carried on in this State without the grant of a franchise for that purpose.

2. Though the amount payable is not a gross sum, but a sum graduated by the number of persons in a given class at the time of the death of the insured, and though there is no means of compelling the payment of the assessment made upon the death, and though the insurer is not liable for the amount actually collected from members upon the happening of the loss, the agreement may be a real contract of insurance where there is a payment of consideration by one and a promise by the other to pay upon the happening of the loss; and where the main object of the existence of the company making such contracts is to do such insuring, it is doing an insurance business within the meaning of the statute.

3. A corporation with salaried officers, paying commissions on risks obtained, insuring and admitting to membership any one having the requisite conditions of age and health, and requiring no other qualification for membership, cannot evade the insurance laws by calling itself a benevolent society and obtaining a charter as such.

APPLICATION for quo warranto.

Judgment of ouster.

REYNOLDS & FROST, for relator: The contract between this association and its members is an insurance contract.--Bouv. L. Dic., tit. “Insurance,” and “Insurance on Lives--Contract, 1 and 2;” Burrill's L. Dic., tit. “Insurance;” 1 Marsh. on Ins. 1, 52, 53; Bliss on Ins., sect. 3; May on Ins., sect. 1; Harrison v. Miller, 7 Term Rep. 340; 7 Term Rep. 338. The fact that its object is benevolent does not change its character.-- The Commonwealth v. Wetherbee, 105 Mass. 140; 2 Marsh. on Ins. 776, 777; 3 Seld. 237. Nor that no sum in gross is set out in the contract.--Broom's Leg. Max. *624.

MCGINNIS & SEARLE, for respondent: Life insurance is a contract by which the insurer, in consideration of a gross sum or an annual payment, agrees to pay the person for whose benefit the insurance is effected, or his executors, administrators, or assigns, a certain sum of money, or annuity, on the death of the person whose life is insured, whenever it happens, if the insurance is for the whole life; or in the event of the death happening within a certain period, if the insurance is only for that period.--3 Kent's Comm. 365; 1 Williams on Pers. Pr. 159; Smith's Merc. Law, 456; Bunyon's Life Assur. 1, 5; Baron Parke, 15 C. B. 365.

BAKEWELL, J., delivered the opinion of the court.

This was an information in the nature of a quo warranto, filed by the circuit attorney against defendants for carrying on the business of life-insurance within the city of St. Louis without any charter or lawful authority.

The return alleges that defendant is a corporation organized under the general law in regard to benevolent associations, for the propose of giving financial aid to the families of deceased members from the proceeds of assessment upon the members of the association; that defendant has in all respects strictly pursued the objects for which it was created, and has never carried on a life-insurance business.

The answer is accompanied by an agreed statement of facts, of which the charter and by-laws of defendant, the form of contract with its members, and blank forms of examination on application for membership, form a part.

Relator asks for judgment of ouster upon the pleadings and evidence.

The articles of association of defendant, filed at the time of the application for incorporation under the provisions of law in regard to the incorporation of benevolent associations (Wag. Stats. 339, sect. 1 et seq.), state that its objects are to give financial aid to the widows and children of deceased members, or to such uses as the members shall by last will appoint. If there are neither widow, children, nor will, then the aid is to form part of the general fund of the association. Applicants for membership must be between twenty-five and fifty-five years old, and residents, at the time, of St. Louis, or of East St. Louis, on the opposite side of the river, in Illinois. The board of trustees accept or reject applications. The officers, and the mode of their election and their duties, are set out. The board of trustees are authorized to make by-laws; to regulate the terms of membership and rate of initiation-fee; to divide the membership into classes according to the sum to be paid on death of a fellow-member, and to limit the number of members in each class; to regulate the manner and time of payment, and the amount to be paid to the representatives of a deceased member of a class; to determine the disposition of the surplus funds; to provide for new offices and officers; to amend the by-laws; to provide what shall constitute forfeiture of membership; and to provide a rule for the equitable distribution among its members, if two-thirds of the members shall determine to close the affairs. The association may hold personalty to the amount of $250,000; it may continue for ninety-nine years; the trustees may invest the surplus funds in bonds of the State or of the United States, and not otherwise.

The by-laws require every person applying for membership to answer, in writing, printed questions such as are usually put by insurance companies, and to furnish a certificate by a medical examiner such as is usually required by such companies.

The association consists of two classes, A and B, each limited to two thousand members; one man may belong to both classes. The annual membership-fee for men under forty is $5 in class A, and $3 in class B; and for members over forty it is $7.50 in A, and $4.50 in B. On admission each member pays a certificate-fee of $1, and an assessment-fee as upon a member's death. When a member dies, each member of his class is assessed $2.50 or $1, according to the class of the deceased, the higher assessment being for class A. Proofs of loss are to be filled up according to a blank form, and if found correct on investigation, the board orders payment in thirty days, and causes an assessment of the class of the deceased; if this is not paid in thirty days, failure to pay forfeits membership; the member who has forfeited may be reinstated on payment of arrears. The executive committee is to take charge of all business and property, and see to the safety of investments. It meets at semi-monthly intervals, and its members are paid $2 each for each attendance, and may hold extra meetings. The duties of other officers are set forth. The manager and secretary receive such compensation as the trustees provide. The manager is to solicit for members, and each member receives $1 for each applicant he procures who is accepted.

The certificate of membership is in the following form:

Class B.

No. _____.

CITIZENS' BENEFIT ASSOCIATION OF ST. LOUIS.
This Certificate of Membership

WITNESSETH, that the Citizens' Benefit Association of St. Louis, in consideration of the representations made to it in his application for membership, which is hereby made part hereof, and of the sum of _____ dollars, to be paid on or before the -- day of _____, in every year during the continuance of his membership in this association, and of one death-assessment of one dollar to it in hand paid; and the further sum of one dollar to be by him paid to this association within thirty days after notice served on him of each death occurring in the membership of Class B of this association, promises and agrees to and with the said _____ ______, well and truly to pay, or cause to be paid, to _____ ______, wife, or the legal representatives of the said _____ ______, within thirty days after due notice and satisfactory evidence of the death of the said _____ ______, the sum of one dollar for every surviving member of Class B of this association; Provided, however, that in the event of the non-payment of assessment by any member or members of said class within the prescribed time, then the residue of said benefit shall be paid to the person or persons entitled thereto under this certificate as and when collected...

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