Stewart v. National Council of Knights and Ladies of Security

Decision Date29 May 1914
Docket Number18,743 - (43)
Citation147 N.W. 651,125 Minn. 512
PartiesTHOMAS E. STEWART and Another v. NATIONAL COUNCIL OF KNIGHTS AND LADIES OF SECURITY
CourtMinnesota Supreme Court

Action in the district court for Ramsey county to recover $2,000 upon defendant's policy of insurance upon the life of plaintiffs' son. The defense set up in the answer is stated in the opinion. The case was tried before Kelly, J who denied defendant's motion for a directed verdict, and a jury which returned a verdict for $1,456 in favor of plaintiffs. From an order denying its motion for judgment notwithstanding the verdict or for a new trial, defendant appealed. Affirmed.

SYLLABUS

Contract -- limitation of action to enforce.

1. Contract stipulations limiting the time within which an action may be brought thereon, when not unreasonable, are valid, though the period fixed be at variance with the statutory limitations.

Insurance -- suspension of right to bring action.

2. Where, in an insurance contract, such a stipulation is coupled with a further provision by which, after the loss occurs, the right to commence the action is suspended for an indefinite period, the duration of which depends upon some action to be taken by the insurance company, and over which the insured has no control, the limitation period commences to run from the time the suspension of the right to sue has terminated.

William G. White and Harvey E. Hall, for appellant.

A. J Hertz and James E. Markham, for respondents.

OPINION

BROWN, C.J.

Defendant is a mutual benefit association, duly incorporated, under the laws of the state of Kansas, and licensed to and doing business in this state. On May 11, 1911, the association issued and delivered to Harrison E. Stewart a benefit certificate in and by which it promised and agreed to pay to plaintiffs herein, father and mother of Stewart, a certain sum of money on the death of the insured and upon the conditions and terms specified in the contract. Stewart died in March, 1912, and this action was thereafter brought to recover upon the certificate of insurance. The defense to the action was: (1) The alleged default of Stewart to pay the premium due in February, 1912, the month preceding his death; and (2) that the action was not commenced within the time prescribed by the by-laws of the association, namely, within one year from the date of the death of the insured. This provision of the by-laws formed and constituted a part of the contract. The first defense stated was not sustained by the evidence, and it was shown that decedent was not in default in payment of the premium referred to, and was in good standing at the time of his death. The second defense was established, if the provisions of the by-laws relied upon in support thereof be construed in harmony with defendant's contention, for the action was not commenced within a year from the date of death. The insured died in March, 1912, and the action was not commenced until May, 1913. Plaintiffs had a verdict and defendant appeals from an order denying its alternative motion for judgment or a new trial.

The substantial question presented by the assignments of error is whether the right of recovery upon the certificate was barred by the failure to commence the action within the year following the death of the insured. The first assignment of error presents a question of practice which we deem unnecessary to consider, further than to say that, if there was error in the ruling complained of, it was without prejudice and is no ground for reversal. The pleadings clearly presented the issues in the case and they were fully litigated on the trial and the cause disposed of upon the merits. Whether, therefore, plaintiffs should or should not have been required to assume the burden of the evidence is not now important. We come then to the real question in issue.

1. The by-laws of the association which, as stated, formed a part of the insurance contract, contain among others the following provision, namely:

"No action for recovery on a death claim, based upon any beneficiary certificate heretofore or hereafter issued by the National Council, can or shall be brought or maintained until after the proofs of death and of claimant's rights to benefits as provided by these laws, shall have been filed with the national secretary and passed upon by the national executive committee, nor unless brought within one year from the death of the member."

In compliance with this by-law plaintiffs duly made and presented proofs of death, and they were passed upon by the association and the claim rejected in July, 1912. The evidence does not show when, if at all, the association informed plaintiffs of its action in rejecting the claim; nor does it appear that the association was required by the laws of the order to so notify them. The action was, however, commenced within a year from the date of rejection but not within a year from the date of death.

It is well settled by the decisions of this and other courts that contract stipulations, limiting the time within which an action may be brought thereon, are valid, when not unreasonable, though the time fixed thereby be at variance with the statutory limitations. 2 Dunnell, Minn. Dig. § 4732; 1 Vance, Ins. 507; 19 Cyc. 905, and authorities there cited. Such stipulations are found in nearly all contracts of insurance and with few exceptions have been sustained. But when coupled with other stipulations and conditions, by which the right to sue on the contract is suspended or postponed pending the happening of some event subsequent to the loss the happening of which is dependent upon the action of one or both the parties, and necessarily absorbs much of the period fixed for the commencement of the action, the limitation clause has not always been construed or given effect in strict accord with its language. The question is usually treated as a matter of contract to which the rules in respect to the construction of statutory limitations do not apply. In those cases where by the contract the insurance company reserves the right of arbitration for the purpose of determining the amount of its liability, no time being fixed therefor, or where the contract provides that payment may be delayed by the company for 60 or 90 days after proofs have been furnished, many of the courts have held that the period of limitation does not commence to run until the arbitration has been had and the amount of the loss thus determined, or until the expiration of the time reserved to the company in which to make payment. 19 Cyc. 906; Matt v. Iowa M.A. Assn. 81 Iowa 135, 46 N.W. 857, 25 Am....

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