United Assurance Association v. Frederick

Decision Date28 May 1917
Docket Number10
Citation195 S.W. 691,130 Ark. 12
CourtArkansas Supreme Court

Appeal from Jefferson Circuit Court; W. B. Sorrels, Judge; modified and affirmed.

Judgment affirmed.

W. P Strait, for appellant.

1. The court committed reversible error in giving instruction No. 1 for appellee as to notice. It throws the responsibility on the appellant to get this notice to, and into the hands of the assured or beneficiary. The contract does not require this and if the notice was placed in the mails in the ordinary way, properly addressed, the association discharged its duty under the contract. Mutual Aid Union v Wadley, 125 Ark. 449. The contract provides for notice by ordinary mail. The testimony shows that the notice was mailed as provided, and there is no testimony that it was not received. The instructions asked by appellant are almost verbatim copies from the cases above cited. The burden was on appellee to show performance of all the provisions of the contract.

2. It was error to refuse No. 9 asked by appellant, as to applicant's age and health. The statement as to age was material and a warranty. 3 Joyce on Ins., § 1970; Cooley's Briefs on Insurance, 1130; May on Ins., § 156; 82 Ark. 400; 150 S.W. 393; 58 Id. 528; 96 Id. 495. If he did not know his age or guessed at it, the responsibility was on the applicant and not the insurer. 58 Ark. 528; 89 Id. 471; 84 Id 57. The fact that the agent encouraged him in the erroneous statement does not relieve him. 58 Ark. 277.

3. The beneficiary had no insurable interest in the life of the assured. 98 Ark 52; Ib. 340; 104 U.S. 775.

4. It was error to assess the penalty and attorney's fees. The statute is purely penal and should be strictly construed. Besides fraternal benefit associations are exempt from the general insurance laws of this State. Kirby's Digest, § 4352; 104 Ark. 423. The assessment is without warrant of law and is error.

Taylor, Jones & Taylor, for appellee.

1. Every assessment was paid of which notice was received. There is no proof in the record that any member of his circle had died which would authorize an assessment and a forfeiture, if not paid within the time provided. Forfeitures are not favored in law and when invoked all prerequisites necessary to sustain the forfeiture must be affirmatively shown. 2 Bacon Life & Acc. Ins. (4 ed.), § 484; 2 S.W. 495; 68 S.E. 842.

2. There is no evidence to show a forfeiture for nonpayment of assessment, whether notice was given or not, and plaintiff was entitled to a peremptory instruction. But the court submitted the question to the jury by instruction No. 1, and it is correct and properly given. Authorities, supra.

3. This instruction was not specifically objected to and appellant can not now complain. 78 Ark. 247; 84 Id. 81; 92 Id. 472; 93 Id. 509; 96 Id. 184. But the instruction is correct, as forfeitures are not favored and the policy is construed most strongly against the company. 113 Ark. 174; 58 Id. 528; 86 Id. 115. See also Bacon Life & Acc. Ins. (4 ed.), Vol. 2, § 489. The members must be notified, either orally, or by delivery through the mail or otherwise. 50 Mich. 273; 14 N.Y.S. 76.

4. There was no misrepresentation as to age or health. The agent made the estimate of age himself. 106 Ark. 91; 113 Id. 174; 81 Id. 205; 71 Id. 295; 111 Id. 435.

5. There was no proof as to whether the beneficiary had any insurable interest in the life of insured or not. A person may take out insurance on his own life and name anyone he pleases as beneficiary. 116 Ark. 527; 77 Id. 60.

6. The damages and attorney's fees were properly assessed. 86 Ark. 115; 92 Id. 378; Act 115 Acts 1905. This company is not exempt under Kirby's Digest, § 4352, and 104 Ark. 417.



The appellant is a mutual insurance society organized under the laws of this State for the relief of its members, and for the mutual aid of beneficiaries of such members in case of death of the member. It is not based upon any subscribed or paid-up capital stock, either in whole or in part, but alone upon membership dues and pro rata assessments upon its members. Its business is conducted substantially as follows: A small membership fee, or policy fee, is charged the applicant upon becoming a member and receiving a certificate thereon. When such party is accepted as a member, and the policy or beneficiary certificate issued, the member is assigned to a circle, the membership being divided into circles of not exceeding 1,000 members each. In the event of the death of any member of any given circle, all the members in said circle are assessed a certain stipulated amount, according to the age and length of time such member has belonged to the association, from the proceeds of which the beneficiary named in the certificate of insurance receives payment of the value of the policy. The application, by-laws, and beneficiary certificates of the association all constitute a part of and, together, make up the contract between the parties. No medical examinations are made previous to accepting a member, but the statements of the applicant contained in his application are made warranties and the truth thereof a condition precedent to the right of recovery.

Ben Hegwood was a member of the appellant company and, as such, held a policy payable to Adam Frederick, the appellee, who had no insurable interest in the life of the assured.

Upon the death of Hegwood, appellant refused to furnish necessary blanks for proof of death, it being asserted by the company that the member stood suspended at the time of his death for the nonpayment of an assessment, due notice of which had been given by mail. The application and certificate provided that notice of assessment should be given Frederick, and he testified that he had paid all assessments of which he had ever received notice. The application contained the following provision in regard to notice:

"It is understood that the value and conditions of this policy to be issued on this application shall be as follows: * * * It is understood that the secretary of the United Assurance Association is to notify said applicant, by ordinary mail, to the last known address and to that stated, of any death occurring in the circle of which policy-holder is a member, which will make applicant liable for assessment, and of the proper amount of the assessment due thereon, and prompt payment of the same must be made within fifteen days to the Home Office, and failure on the port of appellant to pay the assessment within thirty days from date of notice, as provided by the by-laws, forfeits and voids this policy."

The policy contained the following language upon this subject:

"Upon the death of any member of the above named circle, the within named member shall within thirty days from the date of the notice thereof, which the secretary of this association shall have mailed to the within named member, pay to this association an assessment which shall be equal to the sum of one cent for each year of the age of the within named member at the time of the issuance of this policy plus the sum of one cent for each month of time the within named member has been a member of this association, provided, that with the eightieth month from the date of this policy the maximum assessment shall have been reached and will amount to $ 1.34."

Upon the issue of notice, the court gave the following instruction:

"1. If you believe from a fair preponderance of the evidence that the defendant issued unto Ben Hegwood the certificate of membership introduced in evidence, and that all assessments of which he received notice were paid by him, or some other person for him, and that the said Ben Hegwood died on the 18th day of July, 1916, then your verdict should be for the plaintiff in the sum provided in the certificate of membership, together with interest thereon at the rate of 6 per cent per annum from the 22d day of August, 1916, to date."

The correctness of this instruction presents the principal question in the case, although other questions are presented, and these latter questions will be first considered.

The by-laws of the order provided that no certificate should be issued to any person who was over 55 years of age. And there was offered in evidence the marriage record of Hegwood, which showed that on November 14, 1898, he was 45 years old, and, if this statement of his age was true, he was beyond the insurable age permitted by the appellant company on December 12, 1914, when the certificate sued on was issued. But the proof shows that Hegwood made no statement of his age, and the agent of the company who wrote the application testified that, from questions which he asked Hegwood, he estimated Hegwood's age to be 54, and wrote that figure down as being his age, and that Hegwood was an illiterate negro who did not, and could not, read the application, and signed it by mark. This proof being undisputed, there was no issue as to the misrepresentation in regard to age, because the knowledge of the agent who wrote the application is imputed to the company. Hutchins v. Globe Life Ins. Co., 126 Ark. 360, 190 S.W. 446; Fidelity & Casualty Co. v. Meyer, 106 Ark. 91, 152 S.W. 995; Maloney v. Maryland Casualty Co., 113 Ark. 174, 167 S.W. 845; Mutual Reserve Fund Life Association v. Cotter, 81 Ark. 205, 99 S.W. 67.

The right to recover is denied because the beneficiary had no insurable interest in the life of the member. The proof is undisputed, however, that the member took out this policy himself, and that the beneficiary knew nothing of the application until after it had been written. While appellee would have had no right to have taken out this policy himself, because he had no insurable...

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