Van Woert v. Modern Woodmen of America

• Decision Date: 06 February 1915
• Docket Number: 1905
• Court: North Dakota Supreme Court

151 N.W. 224

29 N.D. 441

MRS. DELLA VAN WOERT, Surviving Widow, and Legal Heir of Jiles J. Van Woert, and William Van Woert, Guardian of Ella Van Woert, Joseph Earl Van Woert, Ralph Leighton Van Woert, and Fairy Van Woert, Minor Heirs of Said Deceased, v. MODERN WOODMEN OF AMERICA, a Foreign Corporation

No. 1905

Supreme Court of North Dakota

February 6, 1915

From a judgment of the District Court of Renville County, Leighton J., plaintiffs appeal.

Judgment affirmed.

Affirmed.

Grace & Bryans, for appellant.

The defendant, being engaged in the insurance business in this state as an insurance company, is subject to the general insurance laws of the state, and is not exempt. Rev. Codes 1905, §§ 5893, 5934; Comp. Laws, 1913, 6501.

Under such statute it has been held that, if the application contains untrue statements, the burden of proof is upon the defendant to show that they were made in bad faith fraudulently, and with the intention to deceive the insurance company. Soules v. Brotherhood of American Yeoman, 19 N.D. 23, 120 N.W. 760; Jacobs v. Omaha Life Asso. 146 Mo 523, 48 S.W. 462.

The benefit certificate issued by such fraternal organization doing a life insurance business stands in the place of the policy issued by regular insurance companies, and the distinction sought to be made is without a difference. Both are insurance contracts. 29 Cyc. 8; Penn Mut. L. Ins. Co v. Mechanics' Sav. Bank & T. Co. 38 L.R.A. 33, 19 C. C. A. 286, 37 U. S. App. 692, 72 F. 413; Fogg v. Supreme Lodge, U. O. G. L. 156 Mass. 431; Supreme Counsel, A. L. H. v. Larmour, 81 Tex. 71, 16 S.W. 633; Bolton v. Bolton, 73 Me. 299; Brown v. Balfour, 46 Minn. 68, 12 L.R.A. 373, 48 N.W. 604; Rockhold v. Canton Masonic Mut. Ben. Soc. 129 Ill. 440, 21 N.E. 794; Martin v. Stubbings, 126 Ill. 387, 9 Am. St. Rep. 620, 18 N.E. 657.

The fraternal character of the organization is merely incidental thereto. It is a life insurance company just the same. State v. Bankers' & M. Mut. Ben. Asso. 23 Kan. 499; Folmer's Appeal, 87 Pa. 133; Illinois Masons' Benev. Soc. v. Winthrop, 85 Ill. 537; Illinois Masons' Benev. Soc. v. Baldwin, 86 Ill. 479; State ex rel. Beach v. Citizens' Ben. Asso. 6 Mo.App. 163; Bolton v. Bolton, 73 Me. 299; Bacon, Ben. Soc. chap. 51.

Under modern decisions, it is the tendency of the courts to hold that the untrue statements are but the opinion of the insured, and that they do not constitute warranties, unless made in both faith and with intent to deceive; that the burden is upon the company to prove such bad faith and wrong intention. Lakka v. Modern Brotherhood, Iowa , 49 L.R.A. (N.S.) 902, 143 N.W. 513; Supreme Ruling, F. M. C. v. Crawford, 32 Tex. Civ. App. 603, 75 S.W. 844.

A clause in a policy that insured agrees to warrant the truthfulness of his answers to questions amounts to no more than to warrant that such answers were bona fide. Hough v. City F. Ins. Co. 29 Conn. 10, 76 Am. Dec. 581; Illinois Masons' Ben. Soc. v. Winthrop, 85 Ill. 537; Conver v. Phoenix Mut. L. Ins. Co. 3 Dill. 226, F. Cas. No. 3,143; Goucher v. Northwestern Traveling Men's Asso. 20 F. 598; Connecticut Mut. L. Ins. Co. v. Union Trust Co. 112 U.S. 250, 28 L.Ed. 708, 5 S.Ct. 119; Phoenix Mut. L. Ins. Co. v. Raddin, 120 U.S. 183, 30 L.Ed. 644, 7 S.Ct. 500; Moulor v. American L. Ins. Co. 111 U.S. 341, 28 L.Ed. 449, 4 S.Ct. 466; Grace v. American Cent. Ins. Co. 109 U.S. 278, 27 L.Ed. 932, 3 S.Ct. 207; Fidelity Mut. Life Asso. v. Jeffords, 53 L.R.A. 193, 46 C. C. A. 377, 107 F. 402; Rasicot v. Royal Neighbors, 18 Idaho 85, 29 L.R.A. (N.S.) 433, 138 Am. St. Rep. 180, 108 P. 1048; Rupert v. Supreme Ct. U. O. F. 94 Minn. 293, 102 N.W. 715; Ranta v. Supreme Tent, K. M. 97 Minn. 454, 107 N.W. 156; Royal Neighbors v. Wallace, 73 Neb. 409, 102 N.W. 1020; Modern Woodmen v. Wilson, 76 Neb. 344, 107 N.W. 568.

The plaintiff's proposed amendment to the complaint should have been allowed. Zimmer v. Pauley, 51 Wis. 282, 8 N.W. 220; Johnson v. Tucker, 136 Wis. 505, 128 Am. St. Rep. 1097, 117 N.W. 1003; J. I. Case Threshing Mach. Co. v. Eichinger, 15 S.D. 530, 91 N.W. 82.

The court erred in not allowing the plaintiff to prove that the answers in the application of which complaint is made, were not made by the insured, but were written in by the person who took the application,--the defendant's agent. Session Laws 1907, chap. 146, p. 228; 25 Cyc. 929, and cases cited under note 84; Lyon v. United Moderns, 148 Cal. 470, 4 L.R.A. (N.S.) 247, 113 Am. St. Rep. 291, 83 P. 804, 7 Ann. Cas. 672; Fell v. John Hancock Mut. L. Ins. Co. 76 Conn. 494, 57 A. 175; 25 Cyc. 937 sub-div. (V) text and cases cited under note 5 under enpoint 29 Cyc. 242, and cases cited under note 26; Moore v. Union Fraternal Acci. Asso. 103 Iowa 424, 72 N.W. 645.

Defendant alleges and attempts to prove that the insured died from the tumor; that he had such tumor long before he took out the insurance. The court erred in not allowing plaintiff to prove that insured died from hemorrhage, and not from tumor. 25 Cyc. 243, 921, 941; 29 Cyc. 242, 928; Fell v. John Hancock Mut. L. Ins. Co. 76 Conn. 494, 57 A. 175 Soules v. Brotherhood of American Yeomen, 19 N.D. 23, 120 N.W. 760.

Greenleaf, Bradford, & Nash (Benj. D. Smith, of counsel), for respondent.

A representation is deemed false when the facts fail to correspond with its assertions or stipulations. Rev. Codes 1905, § 5931.

The false representations in this case had been made express warranties by the contract of the parties. This question is settled in this jurisdiction. Satterlee v. Modern Brotherhood, 15 N.D. 92, 106 N.W. 561; Johnson v. Dakota F. & M. Ins. Co. 1 N.D. 167, 45 N.W. 799.

By uniting in the motion for a directed verdict, both plaintiff and defendant waived a submission of the case to the jury. By such motions both parties said to the court that there was no question or issue of fact to be submitted to the jury, and neither party will be permitted to urge that the issues should have been submitted to the jury. Bank of Park River v. Norton, 12 N.D. 497, 97 N.W. 860; Umsted v. Colgate Farmers' Elevator Co. 18 N.D. 309, 122 N.W. 390; American Case & Register Co. v. Boyd, 22 N.D. 166, 133 N.W. 65; 29 Cyc. 242, 928; Fell v. John Hancock Mut. L. Ins. Co. 76 Conn. 494, 57 A. 175; Soules v. Brotherhood of American Yeomen, 19 N.D. 23, 120 N.W. 760.

The respondent is a fraternal benefit society, and as such is not governed by the general insurance laws of the state. Peterson v. Manhattan L. Ins. Co. 244 Ill. 337, 91 N.E. 466, 18 Ann. Cas. 96; 29 Cyc. 7-11.

That § 5934, Rev. Codes 1905, being § 6501, Compiled Laws 1913, does not apply to fraternal benefit societies should be too clear for argument. This question has been passed upon and settled in several jurisdictions. Smith v. Supreme Lodge, K. & L. G. P. 123 Iowa 676, 99 N.W. 553; Knapp v. Brotherhood of American Yeoman, 128 Iowa 566, 105 N.W. 63; Knudson v. Grand Council, N. L. H. 7 S.D. 214, 63 N.W. 911; Hudnall v. Modern Woodmen, 103 Mo.App. 356, 77 S.W. 84; Newland v. Modern Woodmen, 168 Mo.App. 311, 153 S.W. 1097; Valeeroy v. Knights of Columbus, 135 Mo.App. 574, 116 S.W. 1130; Fawcett v. Supreme Sitting, O. I. H. 64 Conn. 170, 24 L.R.A. 815, 29 A. 614; State ex rel. Atty. Gen. v. Mutual Protection Asso. 26 Ohio St. 19; State v. Whitmore, 75 Wis. 332, 43 N.W. 1133; Titsworth v. Titsworth, 40 Kan. 571, 20 P. 213; Extended note in Penn. Mut. L. Ins. Co. v. Mechanics' Sav. Bank & T. Co. 38 L.R.A. 1.

The false representations and answers contained in the policy or contract were expressly made warranties on the part of the insured, and are subject to the general rules of construction of like contracts. They made the contract void from its inception.

That they were innocently made, or made in good faith and without intent to deceive or defraud, is wholly immaterial. The fact that the answers or statements were false is the test, and proof only to such extent is required. Beard v. Royal Neighbors, 53 Ore. 102, 19 L.R.A. (N.S.) 798, 99 P. 83, 17 Ann. Cas. 1199; Hoover v. Royal Neighbors, 65 Kan. 616, 70 P. 595; Metropolitan L. Ins. Co. v. McTague, 49 N.J.L. 587, 60 Am. Rep. 661, 9 A. 766; Cobb v. Covenant Mut. Ben. Asso. 153 Mass. 176, 10 L.R.A. 666, 25 Am. St. Rep. 619, 26 N.E. 230; Modern Woodmen v. Von Wald, 6 Kan.App. 238, 49 P. 782; McDermott v. Modern Woodmen, 97 Mo.App. 636, 71 S.W. 833; 3 Cooley, Ins. 1954; 3 Joyce, Ins. § 1964; May, Ins. § 156; Bacon, Ben. Soc. § 197; Johnson v. Dakota F. & M. Ins. Co. 1 N.D. 171, 45 N.W. 799.

Where the section of our Code to which reference has been made applicable, nevertheless the policy or contract would be void, because the matters misrepresented tended to increase the risk of loss, and therefore, such statements being express warranties, it is wholly immaterial in this case whether or not the same were made with intent to deceive. Satterlee v. Modern Brotherhood, 15 N.D. 92, 106 N.W. 561.

Where the society is ignorant of the facts giving it the right to avoid the contract or to declare a forfeiture, any action or inaction upon its part cannot operate against it, by estoppel or waiver. Finch v. Modern Woodmen, 113 Mich. 646, 71 N.W. 1104; Stuart v. Mutual Reserve Fund Life Asso. 78 Hun, 191, 28 N.Y.S. 944; Modern Woodmen v. Wieland, 109 Ill.App. 340; Marcoux v. St. John Baptist Beneficence Soc. 91 Me. 250, 39 A. 1027; Callies v. Modern Woodmen, 98 Mo.App. 521, 72 S.W. 713; Dunn v. Merrimack County O. F. Mut. Relief Asso. 68 N.H. 365, 44 A. 484; Preuster v. Supreme Council, O. C. F. 135 N.Y. 417, 32 N.E. 135.

The plaintiff's proposed amendment to the complaint would have amounted to a reformation of the contract sued upon; it would have been a different contract and a different cause of action. In jurisdictions like ours, it is the rule that if a...