Westerman v. Supreme Lodge K. P.

• Decision Date: 01 June 1906
• Citation: 196 Mo. 670,94 S.W. 470
• Parties: WESTERMAN v. SUPREME LODGE K. P.
• Court: Missouri Supreme Court

94 S.W. 470

196 Mo. 670

WESTERMAN v. SUPREME LODGE K. P.

Supreme Court of Missouri.

June 1, 1906.

1. INSURANCE — MUTUAL BENEFIT — WHAT CONSTITUTES.

Where a society organized for fraternal and benevolent purposes, and having a lodge system as a secret society, issues death benefit certificates to those of its members desiring them, the insurance being conducted on the assessment plan, and those to whom the certificates are issued constituting what is known as the "Endowment Rank," the certificates are to be regarded as those of a fraternal beneficiary association.

2. SAME — FORFEITURE — APPLICABILITY OF GENERAL STATUTORY PROVISIONS.

Rev. St. 1899, § 7897, providing that no policies issued by any life insurance company shall be forfeited for nonpayment of premiums, after the payment of three annual premiums, and providing for extended insurance in proportion to the amount paid in, etc., and section 7898, providing for the issuance of paid-up policies, are not applicable to fraternal beneficiary associations doing business on the assessment plan, and under the laws of which assessments and the liability of the association are not permanently established.

3. SAME.

Act March 8, 1881 (Laws 1881, p. 87), authorized foreign beneficiary associations to do business in the state, and exempted beneficiary associations from the general insurance laws. By the Revision of 1889, the provisions as to foreign associations were omitted, but Laws 1897, p. 132, exempted all such associations from the insurance laws, and permitted foreign associations to do business in the state. While the law of 1881 was in force, a foreign association issued a death benefit certificate, but in 1893 the member was issued a new certificate for a greater amount, and subsequent to 1897 the member defaulted in the payment of his assessment. Held, that the certificate was subject to the law of 1897, and hence the association was exempt from Rev. St. 1899, §§ 7897, 7898, prohibiting the forfeiture of policies for nonpayment of premiums, and providing for extended insurance and paid-up policies proportioned upon the amount of premiums paid.

4. CONSTITUTIONAL LAW—IMPAIRING OBLIGATION OF CONTRACT—INSURANCE.

Laws 1897, p. 132, exempting beneficiary associations from the provisions of the general insurance laws, did not, as to the beneficiary in a certificate issued prior to the statute, violate Const. art. 2, § 15, prohibiting the enactment of any law impairing the obligation of contract or retrospective in its operation as the beneficiary had no vested right in the certificate.

Brace, C. J., dissenting, and Valliant, J., dissenting in part.

In Banc. Appeal from St. Louis Circuit Court; D. D. Fisher, Judge.

Action by Mary L. Westerman against the Supreme Lodge Knights of Pythias. From a judgment in favor of plaintiff, defendant appeals. Reversed.

This cause is here upon appeal by the defendant from a judgment rendered by the circuit court of the city of St. Louis for the sum of $5,236.27. A statement of this cause was made in Division No. 1 of this court prior to its transfer to court in banc. The statement is substantially correct, and with the permission of my colleagues it will be here adopted:

"This is an action commenced in the circuit court of St. Louis on the 16th day of May, 1900, to recover the sum of $5,000 on a policy of insurance, as the plaintiff designates it, or a certificate of membership, as the defendant styles it, issued by the defendant to J. P. Westerman, the husband of the plaintiff, on the 19th day of May, 1893. There was a verdict and judgment for the plaintiff in the lower court, and the defendant appealed. The petition alleges that the defendant is a corporation doing business in this state, pursuant to the laws thereof; that on the 25th day of January, 1900, she was the wife of said J. P. Westerman; that on the 13th of August, 1883, in consideration of the payment, by the said Westerman, to the defendant, of a premium of $39.60 annually through his natural life, the defendant executed and delivered to said Westerman its policy of insurance in writing, whereby it insured his life in the sum of $3,000 for the benefit of the plaintiff; that on May 12, 1893, in consideration of an additional premium of $39, making a total annual premium of $78.60, to be paid annually, through his natural life, the defendant executed and delivered to said Westerman its policy of insurance for an additional sum of $2,000; the first policy being taken up and canceled, and the new policy for $5,000 being issued to said Westerman for the benefit of the plaintiff; that on the 25th of January, 1900, said Westerman died; that up to the 10th of June, 1899, said Westerman duly paid all premiums on said policy, but on said date he made default in the payment of such premiums; that up to the time of said default, he had complied with all the conditions and provisions of said policy; and that at the date of said default there was a net value in the policy of $336, which, with 4 per cent. added, made a total value of $334.44, three-fourths of which, to wit, $262.08, was sufficient for a net single premium for temporary insurance for the full amount written in the policy, and that said policy was in full force at the time of the death of said Westerman; that said death was not caused by any of the exceptions to liability specified in the policy; that within a reasonable time, to wit, 23d of March, 1900, plaintiff gave to defendant notice of the death, and demanded payment of the amount of said policy, which the defendant refused to pay, and judgment is asked for $5,000, with interest from the date of the proof of loss.

"The answer denies all allegations of the petition, except the death and the default of the payment of the premium, and then contains the following affirmative defenses, to wit: First, that the defendant is a fraternal, benevolent association created by an act of Congress of January 28, 1894, and, at the date of the issuance of the policy or certificate aforesaid, it was doing business in the state of Missouri, as such association, by authority of the state, and has continued to do so ever since; that it is a corporation organized and carried on for the sole benefit of its members and other beneficiaries, and not for profit; that it has a lodge system with ritualistic form of work and a representative form of government, and, through a branch known as the `Endowment Rank,' operated a board of control, which under the direction of defendant, issues benefit certificates to the members alone of said defendant; that the funds from which the payment of such benefits is made, and the fund for the expense of the defendant, are derived from dues, assessments, or monthly payments collected from its members; that the payments of death benefits, by the laws of the defendant, is limited to the families, heirs, or blood relatives of its members; that, in addition to said monthly payments and dues, section 4 of article 2 of its constitution, general laws, rules, and regulations, which was in force at the date of the issuance of the policy or certificate, provided as follows: `The board is hereby empowered to establish a table of rates, and, whenever deemed necessary, adjust the same, to be graded in accordance with the member's age at the date of admission and endowment held or applied for; such table of rates to be at all times applicable to the entire membership in force, and to be applied as the board may from time to time direct. The board is authorized to make special assessments upon all members of the Endowment Rank, when necessary to meet the liabilities of the Rank.' That on the 19th day of May, 1893, it issued to said Westerman its certificate, based upon the application of said Westerman, which was in words and figures as follows, to wit: `Endowment Rank of the Order of Knights of Pythias. This certificate witnesseth: That J. P. Westerman is a member of section No. 457 of the Endowment Rank, Knights of Pythias of the World, said membership being based upon evidence that he is a member in good standing, of a subordinate lodge of the order of Knights of Pythias, and upon the declarations, representations and agreements made in his application, bearing date of May 17th, 1893, and the statements certified by him therein to the medical examiner, which application is filed in the office of the board of control of the Endowment Rank, and made a part of this contract. 8-13-83. In consideration of the payment by said member of the prescribed admission fee and the payments hereafter to said Endowment Rank of all monthly payments, assessments and dues as required, and the full compliance with all the conditions herein contained, and with the laws governing this rank now in force, or that may hereafter be enacted by the Supreme Lodge, Knights of Pythias of the World, or the board of control of said rank, and shall be in good standing, under said laws, the board of control of the Endowment Rank, Knights of Pythias of the World, will pay to Mary L. Westerman, his wife, the sum of $5,000, out of the endowment fund of the rank, in accordance with and under the laws governing the payment of benefits, upon due notice and satisfactory proof of death, and a full receipt and surrender of this certificate, subject, however, to the conditions, restrictions and limitations subscribed to by said member in his application, and to the further conditions and agreements hereafter named; and provided, also, that this certificate shall not have been surrendered by said member, or canceled at his request, and another certificate issued in accordance with the laws of the rank. Provided, further, that the beneficiaries herein designated shall acquire no interest whatever in the certificates, nor in the endowment fund, until the benefit shall have lawfully accrued by reason of the death of said member and no subsequent change in the beneficiary shall have been made. ...