Wilson v. Brotherhood of American Yeomen

• Decision Date: 27 July 1920
• Docket Number: No. 16037.,16037.
• Parties: WILSON v. BROTHERHOOD OF AMERICAN YEOMAN
• Court: Missouri Court of Appeals

223 S.W. 992

WILSON v. BROTHERHOOD OF AMERICAN YEOMAN

No. 16037.

St. Louis Court of Appeals. Missouri.

July 27, 1920.

Rehearing Denied August 5, 1920.

Appeal from St. Louis Circuit Court; Benjamin J. Klene, Judge.

"Not to be officially published."

Action by Edgar J. Wilson against the Brotherhood of American Yeomen. From judgment for plaintiff, defendant appeals. Affirmed.

John D. Denison, of Des Moines, Iowa, and Lehmann & Lehmann, of St. Louis, for appellant.

James M. Rollins and Joseph Reilly, both of St. Louis, for respondent.

NIPPER, C.

This is an action for total disability, based upon a certificate of membership in the defendant order. The petition alleges:

"That the defendant, Brotherhood of American Yeomen, is and was, at all times hereinafter mentioned, a corporation duly licensed under the laws of the state of Missouri to conduct a mutual and fraternal insurance business in said state, and that the said defendant maintains lodges with a ritual, and issues life insurance certificates on the assessment plan on the lives of the insured, payable at death of the insured, or payable in part on the total disability of the insured from injuries."

The plaintiff then further alleges that he became insured by the defendant on the 28th of May, 1915, in the sum of $1,000; that his dues and assessments were fully paid at the time hereinafter mentioned, and that he was a member in good standing; that while working on a locomotive in the city of St. Louis, on the 24th of December, 1915, another locomotive ran against the one on which he was working, and that he was thrown to the ground and received a severe injury to his back which resulted in the permanent loss of the free use of both legs; that his nervous system was shocked and wrecked, and that he is totally and permanently disabled.

The answer, after denying generally the allegations in plaintiff's petition, states:

"That it is a fraternal beneficiary association, incorporated under the laws of the state of Iowa and authorized to do business in the state of Missouri"

—and admitted the issuance of the certificate to the plaintiff on the 28th of May, 1915. The answer further alleges and sets out a portion of the provisions of the certificate of membership ; that his answers in the medical examination and statements in the application are made a part of the agreement and are held to be strict warranties, and form the basis of the contract for the liability under the certificate; and further alleges in detail that the plaintiff gave false answers as to his physical condition in his medical examination; and alleging that plaintiff's disability was not caused by the collision, but that the same was due to a disease contracted before plaintiff became a member of the association; and also setting out one of the provisions of the certificate of membership as follows:

"Should said member die before having lived out his expectancy of life, based on his age at entry, according to the American Experience Tables of Mortality, there shall be paid into the reserve fund of this association, out of the proceeds of this certificate, otherwise payable to the beneficiary, a sum equal to the amount of 12 assessments per year, at rate last paid by the member for the unexpired term of such life expectancy based on his age at entry and any accident or disability benefits to which he may become entitled shall be subjected to proportionate deductions for the reserve fund."

That, under the above provision, defendant would in no event be liable for more than $258.50.

The reply was a general denial.

The case was tried before the court, a jury having been waived, and resulted in judgment for plaintiff for $524.44. From this judgment, defendant in due time and manner perfected its appeal to this court.

The principal questions involved in this appeal are: First, whether or not defendant is entitled to the benefit of the laws of Missouri of 1911 relating to fraternal beneficiary associations; second, whether or not it was necessary for defendant to make a tender of the assessments paid by plaintiff in order to avail itself of the defense of misrepresentation by plaintiff in his application for insurance.

Respondent's contention is that under the authority of Kribs v. U. O. F., 191 Mo. App. 524, 177 S. W. 766, and the provisions of the certificate sued on and introduced in evidence, the contract of insurance is one on the assessment plan, and is therefore governed by, and subject to, the requirements of our statutes relative to insurance on the assessment plan, and that the answer states no defense to the respondent's petition. One of the provisions in the certificate, and the provision which respondent contends makes the certificate one of insurance on the assessment plan, reads as follows:

"First. In the mortuary fund to the amount of one full assessment for all members in good standing in the association, not to exceed $1,000," etc.

It was with respect to a similar provision that this court held, in Kribs v. Foresters, supra, that the certificate was one of insurance on the assessment plan. In order to properly understand this, it is necessary to refer to Kribs v. Foresters, and in doing so we note this particular and very wide distinction between these two cases. In the Kribs Case this court had before it a certificate issued in 1908, before the amendment of 1909, or the enactment of the Laws of 1911. Among the authorities relied upon in Kribs v. Foresters,' supra, was State ex rel. v. Vandiver, 213 Mo. 187, 111 S. W. 911, 15 Ann. Cas. 283; Toomey v. Supreme Lodge, K. of P., 147 Mo. 129, 48 S. W. 936. These cases. however, had to do with the construction of contracts of this character entered into before the amendment of section 1408, R. S. 1899, which section was amended by the Laws of 1909, page 371, by adding the following:

"Provided, that any association which provides for and collects rates of assessments upon all or any class of its membership, computed upon a basis of mortality assumption not lower than that of the American Experience Table of Mortality, with interest not higher than four per cent. per annum, may do business upon the legal reserve basis, and be required to provide for and maintain such legal reserve, and shall have the power to issue term certificates, limited payment certificates and paid-up certificates of insurance, and shall also have the power to grant surrender values in the form of paid-up or extended insurance not to exceed the net value of the certificates less any surrender charge specified by the contract or the laws of the association, and may make loans to members for the purpose of paying their assessments, such loans to be liens upon the borrowing member's benefit certificates, but in no case shall any loan exceed ninety per cent. of the reserve accumulation computed in...