Spande v. Western Life Indemnity Co.

Mr. Justice McNary delivered the opinion of the court. 1. At the gateway of this controversy, defendant challenges the ability of plaintiff to maintain this action, for the reason that the matters here presented were formerly adjudicated, and that in the guise of a new robe plaintiff marshals the same facts as formed the lower structure of the original action. .If this situation be true, it is needless longer to pursue the discussion of this case. A diagnosis of plaintiff’s primary pleading in the former action will disclose the true situation. Plaintiff in his initial complaint took the position that at the time of the purchase of the policies and business of the Order of Washington by defendant it covenanted to assume all the policies issued by the Order of Washington, including the plaintiff’s, and that defendant agreed to pay the policy according to the terms contained therein. In fine, plaintiff founded his right to recover upon the contract had between the Order of Washington and defendant. In his amended complaint, plaintiff declares that defendant represented to him in writing that his benefit certificate had been transferred to defendant, and that it would assume all the obligations imposed thereunder ; that if plaintiff would pay defendant the same premium which he was obliged to pay the Order of Washington, defendant “would step into the shoes” of that order, and perform all the terms and conditions of the policy required to be performed by the Order of Washington; that defendant further represented to plaintiff that by the terms of its contract of purchase with the Order of Washington, defendant was bounden to perform all the obligations of the Order of Washington required to be done under plaintiff’s benefit certificate; that, acting upon such advice, — 180 — he entered into the.contract of insurance with the defendant, releasing the Order of Washington from any further obligation, and promptly and fully paid defendant all premiums and dues thereunder, which defendant duly received under the terms of the contract, and that after plaintiff had paid the first assessment or dues, defendant sent plaintiff a writing, with the request that it be attached to his benefit certificate, which in itself' plaintiff asserts was a binding contract on the part of defendant. Thus it is plain that the first cause of action was predicated on a contract made between defendant and the Order of Washington. Upon this hypothesis, plaintiff could not recover, unless he established the contract which he asserted was the foundation of his right of action. By the terms of the amended complaint, plaintiff places defendant’s liability upon certain written representations, made directly with plaintiff, embodying the essential ingredients of a lawful contract. From these reflections, we are of the view the issues tendered in this action are not the same ones litigated in the former controversy, and that defendant’s attack is without merit. 2. At the conclusion of plaintiff’s case defendant interposed a motion • for an order of nonsuit, upon several grounds, the significant one assigned being that plaintiff offered no evidence to show what “the contract was, or the terms of the contract between the defendant and the Order of Washington, or any contract between the plaintiff and defendant, or to introduce evidence of or prove any contract between the defendant and the Order of Washington whereby the defendant insured the members of the Order of Washington, or assumed to pay their policies, or the certificate held by plaintiff. ’ ’ The trial court overruled the motion. The issues created by the pleadings did not impose upon plaintiff the duty of proving, in a literal way, the context of the contract made between the — 181 — Order of Washington and defendant with respect to the latter’s obligation to the members of the former company. Plaintiff made a case sufficient to be submitted to the jury when he proved from written documents that defendant had promised to take up the load of the Order of Washington, and, relying upon the promise, paid to defendant company the premiums which were due on the policy, and which would have been paid the Order of Washington had not the latter transferred its obligations and property to defendant. 3. Defendant in its answer pleaded specially a contract had with the Order of Washington which it claimed was a limitation of its liability and the measure of its responsibility to plaintiff; consequently the duty of proving this contract rested on defendant. Plaintiff erected his case upon the following correspondence and documents, outside‘of the benefit certificate, which is omitted for the sake of brevity: “Geo. M. Moulton, President. “The Order of Washington Department. “Western Life Indemnity Co., Masonic Temple, Chicago. “Chicago, February 22, 1908. “To the Comrades of the Order of-Washington: “You have already been officially advised by your Supreme President and Supreme Secretary that by the unanimous action of the Supreme Union of your order, and with the approval of the Insurance Department of Washington, the insurance on your life in the Order of Washington has been lawfully transferred to the Western Life Indemnity Company of Chicago. In behalf of this company I extend to you a fraternal greeting with the glad hand of fellowship, and a cordial welcome into the bosom of our organization. By the payment to our company of the next monthly payment due by the terms of your present Life Benefit Certificate you thereby become one of us and one with us, — 182 — I trust until death do us part. Immediately upon our receipt of such payment a formal agreement or guaranty will he. transmitted to you for attachment to your present life benefit certificate, which will bind our company to fulfill all the obligations heretofore imposed upon the Order of Washington, under such certificate, until such time as a policy for an equivalent amount can be issued oh our forms, and at our premium rates in accordance with the provisions of the reinsurance contract entered into between the Order of Washington and this company. Continue the monthly payments on your present certificate as heretofore in the same amount and in the same way. By so doing you may rest assured that your rights thereunder will be fully safeguarded and adequately protected. Come with us — live with us — die with us. You will never regret either. ‘ ‘ Faithfully yours, “Geo. M. Moulton, President.” “Geo. M. Moulton, President. “The Order of Washington Department. “Western Life Indemnity Co., Masonic Temple, Chicago. “March 5, 1908. “Esteemed Comrade: “You will hereafter remit your regular assessment and quarterly dues direct to the Western Life Indemnity Company, Masonic Temple, Chicago, Illinois, making all remittances payable to said company. Immediately upon receipt of your first remittance this company will send you a ‘Guaranty Slip’ which you will attach to your Order of Washington contract. This ‘Guaranty Slip’ will be countersigned by General Geo. M. Moulton, President Western Life Indemnity Company, and it agrees to fulfill all the conditions of your present certificate for one year, upon your paying your regular dues and assessments. This arrangement gives you double protection without addi — 183 — tional cost. A little later you will'be sent a list of the several kinds of insurance certificates issued by the Western Life Indemnity Company, and then, if you wish, you may exchange your present certificate for any certificate issued by the Western Life Indemnity Company within the year. Upon receipt of your first remittance you will be mailed an official receipt, as well as a ‘Guaranty Certificate.’ Make your remittance by post office money order, bank draft or express money order. Do not delay sending in your remittance so that the ‘Guaranty Certificate’ may be sent you for your own benefit. “Faithfully yours for safe protection, “J. L. Mitchell, “Manager Order of Washington Dept. Western Life Indemnity Company. “J. L. M. G. O. S.” “Sam. H. Nichols, Insurance Commissioner. “J. H. Schively, Deputy Commissioner. “The State of Washington, Department of Insurance, Olympia. “March 5, 1908. “Mr. J. L. Mitchell, c/o Western Life Indemnity Co., Chicago, 111. “Dear Sir: Now that arrangements have been completed and all papers signed between the Order of Washington and the Western Life. Indemnity Company of Chicago, I wish to express my most hearty appreciation and approval of the transfer. I know of no movement in insurance circles which will prove of greater benefit to the interested parties than this reinsurance. The Order of Washington, through the stress of financial times and the absorptio’n of certain other fraternal companies, had reached the point where it could no longer fully discharge its increasing liabilities, the only wise solution of the problem being its reinsurance in some substantial and reliable company. That you have made so satisfactory an ar — 184 — rangement with the Western Life Indemnity Company is a matter concerning which the members of the Order of Washington should congratulate themselves: first, because every policy of the Order of Washington immediately becomes worth one hundred cents on the dollar, and secondly, because I have personally looked into the affairs of the Western Life Indemnity Company through the Insurance Department of Illinois and other sources, and I believe it to be a thoroughly reliable and safe company, and in good financial condition. So far as it lies in my power I shall be glad to assist you in convincing the members of the Order of Washington that this change is in the line of good judgment and of their own best personal interests. “Very truly yours, “J. H. Schxvely, “Deputy Insurance Commissioner.” “Geo. M. Moulton, President. “The Order of Washington Department. “Western Life Indemnity Company, Masonic Temple, Chicago. “March 25, 1908. “H. A. L. Spande, Astoria, Ore. “Dear Comrade: Inclosed herewith please find receipts covering the amount of your remittance, and also you will find inclosed Guaranty Certificate to be attached to your Order of Washington certificate as per agreement entered into by and between the Order of Washington and the Western Life Indemnity Company. Kindly send' your next assessment direct to this office to keep your protection well secured. The reinsurance contract is going forward successfully in every degree and every comrade’s certificate is now worth 100 cents on the dollar. We all have much cause for rejoicing over this change. “Fraternally yours, “J. L. Mitchell, “Mgr. The Order of Washington Dept., Western Life Indemnity Company. “J. L. M. A. L. H. Enc.” — 185 — “Western Life Indemnity Co., Chicago. “Kindly attach the inclosed rider agreement to your life benefit certificate as evidence that this company has assumed liability under said certificate pursuant to the terms of the reinsurance contract entered into between this company and the Order of Washington. “Faithfully yours, “Geo. M. Moulton, “President. “Western Life Indemnity Co., “Geo. M. Moulton, President. “Home Office, Masonic Temple, Chicago. “This certifies, that all the covenants and obligations heretofore imposed and undertaken by the Order of Washington under and by virtue of a certain life benefit certificate No. 245, issued by said the Order of Washington on the life of H. A. L. Spande are hereby assumed by the Western Life Indemnity Company to the extent and in the manner as set forth in a certain contract of reinsurance made and entered into by and between the Order of Washington, of Portland, Oregon, and the Western Life Indemnity Company, of Chicago, Illinois, on the 15th day of February, A. D. 1908. Executed and delivered at the home office of the Western Life Indemnity Company in Chicago, Illinois, this 21st day of March, 1908. “Western Life Indemnity Company, “By Geo. M. Moulton, “President.” “Geo. M. Moulton, President. “The Order of Washington Department “Western Life Indemnity Co., Masonic Temple, Chicago. “May 14, 1908. “H. A. L. Spande, Astoria, Ore. “Esteemed Comrade: Please find receipt for assessment No. 5. It affords the writer pleasure and much satisfaction to report the successful and eminently satisfactory examination of this company by — 186 — the Insurance Department of the State of Washington. This company has likewise been examined during the year by the Insurance Departments of Illinois and Indiana and each examination has shown the company to be in excellent condition, with a very promising outlook for the future, all of which we know will be gratifying to our membership. “Fraternally yours, “J. L. Mitchell, “Mgr. the Order of Washington Dept. Western Life Indemnity Company. “J. L. M. C. D. K., Ene.” Plaintiff also offered certain receipts for moneys paid by plaintiff, all of which are identical with the one here given, to wit: “Secretary's Official Receipt for Membership at Large. “The Order of Washington. “Chicago, 111., 5/12, 1906. Received of Comrade H. A. L. Spande — life benefit fund, assessment No. 5, for 1908.... $1 60 Sick and accident fund, assessment No.-, for 1908 .................................. Annual dues, general fund, to-, 1908....... Total............ $1 60 “Western Life Indemnity Company, “By J. L. B.” Stamped on receipt: ‘ ‘ This premium is paid and received under the terms of the reinsurance contract dated February 15, 1908, between the Western Life Indemnity Company and the Order of Washington. Any unearned portion of this premium on February 15, 1909, will be credited upon the first premium of the policy to be substituted under said contract.” — 187 — On the margin, of receipt: “To the President of Any Subordinate Union, O. W.: “If the holder of this receipt visits your union, and be without the password for the current term, you will appoint an investigating committee, and if they can satisfy themselves that the holder hereof is a member in good standing, and his receipt is for the last assessment due, then you may communicate the term password and admit the member to a seat in your union. Patriotism. Purity. Prudence.” In the first letter from the president of the defendant company, plaintiff was told that the insurance on his life in the Order of Washington had been “lawfully transferred to defendant,” and that by the payment of his next month’s dues in accordance with the provisions of his benefit certificate, he would become ‘ ‘ one of us, and one with us, until death do us part,” and that immediately upon receipt of the payment, a formal agreement or guaranty would be submitted for attachment to the benefit certificate, which would bind defendant to fulfill all the obligations theretofore imposed upon the Order of Washington until such a time as a policy would be issued on defendant’s forms, and at premium rates in accordance with the provisions of the reinsurance contract entered into between the Order of Washington and defendant, and that by so doing plaintiff was assured that his rights would be fully “safeguarded and adequately protected.” In this letter plaintiff was apprised of the warmth of the reception that awaited him as indicated from the following excerpt: “In behalf of this company I extend to you a fraternal greeting with the glad hand of fellowship and a cordial welcome into the bosom of our organization. ’ ’ Having extended the ‘ ‘ glad hand of fellowship,” defendant should not be permitted to withdraw that hand upon any subterfuge or refined legal construction so as to defeat plaintiff’s right to — 188 — recover, unless there is a palpable failure to prove a contract of insurance. While there is a legal duty upon the parties to a contract to perform it both in spirit and in essence, yet, in contracts of this nature, there is almost a sacred duty of performance, as they frequently act as a bridge that spans the chasm between penury and well-being for those to whom the insured in his life felt most concerned. 4. The intent' of the parties being the factor which the conrt will try to locate, for this purpose the court will ’place itself in the shoes of the parties, and view the subject matter from their perspective, keeping in mind the rule that the conduct of the parties with respect to the subject matter of the contract will be looked to as affording evidence of the meaning the parties gave to the agreement: Chicago Wharf & Storage Co. v. Street, 54 Ill. App. 569. 5,6. Two other rules are applicable: (1) That the language must be interpreted in the sense that the promisor knew, or had reasons to know, the promisee understood it; (2) that the words are to be strongly construed against the party using them: American Lithographic Co. v. Commercial Casualty Co., 81 N. J. Law, 25 (80 Atl. 25); 9 Cyc. 578, 590. Illumining the documents by these canbns of construction, and it is manifest that plaintiff had a contract of insurance with defendant encompassing all the components required in a definition of that term. No error was committed by the court in overruling defendant’s motion for an order of nonsuit with respect to .the point just discussed. 7. Counsel for defendant further argues that an order of nonsuit should have been granted for the reason that “it is not alleged in said complaint what one assessment upon the life benefit certificate of the members of the Order of Washington would have amounted to at the time of the supposed maturity of plaintiff’s — 189 — certificate of insurance, and that it is not alleged in said complaint that any assessment upon the members in good standing was made or demanded at or after maturity of plaintiff’s certificate, and that there was no evidence introduced by plaintiff showing what c assessment against a member in good standing won! I have amounted to if lived out, or after the maturity of plaintiff’s certificate of membership.” Adverting to plaintiff’s complaint, we observe the statement that immediately upon the maturity of the policy, plaintiff and his wife, the beneficiary named in the benefit certificate, notified defendant in writing that plaintiff had lived out his life expectancy, and that on account thereof the policy had fully matured; and demanded payment of $2,000, which sum or any portion thereof defendant refused to pay, and denied liability whatever to plaintiff. On this phase of the controversy the policy contains this stipulation: “Agrees that after the maturity of this certificate of membership, occasioned by the death of the member, or otherwise, one assessment on the life benefit collected for said fun. not exceeding in amount the sum of $2,000, will be paid as a benefit to Emily "Weokoline Larsen Spande.” The undertaking is not an unconditional one to pay $2,000, for the amount payable to the beneficiary is contingent upon the sum that may be realized from “one assessment on the life benefit collected for said fund.” The amount to be paid was $2,000, or a less sum if the yield of one assessment was the result thereof. The policy being in evidence, plaintiff could recover the maximum amount stated therein, without showing the sum yieldable by an assessment, or that an assessment had been levied. The result of one assessment lying peculiarly within the knowledge of defendant, ' excused plaintiff from alleging and proving ■such matter. The duty rested upon defendant to allege and prove what amount of money one assess — 190 — ment would produce. Failing so to do, a presumption existed in favor of plaintiff that an assessment would pay the full amount named in the certificate: Supreme Lodge K. of P. v. Knight, 117 Ind. 489 (20 N. E. 479, 3 L. R. A. 409); Neskern v. Northwestern etc. Assn., 30 Minn. 406 (15 N. W. 683); Hollings v. Bankers’ Union etc., 63 S. C. 192 (41 S. E. 90); International Order etc. v. Boswell (Tex. Civ. App.), 48 S. W. 1108; Kroge v. Modern Brotherhood etc., 126 Mo. App. 693 (105 S. W. 685). 8. The last material objection urged in favor of a reversal of the judgment rests upon the defense that the policy, having been issued in violation of defendant’s charter and the laws of the state of its creation, is ultra vires and void. It must be conceded that plaintiff met promptly every condition expressed in his policy of insurance, made payment seasonably of each assessment, and that the sums so paid were accepted and now retained by defendant. With this situation in mind can defendant sustain its plea of ultra vires f We think not. While there is a diversity of thought concerning the law applicable to a plea of this nature, we think the weight of the authorities and the sounder reason leans against such a defense when the contract is executed and the company has received the benefit of it. The Supreme Court of Iowa in Field v. Eastern Building & Loan Assn., 117 Iowa, 185 (90 N. W. 717), well said: “Sound public policy cannot be promoted by offering a premium for wrongdoing, and such would be the effect of an authoritative announcement that a corporation may send its agents out among the people, inducing them to invest their small savings in its stock, and then, having received the agreed consideration, escape liability because it has promised to do more than it was legally authorized to do. With that doctrine established, it would be to the interest of every corporation to exceed its lawful — 191 — powers in every contract, as the readiest means of paying its debts without depleting its assets”: Continental Fire Ins. Co. v. Masonic Temple etc. Co., 26 Tex. Civ. App. 139 (62 S. W. 930); Insurance Co. v. Shaw, 94 U. S. 578 (24 L. Ed. 291); Security etc. Co. v. Elbert, 153 Ind. 198 (54 N. E. 753); Thompson, Corporations (2 ed.), §§ 504, 1060, 1064; Presbyterian etc. Co. v. Gilbee, 212 Pa. 310 (61 Atl. 925). After a careful consideration of this case, we conclude that the plaintiff made a case sufficient to entitle him to the benefit of the judgment, and that no prejudicial errors appear in the record, and therefore an affirmance is ordered. Affirmed. Mr. Chief Justice McBride, Mr. Justice Eakin and Mr. Justice Bean concur.