Krause v. Modern Woodmen of America

Ladd, J.— 1 Beneficialinsurance: warranties. The answer raised but one issue and that is whether the certificate of- insurance was void owing to a misstatement in the application of the age of deceased. The general denial of the general ^ allegation of conditions precedent m the petition did not put them in issue. Sections 3626, 3628, Code. A by-law of the society well pleaded fixed the maximum age of admission at forty-five years. According to the answer the insured at the time of signing the application was over forty-seven years of age, but stated therein that he was under forty-five years. The demurrer to this answer was sustained on the ground that scienter was not averred. The statement in the application undoubtedly was in the form of a warranty, and must be treated as such unless obviated by statute. This is so fully settled by the authorities that the citation of a few will suffice. Nelson v. Insurance Co., 110 Iowa, 600; Modern Woodmen of America v. Van Wald, 6 Kan. App. 231 (49 Pac. 782) ; Finch v. Modern Woodmen of America, 113 Mich, 646 (71 N. W. 1104) ; Baumgart v. Modern Woodmen, 85 Wis. 546 (55 N. W. 713). 2. Pleadings: co^porate °f er£“miái.8en The theory of the plaintiff and doubtless of the trial court was that the effect of such statement as to age, even though a warranty was obviated by the section 1813 of the Code, hereinafter set out. Appellant has undertaken to meet this by saying that this statute has no application to societies such as defendant, and if the record were such as to indicate that defendant was a fraternal benevolent society as defined by section 1822 of the Code, this would have to be conceded. Smith v. Supreme Lodge, 123 Iowa, 676. But it is alleged in the petition that defendant is “ a life insurance and beneficial society.” That it is designated as “ a fraternal beneficiary society ” in the certificate attached is not inconsistent with this, for the exhibit forms no part of the allegation with [202] respect to the character of the association.' Insurance societies to which the statute coneededly applies are regulated by chapters'7 and 8 of title 9 of the Code, and are defined in section 1784. All essential was a general averment of defendant’s' corporate capacity as such. Section 3627, Code. Such an allegation cannot be put in issue, however, by a general denial or the averment of a different corporate capacity as a conclusion, but “ the facts relied on must be specifically stated.” Section 3628, Code. The answer, while not putting in issue the character of the defendant corporation, as a life insurance society, merely alleged generally that it was “ a fraternal beneficiary society, with head offices at Rock Island in the State of Illinois, with subordinate lodges.” This was but a conclusion, and, in failing specifically to' plead the facts; indicating that it was not a life insurance society as defined in the Code, and that it was a fraternal beneficiary society as defined by section 1822, and as regulated by chapter 9 of title 9 of the Code relating to such associations, did not put in issue the averment that it was a life insurance society 'as contained in the petition. Stork v. Supreme Lodge, 113 Iowa, 724. See Brown v. Modern Woodmen, 115 Iowa, 450. But for the statute referred to the misstatement as to age would undoubtedly avoid the policy. Dinan v. Supreme Council Ass'n, 201 Pa. 363 (50 Atl. 999) ; Dolan v. Ass’n, 173 Mass. 197 (53 N. E. 398) ; Marcoux v. Society, 91 Me. 250 (39 Atl. 1027); Supreme Lodge v. Davis, 26 Colo. 252 (58 Pac. 595) ; Hanf v. Ass’n, 76 Wis. 450 (45 N. W. 315) ; Preuster v. Supreme Council, 135 N. Y. 417 (32 N. E. 135). 3 Age limit •• waiver; forfeiture of certificate. Appellant contends that it has no application where the applicant is not of an insurable age and the policy or certificate • is issued thereon when, had the true age been stated, this would not have been done. Section 1813 may be set out: .In all cases where it shall appear that the age of the person insured has been misstated, in the proposal, declara [203] tion or other instrument upon which any policy of life insurance has been founded or issued, then and in such ease the person or company issuing such policy shall, upon the discovery of such misstatement, be permitted to demand and collect the difference of premium, if any, which would be due, with interest not to exceed six per cent.-per annum, and payable on account of the true age of the assured, from year to year, according to the rates of premium of such person or company upon which such policy was issued; or such person ;or company so issuing the policy, may, after the decease of the assured, deduct from the amount payable by such policy the difference of premium, if any, with interest, which would so have been payable from year to year, by reason of any difference of age at the time of the issuance of such policy; and no other .defense or deduction by such person or company issuing such policy shall be permitted, after the death of the person assured, on account of such misstatement of age of the assured, notwithstanding any warranty of such statement of age by the terms of the policy or otherwise, except when it be shown by the person or company insuring that the policy was procured by fraud in fact. The language is general, and was evidently intended to cover all cases where the association or company has the power to insure the person to whom the policy or certificate has been issued. The answer contains no averment as to the contents of the defendant’s articles of incorporation. Eor all that appears these contained no limitation other than that of section 1789 of the Code prohibiting insurance by such societies of any persons under fifteen- or over sixty-five years of age. There is no presumption that the articles of incorporation are like the by-laws, save as this may arise to avoid inconsistency. Anything done contrary to the by-laws of a society is not necessarily ultra vires, for the by-laws may be waived and the act performed strictly within the articles or the powers conferred by statute. The authority of the officers of such a society to waive its by-laws, even though relating to conditions at the inception of the contract, has been sustained too [204] often to require citation of decisions in its support. In Weiberg v. Ass’n, 73 Minn. 297 (76 N. W. 37), the articles of association fixed the maximum insurable age at sixty-five years, but a by-law limited it to fifty-five years. The deceased had represented himself to be fifty-three years old when he had attained the age of fifty-seven years. Issue was joined as to the validity of the by-laws, but the court brushed this aside with the statement that this was immaterial, for, assuming its validity, receiving members within the age fixed by the articles, though prohibited by the by-laws, was intra vires, and it was competent'for the association to waive the conditions of a mere by-law. That the by-laws related to the inception of the contract was held to make no difference. See, also, Morrison v. Insurance Co., 59 Wis. 162 (18 N. W. 13) ; Steele v. Fraternal Tribunes, 215 Ill. 190 (74 N. E. 121, 106 Am. St Rep. 160), cited by appellant is not in point. There the articles (not the by-laws) limited the insurable age at between eighteen and fifty-one years. The deceased stated in his application that he was under fifty-one and stipulated that this should constitute a warranty. He was seven or eight years older, and the court held the insurance contract ultra vires. In Sweet v. Citizens’ Mut. Relief Soc., 78 Me. 541 (7 Atl. 394), the age limit was fixed in a by-law but the decision was put on the ground that the misstatement vras a breach of the warranty of the truth of the applicant’s answers. This must have been our conclusion but for the statute prohibiting forfeiture on such ground unless a fraud has been perpetrated. d. same: on certificate; determination. of. Counsel for appellant suggests that no adjustment could be made such as contemplated by statute for the reason that the rate of assessment or premium for a person of the age of fifty-seven years upon becoming a member is not provided for. There is nothing in the - . . record save the bald allegation of the existence of this by-law so to indicate. Even if so it is to be assumed that such rate is provided for existing members, and, if more [205] was exacted from members fifty-seven years old than from those three years younger, the difference might be taken into account in determining the amount of indemnity to which the beneficiary is entitled. We reach the conclusion that the contract was not ultra vires, and that, in the absence of fraud, the alleged misstatement of age was not a defense.— Affirmed.