Supreme Commandery of the United Order of the Golden Cross of the World v. Hughes

Opinion of the court by JUDGE BURNAM — Affirming. This suit was brought by appellee, Susie C.' Hughes, against the appellant, the Supreme Commandery of the United Order of the Golden Cross of the World, to recover $1,000 on a benefit certificate issued by appellant on the life of her deceased husband, Francis M. Hughes, which reads as follows: “This certificate is issued to Francis M. Hughes, member of the Graham ville Commandery, 803, of the United Order of the Golden Cross, located at Graham-ville, Kentucky, upon evidence received from said commandery that hois a. contributor to- the benefit fund of this order, and upon condition that the statements made by him in his application for membership in said commandery, and the statements certified by him to the medical examiner, both of which are filed in the office of the supreme keeper of records, be made a part of this! contract, and upon condition that the said member complies in the future with the laws, rules and regulations now governing said commandery and fund, or hereafter enacted by the supreme commandlery to govern said commandery and fund. These conditions being complied with, the supreme commandery! hereby promises and binds itself to pay out of its benefit fund to Susie C. Hughes, wife, in accordance with and under the provisions of the law governing said benefit fund, and upon .satisfactory evidence of the death of said member, and the surrender of this certificate, the sum of $1,000.00, provided said benefit fund reaches the sum of $2,000.00 at [179] the assessment called in payment of this certificate, and, if said assessment shall not reach said sum of $2,000.00, then there shall be paid on said certificate all or a proportional part of the fund received from the membership in ene assessment.” Appellant, in its answer, says that it was and is a secret fraternal order, and has lodges which were and are under the supervision of a grand supreme body, and said subordinate lodges acquire members therein through the lodge system, exclusively, pay no commissions, and employ no agents, except in the organization and supervision of the work of local subordinate lodges; admits that Francis M. Hughes was a member of the commandery located at Crahamville, Ky.,. and that the benefit certificate sued on was regularly issued to him in consideration of and upon the representation made by him in his application therefor; but denies any liability thereon, for the reason that he made numerous false and fraudulent representations in his application as to the condition of his health, to-wit, that he represented in said application that he had never been insane or predisposed to insanity; that he had never had, and was not predisposed to, spinal disease, when, as a matter of fact, he had been afflicted with the disease* known as “spinal meningitis,” which is a disease affecting the brain and spine; that he was in sound bodily health, whereas in fact his constitution and health .had been seriously impaired; and that he made many other false answers to the questions propounded to him by the medical examiner touching the condition of his health, which are specifically recited, and w'hich were material to the risk, and w'ere relied on by the defendant in the issual of its certificate. A copy of the petition, statements, and application are filed as exhibits with the answer. The trial court sustained a motion to strike from the defendant’s' [180] answer all reference to representations made by the insured in his application for the benefit certificate, on the ground that neither the application, petition, nor medical examiner’s certificate was attached to, accompanied, or was embraced in, the certificate of insurance, to which the defend- and excepted. A general demurrer was then sustained to the answer, and, defendant declining to plead further, judgment was rendered thereon, and, defendant appeals. And it is insisted that section 679 of the Kentucky Statutes, which requires that the application or charter and by-laws of the insurance company doing business under the laws of this State, or a copy thereof shall be attached to the policy before it can be treated as a part of the contract, or used in evidence on the trial of the case, has no application to secret fraternal orders, to which appellant belongs; that by sections 641 and 658 of the Kentucky Statutes, this class of insurance companies is expressly exempted from this and similar provisions of the insurance law. Section 641 of the statutes is found under subdivision 1 of the article on “Insurance,” and reads as follows: “The words, ‘insurance company,’ or ‘insurance corporations,’ as used in this article, shall be held to mean and include any association, individual, company, corporation, partnership, or joint stock company, engaged in or carrying on, in any manner, the business of insurance in this- State, except that the provisions of this chapter or article shall not apply to secret or fraternal societies, lodges or councils, which are under the supervision of a grand or supreme body, and secure members through the lodge system exclusively, and pay no commission nor employ any agents, except in the organization and supervision- of the work of the local lodges.” The exemption in this section only refers to those [181] general provisions regulating insurance companies found in subdivision 1 of the insurance law. Section 60S is found under subdivision 2 of the insurance law, which treats of what aré generally known as standard or old-line insurance companies, and exempts associations which do not guaranty a fixed amount of insurance on their policy contract, and do not charge a fixed premium for the performance of such contracts, from the provisions of the law applicable to the old-line- insurance companies embraced in that subdivision. Appellant undoubtedly belongs to that class of life insurance companies treated of in subdivision 3, known as assessment or co-operative companies. Section 664, which falls under subdivision 3, provides: “Any corporation, association nr society which issues any certificate, policy or other evidence of interest to, or makes any promise or agreement with, its members, whereby, upon the decease of a member, any money or other benefit, charity, relief or aid is to be paid, provided or rendered by such'' corporation, association or society, to the legal representative of such member or to the beneficiary designated by such' member, which money, benefit, charity, relief or aid is derived from voluntary donations or to be collected from the member thereof, or the members of a class therein, and interest and accretions thereon, or rebates from amounts payable to the beneficiaries or heirs, and wherein the paying, providing or rendering of such money or other benefit, charity, relief -or aid is conditioned upon same being realized in the manner aforesaid, and' wherein the money or purposes of such corporation, association or society, and the expenses of the management and prosecution of its business, shall be deemed to be engaged in the business of life insurance upon the co-operative or assessment plan, and shall be subject only to the provisions of this sub-division.” Section [182] 679 of the Kentucky Statutes is found among the provisions especially applicable to the co-operative or assessment life insurance companies, and we think unquestionably applies to the benefit certificate sued on in this case. In Society v. Puryear’s Adm’r, 109 Ky., 381 (22 R., 980), (59 S. W., 15), it was held to apply also to policies issued by old-line companies; and in Rice v. Rice’s Adm’r (23 R., 635), (63 S. W., 586) it was held that, in an action to recover on a policy of insurance, representations made therefor by the insured in his application form no part of the contract, and could not be considered in evidence. The court therefore properly struck out all the paragraphs of the answer which refer to or rely upon the representation made by the insured in his application for insurance, or the report of the medical examiner which accompanied same, and as the certificate only purports to have been issued upon representations made in the application, and there is no averment in the answer that any other form of representations were relied upon, the demurrer was properly sustained. For reasons indicated, the judgment is affirmed. Petition for rehearing by appellant overruled.