Schultz v. Citizens' Mutual Life Ins.

Mitchell, J. The plaintiffs are the widow and children (heirs at law) of August C. Schultz, who died in July, 1892. The defendant is a corporation organized under Laws 1885, ch. 184, “for the transaction of life insurance business on the assessment plan.” This is an action to recover on a policy for $2,000 on the life of August C. Schultz, issued in November, 1886. 1. The first question is, to whom is the policy payable, — to the heirs or to the personal representatives of the insured? By the terms of the policy, the application for the insurance is made a part of it. In this application, in response to the following interrogatories, the insured gave the following answers: ■ “Name in full of the person or persons to whom you desire the money paid in case of death?” Answer, “Legal heirs.” ■ “Relationship?” Answer, “Wife, if living.” “Has the above person any interest in the life of the person insured?” Answer, “Yes.” ’" Then at the end of the applibation is found the following: “Person for whose benefit policy is taken?” “Legal representatives.” The policy itself provides “that the amount shall be payable to and for the sole use of his legal representatives.” Although perhaps not entitled to great weight, in view of the nature of the corporation as expressed in its articles of association, yet it is worthy of mention that its by-laws state that “the [313] object of this company shall be to insure its members, and to secure pecuniary benefits to widows, orphans, families, or heirs of deceased members.” Notwithstanding the loose, inaccurate, and apparently contradictory use of terms in the application and policy, we are satisfied that the heirs (including the widow) of the deceased are the beneficiaries of the policy, and that the words “legal representatives,” as therein used, must be construed as meaning heirs or next of kin, and not executors or administrators. It is always permissible to construe these words in that way, especially in wills and policies of life insurance, wherever it is apparent from the context or subject-matter that they were used in that sense. They will be construed in that way more readily in policies of life insurance than in almost any other kind of instrument for the reason that such insurance is very commonly intended as a provision for the family of the insured. A controlling fact in this case is that, whenever the words' “personal representatives” are used, they have reference, not to the persons entitled merely to receive the money, but to those for whose “benefit” or “use” the policy is taken or the money is payable. It is not to be supposed that the insured intended his executors or administrators personally to be the beneficiaries of the policy. 2. The only other question is whether there had been a forfeiture of the policy during the lifetime of the insured, by reason of the nonpayment of “a mortuary assessment” claimed to have become due and payable April 1, 1892. The amount of this assessment ($7.31) was on April 6th transmitted by mail by the insured to the defendant, and received by it April 13th, but was returned on the ground that the payment was too late, and that the policy was already forfeited. The policy itself contains no provision for a forfeiture for nonpayment of such assessments, and contains no reference to the by-laws of the association; but in the application it is stipulated “that the insurance is applied for and will be accepted subject to the conditions contained in the policy which may be issued on this application, the provisions of the articles of incorporation, and the by-laws of the company”; also, that the insured “will always promptly respond to all demands made upon him according to and by virtue of the by-laws and [314] articles of incorporation of the company.” The defendant contends that by reason of these references, as well as by virtue of the membership of the insured in the company, the by-laws became a part of the contract of insurance, and that by their provisions the policy was forfeited by reason of the nonpayment of the mortuary assessment on April 1st. Much of the briefs of counsel is devoted to the discussion of these two questions, upon the latter of which they discuss at some length the construction of the various provisions of the by-laws, which are quite long, and the meaning of which is not always entirely clear; but we find no occasion to consider either of these questions, for the reason that we are satisfied that there was no valid mortuary assessment. Article 8 of the articles of association provides that “ujion every death loss an assessment may be made on the policy holders in the company, in such amounts, and under such regulations, as shall be prescribed in the by-laws.” In view of the further provision that seventy five per cent, collected on such assessment shall be held for the payment of death losses, and the other twenty five per cent, shall go into the reserve fund to supplement any deficiency that may arise in the payment of death losses, it must be conceded that in making an assessment the company is not limited to the amount necessary to pay the death losses that have already occurred; yet it is perfectly clear that assessments can only be made for and upon death losses that have previously occurred, and not merely on the basis of losses which may be anticipated in the future. The provisions of the by-laws are: “Each policy holder shall pay subsequent quarterly mortuary premiums on each $1,000 of insurance carried in accordance with the rate at the actual age attained in the following table [table No. 2]. Mortuary premiums * * * shall be due and payable ninety (90) days from date of • policy, and every ninety (90) days thereafter.” In short, the scheme of mortuary assessments (called “premiums”) provided for in the by-laws is a fixed and absolute assessment every ninety days, the amount of which is determined solely by the age of the insured and the amount of his policy, without any regard to the number of death losses that have occurred, or whether any at all have actually occurred.' [315] The evidence shows conclusively that the mortuary assessment, for nonpayment of which a forfeiture is claimed, was made solely on this basis. However much more businesslike it may be to have the money on hand io pay losses before they occur, yet it is perfectly clear that no such system of assessments as adopted in this case is authorized by the articles of association. That the association had for years been demanding payment of such assessments, and that the insured had paid them, is not‘material. The fact that one party has been making illegal demands on another, and that the latter has heretofore complied with them, imposes no legal duty upon him to continue to comply with them. Therefore, whether the reasons given by the trial judge for his decision were right or wrong, he was correct in holding that the policy was not forfeited. In closing-, we think we may be excused in digressing to say that, while we do not -mean to be understood as at all characterizing the defendant association, of which we know .nothing except from the record, yet we have no patience with the prolix, obscure, and involved provisions and conditions which so many so-called cooperative, life, endowment, casualty insurance, and other similar associations usually incorporate into their policies and by-laws. The patrons of such associations are largely composed of people of limited means, neither astute lawyers nor experienced business men, whose object is to make moderate provision for their families in case of death. Whether intended to have such result or not, such provisions and conditions are calculated to mislead the insured, and entrap him into some act of omission or commission that will work a forfeiture of his insurance. It would certainly be a great boon to the public if there could be devised legislative forms of contracts and rules for all such associations, couched in clear, concise, and intelligible language, and to or from which the associations could neither add nor subtract. Order affirmed. Gilfillan, C. J., absent on account of sickness; took no part. (Opinion published 61 N. W. 331.)