Smoot v. Bankers Life Ass'n

REYNOLDS, P. J. (after stating the facts)'. — The statutes of this State, section 7901, article 3, chapter 119 (Revised Statutes 1899) provide that every contract whereby the benefit is to accrue to the person named therein, “the payment of which said benefit is in any manner or degree dependent upon the collection of an assessment upon persons holding similar contracts, shall be deemed a contract of insurance upon the assessment plan.” Section 7910, also a part of the same article and chapter, enacts that nothing in the article contained shall subject any corporation doing bus-> iness under the article to any other provisions or requirements of the general insurance laws of this State, — 461 — except as distinctly set forth in the article. What is known as the non-forfeiture section, section 7897 is not one of the excepted sections. This case, therefore, turns' upon the solution of the questions, first, whether this defendant is a company doing an insurance business on the assessment plan, and if that is detérmined in the affirmative, whether by the non-payment in April, of the assessment made upon him for that month, plaintiff has forfeited his membership in the defendant organization and all his rights under that membership. Taking up the first proposition, it is to be said that a certificate of membership, identical on its face with the one now before us, was before the Supreme Court of this State in McDonald against this same Bankers Life Association, reported 154 Mo. 618, with this important difference however, in the McDonald Case, the endorsement or notation which appears in evidence to have been on the back of the certificate here involved, does not appear to have been on the certificate in the McDonald Case, or if it was, it does not appear to have been before the court and is not referred to in any way in the opinion. Repeating that endorsement from the statement, it is as follows: “Benefits due from this association are in the main provided for by assessments on certificate holders and are secured by a fund deposited with the Auditor of the State of Iowa under authority of law.” That an endorsement on the back of the certificate is to be construed along with the face of the certificate has been often decided, and seems to have been a controlling fact in Elliott v. Safety Fund Life Ass’n, 76 Mo. App. 562, l. c. 565, ‘a decision by the Kansas City Court of Appeals. ' The case is cited approvingly by Judge Marshall in the; McDonald Case, at page 628, on another proposition however, but no adverse criticism is made upon any part of the opinion in the Elliott case. A further distinction between the case before us and the McDonald Case is, that in the McDonald Case, the laws of Iowa, — 462 — under which the defendant is incorporated were not properly pleaded, the chapter and sections of the Iowa Code being referred to by members only, neither the language, nor the tenor or effect being set out, and it appears from the statement of the case, that the trial court had also excluded from evidence the articles of association or charter as well as the by laws of defendant corporation. With reference to these as well as the laws of Iowa, Judge Marshall says, at page 629, that they were not pleaded in any manner and therefore were inadmissible and were not properly before the Supreme Court, so that, says Judge Marshall, “their provisions and requirements cannot be considered or analyzed.” He concludes that upon the issues joined and the face of the policy, the defendant is not an assessment company, within the meaning of our statutes,'and that, as the contract was executed and consummated in this State, the law of this State must govern and the law of Iowa, the contrary not being shown, will be presumed to be the same as our law, that being the only law before the court. The form of the certificate issued by this defendant at a later date, was before the Kansas City Court of Appeals in the case of McCoy v. Bankers Life Ass’n, 134 Mo. App. 35, 114 S. W. 551. That court held this defendant to be a company doing life insurance upon the assessment plan, founding its conclusion upon the stated proposition that the form of certificates in the McDonald Case and the McCoy Case were radically different. A careful examination of the two forms of certificates, however, fails to satisfy us that there is any difference in substance between the two forms, the difference being more in their wording than in the legal effect. In the McCoy Case, it appears that the laws of Iowa, the articles of association and the bylaws of the defendant were properly plead and were in evidence. Therein lies the substantial difference between the two cases. That is also the situation in this case at bar. The sections of the Code of Iowa, under — 463 — which the defendant is organized and incorporated are set out in ful] in the answer. The articles of association and by-laws of the corporation defendant are properly plead. These were all given in evidence. Furthermore, in the case at bar, the notice levying the assessment, in payment of which the plaintiff was in default, is set out and in evidence, and testimony was introduced showing proper adoption of a resolution levying the assessment. It is also in evidence in this case that the plaintiff was duly notified of this assessment; that he was in default in the payment of it, in that he had not paid it within the time required; that a forfeiture was declared; that plaintiff applied for reinstatement; furnished a medical certificate of his health and condition; that the certificate was rejected as insufficient, the plaintiff’s money, which he had sent on, returned to him and reinstatement declined, although it is also in evidence that, after the institution of this suit, the defendant offered to reinstate plaintiff, but he declined reinstatement, saying that he would rather fight it out with the company during his lifetime than leave it to his heirs and children to fight after he was dead. The evidence in this case also shows, without any room for quibble or discussion, that the business of this defendant was carried on on the assessment plan, and that, in the language of our statute, the payment of whatever benefit the members of the defendant organization were entitled to receive is not merely “in any manner or degree,” but entirely, “dependent upon the collection of an assessment upon persons holding similar contracts.” This constitutes this defendant a company doing the business of life insurance upon the assessment plan. [Westerman v. Supreme Lodge K. of P., 196 Mo. 670; Williams v. St. Louis Life Ins. Co., 97 Mo. App. 449, s. c. 189 Mo. 70.] Being a corporation so engaged in the insurance business in this State, it is not subject to what are called the non-forfeiture provisions of opr insurance laws (B. S. 1899, sec. 7897).. — 464 — That assessment companies, as they are called for brevity, are not subject to tbis provision of our statute or to tbe general insurance laws of tbis State, save in tbe sections mentioned in tbe statute itself, wbicb excepted sections have no application to tbe present case, has been thoroughly settled by tbe decisions of our Supreme Court. [Hanford v. Mass. Ben. Assn., 122 Mo. 50; Aloe v. Fidelity Mutual Life Ass’n, 164 Mo. 675.] Furthermore tbis defendant is incorporated under tbe laws of Iowa. When a foreign corporation undertakes to do business in tbis State, it must conform to tbe laws of tbis State; it cannot withdraw itself from tbe operation of tbe statutes of tbe state in wbicb it does business by tbe insertion of clauses in its policies wbicb are contrary to tbe provisions of our law, nor can it avail itself of tbe benefits of our laws without bearing its burdens. [Cravens v. Insurance Co., 148 Mo. 583.] In this case, at page 600, will be found an illuminating collection of decisions of tbe courts of tbis State and of tbe national courts, applying tbis rule. But while tbis is tbe rule, there is also another, equally well established, to the effect that when a corporation organized by one State, is authorized by tbe laws of another State to do business in tbe latter, it carries with it its charter and tbe law under wbicb it is incorporated, and persons dealing with it, particularly those who are members of tbe association or corporation, are bound to take notice of tbe provisions for control of its affairs and tbe scope of tbe authority of its officers and agents, and especially of tbe business in wbicb it can engage. [Relfe v. Rundle, 103 U. S. 222; Canada, etc., R. R. Co. v. Gebhard, 109 U. S. 527 l. c. 537; Jemison et al. v. Bank, 122 N. Y. 135, l. c. 140; Bockover v. Life Ass’n of America, 77 Va. 85, l. c. 91; Haden v. F. & M. Fire Ass’n, 80 Va. 683; Bocock, Ex’r, v. Alleghany C. & I. Co., 82 Va. 913; Whitehurst’s Admr. v. Whitehurst’s Widow, 83 Va. 153; Smith v. Cornelius, 41 W. Va. 59, l. c. 74; Giesen v. London & Northwest Ameri — 465 — can Mortg. Co., 102 Fed. 584, l. c. 587; Brown v. Equitable Life Assur. Co., 142 Fed. 835, l. c. 843.] Our own Supreme Court in the State ex inf. v. Continental Tobacco Co., 177 Mo. 1, l. c. 33, has fully recognized this, holding that a corporation haying been organized under the laws of a sister State and being authorized to do business in this State, necessarily brought with it the' powers of its charter, unless restricted by the laws of this State. Furthermore, it is a thoroughly settled principle of law, that the rules and regulations which a corporation adopts, are generally enacted for the government of the corporation in its dealing with third parties, and for third parties dealing with it. [State v. Overton, 24 N. J. 441.] By-laws are the rules of law adopted by the corporation for the regulation of its own acts and concerns and of the rights and duties of its members among themselves. [O. J. Shaw, in Commonwealth v. Turner, 1 Cush. (Mass.) 493, 1 Thompson on Corps., sec. 937, 5 Am. and Eng. Ency. of Law (2 Ed.), p. 88.] When by-laws have been duly adopted they are obligatory upon all the members of the corporation. [Hill v. Rich Hill Coal & M. Co., 119 Mo. 9, l. c. 26; Flint v. Pierce, 99 Mass. 68, l. c. 96; Kent v. Quicksilver Mfg. Co., 78 N. Y. 179; McFadden v. Los Angeles Co., 74 Cal. 571.] All the members of the corporation are chargeable with notice and knowledge thereof. [Brent v. Washington Bank, 10 Peters (U. S.) 614; Susquehanna Ins. Co. v. Perrine, 7 W. & S. (Pa.) 348; Miller v. Hillsborough M. F. & A. Ass’n, 42 N. J. Eq. 459; Pfister v. Gerwig, 122 Ind. 567.] This is subject to the qualification that by-laws impairing the contract obligations of the members, can not be of force as against that member’s contract, without his assent. . This is particularly so as to non-stock associations, associations not for profit, associations practically of the character of this defendant; its members — 466 — are conclusively presumed to know its laws and rules. [Coleman v. Supreme Lodge, 18 Mo. App. 189; Borgraefe v. Knights of Honor, 22 Mo. App. 127, l. c. 140.] Referring then to the laws of the State of Iowa and to the articles of association and the by-laws of the defendant, as given in evidence in this case, this corporation defendant had no power or . authority to transact the business of life insurance on any. plan other than on the assessment plan, and even if it issued certificates of membership or policies of insurance on any plan or basis other than on the assessment plan, those contracts and policies would be void as ultra vires the corporation. Furthermore it is in evidence in this case that this defendant, a foreign corporation, is authorized by the superintendent of the insurance department of .this State to transact life insurance business in this State only and solely, on the assessment plan. While it is true that the certificate of the superintendent of the insurance department is not conclusive upon the courts in determining the character of the business carried on by the company, it is also true that the construction placed on the business of the corporation by the executive officers of the government in the discharge of their official duties and exercise of their powers, is always received by the courts as strong and persuasive in the interpretation of the law. It is, however, beyond question, that with a certificate authorizing it to do the business of life insurance in this State on the assessment plan alone, the defendant is confined to that plan of business, and if it undertook to do life assurance on any other plan, it was proceeding without authority of law and business transacted by it in this State, or contracts made by it in this State Avould be without lawful authority and non-enforceable. But as before noted, the facts in evidence in this case show that this company defendant in this instance — 467 — did transact in this State, the business of life insurance entirely on the assessment plan. The evidence shows that the plaintiff in this case was fully aware of that. He has paid on these assessment notices the assessments demanded of him, varying in amount from a few cents to some six or seven dollars, for the whole period of his membership, so that he cannot be heard to say that he did not know that the defendant corporation, of which he was a member, was actually doing business, as far as he was concerned, on the assessment plan, no matter what might have been in or omitted from the membership certificate. It follows that under the terms of his certificate of membership and under the laws of Iowa, and under the articles of association of the company and under the by-laws of the association of which he was a member, that, upon the non-payment of the assessment levied and payable in April during that month, he forfeited all rights as a member of the association: provided always, that his membership was forfeited lawfully and without fraud and in accordance with the provisions of the company defendant of which he was a member. If the contrary appeared, the forfeiture would be of no force and effect and plaintiff would be entitled to relief, — certainly to reinstatement, if alive, or in case of his death, the way would be open to his heirs or beneficiary under his membership certificate, to recover the amount due under his contract with the defendant. It is further to be said in this case that taking the view of the plaintiff, that this is a regular insurance company and not one conducted on the assessment plan, he does not pretend to bring himself under the law of this State (R. S. 1899, sec. 7898) which forbids forfeiture after the payment of three annual premiums; nor does he ask for a paid up policy, as provided in section 7897; and being alive, he does not come under section 7899. What he does sue for is damages arising out of the cancellation of his policy, averring that it was cancelled wrongfully and unlaw — 468 — fully and that the cancellation was a violation of the contract of insurance alleging that he had complied with all the conditions of the policy and that by reason of age and health he is unable to procure re-insurance and hence he demands $2,000 damages. Whatever right he might have against the defendant, if it was conducting business on other than the assessment insurance plan, he has no right, under the case made by him in this present action against this company, a company conducting the business of insurance on the assessment plan, to recover in this action. The contract in terms provides that failure to pay at the times stipulated, subjects the membership and the contract to forfeiture. The proof shows, in fact, the plaintiff’s own acts and letters admit failure to pay the assessment due in April within that month. The failure produces the forfeiture; it required no act of the defendant to declare it; forfeiture fell in by the failure to pay. The contract could only be reinstated by the affirmative act of defendant. There is no evidence in the case tending to show that the defendant company acted fraudulently or unlawfully or otherwise than within its right in refusing reinstatement and in insisting on the forfeiture. While forfeitures are not favored in law, if parties contract for them, the courts cannot do otherwise than sustain them and enforce the contract, no fraud or misrepresentation appearing. Nor is the fact that the defendant waived the right of forfeiture in other cases, any estoppel against it, in exercising it against this plaintiff. This evidence of the acts of the defend-; ant in other cases and with others, should not have been received. If defendant had waived compliance by plaintiff of the requirement that he pay within the month and to such an extent as to lead him to believe that a forfeiture would not be exacted — if it had done anything in dealing with him, to show that it would not insist on prompt payment, it might have been estopped from enforcing forfeiture as against him. [James v. — 469 — Life Ass’n, 148 Mo. 1; McMahon v. Maccabees, 151 Mo. 522, l. c. 537.] But even in the cases in which it was allowed to be proven that parties in default had been reinstated, the proof is that they had furnished health certificates to the satisfaction of the defendant; that happened even in the case of plaintiff, when he defaulted in 1897. He was reinstated then, on furnishing a satisfactory health certificate. Nor was there any evidence that plaintiff knew of these cases of alleged waiver of time of payment, and that with a knowledge of them and acting on them, he had postponed payment within the allotted time. We do not intend to decide, however, that proof of these things would have been admissible or that if proven they would have constituted an estoppel. In the present instance, when forfeiture occurred in May for failure to pay the assessment due in April, 1907, reinstatement was refused, the defendant declining to accept the health certificate furnished as satisfactory, as it had a right to do, and that terminated plaintiff’s membership. It is difficult to determine upon what theory the learned trial judge decided the case. The most material and important testimony and controlling testimony if admitted, which was offered, was admitted, with the reservation that the court would pass on its admissibility “when he determined the case.” But he did not even then rule on it, and whether he considered it or not as competent, relevant or material, we cannot say. The practice of withholding rulings on objections when objection made, has been frequently condemned. In this case, it is so- prejudicial as to warrant a reversal for that alone, if proper exception had been saved to the refusal of the court to pass on the admissibility of the testimony when offered. Passing over this, how* ever, and assuming that this testimony was excluded, on no theory that we are aware of, can plaintiff in this case recover the face value of the policy — $2,042, ma — 470 — turing only on his death. If the learned trial court undertook to award plaintiff the present worth of his policy, the evidence shows that the present worth of $2,042, payable in fourteen and three-quarters years is $864.80, without allowing for payment of assessments by the plaintiff in the interval, the present worth of which is testified to be $702.64, leaving net value of $162.16. The testimony is, that if the surrender value is calculated on the basis of old line insurance, with level premiums, it would be $453.52. How the trial court arrived at $1,620 as the measure of damage is something we cannot understand, taking into consideration the undisputed facts in the case. It is sufficient to say, that it is not only unsupported by any evidence in the case, but is contrary to the undisputed evidence. This company being one carrying on its business on the assessment plan, with no level premiums, its policies or certificates of membership having no surrender value, like all similar organizations, furnishes mere temporary insurance; it is without a reserve fund applicable to payment of losses, as the reserve fund of an old line company always is supposed to be. In conclusion we are bound to say that however harsh the action of defendant may have been in this case, as long as it does not appear from any facts im the case that its action was brought about by fraud or in disregard of its own laws or in violation of any of its own rules, regulations and by-laws, we are powerless as a court to afford remedy in this action. As great a hardship as the loss of this insurance undoubtedly is to the plaintiff, we cannot in this form of action and in the case made, afford him redress. ' The judgment of the circuit court is reversed. All concur, in the result, Goode, J., however, expressly reserving opinion as to whether suit 'would lie in equity to reinstate the policy.