Corley v. Travelers' Protective Ass'n

DAY, Circuit Judge, after stating the foregoing facts, delivered ihe opinion of ihe court. The learned judge who tried this case directed the jury to return a verdict in favor of the association, being of the opinion that the contract of insurance was made in Missouri, and therefore not controlled by the Kentucky statute, and consequently the action was barred by the contract of limitation of the action entered into by the association and member, because of failure to bring the suit within six months after the claim was rejected. The Kentucky Statutes (section 679) provide: — 858 — “All policies or certificates hereafter issued to persons within the' commonwealth by corporations transacting business therein under this law, which policies or certificates contain any reference to the application of the insured, or the constitution, by-laws or other rules of the corporation, either as forming part of the policy or contract between the parties thereto or having any bearing on said contract, shall contain or have attached to said policy or certificate a correct copy of the application as signed by the applicant, and the portions of the constitution, by-laws or other rules referred to; and unless so attached and accompanying the policy, no such application, constitution, by-laws or other rules shall be received as evidence in any controversy between the parties to or interested in said policy or certificate, and shall not be considered a part of the policy or of the contract between such parties. The said policy or certificate, application, constitution, by-laws or other rules shall be plainly printed, and no portion thereof shall be In type smaller than brevier: provided, however, that nothing in this section shall be construed as applying to health certificates or constitutional receipts, or other evidences used in reinstatement of a policy or certificate.” The purpose of this statute is apparent, and requires that the portions of the constitution and by-laws or rules of the association which are to form part of the policy or contract between the parties, or to have any bearing upon the same, shall be plainly printed and attached to the certificate. It has become so common as to have occasioned judicial comment in more than one instance, that parties obtaining insurance may be misled from the failure to read the many conditions and stipulations inserted in fine-print clauses of policies or embodied in the provisions of lengthy constitutions. This statute is designed to place the conditions upon which the policy is issued in plain and direct form upon the certificate or policy, in order that the policy holder or member may become acquainted with the provisions of his contract, and leave no room to claim that he has made any other or different contract. The present case is a 'good illustration of the fairness and wisdom of such a course. Upon the face of the certificate issued to a member, it is apparent that the constitution and by-laws contain a statement of the measure of obligation undertaken by the company to the assured; yet this constitution is not set forth, and there is nothing upon the certificate to indicate to the member the short period of limitation within which an action must be brought. The beneficiary, finding a certificate among the effects of the deceased person, but not discovering the constitution, may have no notice of this short period of limitation, and be led to rely upon the general law of the state, which in the present case,, we are advised, is five years from the time the cause of action accrued. The purpose and meaning of the statute are plain. Does it apply to this case? The statute, in terms, seeks to regulate certificates issued to persons within the commonwealth of Kentucky by corporations transacting business therein. The right of a state to determine upon what terms it will permit foreign corporations to do business within its borders is too well established to need comment. Repeated adjudications of the supreme court of the United States have established the doctrine that foreign corporations do business in a state ns a matter of grace, and not of right, and the state may prescribe such rules as it may see fit to regulate the privilege granted, and to protect its citizens from the abuse of corporate powers. Insurance Co. v. Daggs, 172 U. S. 557, 19 Sup. — 859 — Ct. 281, 43 L. Ed. 352; Waters-Pierce Oil Co. v. Texas, 177 U. S. 28, 20 Sup. Ct. 518, 44 L. Ed. 657; Hooper v. California, 155 U. S. 648, 15 Sup. Ct. 207, 39 L. Ed. 297; Society v. Clements, 140 U. S. 226, 11 Sup. Ct. 822, 35 L. Ed. 497; Insurance Co. v. Cravens, 178 U. S. 389, 20 Sup. Ct. 962, 44 L. Ed. 1116. The learned judge, in granting the prayer for peremptory instruction in favor of the association, made the case turn upon the consideration that the certificate of membership was issued in the state of Missouri. We do not think this proposition necessarily determines the case, although in this connection it may be remarked the certificate was forwarded through the office of the company in Kentucky, first to the state division, and thence reaching Corley. The certificate was within the control of the company’s agents until delivered to Corley. This statute; in using the terms “certificate issued,” refers to the well-known practice of such companies to grant certificates of membership which shall entitle (he recipient to the benefits of the insurance. In analogy in this respect to policies 'of insurance, the certificate purports to be a. contract of insurance, giving the “benefits” in case of death to the beneficiary. The true test, in our judgment, is whether the obtaining of this membership— the issuing of this certificate — was transacting business within the commonwealth of Kentucky with persons therein. An examination of the facts shows that all the essential business in obtaining the memberships was transacted in Kentucky. In that state the association had established a division. There it received applications and enrolled members, and passed upon their eligibility before forwarding the application to the home office. The local post of which Oorley was a member was organized and had its habitation at Louisville, Ky. There the dues of members were paid, benefits were dispensed, and, except the forwarding of the applications and money to the home office for its action, all the essential features of the business were transacted. Tn the light of this proof, we cannot doubt that, within the meaning of this statute, this corporation was transacting business and issuing certificates to persons within the commonwealth of Kentucky. If it were not so, the company may have all the benefits of collecting dues, organizing divisions and posts, holding meetings, and otherwise carrying on its business, and avoid the force of statutes passed to regulate business of such character in Kentucky, by simply maintaining its home office at its place of organization, and there finally passing upon applications for membership. We think this statute was passed with a view to bringing within its terms and subjecting to its provisions corporations which might avail themselves of the right to transact such business in the state. It is urged that there is no proof that the association had ever applied for the privilege of doing business under this statute, or was acting thereunder. This can make no difference, if by the terms of the law the company came within its provisions. The fact that it saw fit to transact business within the state required it to comply with the laws thereof, and, having had the benefit of such business and received the money of the assured in that state, it is deemed to have submitted to the jurisdiction thereof. Berry v. In — 860 — demnity Co. (C. C.) 46 Fed. 439. It is further urged that this statute' had no application,, because the association is not of the character which the law undertakes to regulate. Section 641, Ky. St., provides: “The words ‘Insurance company or insurance corporation,’ as used in. tliliarticle, shall he held to mean and include any association, individual, company or corporation, partnership or joint stock company engaged in or carrying on, in any manner, the business of insurance in this state, except that the provision 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 of and supervision of the work of local subordinate lodges or councils.” Section 664 provides: “Any corporation, association or society wbicli 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 from admission fees, dues and assessments, or any of them, collected or to he collected from the members thereof, or 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 the same being realized in the manner aforesaid, and wherein the money or other benefit, charity, relief or aid is applied to the uses and purposes of such corporation, association or society, and the expenses of the management and prosecution of its business shall he deemed to he engaged in the business of life insurance upon the co-operative or assessment plan, and shall be subject only to the provisions of this subdivision.” Also section 665: “Any corporation, association or society which issues any certificate, policy oi" other evidence of interest to, or makes any promise or agreement with its members, whereby, upon the sickness or other physical disability of a member, and not' by reason of having attained a certain age, any money or other benefit, charity, relief .or aid is to be paid, provided or rendered by such corporation, association or society, to such member or beneficiary designated by him,., which money, benefit, charity, relief or aid is derived from voluntary donations or from admission fees, dues, assessments, or any of them; collected or to he collected, from the members thereof, or members of a class therein, and interest and accretions thereon, and wherein the paying, rendering or providing of such money, or other benefit, charity, relief or aid is conditioned upon the same being realized in the manner aforesaid, and wherein the money or other benefit, charity, relief or aid is applied to the uses and 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 casualty insurance upon the co-operative or assessment plan, and shall be subject only to the provisions of this subdivision.” The constitution of the association was put in evidence, after-wards excluded by the court, and was not formally offered, except the sections regarding the amount of the recovery and the limitation of the action. However, the defendant attaches to its answer as an exhibit a copy of the constitution, which, it appears, was compiled several years after the issuing of the certificate, hut there is no suggestion that it is not the constitution in force at-the time of the issuing of the.certificate in question; and when thus introduced into — 861 — the record by the association, although the reply makes the issue that it is hot a true copy of the constitution, we may look to it, so far as the association is concerned, with a view to determining the character of the organization, and we find that the annual dues of the association are §10, apportioned §1 to the post, §1 to the state division, — where there is no post, §2 to the state division,- —§0 to the general indemnity fund, and §2 for general expenses. Section 1, art. 6. Further: “Whenever the indemnity or benefit fund is reduced by the payment of indemnity claims to less than $5,000, the board of directors may order an assessment, not to exceed two dollars, upon each member of the association, a notice of said assessment to be mailed to each member by the national secretary; and all members failing to pay said assessment within thirty days shall cease to be members of this association.” Section 3, art. 6. Article 9 provides: “Section 1. The indemnity or benefit fund shall be established and maintained out of the annual dues, as prescribed in section 1 of article 6, and the membership fee, as prescribed in section 2 of article 2.” We think the association comes within the provisions of the Kentucky statute just cited; for, while it has among its purposes the promotion of acquaintance and friendship among traveling men, and to obtain for them better railroad rates and hotel accommodations, it may be said to be its principal purpose to provide a benefit fund for members in case of death or accident. This fund is derived from dues, and when depleted is replaced by assessment upon members. The certificate of membership provides for payment of a specific sum for death by accident. Provisions are made for enforcing and collecting the payment of dues. We think this association comes under the Kentucky statute, unless it is within the exception embodied in section 6:13 of the statutes. We find nothing in the organization of a secret or fraternal character. We do not find the supervision of a grand or supreme body and members secured by the ledge system exclusively. Sot all commercial travelers may become members entitled to the benefits of the insurance. An application is required, setting forth the willingness of each applicant to submit to a physical examination, and waiving all provisions of law now existing or that may hereafter exist preventing any examining or attending physician from disclosing any information acquired while acting in a professional capacity or otherwise, or rendering him incompetent to testify as a witness in any way whatever. The “benefits” are stated at a fixed amount in case of death, and certain specific sums for various injuries. It is evident that persons not answering thesp questions satisfactorily, though otherwise eligible, would be rejected as members. We do not discover in this, association the features which characterize associations which the statute exempts from its provisions. We are strengthened in this conclusion by a letter from the superintendent of the insurance department of Missouri, which seems to have been admitted without objection, wherein it is declared: “After an examination of the constitution and by-laws of the Travelers’' Protective Association of America, forwarded by you to this department* I — 862 — beg leave to inform you that the association not only fails to meet the requirements of the law governing this class of organizations, in reference to having a lodge system with ritualistic form of work,” etc. We concur in the view herein expressed that -the association has no lodge system, with ritualistic form of work, and, we may add, no lodge system by means of which members are exclusively secured. In order to exempt it from the requirements of the Kentucky statute above quoted, it must secure its members through that system exclusively. We are, therefore, of opinion that this association was one coming within the purview of the Kentucky statute, and was transacting business when it obtained members and issued certificates to persons within that commonwealth. The provision of the constitution relied on was therefore required to be printed upon or attached to the certificate, and for failure to comply with the law in this respect the limitation is not a defense. It is urged that this construction will prevent the plaintiff from recovery under this certificate, as the constitution must be looked to in order to make out a recovery of any amount, and no part of it is printed upon the certificate. But we find that the certificate undertakes that the “benefits,” in case of death, shall be payable to the beneficiary. It does not introduce any new element of contract between the parties to ascertain the amount of this benefit from the constitution. The purpose of this statute is to require the company, in its policy or certificate, to bring all of the provisions of the contract to the attention of the insured, and definitely fix the conditions of the insurance beyond the power of others to change or enlarge the contract after his decease. To escape payment because the certificate did not comply with the statute, by failing to print the provisions fixing the amount to be recovered in case of death, would be permitting the company to avoid the contract by its own wrong in failing to comply with the statute. It is urged further by defendant in error that it was correct to instruct the jury for the defendant, because it appears that, Corley having been killed by a gunshot wound inflicted by another, his death was not accidental, and that the company was not liable for death by intentional injury. We think it is the true rule that if the deceased was killed by one incapable of distinguishing between right and wrong, or forming a rational intent to do the act, then the death would not be intentional, any more than it would be if it happened through some unforeseen accident. There is testimony in the record tending to show that the slayer of Corley was insane at the time of the act, sufficient to carry the question to the jury. It is also urged that the beneficiary was nqt adopted in accordance with the laws of Kentucky, and therefore had no insurable interest in the life of the assured. The record of adoption, it is said, does not disclose that the wife of Corley, then living, joined in the application for adoption. We think, however, for 'the purposes of this case, the adoption is sufficiently shown, and against collateral attack it will be presumed that the statute of Kentucky was complied with; there being nothing in the record to exclude this conclusion. We think, therefore, that the case should have been submitted to — 863 — the jury upon the issue of intentional killing, and that the court erred in holding the case barred by the six-months limitation contained in the constitution. The judgment is reversed, and the cause is remanded for further proceedings in accordance herewith. -