Hay v. Bankers Life Co. , 207 Mo. App. 277 ( 1921 )

This is a suit on two certificates of membership issued by the Bankers Life Association of Des Moines, Iowa, on March 22, 1898, to Nathaniel Hay, of Springfield, Illinois, for $2,000 each, and a guarantee deposit of $42 on each certificate.

The case was tried to the court without a jury and resulted in a judgment for the defendant on each of the counts. Plaintiffs in due course appeals.

The petition is in two counts and judgment was asked for $2042 and interest on each count.

The answer pleads forfeiture of both of said certificates for the reason that an assessment due in January, 1915, designated as Call No. 127, had not been paid; and further pleads that this action is barred by the limitation clause in the certificates, which provided that no action shall be brought or sustained upon or under the certificate, unless suit is commenced within one year after the day of the death of the member.

The reply denies the affirmative allegations in the answer and pleads the statute of Illinois extending the time within which action might be brought on the certificates sued on to within three years after the death of Nathaniel Hay, and pleads that defendant waived the limitation clause in the certificates by furnishing blanks for formal proof of death in December, 1916, denying liability, at the time, for the sole and only reason that said Nathaniel Hay was not a member of said company at the time of his death because of his failure to pay the January Call.

Plaintiffs introduced in evidence both of said certificates, and the change of beneficiaries thereon, making plaintiffs the beneficiaries, and proved that plaintiffs were the children and heirs of said Nathaniel Hay.

The uncontradicted proof showed that Nathaniel Hay died at Urbana, Illinois, on February 9, 1915; that the defendant was notified of his death on February 9, 1915, by telegram sent by plaintiff, H.C. Hay, and was asked for instructions as to how to present claim for the amount due under the certificates. The telegram was answered on February 15, by letter, acknowledging receipt of telegram, and stating that the company was holding the claim for advice of payment of January Call; that it had been unable to find any credit for it, and inquiring as to whether it had been paid, and if so, when and how. Deceased's son answered by letter on February 17, stating that he was reasonably certain that the January Call had been paid, but he was unable to find receipt, and inquiring when he might except action by the company and as to how proof of death and claim for money should be made. This was answered by the company on February 19, by letter stating; "Up to this time we have been unable to find any credit showing payment of January Call, and unless you find some evidence that the same was paid, on or before February 1st, we fear that lapse has occurred, in which event it would not be necessary to forward blank for execution, as there would be no liability on the part of the company."

On February 16th an agent of the company at Springfield, Illinois, wrote said son that the company was holding blank proof of death, as they had not yet received the January Call.

In October, 1916, plaintiffs employed counsel to bring suit on the claim under these certificates of membership. No blanks having been furnished plaintiffs to make formal proof of death, such proof had not been made, and counsel desiring to make formal proof of death wrote the company the following letter.

"October 30th, 1916.

"Bankers Life Association, Des Moines, Iowa.

Dear Sirs:

I have for collection claim of Eleanor R. Hay, Howard R. Hay and Henry Collins Hay, as beneficiaries under certificates of membership numbers 70594 and 70595, issued by your company to Nathaniel Hay, March 22, 1898, amounting to $2042 each, making a total of $4084, together with six per cent interest from date that you first denied liability under these certificates. Nathaniel Hay died in February, I think on the 9th day, 1915. I see from the correspondence turned over to me with the certificates that formal proof of death has not been made for the reason that you denied liability and declined to send blanks on which to make the proof, without you prefer to settle the claim without suit, and I ask that you kindly send me blanks on which to make the formal proof.

After we have made the formal proof of death you may pay the claim or contest the question of your liability in court, as you may prefer. Please send me the blanks and let us get the matter going one way or the other.

Yours truly, J.A. WHITESIDE."

In answer to this letter the company sent the blanks with the following letter:

"December 29, 1916.

J.A. Whiteside, Hiller Building, Kahoka, Missouri.

Dear Sir: —

In response to your favor of December 21, 1916, with reference to certificates Nos. 70594 and 70595, issued to Nathaniel Hay, March 22, 1898, I am sending you herewith our form of blank for proof of death of Mr. Hay, but with the express understanding, which is endorsed thereon, that the company does not request that the same be furnished or that any expense, time or trouble be incurred in connection therewith; because as stated in our letter to Mrs. Hay of May 21, 1915, Mr. Hay was not a member of this company at the time of his death, because of his failure to pay the January 1915 Call. His was assessment contracts and the failure to pay the several assessments quarterly within a month after the same was made terminated membership, as you will see by the certificates, which I presume you have. We will also send a copy of the By-Laws and Articles of Incorporation if desired.

Yours very truly, I.M. EARLE, Vice-President and General Counsel."

Formal proof of death was made by plaintiffs at some expense and work and all under the direction of counsel for plaintiffs at Kahoka, Missouri, the witnesses and parties who made the affidavits being at Springfield, Champaign and Urbana, Illinois and Grand Junction, Colorado.

Having waited a reasonable time after mailing formal proof of death to the company, counsel filed suit on the claim on January 31, 1917.

The court, sitting as a jury, found all issues of fact in favor of plaintiffs; that Call No. 127 was paid, and that Nathaniel Hay died February 9, 1915, and was a member of the Bankers Life Association in good standing when he died; but held that the limitation clause in the certificate applied, and that plaintiffs' cause of action was barred by said limitation clause in the certificates, and for that reason rendered judgment against the plaintiffs.

I. We first direct our attention to the question as to whether the defendant, under the record in this case, can be held as a matter of law to have waived the clause in the certificates which requires suit thereon to be commenced within one year after the death of the insured.

Even though the limitation clause in the certificates was valid, a point which we need not here decide, it may be waived and insistence upon one of several known grounds of defense may constitute a waiver of the others. [Home Life Ins. Co. v. Pierce,75 Ill. 426; Moore v. Nat'l. Acc. Soc., 38 Wash. 31; Handell-Elcock Co. v. Frankfort, etc. Acc. Co.,177 Ill. App. 500; Covenant Mut. Life Ass'n v. Baughman, 73 Ill. App. 544; Shearlock v. Mut. Life Ins. Co., 193 Mo. App. 430, 182 S.W. 89; Dolan v. Royal Neighbors, 123 Mo. App. 147, 100 S.W. 487. See, also, Thompson v. Traders' Ins. Co., 169 Mo. 12, 68 S.W. 889.]

While the question whether there has been a waiver is generally a question of fact and the sufficiency of the evidence relating thereto is for the jury, yet where the facts and circumstances relating to the subject are admitted or clearly established, waiver becomes a question of law. [27 R.C.L. 912.] So since in this case the question of the waiver is dependent upon the legal effect of the letter of plaintiff' attorney of October 30, 1916, to the defendant company, which the defendant company admits it received; and the letter of December 29, 1916, written by the defendant to the attorney for plaintiffs, which letter was signed by the vice-president and general counsel of the defendant company, and which defendant admits that it sent, the question of the construction of these letters does not present an issue of fact Their interpretation and legal affect, like that of a contract, is not for the jury, nor the judge sitting as a jury, but is a question of law. [Union Service Co. v. Drug. Co.,148 Mo. App. 327, l.c. 337, 128 S.W. 7; Mounty v. Neighbors Implement Vehicle Co., 195 Mo. App. 21, 189 S.W. 614.]

The letter of October 30, 1916, written by the plaintiffs' attorney to the defendant company, sets out in detail that the writer held for collection plaintiffs' claim on two certificates issued by defendant, giving their numbers, date of issuance, amount of each, and to whom issued, and states the total amount of the claim with interest from the date of the denial of liability on the part of the company, andspecifically sets out the day, month, and year of the insured'sdeath, and further notifies the defendant therein that "I willfile suit on this this claim for the $4084 and interest,without you prefer to settle the claim without suit . . . . . . . . ." (Italics ours.) Thus it clearly appeared from the date of plaintiffs' letter and the date of the death of the insured, as stated therein, that a period of over eighteen months had elapsed since the date of the death of the insured, yet the vice-president and general counsel of the defendant company, in his letter of December 29, 1916, in answer thereto (in which he enclosed forms of proof of death), specifically stated that the reason why the company did "not request that proofs of death be furnished, or that any expense, time or trouble be incurred in connection therewith," was "because, as stated in our letter to Mrs. Hay, of May 21, 1915, Mr. Hay was not a member in this company at the time of his death, because of his failure to pay the January, 1915, Call." But no mention was made therein of the fact that the company would endeavor to invoke the provision contained in the certificates, that suit thereon must be filed within one year from the date of the death of the insured. It is not contended that the defendant, at the time it sent said letter, was not conversant with the limitation provision in the certificates issued by it, nor that it was not aware of the fact that more than one year had elapsed since the death of the insured.

It will be noted that upon the hearing of the case the learned trial judge found against the defendant upon the sole ground which defendant sets out in the letter as its cause for disclaiming liability, and defendant, in its letter, not having mentioned the fact that it would seek to rely upon the provision limiting the filing of a cause of action to within a period of one year, after plaintiffs have gone to the expense of engaging counsel, preparing proofs of death, and filing suit, in the belief that the only objection that the defendant made to the payment of the certificates was that the January, 1915, assessment No. 127, had not been paid, should be held to have waived whatever right it may have had to set up the said limitation clause as a bar to plaintiffs' right to bring their action.

We therefore hold that the learned trial judge erred in holding that there was no evidence proving or tending to prove a waiver of the provisions of said certificates limiting the time in which suit should be brought, and rule, as a matter of law, that the defendant company waived said limitation provision in said certificates.

II. When we turn to the conclusion arrived at by the learned trial judge, sitting as a jury, that the insured was entitled to have his assessment paid out of the so-called "guarantee fund," we are compelled to hold that the learned trial court made an error of law.

By Article 10 of the Articles of Incorporation in evidence, it is provided that the funds of the defendant association shall be kept separate and distinct upon the books thereof, and as to the "guarantee fund" it is provided:

"The guarantee fund, the benefit fund, the reserve fund, and the contigent fund, and such other funds as the Board of Directors may hereafter establish.

"Section 2. The guarantee fund shall consist of the deposits pledged by each member of the Association for the payment of assessments and the said deposit required of each member shall consist of the sum of one dollar for each year of the age of the member at the date of application, counted at his nearest birthday, and may consist of cash, or a note at 4 per cent. interest, payable on such terms as the Board of Directors may prescribe, and the said Board shall have the power to declare a certificate of membership void and of no effect upon defalcation of payment for any note executed for said deposit."

According to the undisputed testimony in the present case, each member of the asociation on becoming such, paid to the association a sum equal to one dollar for each year of his age for each two thousand dollar certificate, which was placed in the guarantee fund. If he dies a member in good standing, the sum is paid to his beneficiary in addition to the amount of the certificate. If the member lapses, the sum so paid goes to the reserve fund, for use in paying death losses when they exceed one per cent. of the insurance in force. In making the assessments on the various members quarterly, an estimate was made in advance of the amount, which would be required for the payment of death losses on the certificates for the ensuing quarter, basing the estimate upon the experience of the company during the previous year in combination with the American Experience Table of Mortality, and the expected losses for the ensuing quarter were calulated from these bases. The amount necessary to pay the Call No. 127, of January, 1915, being in excess of one per cent. of the insurance carried under the certificates, under the provisions of the Articles of Incorporation and By-Laws sets forth the remainder necessary for the payment of death losses over and above the one per cent. was taken from the reserve fund. Then each member was directly assessed in a sum sufficient to pay the death losses, based upon the amount paid by him to the guarantee fund, and not in excess of one per cent. of the insurance of the respondent company on the assessment plan in force. This procedure was in strict conformity with the Articles of Incorporation, the By-Laws of the company and the provisions of the entire contract between the member and the company.

On the record before us we can come to no other conclusion than that the defendant company conducts its business solely on the assessment plan. All that it furnishes its members is temporary insurance covering the time for which the member has paid his assessments. There is no reserve value to its certificates of membership which can carry them beyond the period for which the particular assessment has been levied and paid. This question we had before us and discussed so thoroughly in the case of Smoot v. Bankers Life Ass'n, 138 Mo. App. 438, 120 S.W. 749, that it is unnecessary for us to discuss the question at length. The Kansas City Court of Appeals came to the same conclusion in the case of McCoy v. Bankers Life Ass'n, 134 Mo. App. 35, 144 S.W. 551, in which case it was distinctly held that certificates such as we have before us here were issued on the assessment plan and were not life insurance, and that such certificates are forfeitable for failure to meet the calls and assessments made upon them. It is seriously contended, however, that such a ruling on our part is in conflict with what has been said by our court in Purdy v. Bankers Life Ass'n, 101 Mo. App. 91, 74 S.W. 486.

Our court held in the Purdy case on the evidence then before us, that this guarantee fund was subject to the application of the payment of assessments. In the light of the facts in evidence in the case at bar, we do not think that the decision of our court in the Purdy case is to be followed. It is said by Judge GOODE in that case, that no oral proof was made concerning the practice in the collection of assessments to pay benefits, and that we can only know about the mode in which the benefits were paid from the Articles and the By-Laws; and, referring to the case of Mee v. Bankers Life Ass'n of Minnesota, 69 Minn. 210, 72 N.W. 74, Judge GOODE said that the facts before him in the Purdy case were entirely different, as shown by the evidence, from those in the Mee case; more correctly, that what appeared in evidence in the Mee case did not appear in evidence in the Purdy case. In the case at bar, however, we have a detailed statement of the whole plan and mode of carrying on operations by the defendant company and they are indentical with those reported in the Mee case, so that we are compelled to say that the Purdy case is no authority in the case at bar.

The character of this guarantee fund has been before the courts of other states and they have uniformly held that it is not available for the purpose of paying defaulted assessments. [See Hoover v. Bankers Life Company, 155 Iowa 322; Mulherin v. Bankers Life Ass'n, 163 Iowa 740, l.c. 744; Stubbs v. Bankers Life Co., 55 Ind. App. 701; Bond v. Bankers Life Co.,90 Kan. 215, and Mee v. Bankers Life Co., 69 Minn. 210.] The nature and character of this guarantee fund and the manner in which the business of the company is carried on, are so fully set out in the case of Bond v. Bankers Life Co., supra, and here in evidence, that we do not think it necessary to repeat it here. We are of the opinion and so hold that the learned trial court committed an error of law in looking to the guarantee fund for the payment of this assessment.

III. According to the finding of facts made by the trial judge at the request of the defendant, the assessment due in January, 1915, known as Call No. 127, on the two certificates here sued on, was paid in cash.

Whatever may be the law in other States the principle is well settled in Missouri that the defendant bears the burden of proof to sustain a defense of forfeiture for nonpayment of an assessment. And, "while the burden was upon the plaintiffs, in an action of this kind, to show that the deceased member was in such good standing at the time of his death (Siebert v. Chosen Friends, 23 Mo. App. 268, 275) yet the certificate is proof of good standing at the time when it was issued, and such good standing will be presumed to have continued until the contrary is made to appear. It follows that, in such an action, when the certificate is put in evidence, the burden is upon the defendant to show that, at the time of his death, the member has lost his good standing." [Mulroy v. Knights of Honor, 28 Mo. App. 463, l.c. 467. See, also, Keeton v. Nat'l. Union, 178 Mo. App. 301, l.c. 308, 165 S.W. 1107; Bange v. Supreme Council, 179 Mo. App. 21, 161 S.W. 652; Watkins v. Amer. Yoemen, 188 Mo. App. 626, l.c. 615, 167 S.W. 269; Williams v. Modern Woodmen of Amer., 221 S.W. 414, l.c. 416.]

It is admitted here that the defendant's answer in the case admitted all the facts necessary to make plaintiffs' prima-facie case, and the defendant alleging the affirmative defense of nonpayment to relieve itself of liability on these certificates, the burden of proof as to that issue was placed upon the defendant by the pleadings, and remained there throughout the trial of the case. [Swift Co. v. Mutter, 115 Ill. App. 374; Home Ben. Ass'n. v. Sargent, 142 U.S. 691, 12 Sup. Ct. 332, 35 L. Ed. 1160; Stokes v. Stokes, 155 N.Y. 581, 50 N.E. 342.]

The defendant's evidence on the question of the nonpayment of the assessment number 127 consists of the testimony of witnesses. It is all circumstantial, and its essential parts rest entirely on parol, and even if such evidence were uncontradicted, the question must be submitted to the trial judge, sitting as a jury, to determine the credibility, weight, and sufficiency of the testimony offered. [Gannon v. Laclede Gas Light Co., 145 Mo. 502, 46 S.W. 968; 47 S.W. 907; St. Louis Union Trust Co. v. Hill,223 S.W. 434; Lafferty v. Kan. City Casualty Co., 229 S.W. 750.]

It follows from what we have stated herein that had the learned trial judge correctly applied the law to the facts as found by him, sitting as a jury, judgment in favor of plaintiffs would have resulted. It is therefore ordered that the judgment herein be reversed and the cause remanded with directions to the trial court to enter judgment in favor of appellants.

Allen, P.J., concurs. Daues, J., not sitting.