Court Opinion

ID: 8011190
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:58:22.647046+00
Date Added: 2024-06-11T16:36:05.220768
License: Public Domain

Black, C. J.
(dissenting). — I do not agree to the majority opinion filed in this case. Ea-ch certificate, it will be seen, contains this stipulation: “Upon this condition, however, that if the said Chas. E. Barney shall fail to pay any assessment when the same becomes due and payable by him according to the by-laws of this society, and the terms of this certificate, then this contract and agreement shall be null and void and of no effect, and the said Charles E. Barney and the beneficiary therein shall forfeit all rights accruing under this certificate.”
After the certificates had been issued and various assessments levied and paid by the defendant, the name of the association was changed to that of the “United Masonic Benefit Association of Missouri.” The by-laws were also amended so as to make the amount to be paid by the association on each certificate the fixed sum of $2,000, and so as to fix the amount to *647be paid by tbe insured for each death loss at the sum of $6.40. The amended by-laws which have any bearing upon this case are as follows: . ' -
“1. Upon, the death of a member, or so soon thereafter as ordered by the executive committee, each member of the association shall pay to the secretary -of the association a fixed sum according to the class of which- the assessed was a member at that time, based upon the aggregate amount of benefits to which he, or the beneficiary named therein or in section 1 of article 6 of these by-laws, may be entitled under his certificate of membership.”
By the third by-law it is made the duty of the secretary of the company to notify each member of the assessment made upon him, and it then provides that “any member failing to pay such assessment within twenty days after the date of such notice which has. been served upon, sent or given to him, shall forfeit his membership in the association and all benefits and interests therefrom and therein: Provided, that any payment of assessments after such forfeiture, or any notice to pay a subsequent assessment by the association, shall not have the effect to restore the person notified or paying to membership or to any rights under his certificates, until his application for reinstatement, shall be presented to and approved by the executive committee.”
The defendant paid several assessments under and pursuant to these amended by-laws. An assessment of $6.40 on account of each certificate was duly levied upon defendant on the fourth of December, 1891, of which he was properly notified by notice dated and mailed on the twentieth of January, 1892; and on the twenty-fifth of January, 1892, twenty' other assessments of $6.40 each were duly levied, of which he was notified on the first of February, 1892. On the next day the *648company was adjudged insolvent and was then placed in the hands of the superintendent of insurance. The defendant failed to pay the several assessments levied on the fourth of December, 1891, and on the twenty-fifth of January, amounting in all to $140.80, and it is these assessments which the superintendent seeks to recover by this suit.
The question whether these assessments constitute debts, to recover which suits may be maintained by the company or the superintendent of the insurance department, must be determined by the contracts; for it is the duty of the court to give effect to the contracts which the parties have made, and it has no right to build up a contract for them.
This court, in defining a life insurance contract, adopted and approved the language of Mr. Justice G-bay in the case of Com. v. Wetherbee, 105 Mass. 161, where it is said: “This is not the less a contract of mutual insurance upon the life of the assured, because the amount to be paid by the corporation is not a gross sum, but a sum graduated by the number of members holding similar contracts; nor because a portion of the premiums is to be paid upon the uncertain periods]of the deaths of such members; nor because, in case of nonpayment of assessments by any member, the contract provides no means of enforcing payment thereof, but merely declares the contract to be at an end, and all moneys previously paid by the assured, and all dividends and credits accrued to him, to be forfeited to the company.” State ex rel. v. Benevolent Society, 72 Mo. 160.
There can be no doubt but these certificates issued to the defendant are life insurance contracts, and it accomplishes nothing to say they are in a general sense life insurance contracts. Being life insurance contracts, the principle applicable to such contracts in *649general is applicable to them, though the company denominates itself a benefit association. Speaking of these associations; Mr. May says: “Their certificates of membership often resemble, both in.form and substance, ordinary policies of life insurance; and the courts have with great uniformity treated them as substantially life insurance .companies, applying to them, and to the virtual relatives of the members, the rules and principles applicable to the contract of life insurance.” 2 May on Insurance [2 Ed.], sec. 550a.
According to the better authority, an ordinary contract of life insurance is an entire insurance for life, subject to forfeiture for nonpayment of any premium. Ins. Co. v. Statham, 93 U. S. 24; Ins. Co. v. Smith, 44 Ohio St. 156. In ordinary life policies requiring payment of premiums at'stated times, and providing for a forfeiture in case of nonpayment of any premium, it is optional .with the insured whether he will pay or not. Such contracts are unilateral, and the insured can pay or forfeit all that he has paid, as he may elect. The premiums do not constitute an indebtedness against him in favor of the insurer. Worthington v. Ins. Co., 41 Conn. 379; Goodwin v. Ins. Co., 73 N. Y. 485. “The payment of the premium is optional with the insured, and if he make default, the insurer has no other remedy than the avoidance of the policy. If the policy be voidable only at the option of the insurer, it may be different.” 2 May on Ins. [3 Ed.], sec. 341a.
The same principle applies to certificates issued by mutual benefit societies. In re Ins. Co., 9 Bissell, 188; Niblack on Mut. Benefit Societies, sec. 276. The law on this subject is correctly stated in Bacon on Benefit Societies and Life Insurance, at section 357, where it is said: “In a contract of life insurance there is generally no absolute undertaking of the insured to pay the premiums, or assess ments; and consequently *650no personal liability therefor. The payment of the premium, or assessments, is only a condition precedent of the liability of the company; the insured does not. promise to pay the premiums, and the company only promises to pay if it has received the agreed consideration. Therefore, the insured may pay or not, as he pleases; he has the perfect right to do either, and need give no excuse for his choice. If he does not pay, the contract is ended. It follows, therefore, that the premium, or assessment, is only a debt when there is an absolute promise to pay embodied in the contract.”
Now, if we turn to the certificates issued to the defendant, it will be seen there is no obligation imposed upon him to pay the assessments. Payment of the assessments within the designated time after notice is simply a condition to the continuation of the insurance. The condition written in the contract is, that if the said Chas. E. Barney fail to pay any assessment when due and payable, “then this contract and agreement shall be null and void, and of no effect, and the said Charles E. Barney and the beneficiary therein shall forfeit all rights accruing under this certificate.” Void as to whom? Not as to Barney alone, but as to the insurer and the insured. Such is the plain language of the contract. That this is the legal effect of the contract as expressed in the certificates themselves seems clear to the writer.
But stress is laid upon the amended by-laws, which change the amount of the assessment for each loss from $1.60 to $6.40, and the amount to be paid on each certificate to the fixed sum of $2,000. We can not see that these changes affect the question in hand in the least. If the assessments are to be regarded as an indebtedness from the defendant to the association, it is because of the second amended by-law, which provides that upon the death of a member each living *651member may be assessed, and shall pay to the association a fixed sum according to the class of which the assessed was a member. This by-law must be taken in connection with the third, which provides that any member failing to pay the assessment within the designated time shall forfeit his membership in the association and all benefits therefrom. These by-laws point out what the association and its officers are to do upon the death of a member. They prescribe the procedure to be pursued, and that is their object and purpose. They are to be taken together and in connection with the certificates. When this is done, they do not change the terms of the contract from that expressed in the certificate so far as concerns the liability of the insured to pay the assessments. It is still optional , with the insured whether he will pay or suffer • a forfeiture.
This case is wholly unlike those cases where mutual insurance companies insure property against loss or destruction, and in consideration therefor receive the note or notes of the insured, the policy containing a provision that it is to be' void in case of a failure of the insured to pay the note or notes at maturity or in ease of a failure to pay any assessments made thereon. In many cases of that character it .is held that neither the insolvency of the company nor the cancellation of the policy deprives the company of the right to make and collect assessments to pay losses which accrued while the policy was in force. In such cases the policy and the notes are but parts of one transaction, and taken together constitute mutual agreements to be performed by each party. It is manifest that such cases have no bearing on the question now in hand.
In the case of Life Association v. Bossiter, 132 Pa. St. 314, the assignee of the company sued the defendant to recover certain assessments levied upon a life *652policy. The case shows that the defendant signed an application in which it was stated: “The members and beneficiary shall be jointly and severally liable for all death claims accruing during life of membership, which shall become due within thirty days after mailing a notice showing a statement of the death,” etc. The policy lapsed by reason of nonpayment of an assessment, and the insured ceased to be a member. The defendant was held liable for assessments levied to pay death losses which accrued while he was a member, and he was held liable for the reason that such was the plain terms of his express agreement. As to the case of McDonald v. Boss-Lewin, 29 Hun, 88, it is sufficient to state that the defendant there also signed an application for membership in which he in terms promised and agreed to accept the certificates and pay therefor as provided by the by-laws and regulations of the society.
•The two cases last cited are much relied upon by the plaintiff, but they are unlike this one; for, while the certificates. issued to this defendant recite the fact that he made representations in an application for membership, still the applications are not in evidence, and there is nothing in the recitals from which it can be inferred that he agreed to be personally liable for any assessment. The certificates issued to the defendant and the by-laws taken together show, • and they only show, that the company agreed in each case to pay the children of the defendant at his death the sum of $2,000, provided he made payment for each assessment within the designated time after notice; and a failure to pay any assessment is, by the terms of the contract, made to operate as a forfeiture of all that has been paid. The contracts are unilateral and, in respect of the liability of the insured to pay and thereby keep them in force and effect, do not differ from an ordinary life policy requir*653ing the payment of premiums at stated times. The payment of all assessments up to a given date continued the insurance until the expiration of twenty days after date of a notice of another assessment, and it was entirely optional with the defendant whether he would pay the further assessment or suffer a forfeiture. It follows that the defendant was not liable to the company in a suit by it to recover the assessments, nor is he liable to the plaintiff.
Bbace and Bubgess, JJ., concur.