Johnson v. Hartford Life Insurance

DISSENTING OPINION.

ELLISON, J.

— The following was prepared as the opinion of the court, but my associates not being satisfied therewith, prepared, in opposition thereto, that part of the opinion on the subject of abandonment, in Wayland v. Western Life Indemnity Co., and rest their decision in this case on what is said by them in that case.

*277This action is based on a certificate of membership and life insurance in an assessment company, issued to James T. Johnson on the first of November, 1888, for the sum of five thousand dollars, payable to his wife out of a mortuary fund made up by assessment of members. Johnson died on the 15th day of January, 1907. After issuing the certificate, the company changed its name to that of Hartford Life Insurance Company, by which name it is sued. The company refusing to pay the amount of the insurance, this action was instituted by the widow. The company •claims that Johnson failed to pay an assessment due in June, 1902, and thereby and by force of the express provisions of the contract, his insurance ceased at that time. It likewise claims that Johnson abandoned the contract and acquiesced in its termination. The widow claims that there was an excess surplus in the mortuary fund and that the assessment was unnecessary, unauthorized and void, and that a forfeiture could not follow its non-payment. A peremptory instruction to find for defendant was refused and judgment rendered for plaintiff.

The certificate of insurance was issued in consideration of Johnson paying certain annual dues and all mortality assessments for the maintenance of a mortuary fund, and dues for the creation of a safety fund. The payments of mortality calls, or assessments, were to be made quarterly, on the first day of March, June, September and December of each year. Thirty days’ notice of each assessment was to be given the assured, and it was agreed that the certificate was issued on “the express condition that if either the annual dues, mortality calls, or safety fund deposit, are not paid to said company on the day due, then this certificate shall be null and void and of no effect, and no person shall be entitled to damages or the recovery of any moneys paid for protection while the certificate *278was in force, either from the company or the trustee of the safety fund. And a failure to make the stipulated payments shall absolutely terminate the member’s liability therefor.”

There were also stipulations contemplating applications for reinstatement by the member who had lapsed.

It was further stipulated that the following part of the application was made a part of the contract: “If I or my representatives shall omit or neglect to make any payment as required, in respect of amount, place and time of payment, by the condition of such certificate, then the certificate to be issued hereon shall be null and void, and all moneys paid thereon shall be forfeited to said company.”

Johnson paid his dues and all quarterly assessments from his entrance as a member in 1888, until that due the first day of June, 1902, a period of near fourteen years. He received proper notice of the June assessment of $74.55, but failed to pay. But it appears that the notice sent to Johnson complying with the contract in that respect, had a statement at the close thereof that if payment of the assessment due the first of June was not received at the home office by the 5th of June, a second notice would be sent by registered letter, giving until June 20th to make the payment. It is then stated that: “After June 20th, the limit allowed for payment under the registered notice, the company reserves the right to require a medical examination as a condition of reinstatement.” This second notice was sent to Johnson giving him until the 20th of June. He paid no attention to it until the 19th, one day before the limit would expire and too late to get the payment to the home office in time. Then his son G-arland wrote the following letter (which he afterwards approved) to the company: “My father and I both have been out of town and did not get to attend to payment due on policy 109854, Hartford *279Life & Annuity Insurance Co., on life of Jas. T. Johnson. I see our time expires tomorrow. What steps can we take now to make payment and have it reinstated. Father is in perfect health. I am very sorry indeed for the delay, hut it could not possibly be avoided. Kindly let us know by return mail.”

In due course, June 24, the company answered this letter, again extending the time, until July 5th. It reads: “As you wrote us before the last day of grace expired for payment of the June call, policy No. 109854, we are warranted in extending the time of payment, and have given you until July 5th to renew the policy. If, therefore, you wish to remit us $75.55 on or before that date, the policy will be kept in force.”

But again Johnson failed to pay and neither he nor the company had any further correspondence. Relations between them there ended and nothing connected therewith transpired until subsequent to his death, near five years thereafter. He had been in regular receipt of semi-annual dividends on his certificate down to three months before his default. Though payment of dividends to him thereafter ceased and • though no further assessments were ever made against him, he never uttered a complaint nor gave a sign that he considered himself any longer a member of the company, or connected with it, contractually or otherwise. Is it not manifest to any reasonable man that Johnson considered his connection with the company had ceased? He knew (his contract so informed him) that the whole scheme of insurance which he had been enjoying for fourteen years by paying each year his quarterly assessment, was based upon assessments of members scattered throughout the country; that each one’s security — the payment of the insurance to each one’s beneficiary — depended upon the payment by the others of their assessments. And he must necessarily have regarded his ceasing to pay, as ending his con*280nection with the company. And snch is the law; it is the law even though the assessment which was not paid was not authorized by the contract, for that cannot control the effect of an abandonment. [Mutual Life Ins. Co. v. Hill, 193 U. S. 551; Mutual Life Ins. Co. v. Phinney, 178 U. S. 328; Mutual Life Ins. Co. v. Sears, 178 U. S. 345; Ryan v. Mutual Reserve Fund, 96 Fed. 796; Smith v. New England Mut. L. Ins. Co., 63 Fed. 769; McDonald v. Grand Lodge, 21 Ky. Law, 883; Lone v. Mutual Life Ins. Co., 33 Wash. 577.] In the cases cited from the Supreme Court of the United States the opinions are by Justice Brewer. In the first of these, according to the statement of facts, at page 551, the assured took out insurance and paid one premium. Notice of the second one was given, and he failed to pay. .He was not asked, nor ■did he pay, any succeeding premiums for four years, when he died. The plaintiff in that case relied upon the fact that no notice of forfeiture was given. On the other hand, “the defendant relied upon the nonpayment of the premiums other than the first, and an abandonment of the contract.” The defendant was a resident corporation of the state of New York, while the assured resided in the state of Washington and-took his insurance there. The laws of the state of New York required a notice of forfeiture to be given the assured before one could.be effected. The court held that even though the New York law applied and a forfeiture could not be taken without giving notice to that effect, yet the assured had abandoned the contract by his continued failure to pay the annual premiums. At page 559 of the report, it is said that: “Courts have always set their faces against an insurance company which, having received its premiums, has sought by technical defenses to avoid payment, and in like manner should they set their faces against an effort to exact payment from an insurance company when the premiums have deliberately been left *281unpaid.” The court then cites and.approves Lone v. Ins. Co., supra.

. In the latter case the assured paid one premium and lived twelve years without paying any more, and, as in the former, his representatives contended that thirty days’ notice of forfeiture should have been given as required by the New York statute. The court held that though that were true, yet the assured had acquiesced in the company’s position, paid no further premiums and could not recover. In the course of the opinion it is said that: “We are satisfied that the thought never occurred to Rex (the assured) during his life time that he had a claim against the company on the policy which had been issued so many years before, or, if he did, after the lapse of any appreciable time, it was a dishonest thought, for he knew that he had not performed the duties which devolved upon him under the contract, and that he had no rights thereunder; and there seems to be no just reason why his administrator should demand rights which he had virtually waived.”

In McDonald v. Grand Lodge, supra, an assessment company, in 1882, issued a certificate of insurance on the life of McDonald payable to his wife as beneficiary. In January, 1886, he surreptitiously left home and his wife paid the assessments called for between January and October. But at the latter month the company refused to receive future assessments and notified her of his suspension and failed -to notify her of any subsequent assessments. Nine years thereafter McDonald died and the beneficiary brought an action on the certificate. The court held that having acquiesced in the suspension, without further effort, for nine years, the claim could not be asserted.

In Mutual Life Ins. Co. v. Phinney, supra, the assured paid-the first year’s premium'and failed to pay for two years, when he died. A short time before the second premium became due, he said he could not *282pay and asked the agent if he would take his note for it. This was refused. Pour weeks afterwards and after the premium was due, he informed the agent that he had the money and could pay. The agent informed him that now, he would have to get a certificate of health. The assured said he could not, as he had been rejected by another company. A few months afterwards the agent requested the assured to let him have the policy to use in canvassing. The assured, remarking that it had lapsed, gave it to him. The assured died in less than two years and it was held that he had abandoned the contract.

In Smith v. New England Mut. L. Ins. Co., supra, the policy was dated May 24, 1890, and the assured paid the two first annual premiums. The question was whether he paid the third, due in 1892, or was excused from doing it. He died November 22, 1893. The company treated him as in default for failure to pay and refused a subsequent offer to pay, because, as it claimed, the policy had lapsed. Nothing further transpired, and he died in less than two years. His widow was allowed to recover the paid-up value of the policy, under the provisions of a statute, but was denied the right to a judgment for the amount insured, on the ground of his acquiescence in the lapsing of the policy. The court said: “The assured acquiesced in the company’s position- — that his policy had lapsed — and accordingly neither paid nor tendered subsequent premiums, but treated the policy as a security simply for the interest acquired under the statute. Had his life been continued the claim now made would never have been urged or thought of; his early death alone suggested it. Had he lived ten years longer without payment or tender, this claim would then have been as reasonable as it is now.”

In Ryan v. Mutual Reserve Fund, supra, the assured took out a benefit certificate in 1886 and paid his assessments until February, 1898. On the 26th of *283March, 1898, he wrote the company he would not pay that assessment because of its increased amount, and would “quit.” In less than six months thereafter he •died. The court held that notwithstanding the company had no right to increase the assessment, yet he abandoned the contract instead of contesting the assessment. That there were two modes of action open to him, to contest the assessment he considered to be illegal and unjust or to abandon the contract, and that he chose the latter. The court, in this connection, said, “the case is not one wherein the company is seeking, after the death of the insured party, to establish a right to declare the contract of insurance forfeited by reason of a failure to meet some of its requirements; but the question is whether the insured did not, during his life time, affirmatively put an end to the contract, so that it had, by his action, been terminated before his death. ’ ’

The question has arisen in the courts of this State and has been answered in harmony with the foregoing cases. [Glardon v. Supreme Lodge K. of P., 50 Mo. App. 45; Miller v. Grand Lodge, 72 Mo. App. 499; Lavin v. Grand Lodge A. O. U. W., 112 Mo. App. 1; Bange v. Supreme Council Legion of Honor, 128 Mo. App. 461; McGeehan v. Ins. Co., 131 Mo. App. 417.] In the first of these there was a void expulsion and forfeiture. The member failed to pay an assessment of July 1, 1882, and died in less than two years. In his life time he made no objection and took no steps questioning the act, and it was held that he acquiesced and the beneficiary could not recover. It was stated in the opinion (page 57 of the report) that an expelled member owed a duty to Ms fellow members to at least make known his objection to the measures taken, against him. That the rights of a member are only contractual rights and his being illegally cut off from membership is no more than a breach of contract which the member may, at his election, affirm or disaffirm. It was *284stated (pp. 58, 59) that a member cannot rest indefinitely under his illegal treatment without making protest, and if he does, he disables his beneficiaries to deny acquiescence and recover against the company a sum the paying members must satisfy. It was also said (p. 59) that certificates of insurance, like in that case, involved a scheme of mutual insurance (and so does the one in this controversy) under which the living members contribute a certain sum to make up a fund for the benefit of the widow and children, or other beneficiary, of a deceased brother. The court, speaking through Judge Thompson, said (p. 59) that: “There is an obvious injustice in requiring them to make a contribution to pay such a benefit to the family of a. deceased member, who has for a long time ceased himself to make any contribution on his part; and this is so, although he may have ceased in consequence of a void suspension or expulsion; which he has taken no steps to resist or disaffirm, but in which he has passively acquiesced. We take the just rule to be that, even in the case of a void expulsion or suspension, the expelled’ or suspended member is under a duty to his co-contributors to affirm or disaffirm the act of expulsion or suspension within a reasonable time, and in some distinct manner under the circumstances; and that where he takes no steps of any kind to secure his reinstatement, allows dues which had accrued and were payable prior to the date of his expulsion to remain, unpaid, and neither tenders such dues nor any subsequently accruing dues, he must be taken to have acquiesced in and consented to the sentence of expulsion or suspension.”

In the second of the last cited cases the same rule is stated by Judge Bond.

In the third of the last cited cases, Judge Goode, writing the opinion for the St. Louis Court of Appeals, approved of the cases to which we have just referred. The facts were that a member took his certificate of *285insurance in 1899. He failed to pay the assessment for September, 1900, and died in about ten months thereafter. He was suspended upon his failure to'pay, and to the day of his death did not pay, or offer to pay, any monthly assessments; nor did he take any steps to question his suspension or to show his dissatisfaction therewith. It was said (p. 14) that: “It was incumbent on “a member of a benefit society, when unlawfully suspended or expelled, to act thereafter as a member, if he wished to enjoy the rights and privileges of one; that he might not behave as though the rules of the order were no longer binding on him, perform none of his duties, pay none of his •dues and assessments, and still retain the same- privileges and benefits he would enjoy if he was carrying-his share of the society’s burdens. A suspended member must either acquiesce in his suspension or protest against it — must keep his insurance cum onere. If he ■does not protest formally and by words, he must treat his membership as still subsisting, not alone for the purpose of giving rights, but for the purpose, as well, •of imposing burdens. He cannot elect to regard it as at an end, so far as the obligation to pay dues and assessments and comply with the other rules of the •order is concerned, but in existence as far as his certificate of insurance is concerned. He must treat himself as in the order for all purposes or as out of it.”

In the fourth case, the rule was again stated by “the St. Louis Court of Appeals in the following language, at page 475 of the report; “It is the doctrine •of this court, as well as of the tribunals of other jurisdictions, that by remaining silent after he is notified •of a void expulsion or suspension, a member of a fraternal society will forfeit his rights in the society, including his insurance. This is because the existence •of such associations depends on the prompt payment ■of dues, and they would be destroyed if members were ■allowed, after a suspension technically invalid, to re*286tain their insurance without paying assessments. As has been pointed out in other opinions such a rule would put a suspended member on a better footing than an active one, because the former would continue to enjoy his insurance without paying for it; whereas the latter would pay. Bange died in March, 1905, four or five months after his suspension and seven months after he had paid any dues. If he received notice of the action of the council and did nothing if the premises, nor treated himself as a member of the order and bound to contribute to its burdens no recovery can be had on his benefit certificate.”

The last of these cases arose in this court. It there appears that the assured had a New York policy • of insurance issued to him in that state while he was a resident thereof, on which he paid premiums from 1883 to 1895, when he ceased further payments for a period of eight years. It was the law of New York that there could not be a forfeiture of a policy without first giving thirty days’ notice of the intended forfeiture, and as this was not done it was contended that the policy was a subsisting obligation and that the assured was entitled to the amount insured less the premimums he had not paid. But it was held that notwithstanding the provision as to forfeiture, the fact that the assured ceased to pay premiums for a period of eight years, showed an abandonment. We said that: “It must be conceded that so far as plaintiff’s rights are concerned he was at liberty to abandon and rescind the contract. He did not merely neglect a single payment of premium, nor several, but he abandoned all pretense of recognition of the contract for a long series of years. There is no law nor policy to prevent him, defendant consenting thereto, from giving up his contract.”

Furthermore, the propriety and justness of the rule, thus repeatedly announced, having recently received the endorsement of the Supreme Court of this *287state, is not open for further discussion. [Konta v. St. Louis Stock Exchange, 189 Mo. 26.] That case involved the right of membership of one claiming to be a member of a stock exchange, whose place had been forfeited and he expelled for alleged non-payment of dues. At page 39 of the report, the court said: “But even assuming, as contended by plaintiff, that Mr. Konta was a member of the St. Louis Stock Exchange, and that his expulsion was undoubtedly illegal, as it certainly was if he was ever a member of the exchange, he was bound, within a reasonable time after obtaining knowledge of such expulsion, to assert his rights; otherwise, he will be deemed to have consented to such expulsion, however illegal or irregular it may have been. ’ ’

The court then proceeded to approve Glardon v. Supreme Lodge Knights of Pythias, supra, and then added that:

“In this case plaintiff ascertained through his agent, Mr. Ten Broek, in April or May, 1901, that he had been expelled from the St. Louis Stock Exchange for non-payment of dues. He had allowed dues to accrue which were payable on January 1, 1900, July 1, 1900, and January 1,1901. He has at no time tendered these dues, nor any dues which accrued subsequently and prior to the institution of this suit, to-wit, dues payable July 1, 1901, and January 1, 1902. Nor did he take any steps whatever to set aside his alleged illegal expulsion until June 9, 1902.”

Let it be conceded that an assessment insurance company conducts its business by irregular and illegal methods, and in addition to that, illegally suspends a member and forfeits or terminates his policy. Does it follow that the member is to receive free insurance during his life? If the insurance on the life of a man is wrongfully terminated by the company when he is twenty-five years old, and he lives to the age of seventy five, may he pay no more and, without protest, sit idly *288by during the intervening fifty years, insured all tbe while, and leave a live policy at his death? If. he may for five years, as in this case, he may for fifty, as in the supposed case. New members come into these associations and old ones go out by death, lapses, etc. The new ones come in on the faith of the liabilities and present business appearance of the company. Can a member be permitted to allow the termination of his policy to continue without protest, or objection in any form, thereby inducing persons to become members on the faith that he has no prospective claim on the company, and yet his representative, years afterwards, compel these members to pay the policy the same as if nothing had occurred? The deceased was a physician — a man of intelligence — he knew the basis upon which the company was founded, its mode of insurance and manner of collecting funds to pay death losses. He knew that he was dropped from membership of the company, and never asked for reinstatement. It was his duty to act in accord with the natural thought and bent of any resonable man, and have taken some step in opposition to this action, if he meant to look upon the insurance as a subsisting contract. Not having done so, it is inconceivable that he considered himself connected with the company at the time of his death.

Plaintiff has found no way to meet the foregoing suggestions except by the bare assertion that Doctor Johnson had a right to remain passive; and further, that acquiescence or abandonment was not pleaded and that no instructions were asked on that head. We have already shown that, in the circumstances here involved, passivity is acquiescence. The answer of defendant does especially plead the acquiescence of Johnson for five years up to his death. There was no dispute in the evidence on this point and the defendant asked the only instruction it could ask consistently with the law as we have- stated it, and that was a per*289•emptory direction to the jury that plaintiff had not made a case on the evidence and conld not recover. This the court refused, and, I think, erred in so doing.

I deem the decision of the majority in conflict with Konta v. St. Louis Stock Exchange, 189 Mo. 26; and the following decisions of the St. Louis Court of Appeals: Glardon v. Supreme Lodge K. of P., 50 Mo. App. 45; Miller v. Grand Lodge, 72 Mo. App. 499; Lavin v. Grand Lodge A. O. U. W., 112 Mo. App. 1; Bange v. Supreme Council Legion of Honor, 128 Mo. App. 461. The case should therefore be transferred to the Supreme Court for final determination.