Opinion
No. 31861.
October 28, 1935.
1. INSURANCE.
Local financial secretary of fraternal insurance society is without authority to waive default in payment of premiums by acceptance of premiums after default.
2. INSURANCE.
Acceptance of past-due premium after loss without knowledge of loss does not revive previously forfeited or suspended policy.
3. INSURANCE.
Waiver of default for failure to pay premium on benefit certificate must be by agent empowered to waive and before death, or, if after death, waiver must be with knowledge of death, which knowledge must be that of authorized agent.
4. INSURANCE.
Acceptance of past-due premiums on benefit certificate by principal office of fraternal insurance society without knowledge of previous death of insured held not waiver of provision of certificate that nonpayment of premiums, when due, would result in suspension of insured, rendering certificate void.
APPEAL from the circuit court of Prentiss county; HON. THOS. H. JOHNSTON, Judge.
C.R. Bolton, of Tupelo, for appellant.
Not only was the member actually suspended by the financial secretary, but under the terms of the beneficiary certificate and of the constitution laws and by-laws, nonpayment worked automatic suspension.
Failure of a member of fraternal benefit order to pay monthly dues works automatic suspension where constitution laws and by-laws made part of contract so provided.
Sovereign Camp, W.O.W., v. Cox, 127 So. 847; Brotherhood of Railroad Trainmen v. Bridges, 144 So. 554.
Under the terms of the certificate held by Mr. Muse and the facts as clearly disclosed in this record, Mr. Muse was unquestionably and actually suspended after his failure to pay the assessment due for July on or before the last day of the month and his certificate became of no effect.
The proof introduced in this effort was to the effect that the financial secretary permitted the members of the Booneville camp to pay their assessments after the last day of the month and any time up to the time he sent to the Sovereign Camp his report for the previous month's collection, and reported such collections as regularly made and without any information to the Sovereign Camp that such collections were made after the last day of the previous month.
It was held by this court in the case of Sovereign Camp, W.O.W., v. Hynde, 99 So. 259, that such action or custom on the part of the local camp or the clerk thereof (officer now named financial secretary) was not binding upon the Sovereign Camp, Woodmen of the World and did not waive the provisions of the certificate and constitution laws and by-laws.
Section 109 (g), Constitution Laws and By-laws of the Society; Section 5249, Code of 1930; Sovereign Camp, W.O.W., v. Valentine, 155 So. 194, 165 Miss. 707.
Every material provision with reference to reinstatement was wanting in this attempt. Mr. Muse was not in good health at the time, was never in good health thereafter, and died before the thirty day period elapsed, and there can be no sound reason given for the reinstatement becoming effective.
There could have been no waiver on the part of the secretary of the association from the receipt of the dues, because the record shows indisputably that the dues were not sent by Mr. Rees, the local financial secretary, until September 15th, which was five days after Mr. Muse was dead.
C.L. Sumners, of Corinth, for appellees.
The acceptance of a premium after the time when it should have been paid is a waiver of forfeiture.
Sovereign Camp, W.O.W., v. Rhynek, 171 Miss. 687, 158 So. 472; Wilson v. Sovereign Camp, W.O.W., 154 So. 28, 179 La. 372.
The financial secretary of a fraternal or mutual insurance association, appointed by the association, and delivering policies and collecting and remitting premiums and assessments, is an officer of the association and its agent, and not an officer of the local camp.
The financial secretary is the agent of appellant under the definition of an insurance agent under section 5196 of the Mississippi Code of 1930.
If there were any forfeiture under the policy of F.H. Muse by reason of his failure to pay a premium by a certain date, the same was waived not only through the financial secretary, but directly by the home office.
AEtna Ins. Co. v. Lester, 170 Miss. 353, 154 So. 706; Insurance Co. v. Gibson, 72 Miss. 58, 17 So. 13; Guaranty Accident Co. v. Railroad Co., 97 Miss. 165, 52 So. 787.
The burden of proof is on the insurer to show a forfeiture under the policy contract.
Grangers' Life Ins. Co. v. Brown, 57 Miss. 308, 34 Am. Rep. 446; American Ins. Co. v. Crawford, 110 Miss. 493, 70 So. 579; Davis v. Gulf States, 168 Miss. 161, 151 So. 167; Jefferson Standard Life v. Jeffcoats, 164 Miss. 659, 143 So. 842.
We contend that, leaving out all questions of waivers, the appellant not only failed to prove a forfeiture, but by the terms of its own constitution and by-laws that Fred H. Muse was never delinquent, and that if he had not paid the last two assessments he would still be in good standing and never suspended.
Sections 5234 and 5249 of the Code of 1930, are in violation of section 1, section 87, section 90 (s) and section 144 of the Constitution of 1890, and are unconstitutional.
27 R.C.L. 912, sec. 7; Planters Bank v. Black, 11 S. M. 43; 6 R.C.L. 160, sec. 160; Quintini v. Board of Aldermen, etc., 64 Miss. 483, 1 So. 625; City of Jackson v. Deposit Guaranty Bank Trust Co., 160 Miss. 752, 133 So. 195.
E.C. Sharp, of Booneville, for appellees.
We think this case is controlled by the case of Sovereign Camp, Woodmen of the World v. Rhyne, 158 So. 472. The policy in the Rhyne case was issued by the same association as the one in the present case and is practically, if not identically, the same.
When a party relies upon a time provision in a contract as being of the essence of that contract, it is no more than just that when he thus calls for strictness in adjudication he should show that he has been as definite and certain in his contract stipulations in respect to the time relied on as he is in the strictness to which he seeks to hold the other party in relation thereto.
Love Petroleum Co. v. Atlantic Oil, 169 Miss. 259, 152 So. 829, 153 So. 389.
If the order seeks to avoid its liability by requiring of its members technical exactness in the payment of their dues, this court will exact of it technical exactness in its moral duty towards its membership, to the end that none may be misled.
Morgan v. Independent Order, etc., 90 Miss. 864, 44 So. 791.
The settled rule in this state is that the acceptance of a premium after the time when it should have been paid is a waiver of forfeiture which might have been enforced because it was not paid when due.
Continental Life Ins. Co. v. Clanton, 149 Miss. 289, 115 So. 569; Section 5196, Code of 1930.
It is shown by the record that Rees collected and remitted the premiums for all holders of certificates issued by this company in his community and delivered the policies forwarded to him by the home office, whether the parties to whom they were issued were members of the association or not.
Being the agent of the association it cannot now escape liability by attempting to deny the authority of the agent, and is estopped by the knowledge of Rees.
Germania Life Ins. Co. v. Bladin, 100 Miss. 660, 56 So. 609; Big Creek Drug Co. v. Stuyvesant Ins. Co., 115 Miss. 333, 75 So. 768; Agricultural Ins. Co. v. Anderson, 120 Miss. 278, 82 So. 146; Mutual Life Ins. Co. v. Vaughn, 125 Miss. 369, 88 So. 11; New York Life Ins. Co. v. Smith, 129 Miss. 544, 91 So. 456; Hartford Fire Ins. Co. v. Clarke, 154 Miss. 418, 122 So. 551.
The great supervening principles in the light of which they are to be construed, that as against forfeiture strict construction must be had, so as to prevent a forfeiture if reasonably possible, and that in dealing with these benevolent orders liberal construction in favor of the insured is to be indulged applied here, satisfy us that appellee is liable.
Murphy v. Independent Order, 77 Miss. 830; Supreme Lodge Knights of Pythias v. Withers, 177 U.S. 260; Morgan v. Independent Order, 90 Miss. 864, 44 So. 791; Hartford Life Annuity Ins. Co. v. Unsell, 144 U.S. 439, 12 Sup. Ct. 671, 36 L.Ed. 496; Phoenix Life Ins. Co. v. Doster, 166 U.S. 30, 27 L.Ed. 65.
The financial secretary having called upon him monthly for seventeen years for the collection of his premium, and the premium having almost invariably been sent in late to the company, the insured and his loved ones had a right to expect that the agent would again call for the premium, and if not paid on the first day of the month the policy would not be forfeited.
Fraternal Aid Union v. Whitehead, 125 Miss. 153, 87 So. 453; Modern Order of Praetorians v. Griffin, 151 Miss. 312, 118 So. 175; 1 Couch on Insurance, page 616; Independent Order v. Wilkes, 98 Miss. 179; New York Life Ins. Co. v. Eggleston, 96 U.S. 572, 74 L.Ed. 841.
Argued orally by C.R. Bolton, for appellant, and by C.L. Sumners, for appellee.
Some years ago appellees' decedent, Fred H. Muse, became the holder of a beneficiary certificate or policy of life insurance in appellant society, paying the dues or premiums upon the monthly payment plan. The policy contained a stipulation in regard to the monthly payment of dues or premiums to the effect that if a policyholder "fail to make any such payment on or before the last day of the month, he shall stand suspended, and during such suspension his beneficiary certificate shall be void." This provision is accompanied by other provisions for the reinstatement of a suspended policyholder, but all these provisions for reinstatement contain the requirement that, as a condition therefor, the member must be in good health. See Brotherhood of Railroad Trainmen v. Bridges, 164 Miss. 356, 144 So. 554.
Mr. Muse had made the payments of his monthly dues up to and including the month of June, 1933, but on or about July 15, 1933, he became seriously ill, from which illness he never recovered, and there was an oversight or neglect in the payment of his July dues, and the dues for that month were not paid to the local collector until August 23, 1933. In the meantime, and on or about August 15, 1933, the local collector, called the financial secretary of the local camp, had made his report to the head office for July, 1933, and in this report had reported Mr. Muse in default and as suspended.
On August 31, 1933, there was paid to the local financial secretary the dues for August, and on or about September 15, 1933, the financial secretary remitted to the head office the two payments received by him during August on the Muse certificate or policy. Five days before this remittance to the head office Mr. Muse had died, the death being on the 10th day of September, 1933, but no information of this fact was sent to the head office of the society, and of this the head office was not informed until the receipt by it of the proof of loss on October 7, 1933. The society declined the claim and returned the dues, collected as aforesaid on August 23d and 31st.
The principal argument in behalf of appellees is that the default in the payment in time of the July dues was waived by the acceptance thereof by the local financial secretary on August 23d. We are precluded from assent to this argument because under a similar policy with the same society we have held in Sovereign Camp v. Valentine, 170 Miss. 707, 720, 155 So. 192, that the financial secretary is without power or authority to waive. The head office may and can waive, but the payments received in August by the local financial secretary were not remitted to the head office until after the death, and, at the time of the receipt of these payments by the head office, that office was without information that the death had already occurred; and thus we are obliged to apply the settled rule that the acceptance of a past-due premium after loss without knowledge of the loss does not revive a previously forfeited or suspended policy. A waiver must be by an agent empowered to waive and before the loss or death, or, if after the loss or death, it must be with knowledge of the loss or death, and this knowledge must be that of the empowered agent. See Stonewall Life Ins. Co. v. Cooke, 165 Miss. 619, 638, 144 So. 217.
At the biennial session of the sovereign camp of appellant society held in July, 1933, there was made an amendment to its by-laws, effective on August 1, 1933, as follows: "Sec. 79 (a) Any member of this Association, except members holding term certificates or members holding certificates providing for automatic premium loans, who has paid all monthly installments due on his certificate for a period of three consecutive years from the date placed thereon by the Secretary of the Association, and who shall thereafter fail to pay the August, 1933, or any subsequent monthly installment of assessment on or before the last day of the month when due, the Association, if his certificate does not provide otherwise, without any action on his part, will pay not exceeding three monthly installments of assessments, including the installment of assessment which the member failed to pay, for such member."
In view of the unavoidable uncertainties which encompass the daily lives of all, the misfortunes of sudden illness, serious accidents, temporary business reversals and disappointments, the hundreds of possible eventualities which may, and often do, prevent the prompt payment of monthly premiums, the just and beneficent provision above quoted ought to be required, by legislative action, to be embraced in every policy of life insurance payable on the monthly premium plan. If this laudable provision had been in force one month earlier, the present policy would have been saved to the family of the insured and would have in fact furnished the protection for which the husband and father had for so many years been paying the premiums.
What we have above stated, in reference to the amendment to the by-laws, whereby had the default occurred in and for the month of August, 1933, the association would have paid the dues for that month and succeeding months, is by way of predicate for a response to the contention of appellees that the default of the monthly premium payment was in fact for the month of August, and not for July. We have searched the record for some substantial ground upon which we might uphold that contention, but we are constrained to say that the whole course of the pleadings, all the evidence, and every document submitted discloses that the unfortunate default was for the month of July, 1933, and much as it is to be regretted, we are without rightful authority to sustain the judgment of the trial court, either upon this or the several other contentions of appellees, all of which we have examined with the candid hope that some of them might be well taken.
Reversed, and judgment here for appellant.