286 S.W. 456 | Tex. | 1926
Lead Opinion
delivered the opinion of the court.
On July 25, 1923, plaintff in error filed suit in the District Court of Dallas County, Texas, against defendant in error on a beneficiary certificate issued by the defendant in error to her deceased husband, James F. Bailey, in favor of plaintiff in error as beneficiary. The case was tried before the court without a jury on October 9, 1923, and judgment was rendered in favor of plaintiff in error for §1,514.66, with legal interest thereon from January 25, 1923, and costs. On appeal the Court of Civil
The essential and controlling facts agreed upon in the trial court are fully set out in the opinion by the Court of Civil Appeals, not yet reported (277 S. W., 782), and will not be repeated.
Mr. Bailey was a member in good standing in defendant in error’s order up until midnight of May 31, 1922. Failing to pay his May assessment during the said month of May, he became automatically suspended. He could only become reinstated and entitled to the protection and benefits of his certificate by complying with the requirements contained in said certificate and the by-laws of the order.
It is well settled that fraternal benefit societies have the right and authority to enact by-laws and to make such by-laws, as was done in this case, a part of the contracts of insurance, and that the same are binding upon the insured. Wirtz v. Sovereign Camp, W. O. W., 114 Texas, 471, 268 S. W., 438, and authorities therein cited.
Under the by-laws of the order, Mr. Bailey could have become reinstated within ten days after default by paying all arrearages and dues, and being in good health at the time of such payment and so remaining for thirty days thereafter. Bailey paid his May assessment by posting a money order on June 10, 1922, the tenth day, but said money order was not received by the local clerk at Fort Worth until June 12, 1922, the- twelfth day, two days after the expiration of the ten-day period. The dues, therefore, were not paid within the ten-day -period, because the payment was of the date when received by the agent of the defendant order, in this instance the clerk of the local camp at Fort Worth. The rule of contracts that when an offer is made by mail and accepted by mail, the acceptance is effective and the contract binding when the acceptance is dropped in the post office or mail box, has no application here. The rule of contracts is based upon the theory that the person making , such an offer constitutes the mail service as his agent by adopting
Therefore, the ten-day provision of the by-laws has no application in this case; and Bailey’s reinstatement and plaintiff in error’s right to recover depend solely upon that provision of the by-laws permitting reinstatement after the ten-day period had expired and before the expiration of three months, which right is determined by Sec. 66, Subd. (b) of the by-laws above referred to. In this case, Bailey paid his. arrears and dues after the ten-day period had expired. Upon receipt of said arrearages and dues on June 12, 1922, the defendant order did not have to accept same, and Bailey had no absolute right to make such payment after the expiration of the ten-day period without also-furnishing a written statement and warranty of good health and non-use of intoxicants as provided in Sec. 66, Subd. (b) of said by-laws.
This brings us to a well settled rule in the law of insurance, which is as follows:
When, under a policy of insurance, a forfeiture has been worked and the insurer has knowledge of the existence of facts which constitute the forfeiture of the certificate or policy, any unequivocal act done after, the forfeiture has become absolute, which recognizes the continued existence, of the certificate or policy, or which is wholly inconsistent with a forfeiture,' will, constitute a waiver thereof. See Calhoun v. The Maccabees (Com. App.), 241 S. W., 101, and cases therein cited.
The discussion of this question in that case by Presiding Judge McClendon of the Commission of Appeals is thorough and wholly satisfactory. We do not repeat it, but merely make reference to said opinion and the authorities therein cited.
Under the rule announced above, in order to bring about a waiver of the forfeiture, three conditions of facts are necessary.
First. The insurer must have knowledge of the facts constituting the forfeiture of the certificate.
Second. The forfeiture must be complete and absolute.
Third. There must be some unequivocal act on the part of the insurer which recognizes the continuance of the policy, or which is wholly inconsistent with the forfeiture.
The forfeiture became complete and absolute under the certificate and policy when Bailey failed to pay his dues during the month of May, 1922, and when he did not make payment within ten days; and he could only be reinstated by complying with the requirements of a written warranty, or by a waiver of the forfeiture. '
This brings us to the question as to whether or not there was an unequivocal act by the insurer recognizing the existence of the policy and benefit certificate, and which was wholly inconsistent with the forfeiture. The defendant order accepted the dues and premium upon Bailey’s certificate on the 12th day of June, 1922, and accepted same without requiring a written warranty, a thing they were not forced to do. Nothing could be more inconsistent with the forfeiture of an insurance policy or certificate than the acceptance and retention of the premium paid for the protection afforded by the policy, as was done in this instance. In. the case of Supreme Lodge v. Wellenvoss, 119 Fed., 671, 56 C. C. A., 287, Judge Day, while a member of the United States Circuit Court of Appeals, wrote concerning forfeiture of insurance policies as follows:
“Conceding the right of a society to pass a judgment of this character, which shall work a forfeiture of the contract of insurance, as well as terminate the social and fraternal rights of the member, are there no limitations upon the exercise of this right ? Forfeitures are not favored in the law, and he who would insist upon the exercise of the right must act in strict accordance with
The time has not come in this State when an insurance company, whether fraternal or otherwise, can, with knowledge that a policyholder has forfeited his right of protection, voluntarily accept and retain the premium which the insured has paid, as was done in this instance, without also keeping in full force and effect the liability of said insurance company under said policy. Particularly is this true where the premium is retained with the knowledge of facts constituting a forfeiture and returned only after the death of the insured. One who places his bets after the dice are thrown is sure to win. It is too evident for words that had Bailey lived no forfeiture would have been "claimed or sought. But Bailey died, and the premiums were returned. Insurance companies cannot so gamble on the lives of their policyholders. Having accepted the wager in accepting the premiums, the order was bound by the consequences.
The law, as we have stated it, is supported by the decisions of this court (see Calhoun v. The Maccabees, supra, and the cases therein cited), and by the Courts of Civil Appeals at San Antonio and at Waco (see The Maccabees v. Johnson, 273 S. W., 612, and Sovereign Camp W. O. W., v. Hines, 273 S. W., 927). We are inclined to follow the law as expressed in those cases.
This case clearly illustrates the rule which we have laid down. If Bailey had paid the money within ten days after he became automatically suspended, the defendant Order, by accepting it, could not have been said to have committed an unequivocal act inconsistent with the forfeiture, because it would have had no option but to accept the money. But after said ten-day period, it did not have to accept the money without the written warranty provided in the by-laws concerning good health and the non-use of intoxicants; and when it did accept the money with knowledge of the forfeiture, it waived the requirement of good health at the time of reinstatement, and this also necessarily waived the requirement that the insured remain in good health for thirty days thereafter. See Sovereign Camp, W. O. W., v. Hines, supra. Therefore, in this instance, we hold that the defendant Order clearly waived the forfeiture.
We are of the opinion that the judgment of the Court of Civil Appeals should be reversed and that the judgment of the District Court should be affirmed, and it is so ordered.
We concur in the opinion herein rendered.
W. H. Ward, Special Associate Justice.
John D. Cofer, Special Associate Justice.
Rehearing
ON MOTION FOR REHEARING.
delivered the opinion of the court.
Attorneys for defendant in error have filed an able motion for rehearing, which shows care and diligence in the treatment and discussion of the proposition involved. However, the Court believes that able counsel fail to grasp the material point upon which the decision in this case rests.
The argument on rehearing treats at length the supposed fraud on the part of James H. Bailey. The Court does not conceive that the issue of fraud is presented by the record. It is well settled that where fraud is relied upon for relief from the obligations of a contract, it must be specifically pleaded. We have examined the trial answer in this case and do not find the defense presented. However, we are of the opinion that the facts and circumstances of this case in no wise support any fraud on the part of Bailey. Bailey simply after his certificate had lapsed tendered the association a premium, which they had the right to accept or reject. No fraud can be imputed to such act.
Defendant in error’s argument on the question of waiver does
The decision of this Court has no effect or bearing upon the validity of Art. 4846, Revised Statutes, 1925. This article has reference only to waiver of provisions of the certificate while in force and notice of provisions of the laws of the order to members of the defendant order. It has no reference to waiver of a forfeiture where no certificate is in force, and the party sought to be held to a knowledge of the laws of the order is no longer a member of the order. The statute by its terms has no application where no certificate is in force. After providing that no officer or agent may waive any provisions of the law of the order, or at least providing that such a stipulation in the certificate of insurance shall be valid, the statute provides with reference to said laws :
“And the same shall be binding on the society and each and every member thereof and on all beneficiaries of members.”
When Bailey’s certificate became forfeited, and he ceased to be a member, the statute no longer had any application to his case, and he was no longer bound by the conditions of his certificate, except in so far as his right to enforce reinstatement was concerned. When the company accepted his premium unconditionally, they in effect entered into a new contract of insurance with him. Suppose the properly constituted agent of a fraternal benefit society would enter into a new contract of insurance with a person who was not and had never been a member of the order, and suppose that in this contract the regular provisions of the certificate were not inserted, and the clerk or person writing the certificate would waive and leave out some of the ordinary provisions not required by law, but usually inserted in the certificates, could it be contended that the fraternal order would not be bound, simply because their by-laws and constitution provided that the clerk or agent should have no authority to waive such provisions? The insured, not being a member of the order, would in no way be bound by the by-laws of the order unless he agreed to be, and the waiver of the clerk would bind the company. Under the statute the by-laws and constitution are binding only upon the members of the order. So, after a policy has lapsed, and a forfeiture has been worked,
The application of the statute arises in those cases where, while the certificate is in full force, a local clerk relieves the insured from performance of certain conditions and requirements of the policy. In such a case the insured is a member of the order, his certificate is in force, he is bound by the provisions thereof, and he is charged with notice of the limitation upon the authority of the clerk. Such a case is the Jackson case, 264 S. W., 289, and other cases cited by defendant in error upholding and enforcing the statute. It is settled by those cases that the statute permits the placing in a certificate a provision prohibiting the waiving of conditions and requirements of policies and certificates in good standing. But none of these cases are in conflict with the decision by the Commission of Appeals in the case of Calhoun v. The Maccabees, 241 S. W., 101, and the decision in the Supreme Lodge v. Wellenvoss, 119 Fed., 671 (C. C. A.), holding that after a forfeiture any unequivocal act recognizing the existence of the policy, or inconsistent with the forfeiture, waives not the provisions of the policy, but waives the forfeiture itself.
It is not a case, as attorneys seem to think, of a waiver of conditions and stipulations in the policy or certificate. The policy or certificate has ceased to exist after the forfeiture. And when the forfeiture has itself been waived, then the status is the same as if there had been no forfeiture, and the conditions and requirements of the certificate concerning forfeiture have no application.
It has become trite for a court to say that “forfeitures are not favored in law.” But the statement is particularly applicable here. And the law will never recognize one where the party claiming the forfeiture has not itself at every stage recognized it and insisted upon it. And where, after the forfeiture has become absolute, the party with knowledge of the forfeiture takes some step inconsistent with the forfeiture, the law says there is no forfeiture.
It is not a question of waiver of stipulation of the certificate, nor is it a question of estoppel. But it is a question of the law refusing to recognize and enforce a forfeiture which the insurance company itself by the acceptance of the premium — an act wholly inconsistent with the forfeiture — has failed and refused to recognize.
The able attorneys for defendant in error state that the officers of the sovereign camp did not know of Báiley’s suspen
After the ten-day period the defendant order, with full knowledge of the forfeiture imputed to them by law, could not accept the premium on Bailey’s policy without a health certificate, without recognizing the continuation of the policy and the waiver of the forfeiture.
This rule is too clearly established to require further statement. The motion for rehearing should be overruled.