Opinion
No. 24490
Decided April 4, 1934.
Insurance — Fraternal benefit society — New certificate issued for older certificate preserves no rights under old certificate, when — Payment period and nonforfeiture values preserved, when — Insurance contracts construed most favorably for insured.
1. A new benefit certificate issued by a fraternal organization in lieu of an older certificate, which new certificate is accepted by the insured in writing, with all its conditions and provisions, preserves no rights under the old certificate except such as are made a part of the new certificate.
2. Where such new certificate contains the following language, immediately above the official signature of the organization, viz.: "Issued this first day of October, A.D. 1931. Effective as to payment period, and non-forfeiture values as if issued on the first day of October, 1922," the acceptance of the new certificate by the insured makes a new contract as of October 1, 1931, excepting only as to payment period and non-forfeiture values, which are preserved as of October 1, 1922.
3. The fact that the new certificate, under its non-forfeiture clause, contains the provision that: "When all payments required under this certificate have been duly made for a period of three years from the actual date of issue," does not affect such provision. To hold otherwise would be to depart from the law and construe the contract most favorably to the insurer.
ERROR to the Court of Appeals of Stark county.
On the first day of October, 1931, the German Beneficial Union of Pittsburgh, Pennsylvania, issued to Joseph Weinfurtner of Canton, Ohio, a Class D twenty-payment life benefit certificate. After the usual preliminary recital, and immediately above the signatures of the supreme president and supreme secretary of the Union, the following words and figures appear:
"Issued this first day of October, A.D. 1931.
"Effective as to payment period, and non-forfeiture values as if issued on the first day of October, 1922.
This certificate has a rider attached, as follows:
"To be attached to and becoming a part of Certificate No. 28150 issued to Joseph Weinfurtner a member of District No. 44 of the German Beneficial Union of Pittsburgh, which is the principal contract and of which this additional contract is a part."
The sum and substance of this rider is an agreement to pay an additional sum of $50.00 to the beneficiary or insured under the conditions set out in the rider.
The certificate contains the following suicide provision:
"If within three years from the date of acceptance hereof, the insured shall commit suicide, whether sane or insane, the liability of the Union shall be limited to the amount of cash premiums paid on this certificate."
It likewise contains the following non-forfeiture clause:
"When all payments required under this certificate shall have been duly made for a period of three years or more from the actual date of issue hereof, any dating back by reason of accumulated credits not being taken into consideration in the calculation of said period and before the default thereafter occurs in any payment when due the member shall be entitled to any one of the following options: (a), (b), (c) or (d), * * *."
It is unnecessary to state these options, as they are not drawn into the controversy in this action.
There is likewise an automatic premium loan clause contained in the policy, as follows:
"If the member fails to notify the Union of his selection of any one of the above guaranteed options (a), (b), (c) or (d), within thirty days after default in any required payment, the insurance hereunder shall nevertheless not be forfeited but the cash value at date of default shall automatically be applied to the payment of assessments as they successively fall due, and the insurance under this certificate shall be continued in full force for its face amount so long as the cash value remaining to the credit of this certificate suffices to pay a single monthly assessment."
The following acceptance clause appears at the end of the certificate:
"I hereby accept Certificate No. 28150 delivered to me this first day of October, 1931, subject to all the conditions and provisions thereof, together with the conditions and provisions of the constitution and bylaws adopted or hereafter adopted by the German Beneficial Union, I acknowledge receipt of a copy of said constitution and by-laws. I further declare and warrant that I am in sound bodily health and of temperate habits.
"Joseph Weinfurtner.
"Witness: Joseph Weinfurtner, Sec'y."
Joseph Weinfurtner died June 23, 1932, at which time he was admittedly in default for premiums due in March, April, May and June, 1932. After his first delinquency he was notified that he was suspended and his policy cancelled.
On August 16, 1932, Margaret Weinfurtner as beneficiary under this certificate brought suit against the German Beneficial Union upon such certificate, claiming that there was due her as such beneficiary the sum of $1050 with interest at six per cent. from June 23, 1932. She alleged that on or about August 7, 1922, in consideration of the payment of certain assessments, payable monthly, the German Beneficial Union executed in writing a certain membership certificate to her husband, Joseph Weinfurtner, on his life, in the sum of $1000, known as Membership Certificate No. 116069, and she was named as beneficiary therein. That on or about October, 1931, such membership certificate was transferred by the German Beneficial Union to a Class D twenty-payment life certificate No. 28150 in the sum of $1000, in consideration of the payment of assessments in the sum of $2.20 per month, and in which membership certificate there was a provision for the payment of an additional $50 in case of death, and she was likewise made the beneficiary under the provisions of this membership certificate.
The German Beneficial Union answered, admitting its business capacity and the fact that membership insurance certificates were issued to Joseph Weinfurtner, as alleged, that Joseph Weinfurtner died on June 23, 1932, and that proof of death was made by Margaret Weinfurtner, and payment demanded. It denies that Joseph Weinfurtner performed all the terms and conditions of the benefit certificates on his part to be performed, and alleges that he failed to make premium payments as required under the terms of such certificates. It further alleges that he was not in good standing at the time of his death, and denies each and every other allegation of the petition not specifically admitted to be true.
As a second defense it states that the benefit certificate in question provided for certain non-forfeiture provisions and an automatic premium loan only when all payments required under the certificate shall have been made for a period of three years or more from the actual date of issue, and that the certificate was issued October 1, 1931, less than three years before the death of Joseph Weinfurtner; that the payments required under the certificate were not made during such period, and that the benefits of such provision were not available to Joseph Weinfurtner and are not available to the beneficiary under the certificate.
For a third defense the suicide clause is pleaded.
Margaret Weinfurtner, replying to the answer of the German Beneficial Union, denies each and every allegation in the answer except such as admit the truth of the averments of her petition.
Upon these issues, trial was had in the Court of Common Pleas of Stark county, which resulted in a verdict and judgment in favor of Margaret Weinfurtner. This judgment was affirmed by the Court of Appeals of Stark county, and error is prosecuted to this court to reverse such judgment.
Mr. Paul J. Gnau, for plaintiff in error.
Mr. Harry Nusbaum, for defendant in error.
The Court of Appeals found that substantial justice had been done in the case, and for that reason, according to its entry, affirmed the judgment of the trial court. A number of errors are assigned by plaintiff in error, as follows:
First, that the trial court erred in not granting the motion of the German Beneficial Union to direct a verdict in its favor, made at the conclusion of plaintiff's case and renewed at the conclusion of all the evidence.
Second, that the trial court committed reversible error in excluding evidence of arrest for embezzlement and admitted shortage in accounts, as competent evidence to be considered by the jury under the suicide clause of the certificate.
Third, that the trial court committed error in its charge to the jury.
Fourth, that the trial court erred in submitting to the jury the question of the construction of the contract between the insurer and insured.
The suicide defense was abandoned by plaintiff in error, and will not be adverted to in this opinion.
Plaintiff in error claims that the contract in question needed no construction, and we are inclined to the view that such contention is correct.
Plaintiff in error, by some of the verbiage used in the policy, evidently raised some doubt as to the real date of issuance. This is explained by the fact that Joseph Weinfurtner, prior to October 1, 1931, was the holder of Membership Certificate No. 116069, which was surrendered to the German Beneficial Union on the date that Certificate No. 28150 was issued.
The arrangement of the printed record is calculated to mislead wherein it quotes the contents of the rider and uses the language:
"To be attached to and becoming a part of Certificate No. 28150 issued to Joseph Weinfurtner * * *, which is the principal contract and of which this additional contract is a part."
A casual reading of the printed record would indicate that the certificate issued October 1, 1931, was a part of the certificate issued October 1, 1922, and that the October 1, 1922, certificate was the principal contract. This is not true.
No time need be wasted upon the defense that the insured at the time of his death was in default for premium payments, as it is not necessary to the final determination of this case.
The trouble arose in the trial court over the clashing of effective dates. The date of October 1, 1922, was important as affecting the clause in which it was used, and no further. It provided that the payment period and non-forfeiture values should be the same as if the certificate had been issued on the first day of October, 1922. In all other respects the contract of October 1, 1931, is a new and distinct contract. Under this contract, unless and until all the required payments had been made for a period of three years from and after the effective date of issuance, no rights accrued to Joseph Weinfurtner under the certificate. He died a little more than eight months after the certificate was issued. Consequently he could derive no benefit from the three-year clause unless saved by the provision "Effective as to payment period, and nonforfeiture values as if issued on the first day of October, 1922."
If October 1, 1922, is the effective date of issuance, it is necessary to determine the question as to whether or not there was sufficient cash under the table of withdrawal equities to have taken care of the premiums that were in default, for he was in default for four monthly payments, as a matter of fact.
It is insisted that Certificate No. 28150 was issued by the Union for its own benefit. Be that as it may, it was accepted by Joseph Weinfurtner subject to all its conditions and provisions, and constituted his contract with the Union; and unless at the time of his death he had complied with the conditions and provisions of such certificate his beneficiary could have no right of recovery.
We are cognizant of the rule of law requiring policies to be construed most strongly against the insurer, but we find that this policy needs but little, if any, construction. If as a matter of fact there had been a latent ambiguity in the certificate, it was the duty of the trial court to construe the contract and not to leave its construction to the jury. We see no prejudicial error in the trial court's treatment of this phase of the case.
There is nothing in this case calling for the introduction of parol testimony. The certificate constituted the contract between the parties, and nothing could be added to it and nothing could be taken from it by parol testimony as to extraneous facts and circumstances.
The insurer was responsible for the confusion in this contract of insurance, if confusion there was. The language on the first page of the certificate, namely:
"Issued this first day of October, 1931.
"Effective as to payment period, and non-forfeiture values as if issued on the first day of October, 1922" must be considered in connection with the language:
"When all payments required under this certificate shall have been duly made for a period of three years or more from the actual date of issue hereof, * * * the member shall be entitled to any one of the following options: (a), (b), (c) or (d)."
The court under this situation must determine which date, October 1, 1922, or October 1, 1931, governs as to the three-year provision. This is not a difficult task when it is remembered that the contract must be construed most favorably toward the insured; hence, we must find that the three years referred to in the non-forfeiture clause began to run October 1, 1922, and the insured was entitled to exercise any one of the options specified in the certificate at any time after October 1, 1922. He died without exercising either of the options. Then the Union must do as it agreed to do under its automatic premium loan clause, which is an integral part of the non-forfeiture provision, apply the cash value at the date of default to the payment of the defaulted assessments so long as there is money enough to pay one single assessment in the insured's cash value account. Weinfurtner was, as developed by the record, in arrears for four months; in other words, $8.80. He died June 23, 1932. His policy as to the non-forfeiture feature had been in effect for more than nine years, and reference to the table of withdrawal equities, contained in the certificate under the cash or loan value column, shows that he had $146.32 to his credit.
The principles of law involved in this case are so decidedly fundamental as not to require authoritative support; hence we cite no authorities.
The judgment of the Court of Appeals is affirmed.
Judgment affirmed.
WEYGANDT, C.J., ALLEN, BEVIS and ZIMMERMAN, JJ., concur.