Opinion
May, 1905.
Henry A. Powell, for the appellant.
Maurice E. Page and F.W. Jenkins, for the respondent.
The appellant urges two grounds of reversal: First, that there was an accord and satisfaction of the defendant's liability under the policy; second, that the action was brought too late. Upon the appellant's first objection the proof fails to show any agreement to compromise the claim. On the other hand, such an agreement is specifically negatived by what occurred on the occasion of the payment of the $1,900 upon the policy. Moreover, it is doubtful if the payment of an amount concededly due would be a valid consideration for an agreement on the part of the plaintiff to forego the balance of her claim.
The defendant's main contention, however, is upon its second objection. After Charles Butler had taken out his third certificate and prior to his death the defendant's by-laws were amended so as to provide a short Statute of Limitations of a year within which actions upon claims should be brought. Assuming for the argument that this by-law can be so construed as intended to govern actions upon policies theretofore issued, it is ineffective to govern actions upon such policies unless by distinct agreement between the defendant and the holder of the certificate. By chapter 4 of the Code of Civil Procedure are provided rules governing the times within which actions shall be brought. By section 414 therein the rules of limitation specified in such chapter are applied to all civil actions or special proceedings with certain exceptions. One of those exceptions is specified in subdivision 1 thereof, which reads as follows: "A case where a different limitation is specially prescribed by law or a shorter limitation is prescribed by the written contract of the parties." That a shorter limitation cannot be prescribed except by written contract of the parties is held in Cox v. Fire Assurance Association ( 48 N.J. Law, 53). In that case the head note reads: "A plea setting up a by-law of an insurance company to the effect that if the president of the company should cause notice in writing given to the insured that the company declines an arbitration or to pay loss without suit, the insured must bring suit within six months or be barred is bad, unless it alleges that such by-law was adopted before the contract of insurance was made.' That case arose upon a demurrer to the defendant's plea setting up an amendment of the by-laws providing a short Statute of Limitations. In that plea there was no statement of any contract with the plaintiff to be bound by any amendment to the by-laws made after the making of the contract of insurance. The constitution and by-laws of the defendant association, as they existed at the time of the making of the contract, became as matter of law a part of the contract. An amendment thereafter passed entered into the contract only as consented to by the certificate holder.
These rules of law will probably not be questioned by the appellant's counsel. His contention is that the holder of the certificate has expressly stipulated that both he and his beneficiaries shall be bound by any amendment to the by-laws thereafter to be made.
In the application for membership the certificate holder agreed "to conform in all respects to the Laws, Rules and Usages of the Order now in force or which may hereafter be adopted." In the certificate itself the agreement to pay is made upon satisfactory proof of death "In consideration of the full compliance with all the by-laws of the Supreme Council, A.L. of H., now existing or hereafter adopted and the conditions herein contained."
Before discussing the effect of this stipulation or condition it may be well to refer to a general rule of construction of insurance contracts. The rule is thus stated in Abbott's Cyclopedic Digest (Vol. 8, p. 26): "Where the meaning of a policy of insurance is not entirely plain and where it is capable of two constructions, one involving a forfeiture and the other being fair and reasonable and supporting the obligation of the policy against the insurer, that construction is preferred by the courts which does not involve the forfeiture, not only because it is not so harsh, but also because if the language is doubtful it is that employed by the insurer, and should be taken most strongly against him." (Citing Griffey v. N.Y.C. Ins. Co., 100 N.Y. 417; Holly v. Metropolitan Life Ins. Co., 105 id. 437, and other authorities.)
Assuming the application to be a part of this contract the agreement of the certificate holder to conform to the laws in force "or which may hereafter be adopted" is in the nature of a personal covenant. It would be a strained construction which would under such a stipulation hold the beneficiary bound by an amendment which would abridge his right then existing under the contract to the full six years' Statute of Limitations. It has been held by good authority that such a provision relates only "to his duties as a member of the association." ( Sisson v. Supreme Court of Honor, 104 Mo. App. 54; 78 S.W. Rep. 297.) The stipulation of Charles Butler to conform to all the laws of the association then existing or thereafter enacted has been fully performed, and within that stipulation it cannot be held that his contract has been so changed as to impose upon his beneficiary the duty to bring an action within a year as provided by the amendment to the by-laws passed after the certificate was issued.
The condition of the contract itself, however, would seem to be broader than the stipulation contained in the application. The promise to pay made in the certificate is in consideration of a full compliance with the by-laws existing or thereafter to be enacted. That condition would seem to contemplate a compliance with such by-laws, both by the certificate holder and by his beneficiary. The promise to pay is upon receipt of satisfactory proofs of death. At that time, when the liability accrued, both the certificate holder and the beneficiary had in fact complied with all the requirements of the by-laws in force when the certificate was issued and with all the amendments thereto. All conditions precedent to defendant's liability had been fulfilled. I can find no agreement to bring suit within a year if defendant should deny its just liability. Defendant's interpretation of the contract is to pay upon compliance with the requirements of the by-laws and amendments at the time liability accrued, and also to comply with all amendments to the by-laws limiting plaintiff's time to sue if liability be unjustly denied. Such an interpretation would, I think, be unnatural and forced and as in this case it works a forfeiture is one which the courts will not adopt. The condition is fairly fulfilled when all obligations are met which are made a condition precedent of the original liability. The terms of this agreement were dictated by the defendant and should not be extended to include what was not clearly and unmistakably contemplated by the parties. As to the remedy of these beneficiaries, therefore, left to them after the wrongful denial of liability by the defendant, the contract is governed by the by-laws in force at the time of the making of the contract. Under those by-laws no short Statute of Limitations existed, and the plaintiff's action was brought within the time allowed by law.
The judgment must, therefore, be affirmed.
All concurred, except CHASE and HOUGHTON, JJ., dissenting.
Judgment affirmed, with costs.