Opinion
Submitted May 29, 1931 —
Decided February 1, 1932.
On appeal from a judgment of the Supreme Court in which Judge Jess filed the following opinion:
"This is a suit by the beneficiary designated in a death benefit certificate issued by a fraternal beneficiary society, to recover the amount named in said certificate and payable to her, upon the death of the member, who was the husband of the plaintiff. The plaintiff will hereinafter be referred to as the beneficiary, her husband, the holder of the benefit certificate, as the insured, and the defendant, as the insurer.
"The cause came on for trial before the court and jury. When the plaintiff's case had been put in the defendant moved for a nonsuit. After argument on this motion, it was agreed by counsel to submit the case to the court for decision on the facts and the law, it being conceded that there was no dispute as to the facts and that the determination of the legal questions raised by the defense would be dispositive of the issues. Testimony taken de bene esse, on behalf of the defendant, is in evidence.
"The contract of insurance was made originally between the Legion of the Red Cross and John Kissinger, the insured, under date of January 2d 1908. By this contract the supreme council of the Legion of the Red Cross bound itself to pay, out of its death benefit fund, to Elda H. Kissinger, wife of John Kissinger, $1,000, `upon satisfactory evidence of the death of said companion — provided that the said companion has complied with all the laws of the order at the time of death.' By virtue of an agreement of reinsurance and consolidation entered into between the North American Union (now known as North American Union Life Assurance Society), a fraternal beneficiary society incorporated under the laws of the State of Illinois, and duly authorized to do business in New Jersey, and which agreement took effect December 29th, 1914, a certificate was issued to Kissinger of membership in the North American Union. By this certificate, dated January 2d 1915, the North American Union assumed and agreed to pay to the beneficiary named therein, in the event of the death of Kissinger while in good standing, and the furnishing of satisfactory proof as to the cause and fact of death, the amount of insurance in effect and payable on death, under and according to the provisions of the laws, rules and regulations of said Legion of the Red Cross and its executive board, subject to such changes as might be made in and by the laws, rules and regulations of said North American Union, provided that the said member had made all the required payments and had complied with all the laws, rules and regulations of the North American Union, then in force or thereafter enacted, and the terms and conditions of said articles of agreement. This agreement is not in evidence.
"The insured was a member of Camden Council, No. 217. He died in the township of South Fayette, county of Allegheny, Pennsylvania, on August 18th, 1926. He and his wife, the beneficiary, were not living together at the time of his death. They had been separated for several years. They did not correspond. The beneficiary would hear of her husband occasionally through her son, who exchanged letters with his father. The beneficiary first learned of her husband's death about October 1st, 1927. The first notice of death, given by her initiative, was received by the insurer from the collector of Camden council on January 11th, 1928, together with a certificate of death from the bureau of vital statistics of the department of health of the Commonwealth of Pennsylvania. In this certificate the age of the decedent was given at seventy-three years, he was reported to be a widower and the cause of death was stated to be acute myocarditis, with senile psychosis assigned as a contributing cause. The forms for the proof of death prescribed by the insurer were sent to the beneficiary and received back from her, filled out, on March 2d 1928. On the same date the insurer received a letter from the beneficiary, addressed to the secretary of Camden council, enclosing a statement of the assessments and dues she had paid on her husband's certificate from September 21st, 1925, to October 21st, 1927, aggregating in amount, $158.60 for assessments and $6.75 for dues.
"In response to his request, the beneficiary, on August 3d 1928, sent to the supreme secretary, the Legion of the Red Cross, certificate No. 8341, and the North American Union Reinsurance certificate No. 48799. On August 6th, the supreme secretary wrote to the beneficiary as follows: `We are in receipt of yours of the 3d instant, enclosing certificate held by your late husband, and the same will be referred to the supreme president as well as Camden council, and the amount due you on this policy will be sent within the next week.' There is in evidence a check, drawn by the insurer to the order of the beneficiary, dated August 17th, 1928, for $165.35, which is the precise amount of the dues and assessments paid by her. This sum was stated on the back of the check to be received `as a settlement, full payment and compromise and in full satisfaction and discharge of any and all claims and demands of every nature whatsoever against the North American Union Life Assurance Society, and all other affiliated societies arising out of the issuance of a certificate or certificates of John Kissinger.' This check was not cashed by the beneficiary. The supreme secretary called upon the beneficiary in Detroit, on September 18th, 1928, and informed her that `under the laws we were only liable for the amount she had paid to the society.' He tendered her in settlement of that conceded liability, $158.60. The beneficiary declined the tender. Whether this offer was in the nature of a compromise, as indicated by the endorsement on the check above referred to, or was, in fact, a proposal to pay an admitted liability, as suggested by the secretary's statement, is not clear.
"Suit was brought by the beneficiary against the insurer on January 3d 1929, to recover the amount of $1,000 and interest.
"The insurer denies all liability. It admits the contract of insurance, the death of the insured and its refusal to pay the amount of the death benefit certificate. It sets up two special defenses, each of which is based upon the allegation that its constitution and by-laws constitute a part of the contract of insurance. The first defense is founded upon law 11 of the insurer, section 1, which reads as follows:
"`It is made the duty of the beneficiary, named or legal representative, on the death of a member, to give immediate notice of such death, together with the reputed cause, facts and circumstances in connection therewith to the secretary of the council to which such member belonged, and request proof of death blanks. Such beneficiary shall thereafter diligently have made and furnished to the order, before payment shall be made of such claim, upon forms provided for such purpose, satisfactory proof of the fact, cause and circumstances of such death, and the liability of the order thereon.'
"The second defense rests upon law No. 3, section 18, which provides that —
"`No member of this order, or his beneficiary or any other person or persons in his or their behalf, shall commence any action at law, or suit in equity against this order for the recovery of any claim or demand whatsoever arising by or from his membership in the order, or under or by virtue of his benefit certificate, unless such action or suit shall be commenced within one year next after the death of such member, and within one year next after the cause of action accrued.'
"It is well settled that the relation created by such a beneficial certificate as that involved in this suit, is contractual in its character. The contract between the association and its beneficiary members is to be discovered from the certificate issued to the member, read with the rules and by-laws of the society and the statute from which is obtained its corporate powers. The contract, when discovered, is to be construed and given effect as other contracts upon a similar subject. Tepper v. Royal Arcanum, 59 N.J. Eq. 321 . Courts can only interpret and enforce contracts of such associations according to their terms. Golden Star Fraternity v. Martin, 59 N.J.L. 207.
"The first defense is that the beneficiary failed to notify the insurer of the death of the insured immediately after it occurred, `but neglected and delayed notification thereof for more than two years after said death.' Assuming that the law of the insurer requiring immediate notice of death is a part of the contract of insurance, would the fact that notice of death was not given immediately after it occurred, defeat the beneficiary's right to recover? It seems to me that it would not, for several reasons, founded in part upon general principles and in part upon circumstances peculiar to this particular case. The law of the insurer itself merely makes it the `duty' of the beneficiary to give immediate notice of death. Moreover, such a stipulation, concerning a condition to be performed after the death of the insured, could be waived by an officer or agent of the insurer, even though the contract provided against such waiver. Robbins v. Farmers Mutual Fire Association, 133 Atl. Rep. 513; Carson v. Jersey City Insurance Co., 43 N.J.L. 300; Bohles v. Insurance Co., 83 Id. 246.
"The argument of the plaintiff that there was an implied waiver of this provision finds some support in the evidence.
"The first defense of the insurer, however, is not rested strictly upon the fact that the death was not reported immediately, but upon the ground that the beneficiary `neglected and delayed notification thereof for more than two years after said death.' This defense is not established by the evidence. The only proofs on that phase of the case negative the idea that the lapse of time between the death and the notice thereof was due to any negligence of the beneficiary or any failure on her part, to act, under the circumstances, with reasonable promptitude. She did not learn of the death for more than two years after the event. Her own testimony to that effect is corroborated by the fact that she paid the dues and assessments on the beneficial certificate as they fell due from September, 1925, until October, 1927. The nature of the first defense furnishes a practical interpretation by the insurer itself of the rule requiring immediate notice of death, that the rule is to be construed reasonably and is to be invoked as a bar to recovery only when there has been negligence or culpable delay in complying with it. This interpretation certainly is in harmony with the cannon of construction applicable to such a rule when it is sought to be read into a contract of insurance. 33 Corp. Jur. 15, §§ 663, 664, 665.
"Furthermore, the duty of the beneficiary, under the laws of the insurer, was to report the death of the insured to the local council of which he was a member. The evidence is that upon learning of the death of the insured, the beneficiary at once notified that council of the fact. The notice of death was not received by the insurer until January 11th, 1928, so that about three months elapsed between the notification given by the beneficiary and its receipt by the insurer. This delay cannot be charged to the beneficiary, since she reported the death as soon as she had knowledge of it, to the agent designated by the insurer to receive it.
"The second defense also is purely technical, in that the insurer insists that the beneficiary cannot recover because she did not bring her suit within one year after the death. This defense is based upon the law of the insurer hereinbefore cited.
"Four things are essential under the contract to entitle the beneficiary to recover: Payment of the assessments and dues on the benefit certificate; compliance by the insured with the laws, rules and regulations of the insurer; death of the insured while in good standing; satisfactory proof of the fact and cause of death. There is no question that all these requirements have been met. That being so, the insurer has obligated itself to pay to the beneficiary the amount of insurance in force and effect and payable on death under and according to the provisions of the laws, rules and regulations of the insurer and its predecessor. The laws, rules and regulations mentioned in this clause of the contract must be held to comprehend those only which are pertinent to the subjects therein expressly enumerated. The insured having died in good standing, after compliance with all the stipulations to be performed on his part, and the beneficiary having furnished satisfactory proof of death, her right to recover, under the contract, became, prima facie, fixed. If, in order to enforce or test that right, she must have recourse to a suit at law, she is not to be barred of her action by a law or rule of the insurer, unless such law or rule was expressly or impliedly within the terms of the contract upon which she relies.
"In Roblin v. Knights of the Maccabees, 112 Atl. Rep. 70, the Supreme Court of Pennsylvania held that a law of a fraternal benefit association which provided that any action arising out of a life benefit certificate must be brought within fifteen months of the death of the member, was not enforceable against the beneficiary. The court said:
"`The stipulation is that the member shall comply with the amended by-laws, not that the beneciary shall do so after his death; and such stipulations are construed strictly and in favor of the assured.'
"Assuming that the rule upon which the insurer, in its second defense, relies, is implicit in the contract, it is not clear that it operates to estop the beneficiary from asserting in this action the rights which she claims under the insurance contract. The rule relied upon by the insurer provides that a suit by a member or a beneficiary shall be commenced within one year next after the death of such member `and within one year next after the cause of action accrued.' The effect of this rule is to create a forfeiture. Therefore, if a construction which will defeat it is reasonably deducible from the terms or words used to express it, that construction should be adopted. Hampton v. Hartford Fire Insurance Co., 65 N.J.L. 265, and cases therein cited. Provisions in insurance contracts creating forfeitures are to be construed most strongly against the insurer. Precipio v. Insurance Company of Pennsylvania, 103 Id. 589; Snyder v. Insurance Co., 59 Id. 544.
"Where there is an ambiguity found in a contract of this nature, the provision giving rise to the ambiguity should be most strongly construed against the insurer, and should be construed in a sense so as not to work an injustice to an assured. Michler v. New Amsterdam Casualty Co., 104 N.J.L. 30 ; affirmed, Ibid. 663. The construction of the rule in question most favorable to the beneficiary is that the limitation of her right of action began to run from the time that right accrued; that is, from the time she furnished proofs of death, to wit, March 2d 1928.
"The defense that the suit was not brought within time is subject to the further objection and after the period of limitation had expired the insurer, in negotiations and transactions with the beneficiary, must be held to have recognized the continued validity of the policy. It received the notice and proofs of death without objection. It asked for and received from the beneficiary the benefit certificates. The supreme secretary wrote to the beneficiary on August 6th, 1928, that the amount due on the certificate would be sent to her. On August 17th a check for $165.35 was mailed to her, which was stated to be in full payment and compromise of her claim against the insured. On the 18th of September the supreme secretary informed the beneficiary that the insurer was liable only for the amount she had paid to the society and tendered to her the amount conceded to be due. So that it was not until August, at the earliest, that the beneficiary had any intimation from the insurer that its full liability on the benefit certificate was disputed.
"If in any negotiations or transactions with the assured, after knowledge of the forfeiture, the company recognizes the continued validity of the policy, the forfeiture is waived. Martin v. State Insurance Co., 44 N.J.L. 485.
"It is to be noted finally that where other conditions of the contract are such that a reasonable compliance with them, insisted upon by the insurer, is inconsistent with the observance of the limitation rule, the latter will not be allowed to defeat a recovery. Martin v. State Insurance Co., supra. A requirement that immediate notice of death shall be a condition precedent to a recovery is, under the circumstances of this case, inconsistent with the observance of the limitation rule. The requirement that the death shall be reported necessarily pre-supposes knowledge of the fact of death, and if for reasons beyond the control and without the fault of the beneficiary, that knowledge was not acquired by her in time to permit a compliance with the limitation rule, that rule cannot be invoked to defeat her recovery.
"For the reasons stated, neither the first nor the second defense constitutes a bar to the plaintiff's action.
"The court finds in favor of the plaintiff and against the defendant.
"The damages are assessed at $1,000, together with interest from March 2d 1928."
For the appellant, Charles DeF. Besore.
For the respondent, Edwin G. Scovel.
The judgment appealed from will be affirmed, for the reasons expressed in the opinion of Judge Jess.
For affirmance — THE CHIEF JUSTICE, TRENCHARD, PARKER, CAMPBELL, LLOYD, CASE, BODINE, DALY, DONGES, VAN BUSKIRK, KAYS, HETFIELD, DEAR, WELLS, KERNEY, JJ. 15.
For reversal — None.