KNIGHTS TEMPLARS' & MASONS' LIFE INDEMNITY CO. v. JACOBUS

KNIGHTS TEMPLARS’ & MASONS’ LIFE INDEMNITY CO. v. JACOBUS. (Circuit Court of Appeals, Seventh Circuit. May 3, 1897.) No. 355. Insurance—Reinstatement of Policy Holder. By a resolution of the board of directors of a beneficial association, properly passed, provision was made for the reinstatement of policy holders in default for more than 30 days by furnishing a certificate of good health and a medical examination which should prove satisfactory to the company. J., being in default for that length of time, forwarded to the company such a certificate and examination with the required assessment, but the medical director refused to pass on the examination, because of its “not being accompanied by an application,” J. being informed that his new examination came too late to reinstate his policy, as same had been canceled, and that a new policy would have to be issued, for which a blank application was inclosed. J. acquiesced, and made the new application, by which he agreed that no liability was assumed by the company until the policy should be actually issued. J. died before the application was acted on. Helé that, as the certificate and examination for reinstatement were unobjectionable, the lapsed policy was revived thereby as effectually as if a certificate of reinstatement had been issued, and J., by making the new application, was not precluded from asserting that there had been a reinstatement. Appeal from the Circuit Court of the United States for the Northern Division of the Northern District of Illinois. This suit was brought by Pauline Jacobus, the widow of Osear I. Jacobus, a citizen of Wisconsin, against the Knights Templars’ & Masons’ Life Indemnity Company, a corporation of Illinois, to compel the latter to issue and pay a policy or certificate of insurance upon the life of her husband. The averments of the bill and answer need not be stated, because the hearing was upon an agreed statement of facts and a stipulation that the pleadings, if found at variance, should be considered as amended so as to correspond to the agreed statement. The essential facts were these: The Knights Templars’ & Masons’ Life Indemnity Company was organized under the act of the general assembly of the state of Illinois, approved June 18, 1883 (1 Starr & C. Ann. St. p. 1348, § 123), whereby it is required that the incorporators sign and acknowledge a certificate of association, in which shall be stated “the object of incorporation, with its plan of doing business clearly and fully defined,” which certificate shall be submitted to the auditor of public accounts, who, if he finds it “sufficient and satisfactory,” must indorse his approval, and file the certificate and approval in the office of the secretary of state. In the year 1889, Oscar I. Jacobus, who had permitted a prior membership to lapse, became again a member under certificate of membership or life insurance policy No. 7,448, by which, on conditions and warranties stated, the company promised to pay $5,000 to the widow, children, or heirs of the member, unless he should have directed otherwise. On the back of the policy was printed the “constitution” of the company, of which the sixth article, concerning assessments, is as follows: “Section 1. Upon notice and satisfactory proof of the death of a member (should it be necessary to make an assessment), the company, or such person as the board may direct, shall send by mail, to the last recorded post-office address of every member, a notice containing the name and residence of the deceased member, and the amount due from the member to whom said assessment is sent. The party sending such notice may employ a suitable person, persons, or corporation, in any town or city, who may act in serving such notices either personally or by mail. A notice so sent or served shall be deemed and taken to be a lawful and sufficient notice for the payment of the assessment required. “Sec. 2. Should any one fail to forward, as indicated in the notice, the amount thus due, for a period of ten days after the date of said notice, he shall forfeit his membership and all benefits arising therefrom. Any one having thus forfeited his membership may be reinstated, he being alive, within thirty days after the date of said notice, by the payment of all arrearages, and may be reinstated to membership subsequent to the thirty days, upon such terms as the board of directors may fix. “Sec. 3. Any member may make a deposit in advance, for the payment of his assessments, which money shall be used for no other purpose by the company; and, in case of the member’s death before it is so needed, the unused balance shall be paid back with the policy.” On October 13, 1891, the board of directors of the company, acting within its power, passed the following resolutions: “Resolved, that no policy holder of this company, who is over the age of 56 years (excepting the holder of a limited term policy), who is delinquent more than thirty days in the payment of any assessment or annual due, shall be reinstated to membership; and, further, that no policy holder who is under the age of 56 years, at the time of his being thirty days delinquent, shall be reinstated without first having furnished a certificate of good health signed by himself, and also a medical examination which shall prove satisfactory to this company, the acceptance of which new medical examination shall be governed by the same rules as apply to an original application for membership, and also by the payment of all arrearages: provided, that any holder of a limited term policy may be reinstated upon the same terms as herein stipulated for life policy holders under the age of 56 years.” On March 3, 1893, notice of an assessment was mailed to and received in due course by Oscar I. Jacobus; but he neglected to respond, and, the assessment remaining unpaid, on March 14, 1893, the following letter (unessential parts omitted) was sent him: “Chicago, Ill., March 14, 1893. “O. I. Jacobus, Edgerton, Wis.—Dear Sir and Bro.: A notice of assessment No. 82, amounting to six dollars, was mailed to your address March 3, 1893, with the ten days’ grace provided in the policy. This assessment still remains unpaid. Article 6, section 2, of the constitution, printed on the back of your policy, reads as follows: [See supra.] Under this article, it can be paid, if you are living, any time prior to 30 days from the date of the original notice. Until such payment is made, you are carrying your own risk in case of death. Your receipt is now at this office, and will be mailed to you, and your policy reinstated upon receipt of the amount due, as hereinabove stated. We desire you to remain with us, and assure you our best efforts will be put forth to secure the greatest benefit to our policy holders at the least expense. Please let us hear from you on receipt of this, as to your wishes in the matter. “Respectfully, W. H. Gray, General Manager.” No response to that letter having been received, and the assessment not having been paid, on April 3, 1893, the certificate of membership, policy No. 7,248, was formally canceled on the books of the company, and on the same day the following letter was sent to Jacobus: “Chicago, April 3, 1893. “O. I. Jacobus, Edgerton, Wis.—Dear Sir and Bro.: Your policy has been canceled for nonpayment. By a resolution of the board of directors, governing reinstatements of persons under fifty-six years of age, you will now be required to furnish a new medical examination satisfactory to the company, and sign the certificate of good health as per the inclosed forms. If it is your pleasure to reinstate your policy, give this your prompt attention. In addition, if the policy is reinstated, you will be required to pay $18.00, the amount delinquent at this date. * * * With best wishes, and trusting to hear from you at an early date, I am, “Yours, respectfully, W. H. Gray, General Manager.” To that letter Jacobus made no response until April 27, 1893, when he mailed a letter, which was received the next day by the general manager of the company, inclosing a “P. O. order for $18.00 and medical examination,” for which he asked a receipt. The medical examiner’s report, it is agreed, “was carefully, skillfully, and honestly made, and was true.” It was made by Dr. James A. Lord, at the request of Oscar I. Jacobus, upon a printed blank sent to Jacobus by the defendant, inclosed in the letter of April 3, 1893, the regular custom of the company in admitting persons to membership or reinstating lapsed members under new medical examination being to allow the appb'cant to be examined by his local physician, and to refer the application and the examination so made to the company’s medical director, whose duty it was to examine such application and medical examination, and pass upon the same, before a new certificate of membership could issue, or a lapsed certificate of membership be reinstated. Whether Jacobus knew this custom, there is no-evidence, except the inferences, if any, to be drawn from his several memberships in and communications and correspondence with the company as in the statement of facts set forth. In this instance the examination was forwarded from the home office of the company in Chicago to its only medical director, Dr. J. L. White, at his office in Bloomington, “in accordance with such custom, very soon after it was received by the defendant”; but, by reason of its “not being accompanied by an application,” it was not examined or passed upon by White, and the company had not issued any new policy or certificate of membership to Jacobus before his death. No further communication passed between the parties until May 3, 1893, when the company, acting by its general manager, mailed to Jacobus the following letter: “Chicago, May 3, 1893. “O. I. Jacobus, Esq., Edgerton, Wis.—Dear Sir: Your new examination received at this office, but too late to accept same and reinstate your policy, as same has been canceled off the company’s books. However, we will issue you a new policy, which is the best we can now do for you, for the sum of what one assessment would amount to, or $6.00. I inclose herewith a b’ank application for that purpose, which you may fill out carefully on the members’side, sign same, and forward it to this office. Your examination of recent date will answer if attended to immediately. In the meantime we hold your remittance of $18.00 at this office, subject to your order or the above. With best wishes, I am, “Yours, respectfully, W. H. Gray, Geni. Mgr.” This letter, with the inclosed printed blank application, Jacobus received the next day, and, “having duly filled up and signed” the application, inclosed it in the following letter, which on May 5, 1893, he mailed to the company: “Edgerton, Wis., May 5th, 1893. “W. H. Gray, Geni. Manager, 1303 Masonic Temple, Chicago—Dear Sir: Inclosed please find application filled out as per your letter of the 3rd inst.; if anything left from remittance, place it to my credit. “Yours, Resp., O. I. Jacobus.” The letter and application were received by the company the next day. In the printed part of the application, preceding the signature of the applicant, is the following expression: “I further understand and agree that no liability whatever is assumed by the company under any circumstances, until after the policy or membership hereby applied for has actually been issued at the home office by the officers of the company.” The answers of Jacobus to questions in the application and the certificate of health at the end thereof were truthful and correct so far as he knew. For several months prior thereto he was in apparent good health, without premonitions of disease, and continued so until the evening of May 6, 1893, when he became ill, and on the 10th died, after an unsuccessful attempt by surgery to relieve him of a stricture of the intestines. He was at his death under 56 years of age. Clark Varnum, for appellant. John S. 'Cooper (S. M. Millard and C. P. Abbey, of counsel), for appellee. Before WOODS, JENKINS, and SHOWALTER, Circuit Judges.' [MAJORITY — WOODS, Circuit Judge,] WOODS, Circuit Judge, after making the foregoing statement, delivered the opinion of the court. If it were true, as contended, that the policy upon the life of Jacobus had lapsed for every purpose, and that, when he died, he was simply an applicant for insurance, under a new policy, as if he had never before been a member of the association, it would seem to follow necessarily that the decree of the circuit court was wrong, though it is urged, on the other hand, that, under the circumstances, the last application should be deemed to have been made in order to obtain reinstatement under the lapsed policy, and not to procure the execution of a new one, and that on that theory the provision in the printed part against liability before actual issue of the policy would be inapplicable and without significance. That question it is not necessary to decide. It is not true, as asserted, that, under the lapsed policy, “there were no contractual relations between the company and Jacobus.” At the end of 10 days from March 3d, when notice of the assessment was mailed, the policy ceased to be effective as a contract of insurance; but for 20 days longer there was an absolute right to procure reinstatement “by the payment of all arrearages,” and even after that, time, under the resolution of the board of directors, the same privilege was allowed to one who had “furnished a certificate of good health signed by himself, and also a medical examination” satisfactory to the company. Jacobus complied fully with all these requirements. He sent the requisite sum of money and a certificate of good health and a medical examination, to neither of which was there made at the time, nor has there been suggested since, any objection. By the letter of April 3d he was told that his policy had been canceled, and that he would “now be required to furnish a new medieal examination satisfactory to the company, and sign the certificate of good health as per inclosed forms.” He was not told, and could not properly have been told, that any new application was necessary, and the failure of the company’s medical director to pass on the examination because of its “not being accompanied by an application,” and the statement in the letter of May 3d that the examination had been received too late to be accepted as a basis of reinstatement, because the policy had been canceled, were without justification, and therefore without effect to hinder the reinstatement of the policy. The money to pay arrearages was already in the possession of the company, and it does not appear that there was unreasonable delay in forwarding the required certificate of health and medical examination. The certificate and the examination in form and substance were unobjectionable, and if the medical director of the company had examined the latter, as it was his duty to do, he must have approved it. He could not have rejected it upon capricious grounds. Miesell v. Insurance Co., 76 N. Y. 115. It follows that, upon the receipt by the company of the certificate and the examination, the right of reinstatement was complete, and that, in the contemplation of equity, the lapsed policy was revived, as effectually as if a certificate of reinstatement had been issued or an entry of like purport made upon the books of the company. It is said that Jacobus acquiesced in and agreed to the statement that his former policy had been canceled, and that his only method of again becoming insured was by means of a new application and a new policy. If the new policy had been issued and accepted, there would doubtless have been a waiver of all rights under the old one, but, the negotiations for new insurance having failed, there is in the situation no element of estoppel which could have barred the assertion by Jacobus, or can now bar the assertion by his widow, that the lapsed policy had been revived. In no respect is the company in a worse position on account of the new application. The objection is made that the decree proceeds on the theory of a new application for a new policy, and not of a renewal or reinstatement of the lapsed one; but that is not clearly so, and the objection does not go to the merits. In substance, the decree is right, and therefore is affirmed.