Ordelheide v. M. B. A.

prior to, and at the time of, issuing a beneficiary certificate to one Walter L. Leek, of Missouri, in 1903, was

licensed in Missouri as a fraternal beneficiary association. The certificate was for the sum of one thousand dollars, as thus expressed therein:

"The Modern Brotherhood of America issues to Walter L. Leek of Warrenton, county of Warren, State of Missouri, this membership certificate, which entitles him to membership in said fraternity, and in case of the death of said member while in good standing, permits his beneficiary to participate in the mortuary fund to the amount of one full assessment on all members in good standing in the fraternity not to exceed one thousand dollars, which shall be paid to legal representatives, related to the member as within ninety days after said satisfactory proofs of such member's death shall have been furnished by the beneficiary to the board of directors at Mason City, Iowa."

The certificate contains the usual suicide clause found in most certificates issued by associations of kindred character. Suicide, whilst sane or insane, voided the certificate. Leek committed suicide and his administrator brings this suit.

I. In our judgment the majority opinion of the St. Louis Court of Appeals, which accords with the Kansas City Court of Appeals upon this question, is Suicide as right. Our statute, Revised Statutes 1909, section 7109, contains this provision:

Insurance:

Defense.

"Payments of death benefits shall be to the families, heirs, blood relatives, affianced husband or affianced wife of, or to persons dependent upon, the member."

This clause was likewise in the statute at the date of the issuance of the certificate sued upon. The same section contains an exemption clause, in this language:

"Such association shall be governed by this article, and shall be exempt from the provisions of the insur

Ordelheide v. M. B. A.

ance laws of this State, and shall not pay a corporation or other tax, and no law hereafter passed shall apply to them unless they be expressly designated therein."

This exemption clause was likewise in the statute at the issuance of the certificate involved here. In some particulars the old statute (Laws 1897, p. 132; Sec. 1408, Revised Statutes 1899) was amended in 1909 (Laws 1909, p. 371) but not so as to touch the question at issue in the instant case. The last clause is one purely of exemption. In Schmidt v. Foresters, 228 Mo. l. c. 700, we practically so said. We then used this language in discussing the Act of 1897:

"The Act of 1897 simply exempts fraternal beneficiary associations from the general insurance laws. By thus exempting them the Legislature recognized that but for the exemption, their contracts would be governed by the general laws, for if not, there would be no reason for the exemption.

"Nor is it unreasonable to say, as was said in the Jarman case (Indemnity Co. v. Jarman, 187 U. S. 197), that the defendant in the case at bar cannot claim the benefits of an exemption provided by a law, until such time as it places itself in a position to claim the benefits of the law. It cannot claim the benefits of the law merely because its contracts are of the character mentioned in the law, but to claim the exemption given, it must come under the law, and makes its contracts under the law. If it does that, then the law is read into and becomes a part of the contract, but until it does do that the general law is and must be read into each and every one of its contracts made with a citizen of Missouri. Not only so, but if such general law once becomes a material constituent part of the contract, it cannot be eliminated therefrom by the subsequent act of the defendant. And we are of opinion that the suicide statute is substantial law, and not merely a statute of procedure."

Ordelheide v. M. B. A.

There, as here, we had an association which in its organization was clearly a fraternal beneficiary association. There, as here, the certificate was in the form usually issued by such an association. There is this difference, however: in the Schmidt case the beneficiary named was the mother of the insured, whilst here the beneficiary named is "legal representatives."

We held in the Schmidt case that the defendant could not avail itself of this exemption clause, because it had not availed itself of our fraternal beneficiary association laws by taking out a state license prior to the issuance of the certificate. We held further that the general law as to suicide applied, notwithstanding the character of the association issuing the certificate, and notwithstanding the form of the certificate. And all this for the reason the defendant was not protected by this exemption clause, because not acting under our law pertaining to fraternal beneficiary associations. We then said and now repeat "but to claim the exemption given it (the association) must come in under the law, and make its contracts under the law." The italics have been added in making the quotation here, but our language was carefully measured then, because we were then, as now, settling a dispute between the two courts of appeals.

In the case at bar the defendant did not issue its contract of insurance under our Fraternal Beneficiary Association Act, because under that act it could not make "legal representatives" beneficiaries in the contract. It is true that it had license to issue policies under our law, but it did not see fit so to do. It preferred, in violation of our law, to issue a policy authorized by its charter powers in Iowa, rather than one authorized by its license in Missouri. Its measure of authority for legitimate business in Missouri, is our statute. The test of the character of the policy it issues is the statute, and not the license it may have obtained.

Ordelheide v. M. B. A.

In State ex rel. v. Vandiver, 213 Mo. l. c. 198, VALLIANT, J., well said:

"The character of the relator is an essential fact to be shown in this case, because unless it is a fraternal society, as defined by the statute, it has no right to do even the limited kind of life insurance that the statute authorizes; but the fact that it does entirely fill that definition does not authorize it to go beyond the limit prescribed by the statute. If the relator while issuing only such life insurance policies as the statute authorizes and holding a license from the Insurance Department should be called into court to answer by what authority it is issuing such policies it would be sufficient to say: We are a fraternal society, with our lodge system, our ritual, our representative form of government and we are not doing this for profit. But if it is issuing policies of a character not authorized by the statute, then its fraternal character, its lodge system, its ritual, its form of government, and its no-profit plan, would be no answer or justification of its conduct.

"In Toomey v. Supreme Lodge, 147 Mo. 129, it was held that the defense of suicide was unavailing because, although the defendant was a fraternal beneficiary society, yet the policy sued on was an old-line policy of life insurance and therefore subject to the general statute, and the defendant was liable as an oldline company would be.

"In Aloe v. Fidelity M. Life Assn., 164 Mo. 675, it was held that although the defendant was chartered to do business only on the assessment plan, yet the policy it had issued in that case was not on that plan but an old-line policy and therefore the defendant was held liable as an old-line company. Other cases to the same effect are referred to in the opinions in those cases."

We have italicized some pointed language of the distinguished judge writing that opinion. In that

Ordelheide v. M. B. A.

case the relator was clearly a fraternal beneficiary association, and was chartered as such, but it was seeking license to do business not authorized by our law pertaining to fraternal beneficiary associations. This emphasizes the fact that the character of the business done, and the policy issued, is not measured by the character of the organization, but by the law which prescribes the character of the policy which can be issued under that law. If the policy issued is not one authorized by the law, the association issuing it cannot avail itself of the exemption given in the law. This is reasonable, because an exemption is in the nature of a privilege granted, and such privilege ought not to be granted, unless the association in all its doings comes in fairly and squarely under the law giving the exemption or privilege.

Such seems to be the view taken by the majority opinion of the St. Louis Court of Appeals, and also by the Kansas City Court of Appeals in some three cases, cited in that opinion.

If such foreign fraternal beneficiary society is duly licensed in this State, it can issue certificates or policies, as authorized by our laws, and as to such can claim the benefits of the exemption, but if it issues a policy not authorized by our law it has no right to claim the exemption.

For a fuller discussion I leave this question to the majority opinion of the St. Louis Court of Appeals in this case, and to the following cases by the Kansas City Court of Appeals: Herzberg v. Modern Brotherhood of America, 110 Mo. App. 328; Wilson v. Benevolent Assn., 125 Mo. App. 597; Kroge v. Modern Brotherhood, of America, 126 Mo. App. 693: Dennis v. Modern Brotherhood of America, 119 Mo. App. 1. c.