People ex rel. Leerburger v. Mutual Reserve Fund Life Ass'n

The respondent is a membership corporation, carrying on a business of life insurance upon the co-operative or

In the case at bar the amount of the annual dues to be paid by the relator as a condition of the continuance of his membership and insurance was fixed at the sum of $10, and should have been paid by him on or before the 29th day of May, 1895. This, however, he failed to do, for reasons which will be hereafter stated, and, the respondent refusing to recognize him any longer as a member, he now applies to this court for a peremptory writ of mandamus, in the first instance, to compel the respondent to restore him to his rights of membership, upon the claim that there has been a waiver by it of the forfeiture. The attorney for the respondent read upon the hearing affidavits which, to some extent at least, put in issue some of the facts set forth in the moving papers; and as the relator, notwithstanding, proceeded to argue his case in support of his application for a peremptory writ, all of the facts which are contained in the answering papers of the respondent must be taken as true. People v. New York Law School, 68 Hun, 118 , 22 N. Y. Supp. 663 , and cases there cited. It appears that, in accordance with the custom of the respondent, a printed notice was sent by it to the relator on or about the 1st day of April last, informing him that the annual dues on his policy, amounting to $10, were payable on the 29th day of May, 1895, “without grace,” at the office of the association. The circular also contained these statements:

“Prompt remittance is requisite in order that your protection may be continued. The dues stated above should not be confounded with the mortuary payments. The payment of the one is equally as important as the payment of the other. If the same is not paid within the time stated, the policy and all the payments thereon will become forfeited and void, and your membership with the association will expire, with all rights thereunder. The sending of this notice or acceptance of above dues shall not be held to waive any forfeiture or expiry caused by nonpayment of any previous sum, when due, under said certificate or policy.”

And immediately following the subscription of the circular by the secretary of the association appears in heavily printed capitals the following:

“The above amount must be paid on or before May 29th, 1895.”

It will thus be seen that the relator had substantially two months’ previous notice of the maturity of his annual dues, accompanied by statements from the respondent pointedly calling his attention to the necessity of paying the same on the day specified, in order to avoid a forfeiture of his membership and policy. Under the rules and regulations of the association, members were authorized to designate persons to whom all notices or other communications intended for them might be addressed, and for that purpose the relator designated one Siegmund Harris, who was his son-in-law. The circular above referred to was accordingly forwarded to Mr.

On the 4th day of June, 1895, a letter was addressed by the secretary of the company to the relator, requesting hi¿i to state whether or not his annual dues, payable on May 29, 1895, had been paid. The letter also contained the following statements:

“If you have paid or remitted the above, please state actual date of so doing, whether by check or otherwise, and to whom; and, if you have a receipt for such payment, the name of the person signing or countersigning same, together with date of the receipt. Our books show that the above annual dues remain unpaid, and that your policy has expired. Remittances are frequently received without advice as to the name of the member remitting the same or number of the policy to which credit should be given; hence the correct credit cannot be given the member making the payment. If through an oversight or misunderstanding the above has not been paid, and you desire to reinstate your policy, you may be reinstated upon furnishing the association with a satisfactory application for reinstatement and warranty of health, and under the conditions thereof, and subject to the approval of the executive committee, and payment of amount of your dues as above. The signature of a member to the application for reinstatement must be certified to by some responsible person. In any case, when deemed necessary, a medical examination will be required.”

By this communication the respondent clearly pointed • out to the relator the fact that his membership and insurance had both come to an end by his own act, and that the .only remedy was an appeal, upon conditions named, to the executive committee, under a by-law of the association, which provides that:

“The executive committee Shall have power to reinstate a delinquent member at any time within one year, for good cause shown, and upon satisfactory evidence of good health, and upon payment of all delinquent dues and assessments.”

Upon the receipt of this letter, and- on the 6th day of June, 1895, Mr. Harris forwarded to the respondent' his check for the sum of $10, inclosing therewith the letter which .he had so received. This check was duly received, and was deposited by the

“The sending of this notice or acceptance of above premium shall not be held to waive any forfeiture caused by nonpayment of any previous sum when due under said certificate or policy.”

In the transaction of an enormous business such as is conducted by the respondent, it must often be the case that such calls are made inadvertently upon members whose policies and memberships have recently expired. Such a caution is, therefore, both prudent and reasonable, in order to avoid a claim that the call was a recognition of a continuance of membership and a waiver of the forfeiture. The relator claims that this call was received by Harris on or about June 3, 1895, and that Mr. Harris, knowing nothing at that time of any infirmity in respect to the policy of membership, mailed to the respondent a check for the amount of the call in question, which check was received by the company on June 13, 1895, and indorsed for deposit with the Merchants’ Exchange National Bank “to the credit of the Mutual Reserve Fund Life Association, dues account.” During all this time, notwithstanding the plain notice conveyed by the company to the relator in the letter of June 4th that his policy and membership had expired, and that his only hope of .reinstatement was to make application therefor to the executive committee, and to comply with the other conditions, which were specified, no steps of any kind were taken by him to that end. It does appear, however, from the relator’s papers, that on or about June 11, 1895, his attorney, claiming then to be acting only for the beneficiaries under the policy of insurance, visited the office of the company, and requested the reissuance of the policy to a new beneficiary, and that he was thereupon informed that such change could not be made immediately, as the condition of the policy was doubtful, by reason of the failure to pay the an- ’ nual dues. The answering affidavits of the respondent—which, as has been stated, must be taken to be true for the purposes of this motion—give the following version of this interview, viz.: That on the 10th day of June some one called at the office of the company on behalf of the relator, and was then informed that the policy had lapsed; and that, if the relator desired to continue his insurance with the association, it would be necessary to make application for reinstatement, and to enter into a new contract, and to conform to the terms and conditions prescribed by the constitution, by-laws, rules, and regulations of the association; and that he was furnished with the proper blank therefor, which blank was brought by him to the company on the 12th day of June, filled out and signed, but which the person so bringing refused to leave for the consideration of the executive committee. In answer to the claim that there had been an unconditional acceptance of the checks

“It is the custom of said association, when payments of dues or mortuary calls are tendered upon lapsed policies, to give the delinquent member an opportunity to apply for reinstatement, and to retain the money so tendered with the consent of the delinquent member, subject to" his order, as they did in the case of said relator, awaiting his election to recall such money, or to make application for reinstatement upon the conditions prescribed by the rules and regulations of said respondent association as aforesaid.”

In this connection it will be remembered that the notices sent to the relator contained the statement that the acceptance of the money payable by him should not be held to be a waiver of any previous default which had been incurred by him. The papers read on behalf of the respondent also show that among the books of account kept by it have been two in which are accounts entitled “Suspense Account,” in one of which are entered the respective amounts tendered by delinquent members for overdue annual dues, and in the other the amounts tendered.by such members for overdue mortuary assessments, all of which are credited to said delinquent members, and held subject to their order. On June 7, 1895, the check received on that day by the company for the annual dues of the relator was entered in the suspense dues account to the credit of his policy, and on the 13th day of June, the date on which the same was received by the respondent, the check which was forwarded on behalf of the relator for the mortuary call was entered in the suspense mortuary assessment account to the credit of said policy. On the 14th day of June the secretary of the respondent addressed a letter to the relator, in which it was stated that the remittance of $10 tendered in payment of the annual dues was received on June 7th, and placed in the suspense account, subject to his order, by reason of the lapse of the policy on May 29th. In this letter the relator is also informed that his representative called at the office on June 10th, and had been furnished with a blank form of application for reinstatement; that he returned on June 12th, with the application filled out and signed, presumably by the relator, but refused to leave the same for the consideration of the executive committee. The letter closes with the following statement:

“I call your attention to the matter, in the hope that you will furnish an application for reinstatement upon the form herein inclosed, and return it promptly to this office. It will then he submitted to the executive committee for their action. If approved by them, your policy will be thus reinstated, and a receipt in accordance with the rules of the association sent to you. In the meantime your policy remains lapsed, null, and void.”

It is claimed by the relator that he first had personal knowledge of the condition of his policy and membership on the day on which this letter bears date. On the 21st day of June, 1895, the secretary of the company again wrote to the relator, calling his attention to his previous letter, and stating that he had not been favored with a reply, adding that he had also found that on June 13th the relator had

“I inclose to you herewith a blank form of application for reinstatement, requesting that you will kindly fill out the blank spaces thereon, date, sign the same, have your signature witnessed, and return it to this office. It will then be submitted to the executive committee for their action. If approved, and all moneys due have then been received, your policy will be thus reinstated, and a receipt in accordance with the rules of the association sent to you. As the policy now stands lapsed, null, and void, let me request your prompt attention and reply.”

By the rules and regulations of the respondent, delinquent members desiring reinstatement are required to sign a certain form of application, containing certain statements in regard to the physical condition of the applicant, and other matters pertinent to the desirability of the risk. The relator, both personally and through his counsel, was notified that such a signed application was essential, in order to bring the question of his reinstatement properly before the executive committee, and that the question of his reinstatement would not be considered unless the rule in that respect was complied with. It is true that he underwent a medical examination, which is also required in addition to the making of such application, but he still persisted in refusing to sign the application. The refusal of the relator to sign was based upon a recital which the form of application for reinstatement contained, setting forth his failure to pay the annual dues, and that by reason thereof his membership and policy had expired. This recital forms part of the printed form used by the company in all cases where application for a reinstatement is made. The ground of his refusal was his unwillingness to admit that his policy and membership had expired, and, while he was willing to undergo a medical examination, and to submit other information to the executive committee in respect to his condition, he persistently declined to place himself in the position of asking for reinstatement. The company, on the other hand, as persistently refused to consider him in any other light than as a delinquent member whose rights had been forfeited, and insisted that if he desired reinstatement he must conform to the rules and regulations of the company in making his application. In this respect I think the respondent was right. It is plain that the company was not bound to entertain an application for reinstatement—a purely voluntary proceeding on the part of the delinquent member—when it was accompanied with the assertion that no reinstatement was necessary, as the membership and rights of the relator were unimpaired. The case is not one in which the company, for any purpose of its own, was seeking action on the part of the relator. The proceeding was intended solely for the benefit of delinquent members, and was entirely inappropriate and inapplicable to any other condition than one of existing and conceded forfeiture. Finding that the relator was unwilling to recede from the position which he had taken, the secretary of the company, on July 10, 1895,

It is plain that there is but one question presented for decision upon the above statement of facts: Did the respondent at any time waive the forfeiture of membership and policy which undoubtedly happened when the relator failed to pay his annual dues which matured on the 29th day of May? There is no difficulty in determining the law as to what constitutes a waiver of a breach of condition or forfeiture. In the case of Titus v. Insurance Co., 81 N. Y. 410 , it is stated (page 419):

“When there has been a breach of a condition contained in an insurance policy, the insurance company may or may not take advantage of such breach, and claim a forfeiture. It may, consulting its own interests, choose to waive the forfeiture, and this it may do by express language to that effect, or by aits from which an intention to waive may be inferred, or from which a waiver follows as a legal result. A waiver cannot be inferred from its mere silence. It is not obliged to do or say anything to make the forfeiture effectual. It may wait until claim is made under the policy, and then, in denial thereof, or in defense of a suit commenced therefor, allege the forfeiture. But it may be asserted broadly that if, in any negotiations or transactions with the insured, after knowledge of the forfeiture, it recognizes the continued validity of the policy, or does acts based thereon, or requires the insured by virtue thereof to do some act or incur some trouble or expense, the forfeiture is, as matter of law, waived; and it is now settled in this court, after some difference of opinion, that such a waiver need not be based upon any new agreement or an estoppel.”

The same question was discussed in the case of Armstrong v. Insurance Co., 130 N. Y. 560 , 29 N. E. 991 , in which many of the cases' upon this subject are considered. In Ronald v. Association, 132 N. Y. 378 , 30 N. E. 739 , the court says (page 383, 132 N. Y., and page 739, 30 N. E.):

“A waiver of the forfeiture of a policy, in the absence of any agreement to that effect, results from negotiations or transactions with the insured, after knowledge of the forfeiture, by which the insurer recognizes the continued validity of the policy, or does acts based thereon, or requires the insured, by virtue thereof, to do some act or incur some expense or trouble. Titus v. Insurance Go., 81 N. Y. 419 . In the absence of an ‘estoppel, knowledge of the facts and an intention to waive must exist; provable, of course, by the circumstances.”

There must, therefore, be found in this case satisfactory evidence of an intention on the part of the respondent to waive the forfeiture in order to justify the position assumed by the relator. Of course, this must be largely, if not exclusively, a matter of inference from the acts of the respondent. Mere statements as to what the intention was or was not cannot prevail against the necessary or natural conclusion flowing from its acts. If those acts are consistent only with the theory that the company did not intend to stand upon the forfeiture, it is clear that there has been a waiver, and mere statements that no intention to waive existed will not be allowed to control.

“There are doubtless some decided cases which hold that such forfeitures should not be enforced; but 1 think the better rule is to uphold and enforce such contracts, when free from fraud or mistake, just as the parties have made them. The parties entering into such contracts know best the importance of their exaet and literal performance.”

The relator may still apply to the executive committee for reinstatement under the constitution and by-laws of the association, which, as we have seen, give them the power to reinstate a delinquent member at any time within one year for good cause shown, upon satisfactory evidence of good health, and on payment of all delinquent dues and assessments. It is not to be presumed that the executive committee will not treat the case fairly, or fail to give him the benefit of a deliberate and impartial judgment upon such appeal. If they should fail so to do, the law gives the relator a remedy. He must, however, comply with the rules and regulations of the company in making such application, for it is only in the case of a delinquent member that the respondent is under any obligation to act under the provision of the constitution referred to.

The view which I have taken of the matter necessarily leads to a denial of the motion, and renders it unnecessary for me to discuss the point raised by the respondent as to the propriety of the remedy invoked by the relator. Whether an action in equity should have been brought (Cohn v. Insurance Co., 50 N. Y. 610 ), or the remedy by mandamus was appropriate (People v. Musical Mutual

The motion for a peremptory writ of mandamus is denied, with $10 costs.