Steinhausen v. Preferred Mutual Accident Ass'n — 36 N.Y. St. Rep. 70

Majority

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Laura A. Steinhausen, Resp’t, v. The Preferred Mutual Accident Association of New York, App’lt.

(Supreme Court, General Term, Fourth Department,

Filed February 20, 1891.)

Headnote

Insurance (Accident)—Mutual—Evidence.

A beneficiary in a certificate of insurance in the defendant company has no vested interest until the death of the insured; and, therefore, the declarations of the insured made subsequent to the issuing of the certificate are admissible against the beneficiary in an action on such certificate.

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Appeal from a judgment entered in Oneida county on the 22d November, 1889, upon a verdict for plaintiff for §5,169.20, at Oneida circuit, November, 1889, and from an order denying a motion on the minutes for a new trial.

Action upon a certificate of membership, issued by defendant to Frank J. Steinhausen, July 27, 1886. This provided that: “ The principal sum represented by the payment of three- dollars by each member of the association, as provided in the by-laws (which sum, however, is not to exceed $5,000), is to be paid to Laura A. Steinhausen (his wife), if surviving (in the event of the prior death of said beneficiaries, or any of them, said sum shall be paid as provided in the by-laws), within sixty days after sufficient proof that said member at any time within the continuance of membership shall have sustained bodily injuries, effected through externa], violent and accidental means, within the intent and meaning of the by-laws of said association and the conditions hereunto annexed, and such injuries alone shall have occasioned death within ninety days from the happening thereof.”

The certificate also provided for the payment of certain sums to the member in case of bodily injuries, disabling him from the prosecution of his business. It also provided that the benefits under the certificate should not extend to any bodily injury happening directly or indirectly in consequence of disease, nor to any death or disability which may have been caused wholly or in part by bodily infirmities or disease at any time.

On the 25th January, 1889, Steinhausen met with an accident, and on 27th January, 1889, he died. The plaintiff claims that the accident was the sole, direct and immediate cause. He was by profession a physician, and it was so stated in the certificate.

S. M. Lindsley, for app’lt; Van Auken & Pitcher, for resp’t

We are of the opinion that the proofs in this case are sufficient to justify the submission to the jury of the questions whether the injury was the sole, direct and immediate cause of the death, and whether there was any violation of that clause of the certificate giving the defendant the right to examine the person of the member in respect to an injury or cause of death when and so often as may be reasonably required. There are, however, some rulings upon evidence that call for more particular consideration.

Upon the trial, the defendant called as a witness F. W. Klages, who, having testified that within a year of the death of Steinhausen, he (Klages) spoke to him about his physical ailments, about his kidneys, was asked this question : “ What did he tell you, if anything, as to his condition ? ” This was objected to by the plaintiff as incompetent, and objection sustained, the court ruling that “what the deceased said subsequent to the issuing of the policy was inadmissible; that, after the policy was issued, the rights of the beneficiary were settled, and the assured had no authority to_ make any statement or declaration of any kind calculated to impair the contract.” The defendant duly excepted. The defendant offered to show by another witness that upon the

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morning before the accident the deceased said he was suffering from rheumatism and from kidney difficulty. To this there was the same objection, ruling and exception. Another witness, called by the defendant, having testified that upon a certain occasion he noticed that deceased had a difficulty in breathing, and placed his hand on his breast, was asked the question: “ Did he say anything at the time of his difficult breathing, and at the time he placed his hand on his breast; that is, at the same time, and as he put his hand on his .breast, did he make any statement as to his condition? ” This was objected to as a declaration of the assured after, the policy was issued, and- the objection was sustained, and the defendant excepted.

There seems to. be no doubt as to the materiality of the declarations. They were not objected to on the ground that they were immaterial. The question then is whether the declarations of the member, after the issuing of the certificate, are admissible against the beneficiary.

The defendant is a domestic corporation and within the provision of § 18 of chap. 175 of the Laws of 1883, which provides that: “Membership in any corporation, association or society transacting the business of life or casualty insurance, or both, upon the co-operative or assessment plan, shall give to any member thereof the right at any time, with the consent of such corporation, association or society, to make a change in his payee or payees, beneficiary or beneficiaries without requiring the consent of such payee or beneficiaries.”

The case of Smith v. Nat. Benefit Society of N. Y., 51 Hun, 575 ; 22 N. Y. State Rep., 852, is claimed by the appellant to be in point. There the plaintiff was a creditor of one Tyler who procured from defendant an insurance on his life, and subsequently under a rule of the defendant the plaintiff was substituted as beneficiary under the policy. The defense was that Tyler obtained the policy with intent to. commit suicide. His declarations after the substitution and up to his death were held to be competent; it being said that under § 18, above referred to, the deceased bad the right, with the consent of the company, to change his beneficiary from time to time without the consent of such payee or beneficiary; that “the plaintiff got no separate standing by the designation under the policy before the date of the death; before that the sole right was in Tyler. The deceased by his designation of plaintiff as beneficiary did not make a case to exclude evidence of his declarations. He stood as owner till he died, and the plaintiff was in no better condition in respect to the policy than if the decedent’s representative had brought the action.”

This case was affirmed by the court of appeals, 33 N. Y. State Rep., 67, but upon another basis. It was, however, said with reference to § 18, above referred to: “ That section attaches the beneficial interest to the membership and permits the member to change the payee or beneficiary of the. insurance without the latter’s consent. Where the right of the payee has no other foundation than the bare intent of the member, revocable at any moment,

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there can be no vested interest in the named beneficiary any more than in the legatee of a will before it takes effect.”

There are many other cases to the effect that a beneficiary in a certificate like the present has no vested interest. Hellenberg v. Dist. No. One, etc., 94 N. Y., 585 ; Luhrs v. Sup. Lodge, etc., 27 N. Y. State Rep., 88; Sabin v. Grand Lodge, etc., 6 id., 151; 28 id., 45; Luhrs v. Luhrs, 33 id., 688; Mutual Ben. Soc. v. Burkhart, 110 Ind., 189 ; Bagley v. Grand Lodge, etc., 131 Ill, 498 ; Richmond v. Johnson, 28 Minn., 447 . In this respect the certificate is different from the ordinary policy of life insurance, where a vested interest passes to the beneficiary and the assured ceases to be a party in interest.

Upon this ground, it was held in Rawls v. Am. Mut. Life Ins. Co., 27 N. Y., 290 , that the admissions of the assured after the issuing of the policy were not admissible, and many similar cases are cited by the respondent where. this rule has been followed. The reason is said to be, Swift v. Mass. Life Ins. Co., 63 N. Y., 192 , that after the contract of insurance is effected, the subject of insurance has no such relation to the holder of the policy as gives him the power to destroy or affect it by unsworn statements. This rule does not reach this case.

In Grossman v. Sup. Lodge, etc., 25 N. Y. State Rep., 844, the same rule of inadmissibility is asserted with reference to the claim of the plaintiff as the beneficiary in a certificate of membership in the defendant which entitled the member to participate in its relief fund to a certain amount which, at her death, should be paid to the plaintiff, her husband, and the case of Fitch v. Am. Pop. Ins. Co., 59 N. Y., 557 , is cited. The Fitch case was upon an ordinary policy. It does not appear whether the statute of 1883 was applicable to the Grossman case. Apparently the plaintiff had no vested right up to the time of the death of the member. This, however, was nor considered.

It is, however, claimed by the plaintiff that under chap. 80 of the Laws of 1840 she had a right to insure the life of her husband and have a vested interest in the policy, and that this applies to the present case. A contrary doctrine was held in Durian v. The Central Verein, etc., 7 Daly, 168 . Besides, the act of 1883 does not except the case of wives. We think that the act of 1840 does not help the plaintiff on this question. The insurance there referred to was not intended to cover a case like the present.

We see no escape from the conclusion that the plaintiff had no vested interest until the death of her husband, and that therefore his declarations were admissible the same as if the action was by his representatives. It follows that the judgment must be reversed.

Judgment and order reversed upon the exceptions and a new trial .ordered, costs to abide the event.

Hardih, P. J., and Martih, J., concur.