Accident Ins. Department of Order of Railway Conductors of America v. Brooks , 216 Ala. 605 ( 1926 )

The suit is on a contract or certificate of insurance in the accident insurance department of the Order of Railway Conductors of America, and resulted in a verdict for the plaintiff.

The overruling of demurrer to counts 2 and 3 of the complaint, setting out the substance and legal effect of the contract of insurance declared upon, was without error. These pleadings proceeded upon the theory that the application for insurance, insurance certificate, and the laws of the order that were applicable to insurance constituted the contract of insurance, and alleged that the insurance was in full force and effect at the time in question. Knights, etc., v. Gillespie,14 Ala. App. 493, 71 So. 67; W. O. W. v. Adams, 204 Ala. 667,86 So. 737; W. O. W. v. Eastis, 206 Ala. 49, 89 So. 63. The use of the words in count 3, "together with certain by-laws and regulations of said department, was a contract of insurance between" the parties, in the context of that count, had not the effect of excluding relevant and applicable by-laws and regulations of the department; it meant all by-laws of the defendant order that had application. In Providence, etc., Co. v. Pruett, 141 Ala. 688, 37 So. 700, the sufficiency of a plea was under discussion, and the rule is different for a complaint. The contract of the parties was completed when their minds met in the manner indicated by their writings. Cherokee Life Insurance Co. v. Brannum, 203 Ala. 145, 82 So. 175. The substance and legal effect thereof was sufficiently stated in the pleading. George v. Roberts, 207 Ala. 191, 92 So. 1.

The provisions of the statute (Code of 1907, § 4572; Code of 1923, §§ 8049, 8364, 8507), as to misrepresentations and warranties, have been made to apply to contracts of insurance by a secret fraternity or other organization of like kind, which insures its members or others, or in the negotiation of such a contract of insurance or application therefor or proof of loss thereunder.

It is declared by the statute that written or oral misrepresentation or warranty shall not avoid the contract, or prevent its attaching, unless such misrepresentation is made with actual intent to deceive (Empire Life Ins. Co. v. Gee,171 Ala. 435, 55 So. 166; Mutual Life Insurance Co. v. Allen,174 Ala. 511, 56 So. 568), or unless the matter misrepresented increased the risk of loss (Sovereign Camp v. Hutchinson,214 Ala. 540, 108 So. 522). The effect of warranties the parties may make in insurance contracts was the subject of discussion in Brotherhood, etc., v. Riggins, 214 Ala. 79, 107 So. 44; Sovereign Camp v. Hutchinson, 214 Ala. 540, 108 So. 520, and Massachusetts Mutual Life Insurance Co. v. Crenshaw, 195 Ala. 263,70 So. 768.

The effect of the decisions under the statute is that a plea setting up a misrepresentation as a defense to an action on a policy of insurance is demurrable where it fails to allege (as in cases of deceit, Sovereign Camp v. Hutchinson, 214 Ala. 540,543 [2-3], 108 So. 520), that (a) false statements have been made (b) with intent to deceive, that (c) related to matters intrinsically material to the risk, (d) and that the insurer relied on them. Empire Life Ins. Co. v. Gee, 171 Ala. 435,55 So. 166; Travelers' Ins. Co. v. Whitman, 202 Ala. 388, 391,80 So. 470; Sovereign Camp v. Hutchinson, 214 Ala. 540, 543,108 So. 520; Heralds of Liberty v. Collins, ante, p. 1,110 So. 283.

The effect of the statute was to relieve against the common-law rule as to warranties the subject of contract, and to declare that the matter warranted must be material — such as increased the risk of loss. Brotherhood of Railway, etc., v. Riggins, 214 Ala. 79, 107 So. 44.

It follows that the trial court did not commit error in sustaining demurrers to pleas setting up fraudulent misrepresentations that failed in such averment of facts embraced within one of the alternatives. It may be further observed that pleas 5A and 10 do not specifically aver that plaintiff was not a passenger conductor at the time of the application for insurance. Amer. Ins. Co. v. Wright, 205 Ala. 186,87 So. 577.

Plea 2 set up the law of the order as to notice of total disability, and did not indicate that such failure was a condition precedent to recovery in that this was a forfeiture of all right to indemnity, as for dismemberment, in accord with the certificate sued upon, providing that the principal sum is payable for death of assured or dismemberment, etc. And it is averred in plea 9:

"Defendant denies the allegations of said count as liability for 52 weeks' indemnity, and the defendant says that it is provided in and by the certificate sued on that:

" 'The principal sum will be payable to Sarah Brook relationship, wife, if his death should be caused by accident unless as excepted in article 13 of the accident insurance laws.'

"And article 13 of the accident insurance laws makes provisions and exceptions in the following language and none other:

" 'Article 13. Death and Dismemberment Claims. — When the death by accident of a member of this department occurs, or, when dismemberment in accord with the provisions of article 11 occurs, proof of such death or dismemberment shall be made upon blanks prepared and furnished by the department, and it shall be obligatory on part of claimant to furnish all the information said blank calls for. Said blank shall be filed with the general secretary of the department, who shall immediately refer same to the trustees of the department, for action thereon. If a majority of the trustees approve the claim, the general secretary shall, upon receipt of such approved claim, forward check covering same to claimant in full payment of all liability against this department on account of such death or dismemberment.

" 'No death indemnity will be paid when loss of life has been incurred because of fits, intemperance, recklessness, disreputable or illegal acts, disappearance, injuries, fatal or otherwise, where there is no external contusion, unless certified to by a medical expert designated by the department; suicide or self-inflicted injuries, whether sane or insane; surgical operation for any disease, sickness or affliction of any nature whatsoever, other than accidental injury, as this insurance department does not cover or indemnify against same.'

"And defendant avers that the alleged accident caused a dismemberment within the provisions of section 11 and plaintiff did not make proof of such dismemberment as required by article 13 above quoted, within a reasonable time after such dismemberment."

Article 11 provides, among other things, for the loss of a leg, foot, arm, hand, or eye, due to accident, the sum of $2,500. Adverting to plea 2, it does not aver that the notice referred to was a condition precedent to the right of recovery. Provident Life Accident Ins. Co. v. Elliott, 198 Ala. 230,73 So. 476; Royal Exch. Assur. of London, England, v. Almon,206 Ala. 45, 89 So. 76; Amer., etc., Co. v. Waters, 133 Miss. 28,96 So. 739. It is provided by the rule obtaining (article 12):

"If any member of this department becomes totally disabled by accident, so that he is unable to perform his regular or other employment, he shall make report of such disability on blank prepared and furnished by the department, giving all the information called for on such blank, within ten days from the date of accident, and file it with the general secretary of the department."

It should be said that plea 9 properly presents the issue of fact and that the burden of proof as to it was upon the defendant. The several pleas to which demurrer was sustained sought to set up the same defense as that contained in pleas to which demurrer was overruled.

The evidence discloses that in article 7 of the by-laws of the department a member of the order "in good standing" is eligible to become a "member of this department" (membership therein being voluntary) upon due application therefor accompanied by the premium for the first quarter, forwarded to the general secretary of the department; that when application is in due form and the general secretary knows no reason why it should not be accepted, he "shall accept it" and make due "entry of such acceptance thereon," and notify the applicant that the same became in "force from 12 o'clock noon of the day upon which said application was accepted." We are not informed of any other required certificate or any other prescribed form of the notice of acceptance. This notice is for the benefit of the assured, the acceptance being binding upon the insurer. When the application, in due form, accompanied by the required dues, is accepted, the relation of assured and assurer exists. Thereafter the former would be entitled to the protection of the class of insurance to which he belonged pursuant to the contract evidenced by the application, certificate, and by-laws of the order. W. O. W. v. Alford, 206 Ala. 18, 89 So. 528. The trial court had the various evidences of the complete contract before it, and considered the same together. There was no error in submitting that evidence to the jury as tending to show plaintiff's right to recover for a total disability and dismemberment — the loss of an eye — due to accident. It is immaterial by which of the parties the accident insurance certificate was offered. It was in evidence, and will be read in connection with the by-laws, etc., having application.

The issue was tried upon pleas of whether or not plaintiff, within a reasonable time after the injury, had been discovered, gave defendant due notice thereof; and the replication numbered 1 to the several pleas, that plaintiff, long before the suit, furnished defendant full information as to his said injuries, disabilities and dismemberment on blanks "sent plaintiff by defendant, and that thereafter the defendant advised the plaintiff in writing in substance that defendant was not going to pay the full amount due by reason of the fact that plaintiff had changed his occupation without reporting the same to defendant. Wherefore plaintiff says that defendant has waived any other right it might have which could be set up as a defense to this cause of action." See authorities in Caledonian Ins. Co. v. Jones, 214 Ala. 520, 108 So. 331.

The letter of February 11, 1924, exhibited to defendant's rejoinder to the replication, was to the effect that the department had received information that plaintiff had changed his occupation from passenger to freight conductor, and that such change was required to be reported by article 15 of defendant's by-laws, and that no report had been made. The letter adverted to the fact that the required notice of dismemberment on specific blanks had not been given, or that such notice of disability as was given was made upon the blanks provided for members making application for weekly indemnity; expressed the opinion or declared that this fact was immaterial; indicated that the claim of disability would be re-examined and if payment was made it would be made on the basis of the purported change of occupation from passenger to freight conductor.

The statement of the trial judge as to the affirmative charge was directed to the attorneys, and, though in the presence of the jury, was without reversible error. The fact that the court thereafter reconsidered and declined to give the charge for the plaintiff, and defendant had opportunity to argue the case, discloses no error to reverse. The jury were fully informed as to the controverted issues of fact to be ascertained from the several tendencies of the evidence. If it had been thought by counsel that the charge was not sufficiently comprehensive under the several pleadings and tendencies of evidence, the court should, by special charges, have been duly invoked thereto or reminded of the deficiency. W. O. W. v. Maynor,209 Ala. 443, 96 So. 352; Lewis v. Martin, 210 Ala. 401,98 So. 635.

The general affirmative charges requested by defendant were properly refused.

The judgment of the circuit court is affirmed.

Affirmed.

ANDERSON, C. J., and SOMERVILLE and BOULDIN, JJ., concur.