Supreme Council of American Legion of Honor v. Green

Irving J., delivered the opinion of the Court. This suit was instituted by the appellee as plaintiff to recover upon a contract of insurance effected by one Thomas H. Evans upon his own life, for the sum of three thousand dollars, for the benefit of the plaintiff. The insured, Thomas H. Evans, was a charter member of Reliance Council, Ho. 1069, of “American Legion of Honor,” which was organized in December, 1882; and as such member he had taken out a certificate insuring his life for the benefit of the plaintiff in this suit, who is named in the application as “Elizabeth A. Green, my niece.” The appellant is a corporation chartered under the laws of Massachusetts, which are found in the Revised Statutes of that State, ch. 115, and section 8, as amended by the Act of 1882, ch. 195, contains the provisions under which this controversy arises. That section reads as follows: “A corporation, organized for any purpose mentioned in section two, may, for the purpose of assisting the widows, orphans or other relations of deceased members, or any persons dependent upon deceased members, provide in its by-laws for the payment by each member of a fixed sum, to be held by such association until the death of a member occurs, and then to be forthwith paid to the person or persons entitled thereto, and such fund so held shall not be liable to attachment by trustee or other process; and associations may be formed 'under this chapter for the purpose of rendering assistance to such persons in the maimer herein specified.” In the 5th section of Article 2 of the Constitution of the Supreme Council of the Legion of Honor the object of the order, so far as it affects this case, is declared to be “To establish a benefit fund, from which, on satisfactory evidence of the death of a beneficial member of the ²⁶⁶ order, who has complied with all its lawful requirements, a sum not exceeding five thousand dollars shall be paid to the family, orphans, or dependents, as the member may direct.” The payment of this insurance money, (the insured having died), is resisted by the appellant upon the contention that the appellee does not belong to the classes or any one of them whom the corporation designed to assist or benefit;" or which the statute of Massachusetts authorized to be provided for.

It is also resisted on the ground that in his application for membership and insurance, the insured described the plaintiff (the beneficiary) as “my niece,” whereas she was not his niece, and was in no degree related to him. This representation being untrire, it is .contended, that, under a subsequent clause of the application, there was a forfeiture of rights under the contract. That clause is as follows: “I do hereby consent and agree that any untrue or fraudulent statement made above, or. to the medical examiner, or any concealment of facts in this application, or my suspension or expulsion from, or voluntarily severing my connection with, the order, shall forfeit the rights of myself and my family of dependents to all privileges therein.” What the statute of Massachusetts authorizes to be done under it has been settled by the decisions of Massachusetts’ Courts, and those decisions are controlling as to the effect and meaning of the statute, and we should follow them as making a part of the law of the State, no matter whether they are entirely in harmony with decisions of other States upon somewhat similar statutes or not. In American Legion of Honor vs. Perry, 140 Mass., 589 , it was most distinctly decided that the classes of persons intended to be benefited by the statute are plainly and expressly designated in the statute, and that no person not falling within that designation could be provided for by any corporation holding its charter under ²⁶⁷ the laws of that State.

This decision was made with reference to the appellant in this case. The suitor in that case was engaged to be married to the insured, but was not allowed to recover because she was not embraced within the classes the law allowed insurance to be effected for. She was not the widow, the orphan, a relative or a dependent in the sense of the statute. All subsequent decisions of that State recognize this as the law of that State.

Skillings vs. Mass. Benefit Association, 146 Mass., 217 . In order to recover, the insured knew that the appellee must be found to meet the description of some one of the classes designated in the Act, and in order to meet that requirement she was named by the insured in his application as his niece, which declared her a relative, and therefore a qualified beneficiary, whether a dependent or not. Row the utmost good faith is required in such cases, and the applicant so knew, for he agreed in his application that any untruthful statement, or any fraudulent statement, or any concealment of facts should forfeit all rights under the insurance he was effecting.

The association was entitled to know the facts that they might agree or refuse to have the applicant a member and an associate in the society or not, and to allow the beneficiary named to be the recipient of its provisions for aid as it might decide. It is contended that improper relations existed between the insured and the beneficiary named, to wit, the appellee, and that the designation of her as applicant’s “niece” was a cover to conceal the true relation. The jury seem to have found that immoral relations did not exist, and of course that question is not before us. Whatever may have been the motive of the deceased for stating the plaintiff, the beneficiary, to be his niece, when she was not, is wholly immaterial to the question for decision.

A relationship was stated to exist, which on its face placed the beneficiary named ²⁶⁸ within, one of the classes jmovided for by the corporation, and ■ allowed by the statute of Massachusetts ; and the corporation was called on to look no further, but might rely on the warranty of its truth, and the agreement to forfeit if falsely stated. It is not pretended there was any kinship, in fact, between the parties. It is conceded that there was not. The plaintiff testifies that there was not any relationship by blood, but says she called him uncle, and he treated her as a niece by mutual understanding.

It is very clear that their agreement to act towards each other as uncle and niece could not have the effect to make them such, and bring her within the class named in the statute as “relatives,” so as to make her a qualified beneficiary to take under the statute as a relative. The question of dependency we are not now considering. She is not named in the application or in the policy, (or certificate,) as a dependent, but as “mece,” and it was as “niece” she was intended to'take; otherwise she would not have been so described. The relation of the parties to each other was certainly very peculiar, and on the theory of entire purity the deceased was marvellously generous; but whether she could be regarded as a dependent within the meaning of the society's constitution and the statute of Massachusetts would admit, at least, of serious doubts, if the case turned on that point.

We think the false statement of the insured that the appellee was his “niece,” so manifestly material, as it declared her a relative and qualified beneficiary, in view of the warranty of its truth, and agreement to forfeit fights if false, should defeat this action. This is according to sound principle. Bliss on Life Ins., secs. 47-48-82. Two cases only have been cited as maintaining a contrary view, and establishing that an incorrect statement of relationship will not avoid the contract; but a careful examination of those cases discloses such material differ ²⁶⁹ enees in the facts, the questions involved, and the law under which the decisions were made, that they are not adverse to our view.

In the case oi' Equitable Life Assurance Society, &c. vs. Paterson, 41 Ga., 338 , insurance was taken out in favor of a woman designated as the wife of the insured. She was married to him, lived with him and was reputed as his wife till he died. Payment was resisted on the ground that there was an entire want of insurable interest, because it was alleged she was not the lawful wife of the deceased, her lawful husband being still alive. By the statutes of Georgia, sections 2,671 and 2,672, it is provided that variation from the truth in anything affecting the risk shall avoid the policy, but that i f a party states bona fide what he believes to be the truth, the policy shall not be void though he was mistaken.

This is the substance of the statute. The lower Court instructed the jury that the failure to state the true relations of the parties did not avoid the policy. The Supreme Court reversed that ruling and held it would avoid ^unless the insured bona fide believed his statement to be true. The Court said the true inquiry under the statute was whether the statement was knowingly false, that is, whether the insured knew when he made the statement that his so-called wife’s husband was living, and that the jury should have been told that if the insured did not know when lie made the statement that the husband was living he was acting bona fide and the contract was not avoided, but that if he did know that fact, and kept back part of the truth, then the policy was void.

This case sustains rather than conflicts with our view. There the statute supplied the rule,