author: ELLIOTT, J. LeBLANC, J. ELLIOTT, J.

text:
    Nos. 754-975
    First Circuit
    SHERIDAN v. THIBODAUX BENEVOLENT ASSN.
    (May 5, 1931. Opinion and Decree.)
    (October 7, 1931. Rehearing Granted.)
    (May 2, 1932. Opinion and Decree on Rehearing.)
    (May 23, 1932. Writs of Certiorari and Review Refused by Supreme Court.)

      Ott & Rich, of Bogalusa, attorneys for plaintiff, appellee.
    Voorhies & Labbe, of Lafayette, and Ott & Johnson, of Franklinton, attorneys for defendant, appellant.
   ELLIOTT, J.

Mrs. Cora E. Sheridan claims $1,000 of the Thibodaux Benevolent Association as due her on a benefit certificate, and the further sum of $50 on a burial fund certificate for that amount. These certificates had been issued to George C. Sheridan, her husband, as a member of the said association. Mrs. Sheridan is the beneficiary in the certificate for $1,000, and the certificate for $50 was payable to her as beneficiary of her husband. She alleges that George C. Sheridan was a member of said association in good standing at the time of his death;' that said association has refused to pay said certificate after due proof of his death and amicable demand.

She brought suit in Washington parish, the parish in which she resides and of which her husband was a resident at the time of his death.

The defendant, Thibodaux Benevolent Association, is domiciled in the parish of Lafayette.

Defendant excepted to the jurisdiction of the Washington parish court ratione personae. This exception was overruled, and an exception of non-joinder was then filed, which was also overruled.-

Defendant then answered, denying plaintiff’s right to recover on the certificates, and alleges that it is not liable at all, but that, if liability exists, it is that of the membership of the association, and that they can only be called on to pay in conformity with the articles of agreement under which the association exists.

The association further alleges that the membersip of George C. Sheridan was based on certain warranties concerning his health contained in his application for membership, in which he agreed that, if the stipulation concerning his health were not true, his membership in the association was to be null and void; that said Sheridan, after becoming a member, permitted his membership to lapse on account of nonpayment of assessments; that he after-wards made application for reinstatement, making certain statements in his application as to his health, agreeing therein that if his statements were untrue, his reinstatement was to be null and void.

Defendant alleges that the statements of said Sheridan in regard to his health in his application for membership and in his application for reinstatement were false and untrue; that his membership and said certificates were therefore null and void. Defendant tendered to plaintiff the premium whiph George C. Sheridan had paid, with accrued cost at the time of answering, and prayed that plaintiff’s demand be rejected. There was judgment in favor .of the plaintiff as prayed for. Defendant has appealed.

The Code of Practice, art. 165 (amended by Act No. 130 of 1926), in providing exceptions to the general rule, which requires a defendant to be sued before the court having jurisdiction over the place of his domicile or residence, says:

“10. In all suits on a policy of * * * life, * * * or sick benefit insurance * * * in case of life insurance, at the domicile of the deceased or his beneficiary.”

Defendant contends that it is a beneficent or benevolent association and not an insurance company, and that it is not liable to the provisions of this article of the Code of Practice, and can only be sued in the parish of Lafayette.

The question of jurisdiction was submitted to the court on an agreed statement of facts.

The articles of agreement whereby the Thibodaux Benevolent Association exists, offered in evidence, declare that Thibodaux Benevolent Association Circle 3 is a co-partnership.

The Civil Code, book 3, title 11 (articles 2801-2890), contains the law on the subject of partnership. It is stated in the articles of agreement that it is to have duration for 99 years, and makes no provision on the subject of profits and loss. On the death of a member, the association is to continue with new members for the period of time stated. The purpose of the association is, not to form a partnership, but to provide a fund, upon the death of a member to be collected from the membership for the benefit of the beneficiary of the member deceased.

The testimony of the president, Dudley J. LeBlane, taken by commission, in answer to interrogatory 31, shows, in connection with the article of agreement, that the association is a form of life insurance.

We copy from Yance on Insurance (Horn-book Series) sec. 30, p. 58 et seq., as follows:

“Life Insurance by Mutual Benefit and Adjustment Associations. — The fact that the various benefit associations include insurance upon the lives of their members as only one of the many functions undertaken by them, has induced many authorities to make statements implying that insurance -by such associations is peculiar and not subject to the rules of law applying to the ordinary contract of life insurance. This, however, is not correct. Por whatever may be the ultimate motive of the members of such benefit associations and however true that their membership may be based on the fraternal desire of mutual aid and for the promotion of social pleasures, yet the right of members to demand the benefits due in case of sickness or death, in accordance with the terms of the membership certificate, is purely a contract right, and none the less subject to the rules of law applying to life insurance, because of its intimate connection with the other benevolent purposes of the association. — It may therefore be. properly said that so far as the contract of membership in such benefit associations provides for the contingent payment of money in case of sickness or death, the agreement is one purely of life insurance, and in no wise different from the contract of similar effect made by the so-called ‘Old Line’ companies.”

The distinction between a membership certificate in a benefit association and the contract in an old line policy is then taken up by the author, but the distinction leaves unaltered the paramount fact that a benefit or benevolent association is a form of life insurance.

Bacon on Benefit Societies & Life Insurance (3rd Ed.) vol. 1, sec. 50 et seq., p. 81 et seq., and Ruling Case Law, vol. 19, subject, Mutual Benefit Societies, sec. 7, p. 1185, are to the same effect. The question of jurisdiction is considered in section 106, p. 1318.

The Code of Practice takes no account of the different forms of life insurance in providing where they may be sued. The exception to the jurisdiction of the court was, in our opinion, properly overruled.

The plaintiff sued the defendant by the name given in the articles of association, citing it through its president, Dudley J. LeBlane.

The defendant excepted, urging “that the Thibodaux Benevolent Association is an unincorporated association of persons, and plaintiff’s petition fails to make the members thereof parties defendant.” This exception was submitted to the court on an agreed statement of facts contained in the record.

Defendant cites Civil Code, art. 446, and Workingmen’s Accommodation Bank v Converse, 29 La. Ann. 369, and other authorities, to which we add Soller v. Mouton, 3 La. Ann. 541.

The article of the Civil Code has reference to corporations unauthorized by law. This defendant is an unincorporated organization authorized by law. Article I of the articles of agreement declares: “This co-partnership shall be known as the Thibodaux Benevolent Association, Circle 3 * * * by which name it shall do business, sue and be sued.” This agreement is binding on defendant. The articles of the association provide that it must have a membership of 2,000. It is not possible to cite 2,000 defendants in this suit.

The language contained in the United Mine Workers v. Coronado, 259 U. S. 344, 42 S. Ct. 570, 66 L. Ed. 975, 27 A. L. R. 762, is a proper authority in favor of the suit as brought.

In Executive Committee v. Tarrant, 164 La. 83, 113 So. 774, 776, 53 A. L. R. 1233, the Supreme Court, referring to the members of an unincorporated association, said:

“Where the members have a common or general interest in the subject-matter of the suit, or where the members are numerous and it is impracticable to bring them all before the court, since ithose who sue may' fairly be presumed to represent the rights and interest of the whole,” sustained the competency of certain plaintiffs to bring a suit in which many others were interested.

The converse of this proposition is equally true when the members of an unincorporated association are too numerous to be all sued. The doctrine of virtual representation of all the defendants applies in a case like the present. Ruling Case Law, vol. 20, subject, Parties, sec. 11, p. 672.

The present suit comes within the express provision of Act No. 170 of 1918. The case of Soller v. Mouton, 3 La. Ann. 541, and Workmen’s Accomodation Bank v. Converse, 29 La. Ann. 369, must yield to this enactment and to the necessity of the situation.

The exception of non-joinder was properly overruled.

The plaintiff offered her evidence.

The defendant then offered evidence, the object and purpose of which was to support the defense that George C. Sheridan had knowingly and untruthfully answered questions concerning the state of his health at the time of applying for membership, and had subsequently knowingly made an untruthful statement concerning his health in his application for reinstatement; that his answers in each instance deceived the defendant into accepting him as a member; that his membership, based on his answers, if recognized, would operate as a fraud on defendant; that his membership in the beginning, as well as that under his reinstatement, together with the certificates sued on, were, for said reasons, null and void, and without force or effect.

The plaintiff objected to testimony having this purpose in view, stating her objections at length to that of A. B. Westerfield, Dr. Martin, Dr. Lafferty and Dr. Ba-cot, offered by the defendant. The court overruled the objections only to the extent that it permitted the testimony offered to be introduced, to the end that it might be in the record in case of an appeal, and was ruled admissible on appeal. The lower court felt that the objections were good, and that the evidence was not admissible, because it could not have rendered judgment for the plaintiff as prayed for if the evidence had been taken into account.

It will serve no purpose, however, for us to act on these objections in connection ¡ with the membership of George C. Sheridan based on his first application, bearing date September 1, 1927, because the preponderance of the evidence on the subject does not show that his answers were untruthful in applying for his first membership.

The record shows that Sheridan, before becoming a member of the defendant association, obtained a benefit paying policy in the Pan-American Life Insurance Company. He found it well, after becoming a member of the defendant association, to avail himself of the benefits due under his policy in the Pan-American Life Insurance Company.

Dr. E. E. Lafferty, who was engaged in treating Sheridan for his sickness, made a report to that company on July 5, 1928, in connection with his application for benefits under that policy, stating that Sheridan had chronic nephritis, hypertension.

“Q. On what day did disability occur?
“A. January 1, 1928 (claimant’s statement).
“Q. On what day were you first consulted by claimant in connection with the present disability?
“A. About May, 1927.”

If this date, May, 1927, was true, it would make Sheridan’s consultation with Dr. Lafferty concerning the disease of which he died, say, four months previous to the day of his application for membership in the defendant association.

Dr. P. R. Bacot, who also made an ex parte report to Pan-American Life Insurance Company concerning Sheridan’s sickness, stated in his report:

“Q. On what day did disability occur?
“A. October 15, 1927.
“Q. On what day were you first consulted by claimant in connection with the present disability?
“A. October 15, 1927.”

This was a month and a half subsequent to Sheridan’s application for membership in the defendant association, and a month and six days subsequent to the, day of the certificates sued on by the plaintiff.

The report of Dr. Lafferty and that of Dr. Bacot to the Pan-American Life Insurance Company was placed before the court in the testimony of Mr. Westerfield, an officer of that company. Dr. Lafferty, as a witness on the trial of the present suit, does not sustain his report to Pan-American Life Insurance Company that he was first consulted by Sheridan in connection with the disability of which he died in May, 1927. His testimony leaves the date indefinite:

“Q. Did you treat Sheridan for the disease with which he died?
“A. Yes, sir.
“Q. When was your first treatment of that particular disease?
“A. I do not remember the exact date; I treated him before Dr. Martin and also after he treated him, and I saw him a few times while Dr. Martin was treating him.
“Q. What was that disease?
“A. Chronic Bright’s disease and high blood pressure.
“Q. Can you tell us. rather definitely when the first visit was that he called at your office?
“A. No, sir, I can not.
“Q. Dr. Martin stated that he treated him the first time on May 17th, 1928, was it before that time?
“A. I treated him before Dr. Martin treated him and also afterwards, and I saw him a few times while Dr. Martin was treating him.”

Dr. Lafferty never became more definite on the trial as to the time Sheridan first consulted him with reference to the disease of which he died than to say that he treated him before Dr. Martin treated him.

Dr. Martin testified that he was first consulted by Sheridan, and found him with what might be said to have been the disease of which he died, on May 17, 1928, which was more than four months after the day he first applied for membership in the defendant association.

H. N. Simmons, who took Sheridan’s application for membership, found him at work in his field gathering corn. He was Sheridan’s neighbor, and knew him well.

“Q. What was his appearance, he appeared to be in good health?
“A. Yes, sir. He was in good health as far as I could see.
“Q. You knew him personally and you went around and solicited his membership?
“A. Yes, sir. That was my business, soliciting for the Thibodaux Benevolent Association.”

Sheridan’s answers were written down by this witness as given him by Sheridan, and he was recommended by this_ witness to the defendant association for membership with the answers given.

In his application for membership, Sheridan answered “No” to all questions asked him about diseases. On answer to a specific question about kindney trouble, he answered “No.”

It has been decided a number of times that a policy of life insurance is not to be set aside on the ground that the applicant untruthfully answered questions concerning his health, even though it turned out after-wards that applicant, unknowing to himself, was infected at the time with a. disease which in the end terminated his life. Cole v. Life Ins. Co., 129 La. 704, 56 So. 645, Ann. Cas. 1913B, 748; Goff v. Mutual Life Ins. Co., 131 La. 98, 59 So. 28; Valesi v. Mutual Life Ins. Co., 151 La. 405, 91 So. 818; Cunningham v. Penn Mutual Life Ins. Co., 152 La. 1023, 95 So. 110; Carroll v. Mutual Life Ins. Co., 168 La. 953, 123 So. 638.

The preponderance of the evidence does not show that Sheridan was suffering with Bright’s disease on September 1, 1927, the day of his application for membership, nor on September 6, 1927, the day the certificates sued on were issued.

The defense in that respect is not sustained.

The record shows that Sheridan, after becoming a member, failed to keep up his membership by paying assessment dues.

Article 6 of the agreement under which the defendant was formed contains the provision:

“It being understood that such member shall cease to be a member and shall forfeit his rights to any benefit to his or her certificate and to all funds or affairs of this co-partnership and without further notice, in the event they shall fail to pay such assessment duesi within 20 days after they have been notified by the Association to pay the same. And the mailing of such notice shall be conclusive evidence that it has been received by the member. Such defaulting member, if not over age and in good health, may be re-instated in the discretion of the Board, upon the payment of all dues and assessments owed by him or her to this Association.”

It has been held that an agreement of this kind in the by-laws of the American Legion of Honor was self-operative, and, upon failure of a member to pay dues, the member ceased to be a member. Feiber v. Supreme Council, 112 La. 961, 36 So. 818.

Delinquency on the part of Sheridan in the matter of his dues to the defendant is conclusively shown by his application for reinstatement. This application bears date October 22, 1928, and contains the following stipulation on the part of Sheridan:

“I * * * apply for re-instatement in the Thibodaux Benevolent Association and for that purpose I hereby represent and warrant that I have no sickness or disease and have met with no accident leaving me in a diseased, disabled or crippled condition since my membership lapsed; that my general health is good.”

Defendant avers that Sheridan was aware at the time the above statement was made that it was untrue. There can be no doubt about it, in view of the report of Dr. Lafferty and Dr. Martin to the Pan-American Life Insurance Company, their subsequent testimony given on the trial of the case, and the sworn statement to the Pan-American Life Insurance Company by Sheridan himself on July 19, 1928, in his application for benefit payments to that company.

Mr. Blackwell, who took Sheridan’s application for reinstatement, testified on the subject as follows:

“Q. Do you recall having taken an application for the reinstatement of G. C. Sheridan?
“A. Yes, sir.
“Q. Where was that taken?
“A. Just inside the Great Southern pasture I met him one morning. I don’t know where he was going, but I met him and asked him about it — to let me reinstate him. At that time it cost one dollar for reinstatement and I said you can go ahead and pay me later. He didn’t have the money with him; so in about a week later or two weeks I met him in Bogalusa and he paid me the dollar. He told me that morning — he says, I’m sick today, and I says, well, if you die I’ll make the company go out and get the $1,000, or something like that, just joshing.
“Q. Was G. C. Sheridan doing anything at that time, that you know of, any kind of work?
“A. I don’t know. The morning I reinstated him he was in a hurry. He wanted to get back home to do something; seems to me like he said he wanted to dig potatoes. He was in a hurry, any way.
“Q. Who suggested his reinstatement, you or him?
‘‘A. I did.”

As against this testimony that Mr. Sheridan was up and about and not sick on October 22, 1926, we have his application to Pan-American Life Insurance Company for benefit payments under his policy in that company made July 19, 1928, more than a month previous. He was then asked:

“Q. Are you wholly, continuously and permanently disabled?
‘‘A. Yes.
“Q. Will you be unable for the remainder of your life to perform any work or conduct any business for gain, compensation or profit?
“A. Yes.
“Q. When did you quit work entirely?
“A. January 1, 1928.
“Q. Por what proportion of each day are you confined to your bed and to your house?
“A. All day, except calling on doctor.”

Dr. Lafferty and Dr. Martin both testify that they had, at the time he applied for benefits to Pan-American Life Insurance Company, given him to understand the nature of the disease with which he had been taken.

His statement to the Thibodaux Benevolent Association in his application for reinstatement to membership that he was not diseased, and that his general health was good, was to his knowledge untrue, and untrue to the extent that it must have the effect of rendering his membership in that association, together with the certificates sued on, null and void, and of no force and effect, if it is admissible against the plaintiff. Goff v. Mutual Life, 131 La. 98, 59 So. 28; Lee v. N. Y. Life, 144 La. 445, 80 So. 652; Null v. Sovereign Camp, W. O. W., 2 La. App. 401; Vaughn v. Metropolitan Life, 3 La. App. 614. It is therefore necessary to act on plaintiff’s objections in connection with Sheridan's application to the defendant association for reinstatement.

Her objections, abbreviated as much as possible, without taking from their meaning and effect, may be stated as follows:

(1) That, under the provisions of Act No. 97 of 1908, where no medical examination was required before issuing insurance on the life of an insured, as in this case, the defendant waived any defense in regard to the health of the insured, which defense seeks to defeat the payment of the policy.

(2) That, under the provisions of Act No. 227 of 1916, no statement made by the insured can be used as a defense on a policy issued, unless such statement be contained in the application. In this case none was annexed to the policy or certificate.

(3) That under the provisions of Act No. 227 of 1916 neither the insured nor the beneficiary is bound by any by-law, constitution or regulation not attached to, or made part of, the certificate furnished to the insured; and beneficiary.

(4) And for the further reason that the defense set up in the answer does not allege sufficient legal facts to support a defense to defeat recovery under the policy sued on in this case.

Sheridan’s application for reinstatement contains the following stipulation:

“* * * in consideration of my reinstatement I hereby agree that my original application, my declaration thereon, my declaration hereon, my certificate, and by-laws of the Association, dated October 30th, 1925, shall in the event of my reinstatement, constitute the contract between myself and the Thibodaux Benevolent Association, and that if reinstated, my beneficiary or beneficiaries will not be entitled to any insurance caused by my death in the event it occurs before the day of my reinstatement; nor will they be entitled to any benefits if any misrepresentations have been made by me.”

Plaintiff contends that Act No. 97 of 1908 governs this case, and that, even though fraud in answering questions may be charged and established, fraud is not an available defense under this act when a medical examination has not been required.

This act provides that:

“Whenever life, health or accident insurance companies, which issue policies or contracts of insurance to the assured without a medical examination of the assured by a physician, it shall be presumed (whenever it appears that the agent of the company has’ had an opportunity to ascertain the true condition of the health, habits or occupation of the assured, and has certified to the company the desirability of the risk), that the knowledge acquired, or which might have been acquired with reasonable diligence by the agent of the company in securing the application, as to the health, habits or occupation of the assured, has been disclosed to his principal; and it shall also be presumed that the company has waived its rights to claim a forfeiture of the policy based on the ground that the assured did not make true and full answers in the application as to the health, habits or occupation whenever it shall appear that the' agent of the company knew, or might have ascertained with reasonable diligence, the true condition of the applicant’s health, or the real facts as to his habits or occupation, knowledge of the agent of the company in writing the application, or qf the collector of the company in collecting the premiums from the assured, shall be imputed as notice to the company, as to the health, habits or occupation of the assured.”

This act seems to us, by its terms, to contemplate only insurance companies that issue policies to be paid by the insurance company after the death of the insured. Under defendant's organization, the certificates issued are paid after the death of a member, not by the association, but by means of assessments levied on the membership.

Furthermore, the insurance companies contemplated by this act have agents with authority from the company to sell insurance for profit on the part of the company. In the defendant association there is no profit to the association in issuing certificates to those who become members. Then again, the insurance companies contemplated by the act are such as have agents with authority from the company, upon selling insurance, to have the health of the person to whom the sale is made examined by a physician. The defendant association has no such agents, but, as testified to by Mr. LeBlanc, an examination by a physician of the health of an applicant may be ordered, if his answers indicate that it is advisable that it be done.

Article 10 of the articles under which the defendant association exists stipulates on this subject as follows:

“It is understood and agreed that these articles, as well as the application and beneficiary certificate, are parts of the contract or agreement between the association and the member. The application of a person is accepted by the association based upon the statement of facts contained in it, which are taken as true and correct, whether written by the person or not, and if any part of same is untrue, or if any misrepresentation has been made to gain admission into the association, or for any other purpose, the person agrees that his or her membership shall be null and void —in which case he or she shall not be entitled to any benefits of this association.”

In the case of Russ v. Supreme Council of the Legion of Honor, 110 La. 588, 34 So. 697, 98 Am. St. Rep. 469, the Supreme Court held:

“A benefit certificate issued by a mutual aid association to one of its members' is a contract, which can be changed only by the consent of both parties.”

The case of Randazzo v. La. Mutual Aid Fire Indemnity Society, 13 Orleans App. 223, is to the same effect.

In the case of Mull v. Sovereign Camp, W. O. W., 2 La. App. 401, the court said (we quote from the syllabus):

“A false statement by an applicant for fraternal benefit insurance to the effect that he had not consulted a physician for five years and was ‘never sick’ voids the certificate of insurance subsequently issued by the fraternal benefit society when the application contains a clause stipulating that any false statement contained therein shall vitiate the insurance. Particularly is this true when the applicant is shown to have been suffering with tuberculosis at the time the application was executed.”

According to Bacon on Benefit Societieand Life Insurance (3d E‘d.) sec. 50, p. 81, and section 193, p. 399, the application of statutory provisions, such as Act No. 97 of 1908, to benevolent associations, depends on the evident intent of the act.

The same subject, application of statutes of the kind mentioned to benevolent associations, is considered .in Vance on Insurance, sec. 30, p. 59 et seq., and Ruling Case Law, vol. 19, subject, Mutual Societies, sec. 7, p. 1185 et seq. We do not quote from these authors, because to get their views it is necessary to read the entire sections on the subject.

In the case of Massachusetts Protective Assn. v. Ferguson, 168 La. 271, 121 So. 863, it was held that, although fraud was charged in obtaining a policy, obtained without medical examination as provided for in this act, the charge did not render the act any the less applicable. But in that case the policy seemed to be one of the standard forms of mutual life insurance; therefore, we think the case not governing in the present situation.

It is our conclusion that Act No. 97 of 1908 was not intended to, and therefore does not, apply to benevolent associations having only such purposes, objects and government as the defendant.

. The plaintiff further cites and relies on Act No. 227 of 1916. This act refers to life insurance, and provides:

‘ “That every policy of insurance issued * * * by any life insurance corporation doing business within the State shall contain the entire contract between the parties and nothing shall be incorporated therein by reference to any constitution, by-laws, rules, application or other writings unless the same are endorsed upon or attached to the policy when issued; and all statements purporting to be made by the insured shall in the absence of fraud be -deemed representations and not warranties, and no statement or statements not endorsed upon or attached to the policy when Issued shall) be used in defense of a claim under the policy unless contained in a written application and unless a copy of such statement or statements be endorsed upon or attached to the policy when issued. Any waiver of the provisions of this section shall be void.”

■ 'This act is expressly limited in its application to corporations. The defendant is not a corporation. Not only that, but the act provides an exception when there has been fraud in the representation. The Supreme Court, in considering this provision in the act, has held that the provisions of the act do net protect the insured if fraud has been practiced in answers of such character that the insurance companies w.ere thereby deceived and would he defrauded if the contracts are enforced. This was decided in Goff v. Mutual Life, etc., 131 La. 98, 59 So. 28; Lee v. New York Life, etc., 144 La. 445, 80 So. 652. The same is the proper inference from Valesi v. Mutual Life, etc., 151 La. 405, 91 So. 818, and Carroll v. Mutual Life, 168 La. 953, 123 So. 638.

This court in the case Jim Vaughn v. Metropolitan Ins. Co., 3 La. App. 614, acting on a defense of this kind in which this act was invoked, had this to say:

"We are satisfied from the facts and circumstances in the case that he [meaning the insured] must have been aware and was aware that he had tuberculosis at the time he applied for the insurance; therefore his answers amounted to a fraud on ,the defendant within the sense and meaning- of the law.”

In the case Lee v. New York Life, the insured, as in this case, had Bright’s disease. As already stated, the act in question is limited to corporations, consequently it does not in terms apply to the defendant. But suppose it to be applicable, under the exception which it contains, when there has been fraud it does not govern the situation in the present case, because fraud is charged and proved in the matter of the reinstatement. Therefore the reinstatement as well as the certificates sued on must be regarded and held to be null and void.

Before concluding, we desire to say that Act No. 256 of-1912 (title Amended Act No. 287 of 1914), providing for the organization, admission and regulation of associations transacting the business of life, accident, benefit and physical disability insurance on the fraternal plan, section 4 of which provides: “That except as herein provided, such societies shall be governed by this Act, and shall be exempt from all provisions of the insurance laws of this State * * * and no law hereafter enacted shall apply to them, unless they he expressly designated therein,” provides for fraternal organizations having a lodge system and a ritualistic form of government. The act for said reasons does not apply to the defendant, which was not organized for fraternal purposes, has no lodge system, and is not governed in the way stated.

The judgment appealed from is in our opinion erroneous and contrary to the law and the evidence, and should be- annulled and set aside and plaintiff’s demand rejected.

For these reasons, the judgment appealed from herein is annulled, avoided, and set aside, and the demand of Mrs. Cora Sheridan, the plaintiff, is now refused and rejected at her cost in both courts.

ON REHEARING

LeBLANC, J.

The question about which we entertained further doubt, after the original decision of this case on appeal, 134 So. 360, was whether the provisions and waivers in Act No. 97 of 1908 applied to an association of the character qf this defendant.

The original opinion of this court holds that the Act of 1908 referred to, as well as Act No. 227 of 1916, do not govern mutual benevolent associations, which is what this defendant was held to be, and therefore the waivers therein referred to do not apply, and, as the insured had misrepresented the condition of his health at the time of his application for reinstatement, the defendant was relieved from liability and the beneficiary was denied recovery under the certificate which she held.

We are still of the opinion that the statements made by the insured at the time he applied for reinstatement were untrue. We are also of the same opinion that the provisions of Act No. 227 qf 1916 do not govern in this case, as they are to be applied only against those insurance companies which are legal corporations. In other words, such companies as are duly incorporated under the laws of those states in which they have their domicile. The defendant here is not an incorporated association, and therefore does not come within the requirements and provisions of that act.

The task of reviewing the case on this rehearing is therefore limited to a consideration of two questions: (1) Is the defendant such an insurance company as is governed by the provisions of Act No. 97 of 1908; and, if it be held, to be such, (2) do the waivers provided for under that act apply only to statements made in connection with the original application for insurance, or do they apply equally to statements made in connection with an application for reinstatement of a lapsed policy or certificate?

There is no doubt but that several important differences can he pointed out between associations like this defendant and regular life insurance companies, but, when fully analyzed, is not the fundamental purpose of each the same? Are not such associations in substance and effect companies or associations carrying on the business of life insurance? Instead of a policy, the beneficiary holds a certificate, both being to the same effect, which is that, within a certain time, after proof of death of the insured, the company will pay to such beneficiary a certain sum of money, provided the insured (who is called a member in the association) shall have paid all dues assessed against him. This assessment corresponds to the premiums paid by the insured in the regular insurance company, and, instead of having to be paid at stipulated periods, has to be paid upon due notice of the death of a member in the same circle to which he belongs. It is true, although the amount to be paid under the certificate is stipulated as being $1,000, that there is a qualifying provision following, which may limit it to a certain amount according to the collections that are made, but that qualification does not take away from the association its nature and character, which, strictly speaking, is a form of life insurance. Regular life insurance companies bind themselves to pay a certain amount specified in the policy which they issue, which amount is necessarily also based on the number of persons they keep insured and on a death rate that is calculated along the most scientific lines. If they did not maintain or increase the number of persons they insure, or, if, as LeBlanc, the president of the defendant association, says, they insured people, regardless of their health, they would not be able to survive and pay off their losses any more than his association could. Regardless of the altruistic motives which he says lie back of his association, it stands out in the final analysis as essentially a form of life insurance based on the plan of mutual life insurance. The lofty sentiments of friendship and family ties referred to by him and by which he says members are bound to each other to help themselves in the misfortune of death are overshadowed by a consideration of the fact that the association is statewide, or perhaps wider, and that in a single circle, such as the one to which the deceased in this case belonged, and which is circle No. 3, there are two thousand people, some living hundreds of miles apart, and a vast majority no doubt being tofal strangers to each other. Our conception of a truly mutual benefit society is better conveyed in paragraph 6, which deals with the subject in Ruling Case Law, volume 19, page 1183, than we can express it ourselves. In making a distinction between such societies and insurance companies, among other things, it is stated:

“Nor are benevolent and beneficial associations influenced solely by the strict letter of their contractual obligations, but also by a spirit of fraternity. Thus, it not infrequently happens that the dues of a sick member are paid by the members of his subordinate lodge, or put out of its treasury, to keep him in good standing, in the face of impending death, for the very purpose of securing the payment of the benefit fund to his family. Such is not the conduct of mere strangers with each other, or of those who are bound only by the ties of insurance.”

We cannot say that we read in the organization of the Thibodaux Benevolent Association any such kind of society, and neither do we see, in the conduct of its business any such relation between those who compose it.

That there are differences between such associations as are referred to and regular life insurance companies, is, as already intimated, patent. But the question at issue is: Are they such differences as exempt them from the provisions of states’ laws respecting insurance? In some jurisdictions, it is held that they are, but, as we view it, the weight of authority is otherwise. As appears from Ruling Case Law in the section following the one just quoted, in a number of jurisdictions, they are exempt by some express provisions of law from the regulations, or some of the regulations imposed on life insurance companies. “Under statutes of this nature,” says that authority, “the decisions vary as to what is essential to bring an association within the exception, but they are practically unanimous in agreeing that where such associations have an insurance department and the provisions of a fraternal character are eliminated, their primary and only purpose is that of life insurance.” That language seems peculiarly appropriate in considering this case, particularly in view of the fact that there is, in Louisiana, a special statute, Act No. 256 of 1912, which exempts fraternal insurance societies from the provisions of our special insurance laws. If it had been the intention of the Legislature to also exempt mutual benevolent associations, it would have been a very simple matter to include them along with fraternal societies in the act of 1912.

Quoting, further from where we left off in Ruling Case Law, we see that:

“Where the whole purpose of an association is to secure to each member thereof the payment, on his death, to his beneficiary or representative, of a certain sum of money, subject to the fulfillment of the conditions imposed by the charter and bylaws, and practically the only qualifications required for membership are that the applicant shall be in a certain condition of health and within a certain age, then such society is an insurance company and bound to comply with the laws governing such.”

There, it seems, we have exactly what this defendant association is, and, being so, it is then a society which is essentially in substance and form an insurance company, and is bound by the laws of this state governing such. Among those laws, of course, is Act No. 97 of 1908, which provides, as shown in the original opinion, that the company which does not require a medical examination of an applicant for insurance shall be presumed to have “waived its rights to claim a forfeiture of the policy based on the ground that the assured did not make true and full answers in the application as to the health, habits or occupation whenever it shall appear that the agent of the company knew, or might have ascertained with reasonable diligence, the true condition of the applicant’s health, or the real facts as to his habits or occupation,” and that “knowledge of the agent of the company in writing the application, or of the collector of the company in collecting the premiums from the assured, shall be imputed as notice to the company, as to the health, habits or occupation of the assured.”

Having now reached the conclusion that the defendant is subject to the provisions of the act of 1908, we next have to consider the second question presented, which is: Does the waiver therein specified apply to statements made in an application for reinstatement as well as to those made in connection with the original application?

In view of a recent decision of the Supreme Court on a similar question before it, the matter is now an easy one for us to decide, as we have no alternative but to follow the decision of the Supreme Court.

We refer to the case of Eddins v. National Life & Acc. Ins. Co., 19 La. App. 472, 173 La. 644, 138 So. 430. That case involved the application of the provisions of Act No. 227 of 1916 to applications for reinstatement, and it was held that they applied the same as in the case of the original application. The act of 1916 is one of the same nature as that of 1908 under consideration here, and we believe the decision is controlling in this case. Indeed, counsel for defendant virtually concedes it to be, in the event we held that the act of 1908 governed at all.

The conclusions we have now reached force us to a different decision than was originally rendered by us in which the judgment of the lower court was reversed and the demands of the plaintiff rejected.

For the above and foregoing reasons, it is now ordered, adjudged, and decreed that the original judgment of this court be, and the same is now, set aside, avoided, and' reversed, and it is further ordered, adjudged, and decreed that the judgment of the district court be reinstated and made the judgment of this court. The defendant to pay all costs.

ELLIOTT, J.

(dissenting). I think the Thibodaux Benevolent Association articles of agreement and their policy sued on are a kind of life insurance, and that, such being the case, the defendant is properly sued and cited as stated in the original opinion. I further believe that, if Act No. 97 of 1908 is applicable tq the original policy, it applies with equal reason to the application for reinstatement; but I do not think the act in question applies to the-agreement under which the Thibodaux Benevolent Association is operating and working. I think the act was intended to apply to life insurance companies which sell policies of insurance and receive payment in-premiums, and where the policy issued is the direct obligation of the insurer tq the insured or the parties claiming under him. But the defendant is not bound in that way, and does not operate in such a way, that its policies constitute an obligation such as is usually issued by regular life insurance companies.

I think the original opinion deals with the situation properly in the matter mentioned; consequently the act in question should" not, in my opinion, enable the plaintiff to recover under the circumstances of the present case.

I therefore respectfully dissent.


source: Caselaw Access Project

author: ELLIOTT, J.

license: Public Domain

text:
    No. 978
    First Circuit
    MORRIS v. MILLER
    (May 3, 1932. Opinion and Decree.)
    S. S. Reid, of Amite, attorney for plaintiff, appellant.
    Ellis, Ellis & Ellis, of Amite, attorneys for defendant, appellee.
   ELLIOTT, J.

B. W. Morris alleges that by sale made on June 14, 1930, he sold and delivered to N. E. Miller an automobile for the price and sum of $610, and that he, at .the same time, advanced to said Miller the sum of $9.55 for the purpose of purchasing a license for said car, a total of $619.55. That said Miller owes him the amount, and that amicable demand has been made in vain.

The defendant Miller admits receiving the automobile from the plaintiff, but alleges that he gave in payment and exchange for same a certificate of deposit in Farmers’ Bank of Osyka, No. 4262, bearing date October 22, 1929, for $600. That said certificate was in complete payment and exchange for said automobile. He denies owing plaintiff anything on said account. There was judgment in favor of defendant rejecting plaintiff’s demand. The plaintiff has appealed.

The question is whether the parties entered into a sale or an exchange. They both admit that on October 9, 1930, which was three months and twenty-five days after the date of the transaction in question, the Farmers’ Bank of Osyka closed its doors.

The certificate was produced on the trial and offered in evidence. So far as concerns its form, it says on its face: “* * * N. E. Miller has. deposited in this bank $600.00 payable to the order of himself or Mrs. Beulah Miller in current funds on the return of this certificate properly endorsed 12 months after date, with interest at 4 per cent per annum.— No interest after maturity. Not subject to check.” Mr. Morris, giving his version of the transaction says:

“He came in one day with his family and said he had decided he would take the car, so I sold it to him and he gave me a certificate, that there, for the amount of this car and this certificate was endorsed by him and Mrs. Miller in payment for it and there was an amount of interest which would be due on this certificate that he said would be due at a certain day. So he made arrangements with me that if I would pay the license for him, that part of the interest would take care of that on this sale.”

Mr. Morris was further examined, and testified at length, but the above excerpt is. the substance and effect of his contention on the subject. Mrs. Morris, wife of plaintiff, testified in the case but her testimony adds nothing to the claim of her husband.

Mr. Miller’s version of the transaction is as. follows:

“I asked him, what is the pri.ce of that car and he said $610.00 and I said, Well now, here is what I’ve got. Showing him the duplicate (should be certificate) .there and it is all I’ve got to put in a car. I want the car put on the road with license plate and everything for that certificate. And he said I will do it.”

His testimony continues, but the above excerpt is the' substance and effect of his contention on the subject. The testimony of Miller was corroborated by Mr. Angelin, an employee of Morris at the time, working in his. garage and who assisted him in negotiating with Miller. Mr. Angelin says:

“They went up and looked at the car and I went with them. Mr. Miller had already .told us about this deposit slip he held, that he had to pay for the car with. So he told Mr. Morris, I cannot. * * * He pulled out his pocket book and got the slip out and said, This is all I’ve got, will you put this car on the road for .this? And he said yes.”

There was further examination, but the above is the substance of what he said.

The preponderance of the evidence indicates that the agreement was an exchange. Morris received .the certificate of deposit and gave in exchange for it an automobile, which Miller on his part received and drove home. Civ. Code, art. 2660; Shuff v. Cross, 12 Mart. (O. S.) 89. An exchange of things such as these parties made is not subject to lesion. Civ. Code, art. 1863.

There is no contention on the part of the plaintiff that defendant warranted the payment of the certificate at its maturity. Consequently, we do not discuss that subject, except to say that nothing indicates that the certificate was not good at the time of the transaction.

The judgment appealed from is correct.

Judgment affirmed. Plaintiff and appellant to pay the cost in both courts.


text:
    No. 989
    First Circuit
    THOMPSON v. MICHELLI
    (May 3, 1932. Opinion and Decree.)
    Shelby Taylor, of Baton Rouge, attorney for plaintiff, appellee.
    R. F. Walker and Jos. A. Loret, of Baton Rouge, attorneys for defendant, appellant.
   ELLIOTT, J.

The plaintiff, designating himself as V. L. Thompson, claims, of the defendant, Bruno Michelli, the sum of $396.75, with legal interest thereon, on account of work done for defendant as brickmason. He further claims the existence of a privilege in his favor on the house constructed, and prays for its recognition and enforcement in order to make sure of the payment of the amount due on account of said work.

The defendant, Michelli, was duly cited and appeared, but we are prevented from considering the ease further than the ruling of the lower court on an exception which Michelli filed to plaintiff’s petition in limine litis, designated as an exception of vagueness, but which is in fact based on plaintiff’s failure to state in his petition his Christian name. Defendant timely objected to the failure, but the court overruled the exception. Defendant, under reserve thereof, then further excepted on another ground, which was also overruled, and then, under reserve of his. exception, filed an answer. The case was then tried on its merits, resulting in a judgment in favor of the plaintiff for $267.75; recognizing the existence of a privilege on the property on which the plaintiff had worked, and ordered its enforcement, etc.

Defendant has appealed and urges on appeal his exception that plaintiff’s petition does not mention his name.

The law, Code Practice, art. 172, provides;

“The petition * * * must mention * * * the name, surname and place of residence of the plaintiff.”

The petition gives the initial letters V. L. and states the surname, hut that is not a compliance with the law. This identical question was before the Supreme Court nearly a hundred years ago. In the case Lee & Hardy v. Rice et al., 12 La. 254, the court said:

“The Code Practice, article 172, No. 1, requires that the petition contain the name and surname of the plaintiff. In that under consideration, the plaintiff, Hardy’s surname is only given. We have only, the initials P. A., instead of his other or Christian name. These letters may signify Peter Anthony, Paul Andrew, or any other names having the same initials. This is not a sufficient compliance with the law: and the District Court, in our opinion, erred in disregarding the defendant’s exception in this respect.”

The court then proceeded to reverse the judgment and remand the case, etc. In bringing the present suit, the plaintiff should have stated his name, ordinarily called his Christian name, and, when he was. called on by defendant by means of his exception to do só, he should have been required to furnish his name by the lower court. It was error to overrule the exception, and, after an attentive examination, we find that the judgment appealed from must be set aside and the case remanded on that account.

For these reasons, the judgment appealed from is annulled, avoided, and set aside, the exception mentioned is sustained, and the case is remanded to the lower court, with leave to the plaintiff to amend his petition so as to state his Christian name as required by the Code of Practice. Upon compliance with -the law in the matter mentioned, the case may be then proceeded with in the lower court in due course and in the manner and form provided by law. The plaintiff-appellee to pay the, cost of appeal; the cost in the lower court ,to abide the final result of the suit.


author: MOUTON, J.

text:
    No. 955
    First Circuit
    HOOVER v. PENNINGTON (LUCY LOCKHART, Intervener)
    (May 3, 1932. Opinion and Decree.)

      Rownd & Warner, of Hammond, attorneys for plaintiff, appellant.
    Ellis, Ellis & Ellis, of Amite, attorneys, for intervener, appellee.
   MOUTON, J.

Mathew Lockhart died in Tangipahoa in 1921. An inventory was taken of his property which was in community with Lucy Lockhart, his surviving spouse, who qualified as the natural tutrix of Gordon, Selby, and Beida Lockhart, minors at that time.

In 1919, about two years before his death, Mathew Lockhart executed a mortgage on three small tracts of land in favor of Simpson Sharp for $3,000, represented by a promissory note for that amount. There was no consideration for this note, which was returned by Sharp to Mathew Lockhart a short time before his death, and which was found among his papers.

Sharp testifies that Lockhart was not his debtor in any amount when the mortgage was executed. The fact is that it was known by all that the note was fictitious..

The note found its way in the hands of Clarence Pennington, the son-in-law of Mrs. Lockhart, widow of Mathew Lockhart, and without any consideration being given by Pennington for the note. The fact is that in a counter letter given by Pennington to Mrs. Lockhart, he admits that he was not the owner of the note, but that it belonged to her.

Executory proceedings were however taken out on this note in the name of Pennington, under which the estate of Lockhart was sold at sheriff’s sale in November, 1926, at which the mortgaged property was. bid in by Clarence Pennington.

In the case of Pons v. Yazoo & M. V. R. Co., 131 La. 313, 59 So. 721, the promissory note on which plaintiff inaugurated his foreclosure proceedings, the evidence showed, had been paid.

The court held therein that no title could be conveyed to an adjudieatee on a mortgage note that had been extinguished by payment. The court had previously ruled likewise in Pons v. Yazoo & M. V. R. Co., 122 La. 156, 47 So. 449.

Obviously, the reason underlying these two decisions is that as the note evidencing the obligation had been extinguished by payment, the mortgage, a mere accessory, had ceased to exist, and a sale thereunder could transfer no title.

Here, the estate of Lockhart owed nothing on the note, which therefore never had any legal existence and could not be extinguished by payment. The mortgage likewise had no existence, as it had no principal obligation to support it as an accessory.

The adjudication to Pennington was therefore null and conveyed no title to him for the reason stated in the decisions, above cited. Pennington took this view of the situation, as appears from his counter letter to Mrs. Lockhart, above referred to, wherein he says, the property was bid in his name for Mrs. Lockhart’s convenience, but that it remained her property.

In 1929, for what purpose it is hard to conceive, John Graham was appointed administrator of the succession of Mathew Lockhart, and the property in question was sold to pay debts, and was bid in at the sale in the name of Pennington, who, however, appears in these proceedings and disclaims any ownership thereto. Hence it is clearly established that Pennington never acquired ownership of the property and which remained in community between Mrs. Lockhart, surviving spouse, and five children, issue of her marriage with Mathew Lockhart, three of which were minors, at his death, and two majors.

On November 24, 1926, about two months after Pennington had executed his counter letter recognizing Mrs. Lockhart as the owner of .the property, he, by authentic act, appointed Mrs. Lockhart his agent and attorney in fact to lease, sell, alienate, or mortgage any property owned by him •situated in Tangipahoa, but more particularly the land in question, and which is involved in this litigation, as will hereinafter appear.

November 27, 1926, Mrs. Lockhart, appearing in her capacity as the agent of Clarence Pennington by virtue of the power of attorney hereinabove mentioned, mortgaged the property in question in favor of Julius A. Hoover, plaintiff in this, suit, for $1,200, for money loaned by Hoover, represented by three notes; one for $100, and two for $550. The note for $100 was paid; this suit being instituted under executory process by Hoover, plaintiff, against Pennington, defendant, for the sale of the mortgaged premises to satisfy the two notes amounting to $1,100, with 8 per cent interest, less $25 paid on interest and 25 per cent for attorney’s fees, as stipulated in the act of mortgage.

Mrs. Lockhart, filed an intervention in this case for herself, individually, and for her minors, Gordon, Selby, and Beida, asking for an injunction to prohibit the sale of the mortgaged property.

Gordon and Selby, having been emancipated, joined the two major heirs, praying to be recognized owners of the property in the proportion of one-fifth of one-half each.

As hereinabove stated, the mortgaged land never having been acquired by Pennington, as adjudicatee in foreclosure of a mortgage which was absolutely null, it follows that its ownership remained in the major, minor heirs, and Mrs. Lockhart, in the proportion of one-half for the heirs, and one-half for Mrs. Lockhart, surviving widow.

It is' appropriate to state here, that in granting the mortgage .to Hoover, plaintiff in these proceedings, Mrs. Lockhart had no authority from the major heirs to represent them, and no power hy family meeting or otherwise to represent Gordon and Selby, who have since been emancipated, or Beida, the minor, now under her tutilage. No plea of estoppel was filed against the right of the two majors and the two emancipated minors to attack the mortgage, and so far as it affects .their undivided interest in the property; but even if that defense had been raised such a plea would be unavailable to Hoover, plaintiff herein.

A plea of estoppel is however urged by Hoover against the right of Mrs. Lockhart, and the minor, Beida, to attack the validity of the mortgage, and their claim for an injunction to arrest the sale.

In so far as Beida, the minor is concerned, such a defense by Hoover has no merit, as Mrs. Lockhart, her tutrix, did not have the shadow of any legal authority to affect or bind the undivided interest of that minor in the property mortgaged to plaintiff.

It is different, however, with Mrs. Lock-hart, where plaintiff in his answer to her intervention specially pleads that, as she represented Clarence Pennington in the act of mortgage granted to Hoover for the money loaned by him upon which these executory proceedings have been issued, she is now estopped to deny the validity of that mortgage.

In the case of Americus Watson v. Succession of Thomas Barber, 105 La. 456, 29 So. 949, 951, where the plea of estoppel was urged as a defense, the court, in passing on that issue therein presented quoted from Hermann on Estoppel, as follows:

“Where the party solemnly admits a fact by a deed under his hand and seal, he is .estopped not only from disputing the deed itself, but every fact which it recites.”

It would hardly be contended that Mrs. Lockhart could dispute the deed itself or the notes which she signed in her capacity of agent for Pennington. In the act of mortgage executed by Mrs. Lockhart for Pennington, she grants it on the property in question to which Pennington, in the authentic act constituting her his agent, refers as property owned by him situated in the parish of Tangipahoa. This mortgage is granted under this power of attorney as is therein stated, and on the property mortgaged as belonging to Pennington, which, we find, constitutes a recital of facts that Mrs. Lockhart is estopped under the authority, above cited, from denying or questioning.

The truth is, that the money loaned by Hoover went into the hands of Mrs. Lock-hart, who, it seems, became dissatisfied with the deal, because she expected to sell the property to Hoover instead of mortgaging it. Mrs. Lockhart seems to have made an unwise disposition of the money borrowed in the way of payments for attorney’s fees and costs of court. If she made a mistake in that respect, Hoover was certainly not responsible for it. In her testimony she admits owing Hoover $1,000, and testifies she expects to pay him when she gets the money. The truth of the matter is that the mortgage was. for her benefit, and that, to accommodate his mother-in-law, Pennington permitted the mortgage to be given in his name, and to be so recorded. Pennington also, strange to say, appears in these complicated proceedings asking for an injunction to stop the sale. He alleges that while the title was taken in his name it was so placed to protect the interest of the minors of Mrs. Lock-hart, and that to permit the sale would work an irreparable injury to him and to the minor heirs. As he disclaims any rights or title to the -property, we cannot see how his interests would be affected, except in so far as the proceedings, have been instituted against him; but he has brought this about by his own vountary acts, and for the protection of the minors, and as to which he has no ground for a legal complaint.

We hold that the minor’s interest and those of the other heirs in the property cannot be affected by the mortgage, thus affording the protection to the minors that Pennington, according to his averments, is seeking to obtain by his intervention.

The lower court rendered judgment annulling, in toto, the mortgage granted by Clarence Pennington to plaintiff, Julius A. Hoover, on November 27, 1926, for $1,200, through his agent, Mrs. Lucy Lookhart, and all the proceedings in the foreclosure of that mortgage. This part of the judgment must be reversed, in so far as it liberates from that mortgage the one-half undivided interest of Mrs. Lucy Lockhart in the property mortgaged.

The executory process obtained by plaintiff herein will be maintained to the extent that it affects the interest of Mrs. Lockhart in the property, as above indicated, but the 25 per cent for attorney’s fees stipulated for in the mortgage will be reduced to 10 per cent, usually accorded in such eases; the judgment maintaining the injunction in so far it prohibits the sale of the undivided half of Mrs. Lockhart in the property mortgaged will be reversed.

It is therefore ordered, adjudged, and decreed, that the judgment of the lower court decreeing the total annulment of the mortgage granted by Clarence Pennington for $1,200, November 27, 1926, in favor of plaintiff on the property described in the judgment below, be, and is hereby, annulled, avoided, and reversed, in so far as it affects the undivided one-half interest of Mrs. Lucy Lockhart in the property mortgaged; and the injunction to that extent is hereby dissolved.

It is further ordered and decreed that plaintiff have judgment against defendant for the sum of $1,100, with 8 per cent per annum interest thereon from November 7, 1927, until paid, and 10 per cen-t additional on that amount as attorney’s fees, less a credit of $25, paid on account of interest on December 5, 1928; that the executory proceedings herein issued be maintained; that the one-undivided half of the property mortgaged November 27, 1926, belonging to Mrs. Lucy Lockhart, be sold at public auction, and that the proceeds realized from the sale of the undivided half of the mortgaged property be applied to the payment of plaintiff’s mortgage, reserving to plaintiff his right of action against Mrs. Lucy Lockhart should the amount realized from the sale be insufficient to satisfy plaintiff’s mortgage; in other respects the judgment be maintained, and that defendant pay the cost of these proceedings.


author: ELDlOTT, J.

text:
    No. 957
    First Circuit
    WATSON v. ST. HELENA PARISH SCHOOL BOARD
    (May 3, 1932. Opinion and Decree.)
    S. S. Reid, of Amite, attorney for plaintiff, appellant.
    Robert T. Carter, of Greensburg, attorney for defendant, appellee.
   ELDlOTT, J.

St. Elelena parish school board employed Willie L. Watson, by written contract, to haul school children to and from the Oakland High School, “for the sum of $60.00 per month for a term of session months.” The contract' bears no date, but it was signed in July, 1930, and we conclude from the statement of J. M. Breeden, superintendent, that it was probably about, the middle of the month.

The plaintiff, Willie L. Watson, alleges that immediately upon signing the contract he purchased a motor omnibus and entered upon the performance of his duty hauling children to and from the school as provided for in the contract. That after operating for 4 months and 13 days, and having been paid for only 2 months and 13 days, the school board having notified him that his services were no longer required and having refused to pay him the amount due him on said account, he was' unable to continue. That the school board dismissed him without cause. That he is entitled to collect for 8 months and 13 days, the balance of the school session, in amount $360.

The school board for answer admits that it entered into a contract with the plaintiff, but denies that the period of employment was for the school term. Admits that plaintiff operated an omnibus under the contract, as alleged, for a period of-2 months, and 13 days, but avers that the contract was terminated by agreement at the expiration of said time.

There was judgment rejecting plaintiff’s demand. The plaintiff has appealed.

The defendant offered _ to show by parol evidence on the trial that the words “session months’’ in the contract meant, and that plaintiff so understood at the time of signing the contract, that the employment was. only during a general tax session. The plaintiff objected, on the ground that such evidence was not admissible to vary, alter, or contradict .the written contract. The objection was overruled. Plaintiff excepted, and urges that the court erred in his ruling.

. Defendant school board avers in- its answer that at .the time of making such contract the revenues of said high school were limited and uncertain, and that it was mutually understood and agreed between the contracting parties, that the said transfer was to stop and contract terminate when the general funds of said high school were expended. That with the above limited and uncertain funds in view, the word “session” was written into the contract, denoting the end of the general fund term or session and on the day the said contract was to be terminated, all of which was mutually agreed to. That when the entire general fund was expended there were no other funds- to operate said transfers, no funds budgeted, and respondent could not operate said transfers on anticipated revenues in violation of law; therefore all transfer contracts were terminated in accordance with the stipulation therein written at the expiration of three months.

The term “session months,” used in the contract, is a patent ambiguity, requiring explanation. Defendant’s averments on the subject were sufficient to authorize the admission of parol evidence to explain the meaning of the term used. The plaintiff’s objection was properly overruled. Catherine Mfg. Co. v. Pointe Coupee Trust & Savings Bank, 160 La. 963, 107 So. 711.

The evidence introduced to explain the matter shows that the parties used a printed form for .their contract, and that, as printed, it contained a number of blank spaces left to be filled in. In this contract, after the words “per month for a term of,” there was left in the printed form a blank space in which ordinarily would have been inserted a figure which would have indicated the number of months that would have constituted the length of the term, but, when it came to sign this contract, the number of months which the children could be transported being uncertain for lack of funds available for the purpose, the word “session” was. written in the blank, which made the contract read “* * * for the sum of $60.00 per month for a term of session months,” the words “session months” meaning that .the contract for transportation was terminated at the expiration of the time during which there were funds available for the purpose of paying for the transportation. The evidence fixed the terminating period at 2 months and 13 days from the time the contract was signed, and for which the plaintiff admits that he was paid.

The testimony of the plaintiff on the subject, although, when taken as a whole, is in line with the averment of his petition, it is nevertheless somewhat qualified by an admission that:

“There was some question as to how long the school would run, so instead of inserting nine before the number of months in the contract, the word session was inserted. This was understood by me to mean the whole session of the school, without any mention being made of the general tax session and the special tax session, and I knew nothing of this.”

The evidence shows that the school ran for a period of 9 months, but the transportation of the children to and from the school was only contracted for a period of 2 months and 13 days, after which the school board left the matter to the parents of the children. The parents, paid, else the children walked, and as to which time the school board was not liable. The evidence shows that at the expiration of 2 months and 13 days the school board was not liable for any further transportation. Mr. Breeden, superintendent, testifies that plaintiff understood the contract perfectly well.

It is shown that .there were a number of omnibuses engaged in transporting children to and from the school, and that they all understood the matter perfectly well and stopped at the expiration of 2 months and 13 days. The evidence justifies the conclusion that plaintiff must have understood that he had no contract with the school board 2 months and 13 days after ■the contract in question was signed.

The judgment rejecting plaintiff’s demand on the ground above mentioned was correct. The school board urges another defense based on the minority of the plaintiff at the time the contract was signed and terminated. We do not act on that defense. It is not necessary.

Judgment affirmed. Plaintiff and appellant to pay the cost in both courts.


author: TALIAFERRO, J.

text:
    No. 4018
    Second Circuit (Second Division)
    PHILLIPS v. WEICHERT
    (May 4, 1932. Opinion and Decree.)

      Craig, Bolin & Magee, of Mansfield, attorneys for plaintiff, appellee.
    Irion & Switzer and Thomas M. Comegys, Jr., of Shreveport, attorneys for defendant, appellant.
   TALIAFERRO, J.

On August 28, 1930, plaintiff sold to defendant an interest in the oil, gas, and other minerals under the surface of certain lands in .the parish of De Soto, for the price of $1,032, of which amount $100 was paid in cash, and the balance was due and payable on the 15th day of October following. The title of the property was specially warranted to be “free from any lien, privilege, judgment, mortgage, Oor claim whatever.’’

It was evidently agreed and understood between the parties that the payment of the deferred part of the purchase price should be conditioned upon the title of the conveyed property being found merchantable and free of incumbrances, because of .the incorporation of the following stipulations in the act of sale, viz.:

“The grantor herein specially agrees and binds and obligates himself to furnish at his own costs and expense a complete abstract of title to the land or property above described, showing good and merchantable .title in him to said property conveyed at least thirty days prior to the date for the payment of the balance of the purchase price as above stipulated.
“Should purchaser’s attorney decline to approve title, .the grantor binds, himself to remove the objections at his expense within 60 days thereafter or refund and return the consideration received at the option of the purchaser.”

This suit was instituted by plaintiff on November 21, 1930, to recover judgment for the unpaid part of said purchase price and to enforce vendor’s lien and privilege against the property conveyed, which was sequestered. The act of sale between the parties is specifically referred .to, but is not attached to, nor is it made a part of, the petition.

Defendant filed motion to dissolve the sequestration which was overruled. He then answered, setting out in detail the special terms and conditions in the contract of sale sued on, averring that plaintiff had no.t complied with any of them; that the furnishing of said abstract of title showing good and merchantable title in plaintiff to the property at least 30 days prior to the day on which he could demand the balance of the purchase price is and was a condition precedent to any right of action upon the contract; that plaintiff had 60 days within which to perfect the title after defendant’s attorney had raised objections thereto, or return the payment made on the purchase price, at option of defendant; that, as plaintiff has not complied with his obligations under the contract, he has no right of action against defendant. He prays for attorney’s- fees of $100 for services in dissolving the writ of sequestration; for specific performance on part of plaintiff of said contract; and for general relief.

The lower court gave plaintiff judgment as sued for, and defendant has appealed. The writ of sequestration was upheld.

We do not fully understand why specific performance of the contract is asked for, to the extent of requiring plaintiff to execute title to the property, as the contract in quesion vests defendant with complete title thereto, subject to the stipulations above quoted.

The record discloses that plaintiff to no extent complied with the special stipulations in the contract with defendant. He does not contend that he has done so. His. petition does not make mention of such conditions, nor of any effort to comply with them. Conditions such as were placed in this deed are customary in contracts of the kind, and reflect prudence on the part of ,the purchaser. In this case he did not execute a note for the deferred part of the purchase pricey doubtless preferring not to have his negotiable obligation in plaintiff’s hands pending examination of the title by his own attorneys'. The evidence shows that there were three mortgages on record affecting title to the-property involved, and plaintiff had made no effort to remove them when this suit was filed. Regardless of compliance or noncompliance with the special stipulations, in the contract between these parties, can it be said that plaintiff has the right to enforce against defendant the balance due on the purchase price of the sale in- the face of his warranty obligation and the fact that '.the title is clouded by inscription of several mortgages? No citation of authority seems necessary to support the negative of this proposition. Plaintiff specially warranted the title to be free of mortgages and liens. Certainly he cannot force defendant to pay the price of the sale without clearing the title of its incumbrances. Wamsley v. Hunter, 29 La. Ann. 628; Marsh v. Lorimer, 164 La. 175, 113 So. 808; Lyman v. Stroudbach, 47 La. Ann. 71, 18 So. 662; Beer v. Leonard, 40 La. Ann. 845, 5 So. 257; Civ. Code, art. 2557. He has no right of action against defendant as long as conditions prevail as disclosed by the record. What assurance has defendant that he may not lose the property to -the mortgages against it?

The writ of sequestration sued out by plaintiff illegally issued, and should have been dissolved and set aside with damages of $100 as attorney’s fees. Wall v. Hardwood Mfg. Co., 127 La. 959, 54 So. 300.

For the reasons herein assigned, the judgment appealed from is reversed, annulled, and set aside; and there is now judgment in favor of defendant dissolving the wri-t of sequestration issued herein and dismissing plaintiff’s suit as a nonsuit; and there is further judgment in favor of defendant and against plaintiff for $100, with legal interest from date of this decree; all costs to be paid by plaintiff.


author: DREW, J.

text:
    No. 4063
    Second Circuit (Second Division)
    BEZANSON v. WRAY-DICKINSON, INC., ET AL.
    (March 16, 1932. Opinion and Decree.)
    (May 4, 1932. Rehearing Refused.)

      Wilson & Abramson, of Shreveport, attorneys for defendants, appellants, WrayDickinson.
    T. Overton Brooks, of Shreveport, attorney for defendant, appellee, Motors Securities Company, Incorporated.
   DREW, J.

Plaintiff, C. E. Bezanson, Jr., on April 26, 1929, purchased from WrayDickinson Company, Inc., a Ford- automobile for the price of $689.50, including carrying charges, interest, etc., and gave one note, calling for fifteen monthly payments, and paid no cash. As collateral, he gave notes signed by J. J. Schumway, aggregating $390, secured by a chattel mortgage on a Studebaker automobile he had previously sold to Schumway.

Wray-Dickinson Company, Inc., sold the Bezanson notes to the Motor Securities Company, Inc., and transferred -the collateral notes to them also. Schumway failed to pay his note when it became due, and, under a written agreement, he turned the Studebaker over to the Motor Securities Company for it to hold five days, and, if he did not pay the past-due note, authorized it to sell the Studebaker car and apply the proceeds on his note, without in any manner releasing him from the balance of said notes, if the car failed to bring enough to pay them. This agreement was dated June 13, 1929.

The Ford car purchased by Bezanson was stolen, and the insurance company paid $500, which was turned over to the Motor Securities Company and credited on the Bezanson notes. The Motor Securities Company did not sell the Schumway car, but called upon Wray-Dickinson Company, by virtue of their indorsement, for the balance due on the Bezanson notes, which was paid by Wray-Dickinson Company, amounting to $175, being the balance due, less a refund for unearned interest of $14.70. The Motor Securities Company turned back the Bezanson notes and the Schumway collateral notes to Wray-Dickinson Company, and- the Schumway Studebaker car.

Some time thereafter, on August 13, 1929, Wray-Dickinson Company secured a sale for the Schumway Studebaker car and secured from plaintiff Bezanson the following Ifetter:

“August 13, 1929.
“Wray-Dickinson Company, Inc., Shreveport, Louisiana.
“Gentlemen: Whereas you hold notes on Studebaker Sedan No. 10204, signed by J., J. Schumway and endorsed by me. Mr. Schumway has failed to pay the notes and you have a release on the car from him. This will serve as a release for any claim, of any kind that I might have to the above Studebaker.
“Yours very truly, C. E. Bezanson, Jr.”
And on the same date it sold the car to Clarence Palmer for $500, $40 cash, and the balance in notes.

On March 7, 1930, Bezanson filed this suit against Wray-Dickinson Company and the Motor Securities Company for the sum of $283.30, alleging that the purchase price of the car, plus, interest, insurance, carrying charges, etc., was $689.50; that the actual sale price of the car was $580, and that the $109.50, • difference, was for the fifteen months’ carrying of the notes, and the note was settled by insurance and the taking possession of the Studebaker car within three months after being made; therefore only one-fifth of the carrying charge, etc., was earned, amounting to $20.70, leaving a difference of $82.80 due petitioner as a refund. That, when defendant repossessed the Schumway car, it made the Schumway transaction their own, and that petitioner is entitled to credit of $390 for the Schumway notes, put up by him as collateral. That the $500 insurance received by defendant, $390, Schumway notes, and $82.70 refund due, amounted to $283.20 more than the purchase price of the car, and which amount he claims.

The Motor Securities Company is sued as agent of the Wray-Dickinson Company and also as being part of that concern.

Motor Securities Company answered, denying the allegations of plaintiff’s petition and denying any interest in the matter.

The lower court held that the Motor Securities Company purchased the notes and collateral from Wray-Dickinson Company and had been fully paid, and had turned back to Wray-Dickinson Company all notes and collateral, together with the Schumway car, and were entirely out of the transaction. We fully agree with the lower court’s finding.

Wray-Dickinson Company answered, denying the indebtedness to plaintiff, and based its defense on a letter from plaintiff to it of date August 13, 1929. Its principal defense is set out in article XI of its answer in the following language:

“* *" * Your defendant refused to sell or dispose of said car until the consent of plaintiff could be secured and that in due course, plaintiff visited the place of business of defendant in the city of Shreveport and released any and all claims and right which he may have had to said car in order that same might be sold and the proceeds thereof applied toward the reduction of the indebtedness of plaintiff.”

We might take its allegations as true, and it would be of no aid .to defendant, for at that time plaintiff could only have been indebted to defendant in the sum of $175, and defendant held the Schumway notes for $390. The car was- sold for more than the amount of the Schumway notes, and plaintiff would have been entitled to the full value of the Schumway notes, less the amount he owed defendant,, or $215.

It cannot be presumed, and is not contended, that plaintiff agreed to take only what was collected from the sale. The sale was made by Wray-Dickinson Company, and whethér the amount was collected or not was no concern of plaintiff’s. He was entitled only to the amount of the Schumway notes, which were his property. However, it is clear from the letter of August 13, 1929, and defendant’s answer in this suit, that plaintiff did not release his claim to the Schumway notes, and, when the car was sold by defendant for the amount in excess of the Schumway notes, under .the agreement with Schumway, the notes were canceled as paid and could not be again collected. Plaintiff was, therefore, entitled to credit for them.

Plaintiff is entitled to credit for $500, insurance collected; $390, for the Schumway notes; and $14.70, refund allowed by the Motor Securities Company to WrayDickinson Company for interest that had not accrued, making a total of $904.70. His indebtedness ito defendant was $689.50. The difference is $215.20, which amount he is entitled to have judgment for.

Defendant contends that the Studebaker car only sold for $365, relying on documents attached to an application for rehearing, which was no.t granted. It is not complained in this court about the refusal to grant a rehearing in the lower court and we can only consider the evidence in the record which shows the sale price of the Schumway car to have been $500.

The judgment of the lower court was in favor of plaintiff and against Wray-Dickinson Company in the sum of $215.20, and it is correct.

It is therefore ordered, adjudged, and decreed that the judgment of the lower court be affirmed, with all costs.