Croslen v. Grand Lodge of the Ancient Order of the United Workmen

CRAIL, P. J. This is an appeal by the plaintiff from a judgment against her in an action upon a life and disability insurance contract to recover the life benefits. The contention of the plaintiff on appeal is that the trial court misinterpreted the contract of insurance with regard to certain provisions of the contract which the plaintiff contends are inconsistent.

The defendant at all times was a fraternal benefit society incorporated under the laws of North Dakota and authorized to do business in California. As such it has conducted its business solely for the mutual benefit of its members and their beneficiaries and not for profit, and maintains a lodge system with ritualistic form of work and a representative form of government, and makes provision for the payment of benefits in case of death and disability of its members. One of its subordinate lodges is located at Whittier.

In September, 1926, Roy C. Croslen, the husband of plaintiff, made application for membership and asked for a policy of life and disability insurance. Croslen’s application was forwarded to the home office and was approved by it and the certificate sued upon was issued.

[712]The certificate provided for $5,000 life insurance and $5 per day disability insurance. The premium on the life feature of the contract was $10.25 per month and on the disability, $3.70 per month. Croslen paid the monthly premiums for all accruing months, including December, 1932, and never thereafter made any payments on account of his said membership.

His certificate contained a table of loan values providing that if the certificate had been in force for three years, loans could be made to the member in conformity with the laws of the society for the purpose of enabling him to pay premiums. On January 1, 1933, according to said table his loan value was $300. The by-laws of the society provided that after the certificate had been in force for three years, a loan should automatically he extended to Croslen sufficient to cover the amount due from him for life and disability premiums, and that so long as the loan value on his certificate was sufficient to make delinquent monthly payments, the certificate should be continued in force. In accordance with the provisions of his certificate and the by-laws, the defendant commenced in January, 1933, charging the monthly premiums due from Croslen as they accrued against his reserve accumulations standing to the credit of his contract of insurance, and continued to do this from month to month down to and including the month of June, 1936, at which time the loan value or reserve accumulation was exhausted. On June 29, 1936, the defendant notified Croslen by letter in which it advised him that it had advanced for his account to pay his premiums a total of $562.40, and that his reserve or loan value had been exhausted, and that his insurance would terminate with June, 1936, unless he resumed making payments in the month of July, 1936. No payments were made by Croslen, and he died on September 10, 1936. Croslen never communicated with defendant after he stopped his premium payments in 1932.