ELLS ET AL v. ORDER OF UNITED COMMERCIAL TRAVELERS OF AMERICA (1941)

This is an appeal by defendant from a judgment in favor of plaintiffs in an action to recover death benefits under an insurance certificate issued by the defendant fraternal benefit society.

In 1914 defendant issued an insurance certificate to James Fisk Ells, plaintiffs' father, which provided that he was accepted as an insured member under “Class A” and as such entitled to all of the rights and benefits provided in the constitution of defendant Order for such insured members. The certificate contained the following provision: “This Certificate, the Constitution, By–laws and Articles of Incorporation of said Order, together with the application for insurance * * * shall constitute the contract * * * and shall govern the payment of benefits.” Under the constitution, “Class A” insured members were to be indemnified against the results of bodily injury or death caused by accidental means. On April 2, 1939, the insured accidentally fell in the bathroom of his home and sustained injuries which resulted in his death on April 4, 1939. On April 5th an autopsy was performed upon the body of the insured by the autopsy surgeon of the county of Los Angeles at the request of the county coroner, which revealed that death was caused by contusion of the right lung with traumatic pneumonia. On the same day, but following the post mortem examination, A. J. Loeslein, secretary–treasurer of Los Angeles Council No. 82, the local council of defendant Order, was informed by plaintiffs of the facts concerning the autopsy and of their intention to have the body cremated on the following day. No other notice of the autopsy or cremation was given to the defendant Order. On April 6th, with the express permission of Loeslein, the body of the insured member was cremated. Plaintiffs, as beneficiaries under the insurance certificate, submitted a claim for the death benefits, which was rejected by defendant on the ground that the right to the death benefits was forfeited by plaintiffs' failure to give the manager of defendant's claim department 72 hours notice of the intended autopsy and cremation as required by the constitution.

One of the constitutional provisions in question which was incorporated in the insurance certificate sued on reads as follows: “Any claim for death alleged to have been caused by accidental means shall also be forfeited and rendered null and void should the remains be cremated without first giving notice thereof to the Manager of Claim Department at least seventy–two (72) hours in advance of the intended cremation.” That requirement was obviously intended to afford defendant an opportunity to examine the remains of an insured member with the object of determining whether death was caused by accidental means and thus enable defendant to avoid payment of fraudulent claims. Despite the fact that no notice was given the manager of defendant's claim department, the trial court held that plaintiffs' claim was not barred, evidently on the theory that the secretary–treasurer of the local council as agent of defendant waived full compliance with such requirement.

Defendant's contention that the trial court erred in holding that the claim was not barred by plaintiffs' failure to give the required notice must be sustained. Although conceding that the secretary–treasurer of the local council had one day's notice of the proposed cremation, defendant contends that such knowledge was not notice to defendant and that in any event the local secretary–treasurer had no authority to waive any provisions of the constitution relating to insurance. Even if it be assumed, as plaintiffs contend, that Loeslein was the agent of defendant, since the notice given the agent was less than that required by the constitution, plaintiffs' right to recover must still depend upon proof of the agent's authority to waive full compliance. The evidence shows that Loeslein was powerless to waive compliance with the 72–hour notice requirement, for it is expressly provided in the constitution of defendant Order that: “No Grand or Local Council, officer, member or agent of any Local, Grand or the Supreme Council of the Order is authorized or permitted to waive any of the provisions of the Constitution of this Order, relating to insurance. * * *” A fraternal benefit society is given the right to adopt such a provision by section 11121 of the Insurance Code of this state, St.1935, p. 694, which further declares: “Such provision shall be binding on the society and every member and beneficiary of a member.” A similar statutory enactment is to be found in section 9481 of the General Code of Ohio (1938), the state in which defendant is incorporated. Since the provision prohibiting a waiver is expressly declared by law to be binding upon the beneficiaries, we must conclude that plaintiffs have failed to prove performance of a condition precedent to their right to recover. It follows that the judgment in favor of plaintiffs must be reversed.

In view of the conclusion above set forth, it is unnecessary to discuss the remaining contentions raised by defendant.

Judgment reversed.

PER CURIAM.