206 Mass. 158 | Mass. | 1910
This is one of seventeen appeals from a decree of a single justice,
The receiver and attorneys for the several claimants agreed “ that the foregoing statements of facts, as set out in this the fourth report of the receiver, together with the references therein made, contain all of the facts in the respective claims,” with certain additions there specified. At the beginning of his fourth report the receiver makes these statements: “ The facts of each claim as presented to the receiver . . . are specifically set out in the following pages of this report. All the evidence offered by claimants in proof of these several claims was presented in the form of affidavits, and was received subject to such objections as might be made thereto upon the filing of this report. The statement of facts of each claim has been submitted to counsel of record for correction and approval, and the same are filed as agreed facts.”
There are several cases where the affidavits (or an abstract of them) on both sides are given after a statement of facts, and these affidavits are headed by the words “ Further Proof.” We are of opinion that the facts stated to be “ agreed facts ” have been agreed to be taken to be admitted to be true, and that the cases were submitted for decision upon these admissions and upon the affidavits; and that these cases were not submitted as cases stated or on agreed facts tantamount to a case stated. We shall deal with them on that basis.
As there were no witnesses before the single justice, this court stands where he stood. Harvey - Watts Co. v. Worcester Umbrella Co. 193 Mass. 138.
In Hall’s claim (claim 131), it is stated: “That the beneficiary had a conversation' with the local officers.” We assume that this means that one of the two beneficiaries named in the certificate had a conversation with the “local officers.” The report then goes on to state “who [the local officers] said to her, * the assessment was lowered and they were obliged to reduce the five thousand dollars ($5,000) certificates to two thousand dollars ($2,000) or go into bankruptcy, or give it to a receiver and get nothing ’; that the beneficiary said she believed that if she did not take that amount she would not get anything ”;
It is not necessary for the beneficiaries, in making out a right to rescind this release, to prove a case of fraud and deceit by the defendant corporation through agents authorized to make the false representations relied upon by them. It would be enough if the beneficiaries should prove that the release had been obtained by misrepresentations made by an unauthorized person. That would bring the case within the doctrine acted upon in Rackemann v. Riverbank Improvement Co. 167 Mass. 1,4, namely: “ The defendant cannot retain what is beneficial in the transaction, while disclaiming what is onerous. When it repudiates the means by which the plaintiffs were brought to contract with it, this entitles the plaintiffs to give up the contract altogether, unless there is some other objection to their doing so. The rule in this respect is the same, whether the unauthorized act of the agent was fraudulent, or merely a matter of warranty or promise.”
But in our opinion the claimant has not proved that the release was procured by misrepresentation. We understand the statement made by the “ local officers ” to be a statement as to the facts which led up to the adoption in August, 1900, of by-law 55, which went into effect on October 1, 1900, and that these “ local officers ” meant by the word “ they ” (in the statement set forth above) the representatives duly chosen of all the members of the defendant corporation at the session held in August, 1900, when by-law 55 in its new form was adopted.
That statement appears to have been substantially true. It is set forth in the facts on which this case was submitted for decision “ that the change in the by-laws reducing certificates from five thousand dollars ($5,000) to two thousand dollars ($2,000), and the reason and necessity therefor, were long considered by the Order" and the members thereof, in the meetings of the Supreme, Grand, and local councils, and that it was twice before the annual meetings of the Supreme Council, at which all members and councils were represented under the by-laws (Nos. 5, 37, 42,1900), and that before said change was made advice was taken by the Supreme Council from ‘ Judge John Franklin Fort of Newark, New Jersey, Mr. John L. Farrell of Texas,
In considering the truth of the statement as to what led up to the amendment of by-law 55, it is necessary to understand the kind of corporation the defendant was and what its financial resources were.
The defendant is a fraternal beneficiary corporation organized in 1879 under St. 1874, c. 375, as amended by St. 1877, c. 204, re-enacted in Pub. Sts. c. 115, §§ 2,8. St. 1874, c. 375, was a general act concerning associations for religious, charitable, educational and other purposes. The organization and business of fraternal beneficiary organizations was put on a separate footing by St. 1888, c. 429. That act has been often amended and is now to be found with its amendments in R. L. c. 119. See in this connection Palmer v. Northern Mutual Relief Association, 175 Mass. 396.
It appears from the facts stated in the report in the case at bar that although applications for membership are presented in the first instance to a subordinate or local lodge or council and must be acted upon there before they are presented to the corporation itself, it is the corporation itself which decides whether the certificate is or is not to issue. It also appears that until the corporation issues its certificate no contract comes into existence between the corporation and the member, and that when the certificate is issued the contract which comes into existence is a contract between the corporation and the “ companion ” to whom the certificate is issued.
By the terms of the certificates issued by the defendant corporation, it agreed to pay to the beneficiary a sum named in the certificate usually called a death benefit. A limitation was put on the absolute liability of fraternal beneficiary corporations
These fraternal beneficiary corporations have no capital stock. The principal source of the corporation from which to pay death benefits consists in assessments upon its members. The amount of assessments to be paid by each member is stated in a table set forth in the by-laws. In addition to assessments this corporation had an emergency fund. We say that the defendant had an emergency fund in addition to its assessments because that fund is a fund (as its name implies) to meet the emergency which arises if the assessments do not realize enough to pay the death benefits. The proportion which these two bear to each other is shown by the financial statement made by the receiver on which this case was submitted to the court for decision. From this it appears that between October 1,1900, and July 18, 1902 (a period of a little more than a year and a half) the corporation received from assessments of the reduced amount due under by-law 65, $1,358,040.48, and the amount of the emergency fund on July 18, 1902, was $378,420.17. That is to say, the whole emergency fund was less than twenty-seven per cent of the sum realized by assessments in about a year and a half.
It is apparent that where new members do not join such a corporation the ratio of deaths among the survivors of the old membership would be greater than the average, and that it would be cheaper for a member to forfeit what had been paid than to continue to pay assessments under these conditions in the hope of securing a death benefit to his beneficiary.
That was the kind of corporation the defendant was, and that was the kind of financial situation it had to face.
It appears as a fact that the membership of the defendant corporation had decreased from 51,361 on June 30, 1883, to 13,107 on June 30, 1900. Beyond that the exact condition of this corporation is not given. But in place of that there is the
The burden was on the plaintiff to prove that the statement made by the “local officers” was not true. They have not supported that burden. On the contrary so far as the evidence goes the statements made by the “ local officers ” appear to have been true. The evidence shows that unless something had been done in 1900 the order would have become bankrupt, and if it had become bankrupt those who survived that event would have got nothing or substantially nothing. The most that a survivor could have got would have been his share of the emergency fund if the defendant’s affairs were wound up before that fund was exhausted in paying death benefits which had accrued. That is almost nothing.
The statements made by the “ local officers ” do not appear to have been proved to be untrue.
It is stated that the beneficiary said that “she believed that if she did not take that amount she would not get anything.” Why she entertained that belief is not stated. It is not stated that either the defendant or the “ local officers ” ■told her that if she did not take the $2,000 she would “ get nothing.”
The claimants contend however that the defendant corporation stood in a fiduciary relation to the beneficiaries; and that by reason of that fact it was under am obligation, in making payment of the amount due under the certificate, to disclose to them all material facts. That at the time of the payment to these beneficiaries on July 18, 1902, it was a material fact that four cases had been tried involving the validity of by-law 55, all of which had been decided against the corporation, and that fact was not disclosed to these beneficiaries. These cases were:
The only relation between the beneficiaries (whose rights have been assigned to and are now put forward by this claimant) and the defendant corporation arose from the fact that they are the beneficiaries named in the certificate issued by the defendant to James D. Hall, the member here in question. .Until James D. Hall died the beneficiaries had no rights against, nor relations with, the defendant corporation. Proctor v. United Order of Golden Star, 203 Mass. 587.
It may be that the defendant corporation, being a mutual organization, owed a fiduciary duty to its members in some respects. But that fiduciary duty, if it ever existed, was owed to Hall and came to an end when Hall died. It did not go so far as to include a duty, after the death of the member, to inform the beneficiaries, or any one claiming in the member’s right, of facts which were no part of the proceedings of the corporation or its officers, and which were important only as affecting unfavorably the defense of the company to the claim of the beneficiaries, after the parties had come into adverse relations in reference to the collection of the claim. When Hall died thp defendant, if it owed the beneficiaries anything, owed them a sum of money by virtue of the contract stated in the certificate issued by it to Hall. That was a right resting in contract. With respect to the beneficiaries and that right the defendant did not stand in a fiduciary relation.
It was originally held that those contract rights could be enforced only in the name of the administrator or executor of
This construction of those statutes was adopted on the ground that the money due under the certificate is money in the hands of the corporation due to the beneficiary, and for that reason it is a case where an action can be maintained by one not a party to the contract under the first class of exceptions stated in Mellen v. Whipple, 1 Gray, 317.
The beneficiaries have argued that the emergency fund is a trust fund and that by reason of that fact the defendant stands in a fiduciary relation to the beneficiaries. The emergency fund is a trust fund. Of that there is no doubt. Palmer v. Northern Mutual Relief Association, 175 Mass. 396. It was pointed out in that case that while the beneficiary association is a going concern the question whether a person has a claim against the corporation is one question and the question whether, when that claim is made out, it is a claim which entitles its owner to share in the emergency fund, is a separate and further question. To make out the first the beneficiary must bring an action at law. To make out the second he must bring a bill in equity after he has recovered judgment in the action at law. See Palmer v. Northern Mutual Relief Association, 175 Mass. 396, 398.
It follows that when a beneficiary has established his right to the death benefit named in the certificate or part of it, the corporation comes under a fiduciary relation to the beneficiary as one of the persons entitled to share in the emergency fund. But that does not affect the relation between the corporation and the beneficiary named in the certificate, so far as the question is concerned whether anything is due under the certificate as a contract. So far as that question is concerned the only relation between the two is that growing out of a contract with the member for the payment of money which, if due, is due to the beneficiary.
The case of Blair v. American Legion of Honor, 208 Penn. St. 262, is relied on as a case in which it was decided that the
After a careful consideration of the opinion in Blair v. American Legion of Honor, ubi supra, and of the case of Commonwealth v. Equitable Beneficial Association, 137 Penn. St. 412, referred to in it, we are of opinion that the defendant corporation does not hold a fiduciary relation to the beneficiary named in one of its certificates so far as its right to the benefit therein named, or part of it, is concerned.
We are therefore of opinion that the release given by the
So ordered.
Braley, J.
