183 Ky. 388 | Ky. Ct. App. | 1919
Opinion op the Court by
Affirming.
On tlie 19tH day of May, 1905, Valentine E. Bright, obtained a policy of insurance or benefit certificate, which was issued to him, upon his application, by the Supreme Council of the Catholic Knights and Ladies of America. The insurer, is a fraternal society, under the supervision of a grand or supreme body, and secures its membership through the lodge system, exclusively, and does not pay commissions, nor employ agents, “except in the organization and supervision of the work of local or subordinate lodges or councils.” The beneficiaries named in the certificate, were the three children of the insured, the appellant, Joseph A. Bright, Odella Bright, later Heathcote, the mother of the appellees, and Robert E. Bright. By the terms of the certificate, the benefit, was to be paid to the three beneficiaries, equally, after the death of the insured. The benefit, was the sum of $2,000.00. The conditions, under which the society agreed to pay the benefit, and the persons to whom it was to be paid, are set out, in the policy, as follows: “Upon condition, that the statements by him, made in his application for membership in said branch, the representations and agreements made and subscribed to, by him, in the medical examiner’s blank, and the answers given and certified by him, to the medical examiner, all of which .representations, agreements, statements, and answers, are, hereby declared to be warranties, and are made a part of this contract, and upon condition, that the said member complies, in the future, with all laws, rules and regulations now governing the said branch or order, or that may hereafter, be enacted by the
The insured, died on the 4th day of October, 1917, but, preceding his death, his daughter, Odella Heathcote,died on January 21, 1910, leaving three- children surviving her, and his son, Eobert E. Bright, died on October 10, 1912, leaving no children. On April 21, 1911, the insured executed a last will and testament, by which he devised to the children of Odella Heathcote, one-third of the sum to be derived from the benefit certificate, and to each of his two sons, one-third of it.
There was a provision of the constitution and bylaws of the society, and which was in force, previous to, and at the time of the death'of the insured, and which provided, that if a member desired to change the beneficiary in the certificate, held by him, that he should give written notice, and surrender his certificate, with the designation of the person to whom he desired a new certificate to be issued, in which instance, the old certificate would be cancelled, and a new one issued to tñe member instead, payable to the desired beneficiary, if not contrary to the laws of the order. The insured, never made any attempt, nor expressed any desire to have the certificate changed, so as- to designate other1-or different beneficiaries, from the ones, originally named.
By another by-law of the society, it was provided, lhat no entry should be made in any application, or in any certificate, by which a member should be permitted
During the lifetime of the insured, but, subsequent to tlie repeal of section 679 Ky. Stat. to the extent, that its provisions affected a fraternal society, such as the insurer, in the present instance, the constitution and bylaws, of the society, were changed, so that they provide, that the death benefits, to be paid by the society, shall bo confined to wife, husband, relative by blood to the fourth degree, father-in-law, mother-in-law, son-in-law, daughter-in-law, stepfather, stepmother, stepchildren, children by legal adoption, or to a person or persons dependent upon the member, and in certain instances to a charitable institution, upon which the member is dependent. Another clause of the by-law, is to the effect, that “In case of the death of one or more of the beneficiaries, before the death of the member, the amount -of the certificate or policy, shall be paid to the survivor or surviving beneficiaries.” A further provision is to the effect, that, “If the law of the state, where the member resides, or the branch is located, is more limited or circumscribed or more liberal than the charter of the order as to persons or classes, or subjects allowed to have the benefits of fraternal insurance money, then the law of the state, where the insured member resides or the branch is located shall be observed.”
This action was instituted by Joseph A. Bright, who sought to recover the entire amount of the benefit certificate, as being the only surviving beneficiary, named, in the certificate. The supreme council, the insurer, deposited the amount of the benefit, in court, and had no further interest in the controversy. The appellees, the three children of lOdella Bright, or Heathcote, claim one-half of the benefits, as the heirs of their mother and uncle, Bobert E. Bright. The court, sustaining a general demurrer to the reply, as amended, of Joseph A. Bright, rendered a judgment, directing one-half of the benefit, to be paid to the children of Oclella Heathcote, and the other half, to Joseph A. Bright, and from that
It may be conceded, that every contract of insurance entered into between a beneficial society, and a member, is made in contemplation of its constitution and by-laws, its articles of association, and the statutes of the state applying to the operation of such societies, and all of these- enter into and form a part of the contract of insurance-, which is evidenced by the benefit certificate, and the members' are bound by the provisions of the constitution and by-laws, although, they may not have actual knowledge of them, and it may, also, be conceded, that alterations in the by-laws and constitution of the society, are binding o.n the society, its members and the beneficiaries of its insurance, if the alterations are intended to operate, retrospectively, and the society has reserved the right to malee the changes, in its bylaws, or where in the contract of insurance, the insured agrees to be bound by alterations, thereafter, made. Such alterations, however, can not be made, as to past contracts, if the alterations would destroy vested rights, or in other words, would impair the obligations of the .contracts. If the contract contained a provision, that any alteration, thereafter made in a by-law, should be binding upon the parties and affect the terms of the contract, it would become, upon its enactment, a part of the contract, if it was such a by-law, as the society was authorized to make, and apply to the particular contract. It will be observed, in the instant case, that the by-law, if any, which existed,- at the time of the making of the contract, with reference to whom, a benefit was to be
The holder of a benefit certificate, in a fraternal benefit society, may give it up and release the society from its contract or he may nullify the contract, by failing to be in good standing in the society, and one of the articles of the constitution and by-laws shown in the pleadings, which it may be assumed was in force, whén the certificate was granted, provides how, and in what manner, the insured might- have changed the beneficiaries named in his certificate by surrendering it, and obtaining a new certificate, with other beneficiaries designated; and that be could thus defeat the claim of a beneficiary named in the first certificate, there is no doubt, but, he never did or attempted to do that. It may be conceded, that the weight of authority, is to the effect, that before the death of the insured, the right of the beneficiary, in a benefit certificate granted by such a society, as the one, under consideration, is merely contingent, and that it, only, becomes vested, upon the death of the insured, and, if the beneficiary named, dies before the insured, his right ceases with his death, and hence, a beneficiary can not, during the life of the insured, complain of an alteration by a society, of its laws. 20 Cyc. 78; 157.
Such.has- been declared to be the law of this' state, by the act of March 22,1916. Previous to the enactment of that statute, however, and at the time, the contract, in controversy, was made, a different rule, as heretofore stated, prevailed, and the validity of that rule was rested upon the statute laws of this state, which it was said abrogated the general rule, above stated, in a state of case, where the beneficiaries named in the certificate,
The exact question involved, here, was considered and determined, in Buckler v. Supreme Council, etc., supra. In that case, the designated beneficiary died, intestate, and without children surviving, during the life of the insured. The insured never named another beneficiary. After the death of the insured, a contest arose between his heirs, and those of the mother of the beneficiary, over the proper distribution of the fund. At the time the certificate yras issued, the by-law of the society provided, that if all the beneficiaries should die in the lifetime of the member, and he should make no other or further disposition of it, it should be paid to the heirs of the insured. Previous to the death of the insured, the by-law had been changed, so as to provide, that in the event of the death of the beneficiary, in the lifetime of the insured, and the insured, should make no other or further disposition of the benefit, it should be paid to the direct heirs of the beneficiary. The court held, that notwithstanding, the alteration of the by-laws, since the making of the contract, and by which the beneficiaries were changed, in the event of the death of the beneficiary, and the failure of the insured to make a further disposition of it, the fund should be paid to the heirs of the insured in accordance with the by-law, in force at the time the policy was issued, and excluded those of the mother of the beneficiary, saying: “The constitution of the company and the laws of Kentucky, in force at the time, the policy was issued, fixed the rights of the par-