124 Minn. 437 | Minn. | 1914
Action to recover the amount of a fraternal benefit certificate. Plaintiff had verdict and judgment, defendant’s motion for judgment or a new trial being denied. The latter appealed.
In 1901 Osias ICulberg became a member of one of defendant’s councils and obtained the certificate sued on, which was like the one in Marcus against this defendant, 123 Minn. 145, 143 N. W. 265. He was expelled at the same time as assured was in that case, and what was said in the first paragraph of the opinion therein, outlining the nature and character of the order, its membership and internal management, rights of members, expulsion, etc., is equally applicable here.
In March, 1910, charges of wrong-doing were preferred against assured, to the effect that he (a) was over the maximum age limit when admitted, (b) was not then in good health and a fit subject for life insurance, (c) concealed facts relating to his age, health, and family history, (d) made misstatements relating to the same matters, (e) is not within the eligible list of beneficiaries, and (f) assisted and abetted others in securing and attempting to secure payment of fraudulent and improper claims upon the order. Later he was cited to appear before the National Executive Committee of the order in Minneapolis, on April 7, 1910, to answer these accusations. He appeared accordingly and certain proceedings were had. On April 21 and 22 the committee met at Topeka, Kansas, without notice to or knowledge of assured, found the charges sustained, and ordered ex
Defendant’s answer alleged, among other things, assured’s expulsion under the rules of the order, substantially as stated, and further that in the membership application he knowingly stated -his age as 51 years, when in fact he was 70. Plaintiff’s reply alleged that the charges preferred against assured were made with the preconceived design and intention of ousting him from membership; that he was never required or permitted to answer them or to be heard or to offer evidence in reference thereto; that no witnesses were produced or testified before the committee, and that in fact no hearing or trial on the charges was had, the pretended hearing and trial being arbitrary, unauthorized, oppressive, and void.
The court determined, and so charged, the sole material question of fact to be: Was assured given such hearing before the committee as defendant’s laws, rules, and regulations contemplated? Beyond doubt, the accusations made, if true, were such as would warrant assured’s expulsion, and likewise if he was guilty only of misrepresenting his age in his application for membership. Neither can the right of parties, in associations of this kind, to agree upon the procedure concerning expulsions be questioned, if not so grossly unfair as to be contrary to public policy; and unquestionably they may make appeal within the order a condition precedent to resort to the courts where the procedure provided for has been substantially followed. See Marcus v. this defendant, supra. So, also, it must he held that outside the matter of hearing and notice of expulsion and cancelation, the proceedings had were adequate to require recourse to this remedy. We agree, therefore, with the trial court, that the only material question of fact, if any, was as charged. Defendant, however, contends it conclusively appears that no errors or irregularities occurred in the conduct of the hearing or proceedings resulting in assured’s expulsion, prejudicial to his rights or dispensing with the necessity of an appeal within the order, and hence that no issue of fact was raised and it was entitled to a directed verdict. This presents the vital question. Its importance is self-suggestive when we consider the number of similar organizations now doing business and their large membership. Such associations are insurance companies. As said in Lindahl v. Supreme Court I. O. F. 100 Minn. 87, 91, 110 N. W. 358, 359, 8 L.R.A.(N.S.) 916, 117 Am. St. 666:
“Many of the so-called benevolent and fraternal associations which are largely engaged in the life insurance business can no longer be treated as charitable organizations. Their insurance features are but remotely connected with the charitable and benevolent work of the orders. Their certificates are simply insurance contracts, and the benefits to which the members are entitled thereunder result from the payment of full and adequate consideration.”
If plaintiff’s witnesses are worthy of credence, their testimony, taken in connection with defendant’s documentary evidence, established assured’s conviction of the six independent and disconnected violations of duty before mentioned, merely upon his inspection by the committee and the disclosure of his name, residence and age, conforming to the application for membership. We are not prepared to hold as a matter of law, if this version be true, that the hearing was within the rules of the order. The proceeding was of importance. Assured had paid premiums for 10 years. It is generally known that forfeitures like the present one prevent the obtaining of other insurance entirely, or else at increased cost. Only a strained construction of the laws of this order would permit a holding that either party contemplated action of the kind disclosed by these witnesses. Nor can we say that their testimony is unworthy of belief, especially when it is reinforced by the presumption arising from defendant’s nonproduction of the testimony claimed to have been taken down by the stenographer, and when, moreover, we consider the interest of defendant’s witnesses in the event of the suit. (Note 59 Am. St. 207). As said in Jones, Evidence (2d ed.) § 19:
“The mere withholding or failing to produce evidence, which under the circumstances would be expected to be produced and which is available, gives rise to a presumption against the party. It is a presumption less violent than that which attends the fabrication of testimony or the suppression of documents in which other parties*443 have a legal interest; but tbe courts recognize and act upon tbe natural inference that the evidence is held back under such circumstances because it would be unfavorable.”
See, also, section 20 of tbe same work, and 16 Oyc. 1059. Tbis presumption is ordinarily to be taken as strongly sustaining tbe other evidence adduced. We bold tbe evidence sufficient to take tbe question indicated to tbe jury.
Nor is tbis conclusion in any wise opposed to that in tbe Marcus case, supra, relied on by defendant as presenting issues substantially identical with those in tbe present case and as determinative thereof. In tbe latter it does not appear from tbe answer either what charge was made against assured or of what be was found guilty. Moreover, tbe reply in tbe former was substantially a general denial, whereas here tbe good faith of tbe proceedings and the fact of any bearing on tbe charges made was directly challenged. Tbe courses of tbe trials and tbe proofs received in tbe two cases were also materially different. In tbe former tbe controversy related solely to tbe question of the assured’s age, it appeared be was advised that his expulsion rested on tbis ground, and tbe notice thereof was essentially different from tbe one here involved. Furthermore, there was persuasive evidence of acquiescence in tbe determination of tbe committee and abandonment of membership; while here we have evidence to tbe contrary. In short, the issues in tbe Marcus case were so different from those here presented, that tbe decision therein is neither controlling nor materially in point on tbe question under discussion.
“Plaintiff was entitled to the hearing prescribed by defendant’s by-laws. The construction which defendant itself placed on these bylaws — and, in my judgment, their proper and necessary construction —required it to dispose of controversies upon testimony of some character produced before it at a time’and a place where plaintiff had an opportunity of being heard. We have held, in accordance with fundamental constitutional principles, that an adjudication made by such tribunal is not binding upon a party who is denied the opportunity of being heard. See Rose v. Supreme Court, Order of Patricians, [126 Mich. 511, 85 N. W. 1073] supra.” “The most obvious and essential rights secured to claimant by the opportunity of being heard are these: The right to present testimony, and the right to hear and meet testimony presented against her. If her claim was rejected upon testimony obtained when she was not present, and of which she knew nothing, we should not hesitate to say that she was denied the opportunity of being heard, even though permitted to introduce testimony tending to support her claim. In such a case it would be clear that, though given a hearing in form, claimant was*445 deprived of all advantage of such hearing, and was therefore denied the hearing to which she was lawfully entitled.”
The defect in the proceedings thus disclosed goes beyond mere irregularity, and involves a forfeiture so entirely unsupported either by contract or law that, we think, a court would not have hesitated, by mandamus, to reinstate. (Note 59 Am. St. 200.) Certainly, then, liability on the policy should not be denied on account thereof. See opinion of Judge Seymour D. Thompson in Mulroy v. Knights of Honor, 28 Mo. App. 463; Bacon, Ben. Soc. § 104, note 59 Am. St. 204, et seq.
“It must be some error in regard to my expulsion from membership of this order, and really believe that you are unjustified in doing so.”
With this communication he returned defendant’s draft sent to reimburse him for assessments and lodge dues paid pending investigation, and also enclosed a money-order for $4 in payment of assessments and dues for May; the latter being thereafter returned to him, with the secretary’s reiteration of his expulsion and cancelation of his certificate, and remaining in his possession until his death, May 27, 1912, and subsequently in plaintiff’s possession. Defendant, moreover, having clearly indicated its intention to refuse further recognition of assured’s membership, subsequent tender of dues and assessments was not necessary to keep his certificate in force. Ibs v. Hartford Life Ins. Co. 121 Minn. 310, 141 N. W. 289. See also, Langnecker v. Trustees of Grand Lodge, A. O. U. W. 111 Wis. 279, 87 N. W. 293, 55 L.R.A. 185, 87 Am. St. 860; Byram v. Sovereign Camp, 108 Iowa, 430, 79 N. W. 144, 75 Am. St. 265; Plattdeutsche v. Ross, 117 Ill. App. 247. But a recovery would be subject to deduction thereof.
Judgment affirmed.