75 Neb. 188 | Neb. | 1905
Lead Opinion
This was an action by the plaintiff in the court below in her own right, and as guardian and next friend of her minor son, to recover the sum of $2,000 on a benefit certificate issued August 14, 1897, upon the life of Alexmder D. Lange, by the Royal Highlanders, a fraternal benefit society organized under the laws of the state of Nebraska. The defense interposed was that Alexander D. Lange had come to his death from wounds inflicted by his own hand with suicidal intent. On issues thus joined there was a trial to the jury, and at the close of ill the testimony the court directed a verdict for the defendant. Judgment was entered on this verdict, and to reverse this judgment plaintiff brings error to this court.
The facts underlying this controversy, which are either admitted or fully established by the proofs offered, are: That on August 14, 1897, the deceased, Alexander D.
There are certain underlying propositions, sound in principle and supported by the former decisions of this and other courts of last resort, that govern the rights and liabilities of members of voluntary associations, whether mutual insurance companies or fraternal benefit societies, that are applicable, in the first instance, to the questions involved in this controversy. One of these principles is that a member of such society, who agrees in his application, or has the agreement incorporated in his policy or benefit certificate, that he will comply with the by-laws of the company then in force or thereafter to be adopted, is bound by subsequent by-laws the same as by those in force at the time his certificate was issued, provided that such subsequent by-laws are reasonable in their nature, and are properly adopted in conformity with the rules of the order and the statute governing such associations. Farmers Mutual Ins. Co. v. Kinney, 64 Neb. 808. Another underlying principle established by
From these principles it follows that the only question to be determined is as to whether the by-law relied upon as á defense has been legally enacted by a duly authorized body of the defendant association. This question requires an examination into the articles of incorporation and by-laws or edicts of the society, as Avell as the provisions of the statutes of the state regulating fraternal benefit associations. From the evidence contained in the record it appears that at some time prior to June, 1896, six persons conceived the idea of organizing the society known as the “Royal Highlanders”; that these six members constituted themselves the executive castle of the order, with
Now, as before stated, this executive castle had, by its own by-laws, granted itself plenary powers over the organization, and constituted itself the sole governing and law-making body of the order. Bearing in mind that the inherent right to enact by-laws for the government of a corporation is in the stockholders, and that this right can be exercised by a board of directors, or other similar body, only when such,right is clearly conferred by the rules of the society and the statute of the state governing the incorporation, the question is, was the executive castle of the defendant, constituted as above set out, a representative body of the association? A representative form of government is defined in the Universal dictionary of the English language as one “conducted and constituted by the agency of delegates, or deputies, chosen by the people.” This definition fairly expresses the modern American idea of a representative government, and, as applied to section 1, supra, is in full harmony with the construction placed upon that section by this court in the recenj] case of State v. Bankers Union of the World, 71 Neb. 622, wherein it was said:
“A fraternal benefit association must have a representative form of government. This requires that the directors or other officers, who have general charge and control of the property and business of the society and the management of its affairs, shall be chosen by the members.”
While counsel for the defendant in error have filed a very able and persuasive brief urging us to reconsider and modify the definition of a representative form of government as expressed in the case just quoted, we find ourselves, after a careful consideration of their well written brief and strong oral argument, wholly unpersuaded
It is earnestly contended by counsel for defendant in error that the attack on the suicide edict of 1901 is a collateral attack on the charter of the corporation, and it is urged that, even if the executive' castle of the defendant society is illegally exercising its corporate functions, its right to do so ban only be questioned in an action by the state in quo tvarranto. ■ We concede the contention that the plaintiff cannot in her petition sue the defendant as a legal organization under the laws of the state, and then deny the validity of the organization. But does the denial of the authority of the executive castle, as constituted in 1901, to pass the edict in question amount to a denial of the legal authority of the society to do business? This depends on whether or not the edict assailed should be treated simply as a by-law of the association, or as part of the charter of the corporation. It is conceded in the brief of the association that, if the edict assailed is simply
By reference to section 20, chapter 47, laws 1897, it will be seen that the requisite of authority for a fraternal benefit association to do business in this state is the filing with the auditor of a “certificate of association” signed by the persons who desire to associate themselves together for the purpose of forming such an organization, with a plan of business clearly and fully defined. It is these articles and the plan of association that the auditor is required to pass upon, and, if found correct, it is his duty to issue a certificate of organization. At the time the certificate of association was issued to the defendant society by th.e auditor, the statute requiring such societies to have a representative form of government had not been enacted, and, as the plan submitted was not then in contravention of the statute law, the auditor properly issued the certificate of organization. It is the certificate of association and the statute governing the corporation that stands in place of the charter of the association.
It is true that section 22, chapter 47, laws 1897, provides for the filing of the constitution and by-laAvs of fraternal societies with the auditor after the certificate is issued, but the auditor has nothing to do with the approval or rejection of the by-laws. It is only Avhen it is brought to his attention that a society is doing business in contravention of the provisions of the statute that he is called upon to institute proceedings; and these proceedings are in the nature of an information in quo warranto. Moreover, the tenor and the very nature of the edict relied
We therefore recommend that the judgment of the district court be reversed and the cause remanded for further proceedings according to law.
By the Court: For the reasons given in the foregoing opinion, it is ordered that the judgment of the district court be reversed and the cause remanded for further proceedings according to law.
Reversed.
The following opinion on rehearing was filed February-8, 1907. Judgment of reversal adhered to:
1. Insurance: Benefit Association: Government: Statute. Where a fraternal-benefit association bas not complied with the provisions of section 1, chapter 43 of the act of 1897, and adopted a representative form of government, its governing body is without power to adopt an edict or by-law changing the terms and obligations of a mutual benefit certificate theretofore issued to one of its members.
2. (New By-Law: Collateral Attack. An attack on such an edict or by-law on that ground does not amount to a collateral attack on the right of the society to transact business.
3. Suicide will not defeat a recovery upon a contract of life insurance or a mutual benefit certificate not procured by the insured with the intention of committing suicide, unless the contract so provides in express terms.
This case is before us on a rehearing. The facts, as disclosed by the record, are so clearly and concisely stated
' 1. The defendant’s first contention requires but little consideration, because the reasoning and authorities contained in our former opinion fully answer the brief and argument of counsel on that point. If the statement describing the organization of the defendant, and the manner of the election or selection of its executive castle, is true — and, as its correctness has not been challenged we assume it to be so — it cannot be said that such executive castle gave to the defendant a representative form of government within the meaning of section 91, chapter 43, Compiled Statutes 1905 (Ann. St. 6483). At its session of 1897 the legislature of this state passed an act (Laws 1897, ch. 47), providing for the organization and government of “fraternal beneficiary associations,” which contains the section above mentioned. Since that time all such associations have been required, where necessary, to so change the manner of electing or choosing the officers by which their business is conducted as to give them a representative form of government. State v. Bankers Union of the World, 71 Neb. 622. In that case it was said: “A fraternal beneficial association must have a representative form of government. This requires that the directors or other officers, who have general charge and control of the property and business of the society and the management of its affairs, shall be chosen by the members” — and the defendant therein was enjoined from transacting business until it should provide for and adopt
It is contended, however, that this rule amounts to a collateral attack upon the organization of the defendant, and a declaration that all of its acts, contracts and proceedings are void. We do not so understand the matter. It must be conceded that the defendant, by filing its articles of incorporation in compliance with the law in force át the time of its organization, acquired the right to carry on the business for which it was created. It must also be conceded that when the legislature passed the act of 1897 it became the duty of the defendant to so change the. manner of selecting or choosing its officers as to comply with the terms of that act. It attempted to do so, and, while the change made was not sufficient to confer power to alter the insurance contract without the consent of the insured, yet it was and is a de facto organization, and its acts and doings in the ordinary conduct of its business are to be construed by the rules applicable to such a condition. This, however, does not prevent a member or a beneficiary from questioning the validity -of any of its edicts or by-laws by which it is sought to vary or change the obligations of a contract which it has made with
For the foregoing reasons, our former opinion is right as to this point of the controversy, and should be adhered to.
2. We come now to consider the effect of the suicide of the assured member on the benefit certificate in question. It may be stated, at the outset, that to procure such a certificate with intent to commit suicide is a fraud on the association, and will defeat a recovery. In such a case the insurer would have the option of rescission, with ail of its incidents, even as against the beneficiary. But in this case it is not claimed that the record discloses any such intention on the part of the deceased member. Indeed, the effect of his conduct is to exclude that idea. It appears that he took out his certificate on the 14th day of August, 1897; paid all of his assessments for a period of nearly five years, and was a member of the association in good standing at the date of his death. So it seems clear that the contract in this case was entered into in good faith, and without fraud. Notwithstanding this fact, the defendant contends that suicide is a defense to this action even if the benefit certificate and by-laws of
“Intentional self-destruction, the assured being of sound mind, is in itself a defense to an action upon a life policy, even if such policy does not, in express words, declare that it shall be,void in the event of self-destruction.”
We find, on an examination of that opinion, that the reasoning of the learned judge who wrote it was to some extent based on the assumption that the experience tables used as a basis for fixing the consideration to be paid for such insurance exclude suicide as a cause of moi'tality, but we find it to be a fact, as shown by the authorities, and one which we have never heard questioned, that all of the mortality or experience tables used as a basis for computing premiums on life insurance, and assessments for carrying benefit certificates in fraternal benefit associations, include all forms of death, of which suicide is considered one. Campbell v. Supreme Conclave, I. O. H., 66 N. J. Law, 274, 54 L. R. A. 576. So, self-destruction, although it may shorten the period of the life expectancy of the member, and thus decrease the amount which he may be expected to pay to the association, does not violate the terms of his contract, unless it is so expressly stipulated therein, because that contingency is included in, and is a part of, the consideration which supports such contract. Suicide is only one of the many ways that may determine the event of death. Life insurance, of whatever kind and nature, is, in effect, an indemnity against the happening of that event, which is certain; and, insurance rates being based upon the average expectancy of life, as determined from experience tables, which include suicide as one of
Our attention is also directed to Shipman v. Protected Home Circle, 175 N. Y. 498, 67 N. E. 83. In that case the benefit certificate was silent on the subject of suicide, while sane, but a by-law, subsequently enacted, provided that the certificate should be void if the insured should die by suicide, sane or insane. No question was raised as to the power of the governing body of the association to adopt such a by Jaw, or its validity; and it was held to apply to a certificate in force at the time of the amend
In Patterson v. Natural Premium Mutual Life Ins. Co., 100 Wis. 118, 42 L. R. A. 253, 69 Am. St. Rep. 899, it was held that intentional suicide, while sane, does not avoid a life insurance policy, in the absence of any provision therein to that effect, if third persons are beneficiaries, and, although suicide is technically a crime, it is not within the clause of an insurance policy providing that death in consequence of, or in violation of, law is not covered by the policy, where the usual suicide clause is omitted, and an absolutely incontestable clause included. An examination of the opinion, however, discloses the fact that the court declined to put its decision upon the incontestable clause and said:
“Bearing these things in mind, and while conceding the strength of the arguments upon public policy on which the Ritter case is based, we still think, in view of the prior decisions above cited to the contrary of the rule there laid down, and the general apparent acquiescence*204 in those decisions by the courts and by the people, that we ought to hold, in accordance with those decisions, that, in case where third persons are beneficiaries, intentional suicide of the insured while sane does not avoid the policy, in the absence of any provision in the policy to that effect. Whether the rule would apply to a case where the personal representatives of the insured Avere bringing the action for the benefit of the estate of the insured is not decided, because that case is not before us. In so holding, it becomes unnecessary to consider the effect of the incontestable clause upon this branch of the case.”
Indeed, we find the rule in most jurisdictions to be that suicide is not a defense to an action on a life insurance policy, or mutual benefit certificate, unless it is made so by the terms of the contract. Kerr v. Minnesota M. B. Ass’n, 39 Minn. 174; Horn v. Anglo-Australian and U. F. L. Ins. Co., 7 Jur. N. S. (Eng.) 673; Pierce v. Travelers’ Life Ins. Co., 34 Wis. 389; Northwestern Benevolent and M. A. Ass’n v. Wanner, 24 Ill. App. 357; Mills v. Rebstock, 29 Minn. 380; Fitch v. American Popular Life Ins. Co., 59 N. Y. 557; Keller v. Travelers’ Ins. Co., 58 Mo. App. 557; Knights Templar & M. L. I. Co. v. Berry, 1 C. C. A. 561. Again, avc find that this is not the first time this question has been before us. In Supreme Lodge, S. & D. P., v. Underwood, 3 Neb. (Unof.) 798, we held that: “a certificate of membership, in faAror of a person therein named as beneficiary, in a fraternal insurance company organized for the benefit of its members and beneficiaries, is not avoided by the suicide of the assured, in the absence of a provision in the contract of insurance to that effect.”
So we are of opinion that Ave should decline to follow Ritter v. Mutual Life Ins. Co., supra; that we ought to place ourseNes in line with the great weight of authority in this country, which leads us to the conclusion that the defense of suicide in this case cannot be maintained.
For the foregoing reasons, our former judgment is adhered to.
Judgment accordingly.
Concurrence Opinion
I concur in the conclusions reached upon both points discussed in the opinion, but dp not concur in the language used in the criticism of the reasoning of the supreme court of the United States in Ritter v. Mutual Life Ins. Co., 169 U. S. 139.
