119 F. 671 | 6th Cir. | 1903
after making the foregoing statement of facts, delivered the opinion of the court.
In the view that we take of this case it may be conceded that by the law of the order, binding upon the membership, in order to maintain the rights conferred by the insurance certificate, it was necessary to continue membership in good standing in the subordinate lodge of which insured was a member. It may also be granted that the Supreme Tribunal had the right to try Wellenvoss for the offense of which he was convicted, and that it was of sufficient gravity to warrant a suspension from the privileges of the order for the term of two years within the rules and regulations lawfully enacted. It may also be granted that the various acts of incorporation had only the effect to continue the corporate body as a single existence with its laws and regulations in continual force, except as modified from time to time. These questions have been elaborately argued. In our judgment the case may properly turn on the interpretation of the legal effect of the suspension of Wellenvoss on the right of the beneficiary to recover on his certificate. The rights of such organizations as the Knights of Pythias to control their internal management, and determine for themselves who shall be members of the organization, so far as the fraternal and social features are concerned, is not before us in this case. An examination of the adjudicated cases will show the general disposition of the courts to permit to such bodies full liberty to deal with those features of the organization, and to determine; by tribunals of their own, rights and obligations of membership in these secret and fraternal bodies.
We are dealing in this case, not with these social and fraternal rights and obligations, but with contractual rights under a certificate of insurance upon the life of the insured in favor of the beneficiary who brings this action. In this respect these organizations are business corporations. They do not issue policies of insurance strictly speaking, but the benefit certificate is a contract of insurance none the less, and the assessments are levied in lieu of premiums to keep the contract alive. The corporation agrees, in consideration of the payment of the assessments and the fulfillment of the other requirements, to pay a stipulated sum upon the death of the certificate holder to the
“Where no fraud has been practiced by the insured in concealing his state of health at the time the payments are made, and the company receives such payments out of time, when it might refuse payment and declare the insurance forfeited, it cannot accept the money, and keep it, and still insist upon a forfeiture.”
In Modern Woodmen of America v. Jameson, 48 Kan. 718, 30 Pac. 460, it was held that the forfeiture of such contracts was not to be favored.
In Supreme Lodge v. Kalinski, 163 U. S. 289, 16 Sup. Ct. 1047, 41 L. Ed. 163, the court said:
“Aside from this, the continued receipt of assessments upon Kalinski’s certificate up to the day of his death was a waiver of any technical forfeiture of the certificate by reason of the nonpayment of the lodge dues. Granting that the continued receipt of premiums or assessments, after a forfeiture has occurred, will only be construed as a waiver when the facts constituting a forfeiture are known to the company (Insurance Co. v. Wolff, 95 U. S. 326,*676 24 L. Ed. 387; Bennecke v. Insurance Co., 105 U. S. 355, 26 L. Ed. 990), this is true only of such facts as are peculiarly within the knowledge of the assured. If the company ought to have known the facts, or with proper attention to its business would have been apprised of them, it has no right to set up its ignorance as an excuse.”
These contracts are relied upon as a means of providing for wife and children. In many of these societies only such as are near in relation or kinship can be beneficiaries. If the right to enforce them is to be taken away, good faith requires such action to be taken with reasonable promptness, that the insured may not, by'the failure of the society to assert'the right, be lulled into assurance that the fault is condoned, so far, at least, as his insurance is concerned, and the sum intended will be available to his beneficiaries in the event of his death. .If this is not law, such associations, with the full knowledge that a cause of forfeiture has arisen-, may go on indefinitely levying and collecting assessments, until the assured by reason of age or disease can no longer procure a contract of insurance in favor of those who have a natural claim upon him for such provision. While these societies are peculiar in their organization, and are conceded the fullest right to control their membership and regulate for themselves their internal affairs, as insurance companies we perceive no reason why they should not be held to act upon those principles of equity and fair dealing which the law requires of other companies whose business is that of insurance. Nor is this view, so entirely just in itself, lacking authority for its support.
In Nib. Ben. Soc. (2d Ed.) § 565, the author says:
“Knowledge on the part of the society of a breach of one of the conditions of the contract by the member, and the subsequent collection of assessments, is a waiver of the right to forfeit the contract for that cause.”
In Bac. Ben. Soc. § 431, the rule is thus stated:
“But it seems that good faith would require the company, when it becomes aware of a right of forfeiture, to avail itself of it within a reasonable time, and if, after such knowledge, it collects a premium, it should be held to have waived forfeiture.”
This seems to be a reasonable statement of the rule. Applying it to the facts in this case, what is the result? Let it be assumed that Wellenvoss, by his participation in the movement of June, 1893, had so far violated the obligations of the order, in participating in and directing the movement to print the ritual in defiance of the order of the duly constituted authorities of the society, as to justify proceedings for his expulsion or suspension, and the consequent loss of his insurance, no such action was taken. The first action of the association was in 1894, when the report of the supreme chancellor was-filed. The recommendation of that officer was that steps be taken for the expulsion or suspension of the offending officers from further membership in the Grand Lodge. No steps were then taken to expel him from the order or suspend his membership, and none were suggested. In 1896, when the report of the past supreme chancellor was made who had investigated the conduct of the recalcitrant officers, his recommendation as to Wellenvoss was that he be suspended from the order, and his name be erased from the membership of the Supreme Lodge. Wellen
It is urged that Wellenvoss should have sought a remedy within the society for his suspension, and that class of cases is cited which hold that a member of a fraternal organization who claims to have been \yrongfully deprived of membership must seek the redress provided for in the order to which he belongs. If this doctrine can have application to a case like the present, it is to be noted that Wellenvoss was convicted by the highest tribunal of the order. The judgment was unanimously rendered by that body. It would have been vain to have filed a petition for rehearing, which was the only recourse left to the assured. Loubat v. LeRoy, 40 Hun, 546-549.
It is further contended that by the terms of the' certificate of insurance Wellenvoss’ beneficiary could only recover in the event that he continued in good standing until his death. It certainly can be no defense to an action on the certificate that the society wrongfully deprived the member of “good standing.” If that be so, the unwarranted action of the society might be made to protect it from just liability.
We find no error in the direction of a verdict for the plaintiff below. Judgment affirmed.