Britton v. Supreme Council of the Royal Arcanum

• Decision Date: 15 November 1889
• Citation: 18 A. 675,46 N.J.E. 102
• Parties: BRITTON v. SUPREME COUNCIL OF THE ROYAL ARCANUM.
• Court: New Jersey Court of Chancery

18 A. 675

46 N.J.E. 102

BRITTON

v. SUPREME COUNCIL OF THE ROYAL ARCANUM.

Court of Chancery of New Jersey.

Nov. 15, 1889.

(Syllabus by the Court.)

On final hearing on bill, answer, and proofs taken before a master.

Charles H. Voorhis, for complainant. William Brinkerhoff, for defendant corporation.

VAN FLEET, V. C. The complainant brings this suit to compel the Supreme Council of the Royal Arcanum to pay her the sum of $3,000, which she alleges she became entitled to by the death of her son, Merritt C. W. C. Britton, under a contract made by her son with the defendant. Her son was a member of the defendant corporation at the time of his death. He was admitted as a full-rate member on the 13th day of February, 1884, and died on the 2d day of May, 1886. He died childless, never having been married, and his nearest kindred at the time of his death were the complainant and two brothers. The defendant is a corporation organized under statutes of Massachusetts, authorizing the formation of corporations to raise a fund "for the purpose of assisting widows, orphans, or other relatives of deceased members, or persons dependent upon deceased members." By a statute passed in 1877 the persons to whom the accumulated fund of such a corporation could be dispensed or paid were limited to "widows, orphans, or other persons dependent on deceased members." But a statute passed in 1882 enlarged the class of persons who might become the beneficiaries of the fund accumulated by such a corporation so as to embrace "widows, orphans, or other relatives of deceased members, or persons dependent upon deceased members." Legion of Honor v. Perry, 140 Mass. 580, 5 N. E. Rep. 634.

The contract on which the complainant rests her right to relief is to be found in the application for membership made by her son, the certificate of membership issued to him, and the constitution and by-laws of the defendant corporation. One of the principal objects of the defendant corporation, as its constitution declares, is to establish a widows' and orphans' benefit fund, from which, on satisfactory evidence of the death of a member of the order who has complied with all its lawful requirements, a sum not exceeding $3,000 shall be paid to his family or those dependent on him, as he may direct. One of its by-laws ordains that there shall be paid on the death of each full-rate member, who is in good standing and not under suspension for any cause at the time of his death, the sum of $3,000. This payment is to be made by a draft drawn by the secretary on the treasurer, in favor of the person entitled to the benefit, and delivered to the payee, who must, when he presents his draft to the treasurer for payment, surrender the outstanding benefit certificate. Another by-law provides that each applicant for membership shall enter on Ms application for membership the name of the person to whom he desires his benefit paid on his death, and that the name of the beneficiary so designated shall be entered in the certificate issued to the member. Members have the right to change their beneficiary on surrendering the benefit certificate previously issued, and to have a new certificate issued in the name of the new beneficiary. By another by-law it is ordained that "in the event of the death of all the beneficiaries, designated by the member in accordance with the laws of the order, before the decease of such member, if he shall have made no other or further disposition thereof, the benefit shall be paid to the legal heirs of the deceased member dependent upon him; and, if no person or persons shall be entitled to receive such benefit by the laws of this order, it shall revert to the widows' and orphans' benefit fund." By the constitution and by-laws, no person is qualified to become a member of the defendant corporation unless he is a "white man between twenty-one and fifty-five years of age, of sound health, of good moral character, a believer in a Supreme Being, and competent to earn a livelihood for himself and family." The foregoing summary states, in substance, all of the provisions of the constitution and by-laws pertinent to the present discussion.

In his application for membership Merritt C. W. C. Britton designated Robert M. Brennan as the person to whom he desired his benefit to be paid on his death, and, in the certificate which the defendant issued to Britton, Brennan was named as beneficiary, and Britton, after obtaining the certificate, delivered it to Brennan, who still retains it, and who has, on demand, refused to surrender it. Brennan was not related to Britton, nor was he in any wise dependent on Britton. The proofs show that Brennan was a creditor of Britton, and that the reason why Britton appointed him his beneficiary, and delivered his certificate to him, was to secure him for a debt. Brennan can take nothing under this appointment. Britton's attempt to make Brennan his beneficiary must be treated as nugatory. In another case involving the same question I have said, in conformity to what I understand to be the uniform course of decision on this subject, that where a corporation is organized under a statute authorizing the formation of corporations to accumulate a fund to be paid to the widows and children of deceased members, the corporation can only pay the fund to the widows and children of deceased members, and if it should make a promise to pay any part of it to any other person its promise would be void. Its promise would not only be ultra vires, but in direct contravention of the purpose of the statute from which it derived both its corporate existence and power. And a member of such a corporation is equally powerless to divert from its appointed channel that part of the fund of the corporation which becomes payable on his death. Legion of Honor v. Smith, 45 N. J. Eq—, 17 Atl Rep. 770. So that I think it must be regarded as entirely clear that Brennan has no right whatever to the sum in controversy, nor to the certificate of membership issued to Britton.

The question of the case is, did the complainant, by the death of her son, become entitled to the sum which she claims? The defendant says she did not, because her son procured his certificate of membership by deceit and fraud; and it has, in addition to answering, filed a cross-bill asking for the surrender and cancellation of the certificate. The fraud charged consists in a representation in his application for membership that Brennan was his cousin, when in truth no relationship existed between them. The following are the material parts of Britton's application: "I am not now a member of this order; I have not within six months been rejected; am not now under suspension; and have never been expelled from any council of this order; and am a believer in a Supreme Being. I reside at 305 York street, Jersey City. I was born on the 7th day of August, 1851, and am between thirty-two and thirty-three years of age. My occupation is that of a medical student. Place of business, College of P. and S., New York city. I direct that, in case of my death, all benefit to which I may be entitled from the Royal Arcanum be paid to Robert M. Brennan, Hopewell, Mercer county, N. J., related to me as cousin, subject to such future disposal of the benefit among my dependents as 1 may hereafter direct, in compliance with the laws of the order. I am temperate in my habits, and have no injury or disease which will tend to shorten my life. Am now in good health, and able to gain a livelihood. I do hereby consent and agree that any untrue or fraudulent statement made above, or to the medical examiner, or any concealment of facts by me in this application, or any suspension or expulsion from, or voluntarily severing my connection with, the order, shall forfeit the rights of myself and my family or dependents to all benefits and privileges therein." The only one of the foregoing statements which it is asserted was either untrue or fraudulent is the one in which it is stated that Brennan was related to Britton as cousin. But conceding, as it must be, that that statement was untrue, and that it was made knowing it to be untrue, the question which this condition of facts raises is this: Did that statement have the least effect in influencing or inducing the defendant into doing something to its harm or injury which it would not have done if no such statement had been made? It is clear, I think, that it cannot be considered a warranty. There is nothing in the constitution or by-laws which would warrant the court in so construing it. It has been held where an applicant for admission to membership in a similar corporation made representations concerning the condition of his health which were untrue, but which he supposed to be true when he made them, that they did not constitute warranties, nor preclude his beneficiary from recovering...