Kennedy v. Supreme Tent of Knights of Maccabees of the World

• Decision Date: 31 January 1918
• Docket Number: 14280.
• Court: Washington Supreme Court
• Parties: KENNEDY v. SUPREME TENT OF KNIGHTS OF MACCABEES OF THE WORLD.

170 P. 371

100 Wash. 36

KENNEDY v. SUPREME TENT OF KNIGHTS OF MACCABEES OF THE WORLD.

No. 14280.

Supreme Court of Washington

January 31, 1918

Department 1. Appeal from Superior Court, King County; Kenneth Mackintosh, Judge.

Action by H. E. Kennedy, as guardian ad litem for Frank Hall Kennedy, a minor, against the Supreme Tent of the Knights of the Maccabees of the World. Judgment for plaintiff, and defendant appeals. Affirmed.

Ballinger & Hutson, of Seattle, for appellant.

J Speed Smith, Henry Elliott, Jr., and G. E. Steiner, all of Seattle, for respondent.

FULLERTON J.

The appellant, on July 24, 1914, issued a benefit certificate in the sum of $3,000 to Francis Sprague Kennedy, in which his son Frank Hall Kennedy was named as beneficiary. The insured died on March 28, 1915, and the respondent, claiming the certificate had lapsed through nonpayment of dues and the consequent suspension of the insured from the order, refused to make payment according to its terms. The appellant, as guardian ad litem for the beneficiary, who was a minor instituted this action to recover upon such benefit certificate. The theory of the action was that the laws of the order whereby a member would be automatically suspended for nonpayment of dues were waived by long-continued custom of the society allowing a member to retain his good standing notwithstanding a failure to meet his dues as they accrued. Upon a trial to a jury, verdict was returned in favor of respondent upon which a judgment was rendered in the sum of $3,000, with interest and costs.

The complaint of respondent was attacked both by motion to strike and by general demurrer. After allegations setting up the membership of the insured in Seattle Tent No. 8 of the Knights of Maccabees of the World, the issuance to him of a life benefit certificate in favor of his son, his appointment as a deputy state commander authorized to solicit new members upon a certain compensation per $1,000 of insurance, the indebtedness to him of the Supreme Tent for commissions earned, and that his dues had been fully paid until the end of December, 1914, the complaint alleged in substance that the record keeper for Seattle Tent No. 8 had for years accepted the dues of members up to the 20th of the month following the month for which they were due and payable, and that no record of suspension for defaults in a prior month was made until such report was sent in to the Supreme Tent on or about the 20th; that it was the custom of the record keeper before sending in the report of suspension to send a notice to the member that his dues were unpaid, and that unless they were paid by the 20th he would be reported as suspended; that it was the custom of the record keeper and also a duty imposed by one of the by-laws to mail a notice to each member suspended, notifying him of his suspension and calling his attention to the method of reinstatement; and that there was a custom and practice followed in Seattle Tent No. 8 by which the tent or its trustees authorized the payment of the dues of a member out of the funds of the tent when the member was outside of its jurisdiction, or for any other cause deemed by the tent or the trustees to be good and sufficient. It was further alleged that there was an unsettled account between the insured and Hurd, another deputy state commander, who had gone to Russia, whereby the sum of $18 was coming to Kennedy for members secured for the order in such deputy's territory, Seattle Tent No. 8 which sum, it was agreed by Hurd, should be applied on Kennedy's dues accruing subsequent to November 1, 1914, and that his dues for the months of November and December were paid by the lodge pending the adjustment of the commissions earned by the insured; that on February 17, 1915, at a meeting of the tent, and in the presence of Kennedy, the record keeper was instructed to pay the dues accruing during Kennedy's absence from the jurisdiction until such time as the matter of the commissions due him from the appellant should have been adjusted; that thereafter Kennedy left Seattle, and on February 20th the record keeper through inadvertence and mistake noted Kennedy as suspended and so reported to the appellant; that Kennedy was never advised that he would be suspended nor of the fact that he had been marked and reported suspended; that at the time he had a credit with the appellant of $18, which had been agreed by its local officers to be applied upon his dues and rates, and which was sufficient to fully pay them for the months of January, February, and March, 1915; and that at the time of his death on March 28, 1915, he had fully complied with all the conditions of his benefit certificate. The motion to strike portions of the complaint was addressed to those allegations showing custom, and to further allegations tending to fortify the showing of custom by the statement of interrelated facts. The demurrer was on the ground of the insufficiency of the ficts to state a cause of action. We think the motion and the demurrer were both properly overruled.

It is the rule in this state that the by-laws of a fraternal insurance society may be waived by a custom acquiesced in by the society. Richardson v. Brotherhood of Locomotive Firemen & Enginemen, 70 Wash. 76, 126 P. 82, 41 L. R. A. (N. S.) 320; Frank v. Switchmen's Union of North America, 87 Wash. 634, 152 P. 512; Morgan v. Northwestern Nat. Life Ins. Co., 42 Wash. 10, 84 P. 412, 7 Ann. Cas. 382; Boutin v. National Casualty Co., 86 Wash. 372, 150 P. 449.

But it is appellant's contention that the custom must not be general and uniform but must have been known by the insured and relied upon by him to his injury, citing Butler v. Supreme Court of Independent Order of Foresters, 53 Wash. 118, 101 P. 481, 26 L. R. A. (N. S.) 293. While the complaint does not expressly allege the insured's reliance on the custom, it does state facts from which such a reliance is incessarily inferred. Edmiston v. Homesteaders, 93 Kan. 485, 144 P. 826, Ann. Cas. 1916D, 588; Watkins v. Brotherhood of American Yeomen, 188 Mo.App. 626, 176 S.W. 516. In Trotter v. Grand Lodge of Iowa Legion of Honor, 132 Iowa, 513, 109 N.W. 1099, 7 L. R. A. (N. S.) 569, 11 Ann. Cas. 533, the rule is stated that the question whether waiver will be found in any particular case depends not upon the intention of the insurer against whom it is asserted, but upon the effect which its conduct or course of business has had upon the beneficiary.

The appellant also contends that the secretary of a subordinate lodge of a national fraternal insurance society, charged with the collection and remittance of dues, is merely the agent of the national body for that limited purpose, and is not such a general agent that his mistake in the performance of those duties could be chargeable as the act of his principal. But the contrary rule is well established in this state. Schuster v. Knights & Ladies of Security, 60 Wash. 42, 110 P. 680, 140 Am. St. Rep. 905; Frank v. Switchmen's Union of North America, supra; Shultice v. Modern Woodmen of America, 67 Wash. 65, 120 P. 531; Richardson v. Brotherhood of Locomotive Firemen & Enginemen,

70 Wash. 76, 126 P. 82, 41 L. R. A. (N. S.) 320. See, also, Lounsbury v. Knights of Maccabees, 128 A.D. 394, 112 N.Y.S. 921; Knights of Pythias v. Withers, 177 U.S. 260, 20 S.Ct. 611, 44 L.Ed. 762; Murphy v. Independent Order Sons & Daughters of Jacob of America, 77 Miss. 830, 27 South, 624, 50 L. R. A. 111.

There are decisions of other courts holding that the custom of a local lodge is not binding on the supreme lodge. But if that rule were recognized in this state, there is evidence showing that one of the supreme officers had knowledge of the custom of Seattle Tent No. 8 in carrying its members, and commended that lodge for paying the dues of delinquent members out of its general fund.

The contention is made that the duty to pay assessments in a fraternal beneficiary society is correlative with the right to benefits, and since the society has no other source of income, such duty to pay is of the very substance of the contract made by the certificate holder. In support of this proposition Elliott v. Knights of the Modern Maccabees, 46 Eash. 320, 89 P. 929, 13 L. R. A. (N. S.) 856, is cited, in which this court held that the fraud practiced by a local officer of the society, in admitting a member over the age limit prescribed by the...