Knights of the Maccabees of the World v. Johnson

• Decision Date: 02 January 1917
• Docket Number: 8140.
• Parties: KNIGHTS OF THE MACCABEES OF THE WORLD v. JOHNSON.
• Court: Oklahoma Supreme Court

185 P. 82

79 Okla. 77, 1917 OK 2

KNIGHTS OF THE MACCABEES OF THE WORLD v. JOHNSON.

No. 8140.

Supreme Court of Oklahoma

January 2, 1917

On Rehearing Oct. 28, 1919.

Syllabus by the Court.

The first, second, and third paragraphs of the syllabus in Pacific Mutual Life Insurance Company v. McDowell, 42 Okl. 300, 141 P. 273, L. R. A. 1918E, 391, are approved and adopted herein.

Under the facts set out in the opinion it is held that the recorder of the local branch of the mutual benefit society in collecting the monthly dues and assessments from the members, acted as the agent of the general society, and not of the individual members, the provisions of the by-laws to the contrary notwithstanding.

Where the by-laws of a fraternal society provide that no benefit shall be paid on account of the death of a member, whose death occurs while such member is to any extent "under the influence of intoxicating liquors," and an action on a certificate is defended on the ground that the member died while under the influence of intoxicating liquor, the question whether the member was under the influence of liquor "to any extent," within the terms of the contract in a cause tried to the court, was one of fact, to be determined by the court, and its finding, being supported by the evidence, is binding upon appeal to this court.

On Rehearing.

A policy issued by a fraternal life insurance company provided that a life benefit member, suspended for the nonpayment of a monthly rate, etc., may be reinstated within a certain time by complying with the by-laws of the company. Held, that the right to reinstatement does not die with the insured, but passes to the beneficiary under the policy, and may be exercised at any time during the period of extension.

Commissioners' Opinion, Division No. 2.

Error from District Court, Tillman County; T. P. Clay, Judge.

Action by Willie Z. Johnson against the Knights of the Maccabees of the World. Judgment for plaintiff, and defendant brings error. Affirmed.

Maxey & Brown, of Muskogee, for plaintiff in error.

Mounts & Davis, of Frederick, and W. C. Stevens, of Lawton, for defendant in error.

GALBRAITH C.

This was an action on a benefit certificate issued by the plaintiff in error to Sam W. Johnson, and payable to his wife, Willie Z. Johnson, in the event of his death. The petition alleged the issuance of the certificate in April 1909, and the death of the member on October 5, 1915, and also a compliance with all the terms and conditions of the policy required on her part to be performed, and that the society had refused to pay, and that it therefore owed the amount of the policy and interest thereon. The company in its answer admitted the issuance of the policy and the death of the member, but denied liability on two grounds: One, that the insured was in default in the payment of dues and assessments at the time of his death; and, second, because of the terms of its by-laws, made a part of the contract of insurance, which provided that, if "the insured was to any extent under the influence of intoxicating liquors" at the time of his death, nothing could be recovered on the certificate, and that he was under the influence of liquor at the time of his death, and therefore the society was not liable. A reply was filed, denying that the insured was in default in the payment of dues and assessments at the time of his death, and set up facts relied on as a waiver of the provisions of the by-laws prescribing the time and place of paying dues and assessments, and denied that the assured was under the influence of intoxicating liquor to any extent at the time of his death. A jury was waived, and the cause was tried to the court. Findings of fact and conclusions of law made, upon which judgment was rendered in favor of the defendant in error for the full amount of the certificate and interest thereon. To review that judgment an appeal has been prosecuted to this court.

The finding of the court on the first ground of defense is set out in finding No. 9, and is as follows:

"That in order to facilitate the collection of the tent and other dues, the monthly rate, and other assessments due the defendant from Sam W. Johnson, the said Sam W. Johnson made an arrangement with the State Guaranty & First National Bank of Frederick, Oklahoma, through Stanley Patten, its cashier, at the request of and by agreement with the said John B. Wilson, record keeper of the local tent of defendant at Frederick, Oklahoma, whereby all dues, special assessments, and monthly rates of said Sam W. Johnson would be paid each month when due, whenever demanded or required by said local record keeper, and that for a number of years prior and up to the time when the last monthly rate of said Sam W. Johnson was paid the said arrangement between the said bank and the said Sam W. Johnson and the said local record keeper was kept up and followed, and the monthly rate of said Sam W. Johnson always paid in time and remitted to the supreme officers within the time required by the by-laws of the order. That the said John B. Wilson considered and treated said agreement as a payment of the dues, assessments, and rates of the said Sam W. Johnson, and that the amounts of such assessments, dues, and rates were at his command and under his control at all times when the same became due by the laws of the order."

This finding is attacked by the society on the ground that it is contrary to the law and evidence, inasmuch as the by-laws of the association, which are by express terms made a part of the contract of insurance, provide that the recorder of the local tent of the society at the town of Frederick should be the agent of the member, and not the agent of the society, and therefore he had no right to waive the prompt payment of the dues and assessments, as provided in the by-laws, and that the finding made by the court in regard to the arrangement made between the recorder and Johnson, the insured, by which the dues were to be paid at the bank, was not called to the knowledge of the society, and it was therefore not bound by it. The Supreme Court of Nebraska, in Modern Woodmen of America v. Asa Colman, 64 Neb. 162, 89 N.W. 641, make an instructive argument against the contention of the plaintiff in error in the instant case, from which we quote the following:

"Notwithstanding the cunningly devised by-laws and stipulations of beneficiary associations like the plaintiff in error, the clerks of local camps are, in the matters of collecting and remitting assessments and the waiver of forfeitures, the agents of the societies, and not of the local camp or of their members. As is pointed out by Sanborn, J., speaking for the United States Court of Appeals for this circuit in Modern Woodmen of America v. Tevis, 111 F. 113 , quoting from the syllabus: 'The actual legal relations of parties to each other, their acts and transactions, prevail over previous written stipulations, which were subsequently disregarded, and condition their rights. Where a beneficiary association empowers the clerk of the local camp to collect, receipt for, remit, and report upon its benefit assessments, and the clerk acts under this authority with the knowledge and consent of all parties, the relation of principal and agent for this purpose exists, and conditions the rights of the parties, notwithstanding the fact that the by-laws and certificates of membership contain a uniformly disregarded stipulation that the clerk of the local camp shall not be the agent of the association, but shall be the agent of the local

camp, which has no interest in the benefit assessments, and that the acts or omissions of the clerk shall not affect the liability or waive any of the rights of the association.' It ought to be regarded as the settled law of this state that if a beneficiary insurance association, like the plaintiff in error, continues to collect dues or mortuary assessments from a member who has forfeited his beneficiary certificate, after knowledge of such forfeiture by its officers or agents intrusted with the duty of making such collections, it will be held to have waived such forfeiture, without regard to any restrictions or limitations incorporated in its certificates of membership or by-laws with respect to the power or authority of such persons to make such waivers. It cannot be regarded as material upon what ground or for what reason such forfeiture was incurred. The underlying principle is in all cases the same, namely, that the association, with full notice or knowledge, through its accredited agents, of the facts by reason of which the contract of insurance might have been avoided, has chosen to treat it as valid and in force, and to receive a consideration for so doing. It is no answer to say that such a rule renders the business of the association extremely hazardous, on account of the character of the persons who are necessarily chosen to represent it as officers of the local camps, and of the local influences to which such persons may be subjected. This is one of the hazards voluntarily assumed by those who engage in a business from which they may retire at will, and it furnishes no reason for relieving them from such obligations to the holders of their beneficiary certificates as are imposed upon those in other like enterprises, and as considerations of honesty and fair dealing demand."

The testimony in the record, and upon which the finding is based shows that an arrangement of long standing existed by which the recorder of the local tent called at the bank and collected the dues and assessments of the members; that the members had arranged with the cashier to pay the dues upon demand of the recorder, and to charge the amount to the accounts of the members; that under the...