Lange v. Highlanders
| Citation | 106 N.W. 224,75 Neb. 188 |
| Decision Date | 06 December 1905 |
| Docket Number | 13,913 |
| Parties | LOUISA LANGE v. ROYAL HIGHLANDERS. [*] |
| Court | Supreme Court of Nebraska |
ERROR to the district court for Seward county: BENJAMIN F. GOOD JUDGE. Reversed.
REVERSED.
R. S Norval and Hainer & Smith, contra.
OLDHAM, C. AMES and LETTON, CC., concur.
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 Alexander 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 all 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. Lange, was duly admitted to membership in the defendant society and received a certificate of indemnity for the amount sued for in the petition, payable at his death to the beneficiaries therein named; that by the application and certificate of indemnity it was agreed that the insured should comply with the edicts of the association then in force and such as thereafter should be enacted; that at the time the deceased was admitted to membership there was no edict or by-law of the society providing for a forfeiture of the policy if the member came to his death by suicide, whether sane or insane. It is clearly established by the proofs offered that on June 26, 1902, Alexander D. Lange died from the effects of a gun-shot wound inflicted by his own hand with suicidal intent, and that on June 12, 1901, the executive castle of the defendant association assumed to pass and publish an edict or by-law which provides as follows: "The benefit certificate issued to a member shall become void and all benefits thereunder shall be forfeited in case the member shall die from suicide, feloniously or otherwise, sane or insane."
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, 90 N.W. 926. Another underlying principle established by the clear weight of authority is that, where a member of a fraternal benefit association contracts in his application or certificate of membership to be bound by subsequently enacted by-laws, a by-law, properly enacted, providing for the forfeiture of a certificate where the death of the member is occasioned by suicide, whether sane or insane, is a reasonable by-law and will be upheld. Hughes v. Wisconsin Odd Fellows' Mutual Life Ins. Co., 98 Wis. 292, 73 N.W. 1015, and cases therein cited. Another well established principle is that a subsequent by-law providing for a forfeiture will be strictly construed most strongly against the association, and if passed in contravention of the provisions either of the articles of association, the constitution and by-laws of the society, or the statute governing it, it will be held ultra vires and of no effect. Briggs v. Earl, 139 Mass. 473, 1 N.E. 847; Supreme Council, A. L. H., v. Perry, 140 Mass. 580, 5 N.E. 634; Supreme Lodge, K. P., v. Kutscher, 179 Ill. 340, 70 Am. St. Rep. 115, 53 N.E. 620; Supreme Lodge, K. P., v. La Malta, 95 Tenn. 157, 31 S.W. 493; Supreme Lodge, K. P., v. Stein, 75 Miss. 107, 65 Am. St. Rep. 589, 21 So. 559. Again it is well established that, where the exercise of corporate power has been regulated by statute, the corporation cannot by its by-laws, resolutions or contracts, change the mode of the exercise of this power. 1 Thompson Corporations, secs. 849, 1,013; Brewster v. Hartley, 37 Cal. 15, 99 Am. Dec. 237.
From these principles it follows that the only question to be determined is as to whether the by-law relied upon as a 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 well 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 plenary powers in the organization. On August 10, 1896, the society commenced business with a membership of 311, and properly filed its articles of incorporation. It appears from the testimony that there never was a meeting of the members of the association, and that the officers were never voted on, either directly or indirectly, by the policy-holders of the order. On June 14, 1897, the executive castle, which had in the meantime increased its number to 12 members, together with one delegate of the association, held a meeting at which they formally elected themselves to the different officers in the executive castle for a term of four years, and adopted the edicts or by-laws in force at the time the certificate of membership was issued to Alexander D. Lange. Section 4 of the edicts so adopted provides as follows: "The executive castle shall be composed of its officers, its standing committees, its special committees, and its delegates elected by district conventions, as is hereinafter provided." In 1897 the legislature of Nebraska enacted: ...
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