Loudon v. Modern Bhd. of Am.

• Decision Date: 22 January 1909
• Citation: 107 Minn. 12,119 N.W. 425
• Parties: LOUDON v. MODERN BROTHERHOOD OF AMERICA.
• Court: Minnesota Supreme Court

107 Minn. 12

119 N.W. 425

LOUDON

v.MODERN BROTHERHOOD OF AMERICA.

Supreme Court of Minnesota.

Jan. 22, 1909.

Appeal from District Court, Freeborn County; Nathan Kingsley, Judge.

Action on a benefit certificate by David R. Loudon against the Modern Brotherhood of America. Judgment for plaintiff, and defendant appeals. Reversed, and judgment ordered for defendant.

Syllabus by the Court

Benevolent fraternal associations are not included in the class of insurance companies referred to in section 1616, Rev. Laws 1905, which provides that neither the application nor the by-laws shall be considered as a part of the contract, unless incorporated in the policy.

According to the by-laws of respondent association the beneficiary fund is applicable to members only, and, to constitute membership in a prospective local lodge, the applicant must pass the physician's examination, be accepted at the head office, and be initiated and receive the obligation after the local lodge is organized. If the applicant is in good health upon the completion of these several steps, he is entitled to receive a certificate of membership.

District and local deputies have authority to solicit and receive applications for membership in a local lodge, receive the membership and examination fees, forward the applications to the home office, receive the certificate when approved by the home office, and deliver the same to the secretary of the local lodge when organized. But such deputies have no authority to vary the terms of the contract by accepting assessments or by delivering the certificate to applicants before the lodge is organized and the applicant becomes a member.

The application of respondent's wife was approved by the home office and returned to the local deputy, who delivered it to her with the declaration that it was in force. The lodge was organized a week later, and she was voted in as a member, but was prevented by sickness from attending, and so was not initiated and did not receive the obligation. After the lodge was organized the certificate was attested by respondent as secretary and by the president, and redelivered to her.

Held, she did not become a member of the lodge, the contract was not completed, and the certificate was void.

Respondent, the beneficiary named in the certificate, reported as secretary of the local lodge to the head office that the applicant had become a member, and respondent paid several assessments, which were received and applied in payment thereof at the head office in ignorance of the facts.

Held, acceptance of the money did not constitute a waiver by the association of the right to repudiate the transaction and the certificate upon discovery of the facts. On the undisputed evidence the defendant was entitled to judgment notwithstanding the verdict. Kerr & Fowler, Blythe Markley, and Rule & Smith, for appellant.

H. H. Dunn and Lafayette French, for respondent.

LEWIS, J.

Appellant was organized in the state of Iowa under a statute as follows: ‘A fraternal beneficiary organization is hereby declared to be a corporation, society or voluntary association, formed, organized and carried on for the sole benefit of its members and their beneficiaries, and not for profit, and having a lodge system, with ritualistic form of work and representative form of government.’ The association was permitted to carry on business in other states than Iowa, and for that purpose it appointed district or local deputies, who were authorized to receive applications for membership and to organize local lodges. A state manager was appointed for Minnesota, and a Mr. Aldrich was appointed district manager for certain territory, including the village of Glenville, and a Mr. Adams was appointed as a local deputy for the purpose of soliciting and receiving applications for membership in the local lodge to be organized at Glenville. Insurance was the leading feature of the association, and all applicants, with a special exception, who received certificates of membership were subject to assessment. When ten applications for membership had been received and accepted at the main office, the deputies were authorized to call a meeting of such applicants and organize the local lodge. The certificates of membership, having been approved and returned from the home office, were attested by the president and the secretary of the local lodge, and delivered to the member, at which time they became effective.

In February, 1906, Calista E. Loudon, the wife of respondent, made application for membership in a lodge to be organized in the village of Glenville. She passed the physician's examination, and her certificate was approved at the home office and returned to Mr. Adams, the local deputy, who had solicited her application, among others. Instead of retaining the certificate until the lodge was organized, Adams handed it to Mrs. Loudon herself, or to respondent for her. Soon after this occurrence, a sufficient number of applicants having been approved by the main office and returned, a meeting of the applicants was called for March 22d, for the purpose of organizing the lodge. At that meeting respondent was elected secretary and Mr. Koontz president. The deputies were present and initiated the applicants, with the exception of Mrs. Loudon, who was unable to be present on account of sickness. Notwithstanding that fact, upon the completion of the organization, respondent,...